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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
effective as of April 1, 1997, by and between Xxxxxxx X. Xxxx (the "Executive")
and Novadigm, Inc., a Delaware corporation (the "Company").
R E C I T A L S
A. It is expected that the Company from time to time will consider
the possibility of an acquisition by another company or other change of control.
The Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Executive and can cause the Executive
to consider alternative employment opportunities. The Board has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication and objectivity of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the
Company and its stockholders to provide the Executive with an incentive to
continue his employment and to motivate the Executive to maximize the value of
the Company upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Executive
with certain benefits upon termination of the Executive's employment in
connection with a Change of Control, which benefits are intended to provide the
Executive with financial security and provide sufficient incentive and
encouragement to the Executive to remain with the Company notwithstanding the
possibility of a Change of Control.
D. Further, the Board believes that it is in the best interests of
the Company and its stockholders to provide additional benefits to the Executive
in the event the Executive's employment terminates for any reason other than a
Change in Control. Such benefits are intended to provide the Executive with
financial security and provide sufficient incentive and encouragement to the
Executive to remain with the Company notwithstanding the possible termination of
employment.
E. To accomplish the foregoing objectives, the Board of Directors
has directed the Company, upon execution of this Agreement by the Executive, to
agree to the terms provided herein.
F. Certain capitalized terms used in the Agreement are defined in
Section 6 below.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Executive by the Company, the
parties agree as follows:
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1. Duties and Scope of Employment.
(a) Position. The Company shall employ the Executive in the
position of Vice President, Finance/Chief Financial Officer/Treasurer, as such
position was defined in terms of responsibilities and compensation as of the
effective date of this Agreement; provided, however, that the Board of Directors
by mutual agreement with the Executive shall have the right, at any time prior
to the occurrence of a Change of Control, to revise such responsibilities and
compensation. The Executive shall continue to devote his full business efforts
and time to the Company and its subsidiaries. The Executive shall comply with
and be bound by the Company's operating policies, procedures and practices from
time to time in effect during his employment. During the term of the Executive's
employment with the Company, the Executive shall devote his full time, skill and
attention to his duties and responsibilities, and shall perform them faithfully,
diligently and competently, and the Executive shall use his best efforts to
further the business of the Company and its affiliated entities.
2. Base Compensation. Effective April 1, 1997, the Company shall
pay the Executive as compensation for his services a base salary at the
annualized rate of $165,000 (the "Annual Salary"), subject to any increases as
the Board shall authorize from time to time in connection with an annual review.
The Annual Salary shall be paid periodically in accordance with normal Company
payroll. The Annual Salary together with agreed upon bonus and commission
amounts, and any increases in such compensation that the Board of Directors may
grant from time to time, is referred to in this Agreement as "Base
Compensation."
3. Executive Benefits. The Executive shall be eligible to
participate in the employee benefit plans and executive compensation programs
maintained by the Company applicable to other key executives of the Company,
including (without limitation) retirement plans, savings or profit-sharing
plans, stock option, incentive or other bonus plans, life, disability, health,
accident and other insurance programs, paid vacations, and similar plans or
programs, subject in each case to the generally applicable terms and conditions
of the applicable plan or program in question and to the determination of any
committee administering such plan or program. In addition, the Executive shall
continue to be entitled to receive any other benefits currently received by the
Executive such as automobile and car phone allowance benefits.
4. Agreement Term. The terms of this Agreement shall terminate
upon the earlier of (i) the date that all obligations of the parties hereunder
have been satisfied, or (ii) twelve (12) months after a Change of Control unless
the Executive's employment terminates as a result of Involuntary or Constructive
Termination. A termination of the terms of this Agreement pursuant to the
preceding sentence shall be effective for all purposes, except that such
termination shall not affect the payment or provision of compensation or
benefits on account of a termination of employment occurring prior to the
termination of the terms of this Agreement.
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5. Severance Benefits.
(a) Termination in Connection With a Change of Control.
