EMPLOYMENT AGREEMENT
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This Employment Agreement ("Agreement") is made and entered into between
SERENA Software International, a corporation organized under the laws of the
State of California, with its principal office at Burlingame, California
("Company"), and Xxxxxxx X. Xxxxx ("Employee").
For and in consideration of the employment of Employee as President and
Chief Executive Officer of Company, the Company and Employee hereby covenant and
agree:
1. EMPLOYMENT
The Company employs Employee and Employee accepts employment as President
and Chief Executive Officer on the terms and conditions set forth in this
Agreement. As President and Chief Executive Officer, Employee shall perform such
duties as shall be assigned by the Company and as are normally performed by
persons holding like positions, including, but not limited to overall management
of and accountability of Company operations, Finances, Sales and Marketing,
Distribution Channels and International Operations. The Effective Date of this
Agreement shall be April 21, 1997. Employee accepts such employment and agrees
to render his services as provided in this Agreement and as directed from time
to time by the Board of Directors of the Company. All of Employee's services
shall be performed conscientiously and to the full extent of his ability.
Employee shall devote his entire productive time, ability and attention to the
business of the Company during the term of this Agreement. Employee shall not
directly or indirectly render any services of a business, commercial or
professional nature to any other person or organization for compensation or
otherwise without the prior written consent of the Company. This provision is
not intended to preclude personal investments of Employee which do not require
significant day to day attention and management on his part.
2. COMPENSATION AND BENEFITS OF EMPLOYEE
The Company shall pay as full consideration to Employee for his services to
be rendered pursuant to this Agreement compensation consisting of the following:
a. Salary computed at an annual rate of two hundred thousand dollars
($200,000.00). Employee's salary shall be paid according to the Company's
periodic payroll practice. Employee's salary will be reviewed on an annual
basis. Employee's annual salary reviews are not a guarantee of increases, which
may be granted solely in the Company's discretion. The payment of a salary
determined on an annual basis is not a promise of employment for any specified
term.
b. Employee shall receive those fringe benefits regularly provided by the
Company to its employees as set forth in the Company's "Employee Handbook," on
such terms and conditions as are described in the Employee Handbook or other
applicable policies or plans. Nothing in this paragraph shall be construed to
obligate the Company to continue to provide employee benefits to its employees
or to prohibit the modification of the type or extent of benefits provided by
the Company to its employees.
c. Employee shall accrue vacation at the rate of three (3) weeks per
year, calculated on the basis of his anniversary date. Vacation will be
scheduled at times consistent with the needs of Company, as determined by the
Chairman of the Board.
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d. Employee will be eligible to receive an annual bonus beginning with
the Company's 1997-98 fiscal year so long as the Company is able to meet the
targets set forth below during the 1997-98 fiscal year (or other such targets or
measures for future fiscal years as may be determined by the Board of Directors)
while employed with the Company. The amount of the bonus will be determined
after the close of the Company's fiscal year and after the Company has received
its audited financial statement for the just-ended fiscal year. All references
to Sales Volume shall be calculated to exclude upgrades as defined in SERENA's
current Pricing Manual. The references to Profit Before Taxes ("PBT) shall be
calculated before payment of any bonus to the Chairman of the Board and shall be
as determined by the Company's auditors using generally acceptable accounting
principles. The amount of the bonus shall be determined according to the
following formula:
(1) If the new Sales Volume increases at least 25% over the prior
fiscal year AND the Company's PBT increases at least 12.5% over
the prior fiscal year, in the same fiscal year, Employee will
receive a bonus of $50,000; and
(2) Employee shall be eligible to receive 1.25% of each dollar
constituting new Sales Volume in excess of the 25% increase over
the prior fiscal year's Sales Volume until such time as the Sales
Volume is at a 50% increase over the prior fiscal year and 2.5%
of each dollar of PBT until such time as the PBT is at a 25%
increase over the prior fiscal year.
(3) If the new Sales Volume increases by 50% over the prior fiscal
year AND if the Company's PBT increases by 25% over the prior
fiscal year, in the same fiscal year, Employee shall be entitled
to receive the following:
(a) 3% of each dollar of New Sales over the 50% increase as set
forth above, and
(b) 2.5% of each dollar of PBT over the 25% increase as set
forth above.
e. In the event of Employee's termination prior to the end of any fiscal
year in which he is eligible to receive a bonus, Employee's bonus, if any, will
be calculated based on the Sales Volume and PBT accrued as of the last day of
Employee's employment with the Company.
