EMPLOYMENT AGREEMENT
BETWEEN
PSW Technologies, Inc.
AND
Xxxxx X. Xxxxxxxxx
THIS AGREEMENT, made and entered into as of January 18, 1999, by and between PSW
Technologies Inc., with its principal offices located at 0000 Xxxxxxxxxxx
Xxxxxxx, Xxxxxxxx 0, Xxxxx 000, Xxxxxx, Xxxxx 00000 (hereinafter called the
"Company"), and Xxxxx X. Xxxxxxxxx (hereinafter called the "Executive").
WITNESSETH
In consideration of the mutual covenants herein contained and other good and
valuable considerations, the parties hereto agree as follows:
SECTION I - TERM OF EMPLOYMENT AND DUTIES
1.1 Term. The term of this Agreement shall commence as of January 18, 1999.
1.2 Duties. Executive shall be employed by Company as the Vice President,
Corporate Strategy and Marketing. Executive shall report directly to the
Chief Executive Officer. Executive shall have such responsibilities and
authority as may from time to time be assigned to Executive by the Chief
Executive Officer of the Company or by the Board of Directors, provided,
however, that the responsibilities assigned shall be of a character and
dignity appropriate to a senior executive of the Company. During the
employment period, the Executive agrees to devote substantially all of his
normal business time and attention (reasonable vacation and periods of
leave excepted) to the affairs of the Company and the promotion of its
interests.
SECTION II - COMPENSATION, BENEFITS AND PERQUISITES
2.1 Base Salary. The Executive will receive a base salary at a rate of $200,000
per annum, payable in accordance with the Company's customary payroll
practices. At least annually, the Chief Executive Officer or the
Compensation Committee of the Board of Directors will review the
Executive's base salary for competitiveness and appropriateness in the
industry, and in light of such review may, in the sole discretion of the
Company, increase such salary.
2.2 Transition Bonus. In addition to the other payments referred to in this
Agreement, the Company agrees to pay to the Executive a transition bonus of
$30,000 to be paid as follows: $15,000 on February 15, 1999 and $15,000 on
April 15, 1999. Executive must be employed on these dates in order to
receive the bonus.
2.3 Annual Incentive Bonus. In addition to the other payments referred to in
this Agreement, the Executive shall be entitled to participate in an annual
incentive bonus plan with a target annual cash bonus of 30% of the base
salary earned during the fiscal year. The actual achievement and payout
shall be based upon criteria established by the Chief Executive Officer and
approved by the Compensation Committee of the Board of Directors. The
annual incentive bonus plan payments ("Annual Incentive Bonus") will be
paid in cash on February 15.
2.4 Stock Option Grants. Executive shall be granted non qualified stock options
pursuant to the Company's Stock Option Plan (the "Plan') to purchase
125,000 shares of Company common stock having an exercise price equal to
the fair market value (determined in accordance with the applicable
provisions of the Plan) of Company common stock on January 18, 1999. The
options will vest as follows:
Vest Date Expiration Date Number of Shares
07/18/1999 01/18/2009 31,250
07/18/2000 01/18/2009 31,250
07/18/2001 01/18/2009 31,250
07/18/2002 01/18/2009 31,250
Such options shall be subject to, and governed by, the terms and provisions
of the Plan except to the extent of modifications of such options which are
permitted by the Plan and which are expressly provided for herein.
2.5 Benefits. Executive shall be entitled to participate in all employee
benefit plans of the Company in proportion to his position and compensation
herein. "Benefit Plans" shall include, but not be limited to, group life,
long term disability, medical, dental and vision insurance; stock options;
stock purchase or bonus plans; profit sharing arrangements; 401(k);
deferred compensation; and any other incentive compensation plans.
Executive will be entitled to four (4) weeks of paid vacation per annum.
SECTION III - TERMINATION
3.1 Employment at Will. This Agreement is a contract of employment at will.
This means that employment will continue only so long as both Company and
Executive want it to do so. Subject to the Notice of Termination
requirement set forth in Section 3.4, Executive is free to quit at any time
at his discretion and Company is, subject to the severance payment
provisions of Section 3.2, free to terminate Executive's employment at any
time at its discretion. If the Agreement is terminated for reasons other
than death, total disability, Cause (as defined in Section 3.3), or
voluntary termination, the Executive shall be paid as described in Section
3.2.
3.2 Severance. In the event that the Executive's employment is terminated by
the Company for reasons other than death, total disability, Cause (as
defined in Section 3.3) or voluntary termination, the Company will pay to
the Executive a lump sum payment equal to three months of the Executive's
then current base salary. The payment will be made in cash on the
termination date. In addition, one third of the Executive's unvested
options shall automatically vest, so that this option shall immediately
become exercisable for those particular Option Shares as fully-vested
shares of Common Stock.
3.3 Cause. Termination by Company of Executive's employment for "cause" as used
in this Agreement shall be limited to gross negligence or malfeasance by
Executive in the performance of his duties under the Agreement, the
Executive's conviction or plea of "guilty" to any felony crime, or
indictment for a felony violation of the federal securities laws.
3.4 Involuntary Termination. An "Involuntary Termination" shall mean the
termination of Executive's employment by reasons of
(a) Involuntary dismissal or discharge by the Company for reasons other than
Cause, or
(b) Executive's voluntary resignation following (1) a change in Executive's
position with the Company which materially reduces Executive's level of
responsibility, or (2) a reduction in Executive's level of compensation
(including base salary, fringe benefits and participation in any
corporate-performance based bonus or incentive programs).
3.5 Notice of Termination. The Agreement may be terminated by the Executive or
the Company upon written notice.
SECTION IV - CHANGE OF CONTROL
4.1 Change of Control. A "Change of Control" means any of the following events:
(a) the sale by the Company of substantially all of its assets to a single
purchaser or a group of associated or affiliated purchasers.
