EXHIBIT 10.16
BEA SYSTEMS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, is entered into as of September 1, 1999,
between BEA Systems, Inc., a Delaware corporation (the "Company"), and Xxxxxxx
X. Xxxxxxx III ("Employee").
R E C I T A L S
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A. Employee entered into an Employment Agreement with the Company
dated September 28, 1995 (the "1995 Agreement"), which expires on September 28,
1999.
B. Company desires to obtain the continued services of Employee, on
its own behalf and on behalf of all existing and future Affiliated Companies
(defined to mean any corporation or other business entity or entities that
directly or indirectly controls, is controlled by, or is under common control
with the Company), and Employee desires to secure continued employment from the
Company upon the following terms and conditions.
A G R E E M E N T
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ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
1. Position, Period of Employment.
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(a) Period of Employment. The Company hereby employs Employee to
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render services to the Company in the position and with the duties and
responsibilities described in Section 1(b) for the period (the "Period of
Employment") commencing on the date of this Agreement and ending the earlier of
(i) July 31, 2003; or (ii) the date this Agreement is terminated in accordance
with Section 3 below.
(b) Position. Employee shall currently serve as the Company's CEO
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(or in such other position(s) as the Board of Directors of the Company (the
"Board") shall designate). Employee shall devote his full time and attention and
his best efforts to the performance of the services customarily incident to such
office and to such other services as may be reasonably requested by the Board.
The Company shall retain full direction and control of the means and methods by
which Employee performs the above services and of the place(s) at which such
services are to be rendered.
(c) Other Activities. Except upon the prior written consent of the
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Board, Employee, during the Period of Employment, will not (i) accept any other
employment; (ii) engage, directly or indirectly, in any other business activity
(whether or not pursued for pecuniary advantage) that is or may be competitive
with, or that might place him in a competing position to that of the Company or
any Affiliated Company, as determined in the discretion of
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the Board; or (iii) engage in any work or business activity of any kind outside
those of the Company.
2. Compensation, Benefits, Expenses.
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(a) Compensation. In consideration of the services to be rendered
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hereunder, including, without limitation, services to any Affiliated Company,
Employee shall be paid an annual salary of Three Hundred Thousand Dollars
($300,000.00), payable at the times and pursuant to the procedures regularly
established, and as they may be amended, by the Company during the Period of
Employment. This rate shall be reviewed annually on a calendar year basis, in
accordance with the Company's salary review practices, and adjusted in the sole
discretion of the Board of the Company to reflect increases in the cost of
living and such other increases as are awarded in accordance with the Company's
regular salary review practices for giving salary increases to similarly
situated employees.
(b) Stock Options. Employee is eligible to receive options under
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the Company's 1997 Flexible Stock Incentive Plan (the "Option Plan") and such
other option plans as the Company may from time to time adopt, as approved by
the Board or a Committee (as defined in the Option Plan) thereof. Twenty-five
percent (25%) of the Shares subject to the Option Plan shall vest twelve months
after the date of an Award (as defined in the Option Plan) (the "Vesting
Commencement Date"), and 1/48th of the Shares subject to the Option Plan shall
vest on each monthly anniversary of the Vesting Commencement Date thereafter.
All such options are transferable to the extent provided in the agreement
evidencing a grant of an Award and such agreement is amended as described in
Exhibit E.
(c) Bonus. Employee shall be eligible to participate in such bonus
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plans as the Company may from time to time adopt for the benefit of similarly
situated employees of the Company. Employee's right to receive any such bonus
shall be subject to the terms of any Company bonus plan for which he may become
a participant and the terms determined by the Board or a Committee thereof
designating him as a participant or granting him an Award thereunder.
(d) Vacation. Employee shall be entitled to vacation in accordance
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with the Company's vacation policies for similarly situated employees, as such
policies may be amended from time to time.
(e) Benefits. As he becomes eligible therefor, the Company shall
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provide Employee with the right to participate in and to receive benefits from
all present and future life, accident, disability, medical, pension, and savings
plans and all similar benefits made available generally to similarly situated
employees of the Company. The amount and extent of benefits to which Employee is
entitled shall be governed by the specific benefit plan, as it may be amended
from time to time.
(f) Expenses. The Company shall reimburse Employee for reasonable
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travel and other business expenses incurred by Employee in the performance of
his duties hereunder in accordance with the Company's general policies, as they
may be amended from time to time during the course of this Agreement.
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3. Termination of Employment.
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(a) By Death. The Period of Employment shall terminate automatically
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upon the death of the Employee; provided however that the Company shall pay to
the Employee's beneficiaries or estate, as appropriate, the compensation to
which he is entitled pursuant to Sections 2(a) and 2(c) and the benefits to
which he is entitled pursuant to Section 2(e) shall continue through the end of
the Period of Employment, on the same time schedule as if Employee were living.