Subject to Section 5(b) and Section 7 below, if the Company terminates the
Executive's employment at any time during the period beginning thirty (30) days
before and ending twelve (12) months after a Change of Control, then the
Executive shall be entitled to receive severance benefits as follows:
(i) Involuntary or Constructive Termination. If the
Executive's employment terminates as a result of Involuntary or Constructive
Termination other than for Cause, then (1) the Executive shall be entitled to
receive severance pay in an amount equal 100% of the Executive's Base
Compensation for the year coinciding with the year of termination plus an amount
equal to the bonus and commissions the Executive would have earned had he been
employed by the Company at the end of such year multiplied by a fraction (x) the
numerator of which is the number of completed months in that year, and (y) the
denominator of which is twelve (12) (the "Current Bonus") and (2) in addition to
any portion of the Executive's stock options that were exercisable immediately
prior to such termination, such options shall accelerate and become exercisable
in full. Any severance payments except for the Current Bonus to which the
Executive is entitled pursuant to this Section shall be paid in a lump sum
within thirty (30) days of the Executive's termination. The Current Bonus to
which the Executive is entitled pursuant to this Section shall be paid in a lump
sum within thirty (30) days of the date that the Company's audit is complete for
such year.
(ii) Voluntary Resignation; Termination For Cause. If
the Executive voluntarily resigns from the Company (other than as an Involuntary
or Constructive Termination described in subsection 5(a)(i)), or if the Company
terminates the Executive's employment for Cause, then the Executive shall not be
entitled to receive severance or other benefits except for those (if any) as may
then be established under the Company's then existing benefit plans at the time
of such termination.
(iii) Disability; Death. If the Company terminates
the Executive's employment as a result of the Executive's Disability, or such
Executive's employment is terminated due to the death of the Executive, then (1)
the Executive or the Executive's estate, as the case may be, shall be entitled
to receive severance pay in an amount equal to one-half (1/2) of the Executive's
Base Compensation for the year coinciding with the year of termination plus his
Current Bonus, (2) in addition to any portion of the Executive's stock options
that were exercisable immediately prior to such termination, such options shall
accelerate and become exercisable as to that number of additional shares that
would have vested if the Executive had remained continuously employed for a
period of six (6) months following such termination (and if any of such options
vest on an annual basis, the appropriate credit shall be given as if the vesting
accrued monthly), and such options shall remain exercisable for the period
prescribed in Executive's stock option agreements and (3) the Executive or the
Executive's estate, as the case may be, shall be entitled to receive such other
benefits (if any) as may then be established under
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the Company's then existing benefit plans at the time of such Disability or
death. Any severance payments except for the Current Bonus to which the
Executive is entitled pursuant to this Section shall be paid in a lump sum
within thirty (30) days of the Executive's termination. The Current Bonus to
which the Executive is entitled pursuant to this Section shall be paid in a lump
sum within thirty (30) days of the date that the Company's audit is complete for
such year.
(b) Certain Business Combinations. In the event it is
determined by the Board of Directors, upon receipt of a written opinion of the
Company's independent public accountants, that the enforcement of any section or
subsection of this Agreement, including, but not limited to, Section 5(a) (which
allows for the acceleration of the vesting of stock options to purchase shares
of the Company's Common Stock in connection with a Change of Control).
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above, would preclude accounting for any proposed business combination of the
Company involving a Change of Control as a pooling of interests, and the Board
otherwise desires to approve such a proposed business transaction which requires
as a condition to the closing of such transaction that it be accounted for as a
pooling of interests, then any such section or subsection of this Agreement
shall be null and void.
6. At-Will Employment. The Company and the Executive acknowledge
that the Executive's employment is and shall continue to be at-will, as defined
under applicable law. If the Executive's employment terminates for any reason,
including, without limitation, any termination prior to a Change of Control, the
Executive shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies at the time of termination. The following terms referred to in this
Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean (i) any act of personal
dishonesty taken by the Executive in connection with his responsibilities as an
employee and intended to result in substantial personal enrichment of the
Executive, (ii) committing a felony or an act of fraud against the Company or
its affiliates, and (iii) acts by the Executive which constitute gross
misconduct, are injurious to the Company, and which are demonstrably willful and
deliberate on the Executive's part after there has been delivered to the
Executive a written demand of cessation of such acts from the Company which
describes the basis for the Company's belief that the Executive engaged or
committed such acts.