3. STOCK OPTIONS
During his first year of employment, Company agrees to create a stock
option plan under which Employee shall be entitled to receive stock options
constituting 593,000 shares of the Company's stock. The xxxxx xxxxx per share
will be determined by the Board of Directors on the date of grant. Except as
otherwise provided herein, Employee's stock options shall be governed by the
SERENA Software International Stock Option Plan (the "Plan"), as may be adopted
by the Board of Directors.
a. So long as he remains employed on the vesting date, Employee's stock
options shall vest according to the following schedule:
(1) One third (1/3) shall vest on the one year anniversary of
Employee's first day of employment.
(2) The remaining two thirds (2/3) shall vest on the last day of each
month over 24 months, commencing the 13 month of Employee's
employment.
b. The term of the options is ten (10) years from the date of vesting,
unless sooner terminated.
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c. These options will terminate one year after cessation of employment
with the Company.
d. These stock options are not transferable except by will or by the
applicable laws of descent and distribution.
e. Employee acknowledges and agrees that the Company has made no
representations or warranties about the tax treatment of Employee's stock
options or the exercise of such options. Employee acknowledges that he has been
advised to seek professional tax advice from an advisor of his own choosing
prior to exercising any option and prior to the disposition of shares issued
upon the exercise of any option.
4. TERMINATION OF EMPLOYMENT
a. If the Company terminates Employee's employment without Cause within
one (1) year of Employee's first day of employment, or Employee resigns for Good
Reason as defined herein, the Company will pay Employee a severance package
consisting of twelve (12) months of severance pay, less applicable payroll
deductions, at Employee's then current base salary. After the first year of
employment the severance package shall be six months of Employee's then current
base salary. Said severance pay will be paid to Employee, at the Company's
option, (1) in accordance with the Company's periodic payroll practices or (2)
in a lump sum within thirty (30) days of Employee's termination. For purposes of
this Agreement, Cause means:
(1) Willful breach or continual neglect or failure to perform any
material duty or material responsibility which Employee is
charged with performing under this Agreement;
(2) Commission of any act of dishonesty, fraud, misrepresentation or
other act of moral turpitude;
(3) Commission of any act of disloyalty, refusal to cooperate with
co-workers which, in the exclusive judgment of the Company,
prevents effective performance of duties, or insubordination;
(4) Misappropriation or misuse of the Company's confidential trade
secret information; or
(5) Misrepresentation or concealment of any material fact for the
purpose of securing or maintaining this Agreement.
b. Termination of employment by you for Good Reason shall be deemed to
have occurred if you terminate your employment for any of the following reasons:
(1) The assignment to you of any duties grossly inconsistent with
your positions, duties, responsibilities and status with the
Company;
(2) A material change in your reporting responsibilities and titles;
(3) A material reduction by the Company in your Base Salary or a
failure by the Company to pay you any portion of your current
compensation under any plan, agreement or arrangement of or with
the Company that is due to you; or
(4) A sale of a controlling interest of the Company's stock which for
purposes of this Agreement shall be in excess of 51% of the
outstanding shares.
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c. The Employee and the Company shall have the same right to terminate
Employee's employment for any reason whatsoever with or without Cause upon
thirty (30) days' written notice to the other party. Thereafter, the parties
will meet for the purpose of reviewing all facts and circumstances upon which
the termination is based. In lieu of the thirty days' advance written notice, at
its discretion, the Company may terminate Employee's employment without notice
to Employee by providing Employee thirty (30) days' pay, in addition to any
other sums due to Employee as of the date of termination.
d. The rights and duties created by this section may not be modified in
any way except by a written agreement dated and signed by the Company's Chairman
of the Board.
5. COOPERATION WITH THE COMPANY AFTER TERMINATION
Following any notice of termination of employment, Employee shall cooperate
fully with the Company in all matters relating to the winding up of his pending
work on behalf of the Company and the orderly transfer of any such pending work
to other employees of the Company as may be designated by the Company. The
Company shall be entitled to such full-time or part-time services of Employee as
the Company may reasonably require during all or part of any period following
any notice of termination.
6. CONDUCT
Prior and subsequent to Employee's termination date, if any, Employee shall
not do or attempt to do any of the following acts: (I) interfere with any of the
Company's business; (ii) interfere in any manner with any of the Company's
employees or independent contractors; (iii) use any of the Company's trade
secrets, including, but not limited to, its customer lists, or other property,
except in the best interests of the Company (as determined by the Company in its
sole discretion); or (iv) withhold any premiums, deposits or other forms of
payments, applications, financial or confidential information of the Company's
clients or customers.
7. COMPANY PROPERTY
In the event of Employee's termination, whether voluntary or involuntary,
Employee shall take all reasonable steps promptly to deliver to the Company all
property belonging to the Company which is in Employee's possession or under
Employee's control. Employee shall also inform the Company of the whereabouts of
any such items the location of which is known to the Employee but not the
Company.