The level of bonus compensation payable pursuant to said Section 2(c) shall be
80% of the target bonus for Employee for the year of termination as reasonably
determined by the Board. Thereafter, the Company's obligations hereunder shall
terminate. Nothing in this Section shall affect any entitlement of the
Employee's heirs to the benefits of any life insurance plan.
(b) By Disability. If the Employee shall become "permanently
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disabled" as determined for purposes of the disability insurance policy provided
by the Company for Employee, then, to the extent permitted by law, the Period of
Employment shall terminate as of the date that Employee shall be deemed to have
become "permanently disabled" for purposes of such disability insurance policy,
provided, however that, the compensation to which Employee is entitled pursuant
to Sections 2(a) and 2(c) (net of amounts paid to Employee pursuant to said
disability insurance policy) and the benefits to which he is entitled pursuant
to Section 2(e) shall continue through the end of the Period of Employment, on
the same time schedule as if Employee were not disabled. The amount of bonus
payable to Employee pursuant to this Section 3(b) shall be calculated in the
manner set forth in Section 3(a) above. Thereafter, the Company's obligations
hereunder shall terminate. Employee shall continue to be receive benefits under
any disability plan in which Employee is a participant to the extent permitted
under the applicable plan.
(c) By Company For Cause. The Company may terminate, without
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liability, the Period of Employment for Cause (as defined below) at any time
upon ten (10) days' advance written notice to Employee. The Company shall pay
Employee the compensation to which he is entitled pursuant to Section 2(a)
through the end of the notice period and thereafter the Company's obligations
hereunder shall terminate. The Company may terminate the employment of the
Employee and all of the Company's obligations under this Agreement at any time
for "cause" by giving the Employee notice of such termination, with reasonable
specificity of the details thereof. For the purposes of this Section 3(c),
"Cause" shall mean: (i) the Employee's material misconduct which could
reasonably be expected to have a material adverse effect on the business and
affairs of the Company, (ii) the Employee's disregard of lawful instructions of
the Company's Board of Directors consistent with the Employee's position
relating to the business of the Company or neglect of duties or failure to act,
which, in each case, could reasonably be expected to have a material adverse
effect on the business and affairs of the Company; (iii) Employee is convicted
of common law fraud, or a felony or criminal act against the Company or any
Affiliated Company thereof or any of the assets of any of them; (iv) the
Employee's abuse of alcohol or other drugs or controlled substances, or
conviction of a crime involving moral turpitude, or (v) the Employee's material
breach of any of the agreements contained herein. A termination pursuant to
Section 3(c) (i), (ii), (iv) (other than as a result of a conviction of a crime
involving moral turpitude), or (v) shall take effect 10 days after the giving of
the notice contemplated hereby unless the Employee shall, during such 10-day
period, remedy
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to the satisfaction of the Board of Directors of the Company the misconduct,
disregard, abuse or breach specified of such notice; provided, however,
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that such termination shall take effect immediately upon giving of such notice
if the Board of Directors of the Company shall have determined that such
misconduct, disregard, abuse or breach is not remediable which determination
shall be stated in such notice. A determination pursuant to Section 3(c) (iii)
or (iv) (as a result of a conviction of a crime involving moral turpitude) shall
take effect immediately upon giving of the notice contemplated hereby.
(d) At Will by Employee. At any time and subject to Section 3(g)
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below, Employee may terminate the Period of Employment with or without cause, on
written notice to the Company. In the event Employee elects to terminate the
Period of Employment pursuant to this Section 3(d), Employee shall give the
Company not less than two (2) weeks notice of such termination. If the Employee
terminates his employment pursuant to this Section 3(d), the Company shall pay
Employee the compensation to which he is entitled pursuant to Section 2(a)
through the end of the notice period and thereafter all obligations of the
Company shall terminate.
(e) At Will by the Company. At any time, the Company may terminate
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the Period of Employment for any reason, without cause, upon 24 hours written
notice to the Employee. In the event the Company elects to terminate the Period
of Employment pursuant to this Section 3(e), the Company shall retain Employee
as a consultant to the Company for a period commencing on the date of such
termination and continuing until the expiration of the Period of Employment (the
"Consultancy Period"), during which time Employee agrees to be available to the
Company (which may include availability via telephone) to consult with officers
and directors regarding the business of the Company, whenever so requested, such
consultancy work not to exceed 40 hours per week. Employee shall continue to
receive payment of his compensation under Sections 2(a), 2(c) and 2(f) during
the Consultancy Period and his benefits described in Section 2(e); provided that
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if (i) any of the events listed in paragraph (c) of this Section 3 occur then
the Company's obligations hereunder shall be governed in accordance with the
applicable paragraph or (ii) Employee breaches Sections 3(h), 3(i) and/or 4
hereof, including a violation of his Proprietary Information and Inventions
Agreement (described at Section 4 below), then all of the Company's obligations
hereunder shall cease immediately. The amount of bonus payable to Employee
pursuant to this Section 3(e) shall be calculated in the manner set forth in
Section 3(a) above through the end of the Consultancy Period. Employee hereby
agrees that the Company may dismiss him under this Section 3(e) without regard
(i) to any general or specific policies (whether written or oral) of the Company
relating to the employment or termination of its employees, or (ii) to any
statements made to Employee, whether made orally or contained in any document,
pertaining to Employee's relationship with the Company. During the Consultancy
Period, Employee agrees not to compete with the business of the Company during
such Consultancy Period as set forth in Section 3(i) hereof.