(b) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities; or
(ii) A change in the composition of the Board of
Directors of the Company occurring within a two-year period, as a result of
which fewer than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (A) are directors of the Company as
of the date hereof, or (B) are elected, or nominated for election, to the Board
of Directors of the Company with the affirmative votes of at least a majority
of the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company); or
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(iii) A merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation.
(c) Involuntary or Constructive Termination.
"Involuntary or Constructive Termination" shall mean (i) without the Executive's
express written consent, the assignment to the Executive of any duties or the
significant reduction of the Executive's duties, either of which is inconsistent
with the Executive's position with the Company and responsibilities in effect
immediately prior to such assignment, or the removal of the Executive from such
position and responsibilities; (ii) without the Executive's express written
consent, a substantial reduction, without good business reasons, of the
facilities and perquisites available to the Executive immediately prior to such
reduction; (iii) a reduction by the Company in the Base Compensation of the
Executive as in effect immediately prior to such reduction; (iv) a material
reduction by the Company in the kind or level of employee benefits to which the
Executive is entitled immediately prior to such reduction with the result that
the Executive's overall benefits package is significantly reduced; (v) without
the Executive's express written consent, any relocation of the Executive's job
or office more than 40 miles from the Executive's then current job or office;
(vi) any purported termination of the Executive by the Company which is not
effected for Disability or for Cause, or any purported termination for which the
grounds relied upon are not valid; or (vii) the failure of the Company to obtain
the assumption of this Agreement by any successors contemplated in Section 8
below.
(d) Disability. "Disability" shall mean that the
Executive has been unable to perform his duties under this Agreement as the
result of his incapacity due to physical or mental illness, and such inability,
at least 26 weeks after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative (such agreement as to
acceptability not to be unreasonably withheld). Termination resulting from
Disability may only be effected after at least 30 days' written notice by the
Company of its intention to terminate the Executive's employment. In the event
that the Executive resumes the performance of substantially all of his duties
hereunder before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been revoked.
7. Successors.
(a) Company's Successors. Any successor to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and assets shall assume the obligations under this Agreement
and agree expressly to perform the obligations under this Agreement in the same
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manner and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this
Agreement, the term "Company" shall include any successor to the Company's
business and assets which executes and delivers the assumption agreement
described in this subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.
(b) Executive's Successors. The terms of this Agreement
and all rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees and legatees.
8. Notice.
(a) General. Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Executive, mailed notices shall be addressed to him at the home address which he
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company
whether for Cause or without Cause or by the Executive as a result of an
Involuntary or Constructive Termination shall be communicated by a notice of
termination to the other party hereto given in accordance with Section 8 of this
Agreement. Such notice shall indicate the specific termination provision in this
Agreement relied upon, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the provision so
indicated, and shall specify the termination date (which shall be not more than
15 days after the giving of such notice). The failure by the Executive to
include in the notice any fact or circumstance which contributes to a showing of
Involuntary or Constructive Termination shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
9. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Executive shall not be
required to mitigate the amount of any payment contemplated by this Agreement
(whether by seeking new employment or in any other manner), nor shall any such
payment be reduced by any earnings that the Executive may receive from any other
source.
(b) Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Executive and by an authorized officer of
the Company (other than the Executive). No waiver by
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either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.
(d) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware.
(e) Severability. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(f) Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in Santa Xxxxx County, California in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Punitive damages shall not
be awarded.
(g) No Assignment of Benefits. The rights of any person to
payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this subsection (g) shall be
void.
(h) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(i) Assignment by Company. The Company may assign its
rights under this Agreement to an affiliate, and an affiliate may assign its
rights under this Agreement to another affiliate of the Company or to the
Company; provided, however, that no assignment shall be made if the net worth of
the assignee is less than the net worth of the Company at the time of
assignment. In the case of any such assignment, the term "Company" when used in
a section of this Agreement shall mean the corporation that actually employs the
Executive.
(j) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.
COMPANY: NOVADIGM, INC.
/s/ Albion X. Xxxxxxxxxx
By:______________________________________
Albion X. Xxxxxxxxxx
Chief Executive Officer
/s/ Xxxxxxx X. Xxxx
EXECUTIVE: _________________________________________
Xxxxxxx X. Xxxx
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