8. TRADE SECRETS, RIGHTS AND DUTIES
a. Employee specifically agrees that he shall not at any time, either
during or subsequent to the term of Employee's employment with the Company, in
any fashion, form or manner, either directly or indirectly, unless expressly
consented to in writing by the Company, use, divulge, disclose or communicate to
any person or entity any confidential information of any kind, nature or
description concerning any matters affecting or relating to the business of the
Company, including, but not limited to, the Company's sales and marketing
methods, distribution channels, programs and related data, financial
information, pricing information or other written records used in the Company's
business; the Company's computer processes, programs and codes; the names,
addresses, buying habits or practices of any of its clients or customers;
compensation paid to other employees and independent contractors and other terms
of this employment or contractual relationships; any other confidential
information of, about or concerning the business of the Company, its manner of
operations, or other data of any kind, nature or description. The parties to
this Agreement hereby stipulate that, as between them, the above information and
items are important, material and confidential trade secrets that affect the
successful conduct of the Company's business and its good will, and that any
breach of any term of this section is a material breach of this Agreement. All
equipment, notebooks, documents, memoranda, reports, files, samples, books,
correspondence, lists or other written and graphic records, and the like,
including tangible or intangible computer programs, records and data, affecting
or relating to the business of the Company, which the
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Employee might prepare, use, construct, observe, possess or control, shall be
and shall remain the Company's sole property.
b. Employee agrees that all business procured by the Employee while
employed by the Company is and shall remain the permanent and exclusive property
of the Company. Employee further agrees that each of the employees and
independent contractors of the Company is a significant and valuable asset of
the Company and shall at all times, both during and subsequent to the
termination of Employee's employment, be treated as the sole and exclusive
property of the Company.
c. Any interference with the Company's business, property, confidential
information, trade secrets, clients, customers, employees or independent
contractors by the Employee or any of Employee's agents during or after the term
of Employee's employment, which causes actual or threatened damage to the
company's business interests or business relationships, shall be treated and
acknowledged by the parties as a material breach of this Agreement.
9. NON-SOLICITATION
Employee hereby acknowledges and agrees that he will likely be exposed to a
significant amount of confidential information concerning the Company's business
methods, operations and customers while employed under this Agreement, that such
information might be retained by Employee in tangible form or simply retained in
the Employee's memory, and that the protection of the Company's exclusive rights
to such confidential information and trade secrets can best be ensured by means
of a restriction on the Employee's activities after termination of employment.
Therefore, the Employee agrees that for a one-year period following employment
termination (whether voluntary or involuntary and with or without Cause), he
shall not solicit, divert or initiate any contact with (or attempt to solicit,
divert or initiate any contact with) any customer, client, independent
contractor or employee of the Company for any commercial or business reason
whatsoever which would be detrimental to the Company.
10. Injunctive Relief
Employee hereby acknowledges and agrees that any violation of Sections 6, 8
and 9 of this Agreement pertaining to Conduct, trade Secrets and
Non-Solicitation, will cause damage to the Company in an amount difficult to
ascertain. Accordingly, in addition to any other relief to which the Company may
be entitled, the parties agree that the Company shall be entitled to temporary
or permanent injunctive relief for any breach or threatened breach by Employee
of the terms of Sections 6, 8 and 9 of this Agreement.
11. ASSIGNMENT
The rights and obligations of the Employee under this Agreement are not
assignable except to the extent set forth in paragraph 11 herein. Any attempt to
assume the rights and obligations, in whole or in part, will be void and of no
effect unless prior written consent of Employee is obtained. The rights and
obligations of Employer may be assigned or transferred without the consent of
Employee.
12. ARBITRATION OF CONTROVERSIES
a. WHEN ARBITRATION IS REQUIRED
Except as provided below, Employee and the Company agree to submit the
following disputes, claims or controversies to final and binding arbitration,
in accordance with the provisions of California Code of Civil Procedure 1280
ET SEQ: Any and all claims arising out of Employee's employment or cessation
of employment which could have been brought before an appropriate government
agency or in an appropriate court of law, including but not limited to: (1)
breach of this Agreement or any other employment agreement or contract,
express or implied; (2) breach of any other term or condition of employment,
whether express of implied; (3) breach of any covenant of good faith and fair
dealing; (4)
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employment discrimination or harassment in violation of the California Fair
Employment and Housing Act or Title VII of the Civil Rights Act of 1964; (5) age
discrimination or harassment in violation of the Age Discrimination in
Employment Act or the California Fair Employment and Housing Act; (6) any other
claim arising under the common law of the State of California or of the United
States related to Employee's employment or termination from employment; and (7)
violation of any other federal, state or local statute, ordinance or regulation
related to Employee's employment with the Company or the termination of that
employment.