(b) the sale, exchange or other disposition, in one transaction to an entity or
entities not affiliated with the Company, of more than fifty percent (50%)
of the outstanding common stock of the Company.
(c) the merger or consolidation of the Company in a transaction in which the
stockholders of the Company receive less than fifty percent (50%) of the
outstanding voting stock of the new or continuing entity.
4.2 Accelerated Vesting of Options. In the event of a Change in Control, all of
the options granted but not otherwise vested shall automatically vest so
that the options shall, immediately prior to the effective date of the
Change in Control, become fully exercisable for all of the options as fully
vested shares of Common Stock and may be fully exercised for any or all of
those vested shares. However, the options shall not vest on such an
accelerated basis if and to the extent the options are, in connection with
the Change in Control, assumed by the successor corporation (or parent
thereof), replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof) or otherwise
continued in full force and effect pursuant to the Change in Control
transaction. The determination of option comparability shall be made by the
Plan Administrator, and such determination shall be final, binding, and
conclusive.
4.3 Voluntary Termination Option Following Change of Control. In the event of a
Change of Control, the Executive may at his option decide to leave the
Company within 90 days of the Change of Control, and be paid severance
pursuant to Section 3.2 as though the Executive were terminated by the
Company without Cause.
4.4 Involuntary Termination Following Change of Control. Upon an Involuntary
Termination of Executive's employment within twelve (12) months following a
Change in Control a portion of the Option Shares at the time of the Change
of Control (or any replacement grant) not otherwise vested shall
automatically vest, so that the Option shall immediately become exercisable
for those particular Option Shares. The number of Option Shares which shall
vest upon such an accelerated basis in connection with the Involuntary
Termination shall be equal to the number of Option Shares in which
Executive would have vested had Executive remained employed by Company for
an additional two (2)-year period measured from the date of his Involuntary
Termination.
SECTION V - DISPUTE RESOLUTION
5.0 Dispute Resolution. Before filing a claim in any state or federal court, or
any state or federal agency, arising out of a dispute under this Agreement,
both parties agree to submit such claim or controversy to a third party
mediator in a good faith effort for resolution.
SECTION VI - NONCOMPETITION, CONFIDENTIALITY AND OWNERSHIP
6.1 Non-competition. Executive shall not during the term of this Agreement, and
for a period of one year thereafter, directly or indirectly:
(a) Solicit or induce any employee of Company to terminate his or her
employment.
(b) Perform any act of direct competition with Company (whether the
solicitation of sales, sale, or marketing presentation) to any Company
customer or prospective customer with which the Executive had direct
contact while employed by Company and for twelve (12) months after such
employment ends. A Company customer shall be defined as the entire customer
entity for entities with only regional or local offices. For Company
customers who have national or worldwide offices, the Company customer
shall be defined as that regional or local office with which the Executive
had contact.
(c) Accept any opportunity (whether of a contract or full-time employment) with
a Company customer if Executive learned of the opportunity as a direct
result of the Executive's employment by Company without the mutual consent
of the Executive and the Company.
6.2 Confidentiality. The Executive shall not disclose or furnish confidential
information about the Company or its customers to any third party except as
specifically authorized by Company or as reasonably necessary to carry out
the duties performed by the Executive. Upon termination, Executive will
return to Company all such information, materials, and company equipment in
his or her possession. This paragraph shall survive the expiration or
termination of this Agreement.
6.3 Ownership. Executive agrees to disclose to Company in writing any and all
documentation, inventions, improvements or discoveries which arise out of
his or her employment with Company. All copyrightable work is "work for
hire" and Executive hereby assigns to Company all rights and interest in
any copyrightable work, invention or idea made or conceived while in the
performance of any job related duties during the term of this Agreement.
Executive will execute any documents, and at Company's expense provide any
cooperation reasonably necessary to create or record any such transfer of
ownership.
SECTION VII - MISCELLANEOUS
7.1 Successors. The rights and duties of a party hereunder shall not be
assignable by that party; provided, however, that this Agreement shall be
binding upon and inure to the benefit of any successor of the Company, and
any such successor shall be deemed substituted for Company under the terms
of this Agreement. The term successor as used herein shall include any
person, firm, corporation or other business entity which at any time, by
merger, purchase or otherwise, acquires all or substantially all of the
assets or business of the Company.
7.2 Entire Agreement. With respect to the matters specified herein, this
Agreement contains the entire agreement between the parties and supersedes
all prior oral and written agreements, understandings and commitments
between the parties.
7.3 Amendments. This Agreement may be amended but only by a subsequent written
agreement of the parties.
7.4 Jurisdiction. This Agreement will be governed by Texas law.
7.5 Notices. Any notice, request, or other communication required or permitted
pursuant to this Agreement shall be in writing and shall be deemed duly
given when received by the party to whom it shall be given or three days
after being mailed by certified, registered, or express mail, postage
prepaid, addressed as follows:
If to the Company:
PSW Technologies, Inc.
0000 Xxxxxxxxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
If to the Executive:
Xxxxx X. Xxxxxxxxx
0000 X.X. 000 Xxxxxx
Xxxxx, Xxxxxxx 00000
Any party may change the address to which communications are to be mailed
by giving notice of such change in the manner provided above.
This Agreement shall be binding upon and shall inure to the benefit of the
Executive, Executive's heirs, executors, administrators and beneficiaries,
and shall be binding on and inure to the benefit of the Company and its
successors and assigns.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as of the
year and day first above written.
COMPANY - PSW Technologies, Inc.
EXECUTIVE - Xxxxx X. Xxxxxxxxx
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxxx
Name (Print): Xxxxxxx X. Xxxx Name (Print): Xxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