Employee and Company further agree that this duty to arbitrate extends not
only to disputes between Employee and the Company, but also to disputes between
Employee and the Company's officers, directors, employees and agents which arise
out of Employee's employment with the Company or the termination of that
employment.
Notwithstanding the foregoing, the parties agree that Employee and the
Company will not arbitrate any dispute, claim or controversy arising from (1)
any misuse, misappropriation or unlawful disclosure of the Company's
confidential trade secret information by Employee, or (2) any solicitation of
Company's employees, independent contractors, customers or clients by Employee.
b. TIME FOR DEMANDING ARBITRATION
Any demand for arbitration shall be made in writing and served upon the
other party to this Agreement, in accordance with paragraph 15a hereof. Such
demand shall be served no later than ninety (90) calendar days following the
date upon which the dispute arises. For purposes of this paragraph, the date
upon which the dispute arises shall be the date of the event, occurrence, or
happening giving rise thereto. This time period shall not be extended by virtue
of informal attempts to resolve the dispute.
c. SELECTION OF ARBITRATORS
In the event of a demand for arbitration, the parties shall first attempt
to agree upon an arbitrator to hear the dispute. If agreement is not reached
within fourteen (14) calendar days of the demand for arbitration, the party
seeking arbitration shall, within the fourteen (14) day period, request from the
American Arbitration Association ("AAA"), a list of five (5) arbitrators
experienced in labor and employment disputes. Immediately upon receipt of the
list of arbitrators from AAA, the party seeking arbitration shall forward a copy
of the list to the other party. Within fourteen (14) calendar days of receipt of
the list by the party seeking arbitration, the parties shall confer and attempt
to agree upon one of the arbitrators appearing on the list. If such agreement
cannot be reached, then within said fourteen (14) day period the parties shall
select the arbitrator by alternately striking names from the list until a single
name remains. The party seeking arbitration shall be the first to strike.
d. TIME IS OF THE ESSENCE
The parties expressly recognize the importance of resolving disputes under
this Agreement in an expeditious and timely manner. Therefore, time is of the
essence. Failure of a party seeking arbitration to abide by the time limits set
forth herein shall constitute a waiver by that party of the dispute.
e. REMEDIES
The arbitrator shall have the power to award any types of legal or
equitable relief that would be available in a court of competent jurisdiction or
administrative tribunal, including punitive damages for causes of action when
such damages are available under law.
f. FINAL AND BINDING ARBITRATION
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The decision of the arbitrator shall be final and binding on the parties.
g. NO DELETION, ADDITION OR MODIFICATION
The arbitrator shall have no authority to add to, delete from, or modify in
any way the provisions of this Agreement.
h. COSTS OF ARBITRATION
Employee understands and agrees that he shall be responsible for paying the
first $120, of the costs of commencing the arbitration, if Employee initiates
the arbitration, and the remainder of the fees will be paid by the Company,
subject to a subsequent award by the arbitrator. Each party shall pay their
respective attorney's fees, if any.
13. EMPLOYEE'S DUE DILIGENCE
Employee has had the opportunity to investigate fully the employment
offered by the Company and Employee has exercised due diligence in investigating
the Company's offer. Employee therefore acknowledges that except for the terms
and conditions set forth in this Agreement, no representations of any kind have
been made to his with respect to the nature of his work, the duration of his
employment, his expected compensation, or any other conditions surrounding his
employment by the Company.
14. GENERAL PROVISIONS
a. NOTICES
Any notices to be given under this Agreement by either party to the
other may be effected by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested. Mailed notices shall
be addressed to the parties at the addresses appearing below their signatures
and each party may change his address by written notice, in accordance with this
paragraph. Mailed notices shall be deemed communicated as of three (3) days
after mailing.
b. ENTIRE AGREEMENT
This Agreement supersedes any and all other agreements, either oral or
in writing, express or implied, between the parties hereto with respect to the
employment of Employee by Company, and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever. Each party to this Agreement acknowledges that no representation,
inducements, promises, or agreements, oral or written, express or implied, with
regard to Employee's employment, have been made or intended by any party, or
anyone acting on behalf on any party, or anyone acting on behalf of any party,
which are not embodied herein and that no other agreement, statement, or promise
regarding employment, either oral or written, express or implied, not contained
in this Agreement will be effective only if it is in writing and signed by both
parties.
c. PARTIAL INVALIDITY
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If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions
shall nevertheless continue in full force without being impaired or invalidated
in any way.
d. WAIVER OF BREACH
A waiver by either party of a breach of this Agreement by the other
party shall neither constitute nor be construed as a waiver by that party of
later similar breaches.
e. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
SERENA Software International, Inc. Xxxxxxx X. Xxxxx
(COMPANY) (EMPLOYEE)
By: /s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxx
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Title: President
Date:1997/04/17 Date: April 18, 1997
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