(f) Termination by Employee for Good Reason Following Corporate
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Transaction. At any time following a Corporate Transaction (For purposes of this
Agreement, a "Corporate Transaction" shall include any of the following
stockholder-approved transactions to which the Company is a party: (i) a merger
or consolidation in which the Company is not the surviving entity and securities
representing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to holder different from
those who held such securities immediately prior to such merger; (ii) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company in liquidation or dissolution of the Company; or (iii) any reverse
merger in which the Company is the surviving entity but in which securities
representing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to holder different from
those who
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held such securities immediately prior to such merger.) In addition, a Corporate
Transaction shall also include a Change of Control as such is defined in the
Option Plan and without limitation of Employee's rights under Section 3(d)
above, Employee may terminate the Period of Employment for Good Reason (as
defined below) on not less than two (2) weeks written notice to the Company. In
the event of a termination by Employee for Good Reason pursuant to this Section
3(f), the Company shall retain Employee as a consultant to the Company for a
period commencing on the date of such termination and continuing for two (2)
years thereafter (in lieu of the Consultancy Period set forth in Section 3(e))
for the compensation and benefits and subject to all of the terms set forth in
Section 3(e) above (other than the term for such consultancy services). The
following shall constitute a termination by Employee for "Good Reason" if: (i)
there is an assignment to the Employee of any duties materially inconsistent
with or which constitute a material change in the Employee's position, duties,
responsibilities, or status with the Company, or a material change in the
Employee's position, duties, responsibilities, or status with the Company, or a
material change in the Employee's reporting responsibilities, title, or offices;
or removal of the Employee from or failure to re-elect the Employee to any of
such positions, except in connection with the termination for the Period of
Employment for Cause, or due to disability or death; (ii) there is a reduction
by the Company in the Employee's annual salary then in effect other than a
reduction similar in percentage to a reduction generally applicable to similarly
situated employees of the Company; or (iii) the Company acts in any way that
would adversely affect the Employee's participation in or materially reduce the
Employee's benefit under any benefit plan of the Company in which the Employee
is participating or deprive the Employee of any material fringe benefit enjoyed
by the Employee except those changes generally affecting similarly situated
employees of the Company.
(g) Company Right to Require Consulting Services. In the event of a
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termination of the Period of Employment pursuant to Section 3 (c) and 3(d)
above, the Company shall have the option, exercisable on written notice to
Employee within twenty (20) days following such termination of the Period of
Employment, to require Employee to provide consulting services upon the same
terms provided in Section 3(e) above, including without limitation, Employee's
duties not to compete with the Company as provided in Section 3(i), except that:
(i) the Company may thereafter terminate the Consultancy Period on thirty (30)
days notice to Employee; and (ii) the compensation payable to Employee during
the Consultancy Period shall be equal to Employee's salary payable pursuant to
Section 2(a) hereof as prorated and reduced to be equal to an hourly rate
(assuming forty (40) hours work weeks and forty-eight (48) full weeks of service
during a year), and Employee shall be so paid by the Company at such hourly rate
for such consulting services based on the greater of: (i) the actual number of
hours of consulting services provided by Employee; and (ii) ten (10) hours per
calendar month; provided, that if the Company requires in excess of twenty (20)
hours per week of consulting, then the Company shall compensate Employee and
provide benefits and bonuses as if Employee is working full time during the
Consultancy Period. The Company may require up to a maximum of forty (40) hours
per week of consulting services. In the event that the Company requires less
than forty (40) hours of consulting services per week, then the Company may not
prevent
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Employee from accepting other employment or engaging in any work or other
activity of any kind during the Consultancy Period provided that such
employment, work or activity is not competitive with the business of the Company
(as defined in Section 3(i) hereof) and Employee may accept such other
noncompetitive employment or engage in other noncompetitive work or business
activities during the Consultancy Period. The Company acknowledges that once it
chooses to require less than forty (40) hours per week of consulting services
from Employee that the Company may not later unilaterally increase the
consulting services required of Employee to forty (40) hours per week or
restrict Employee's ability to accept other noncompetitive employment or engage
in other noncompetitive work or activities without Employee's consent, which may
be withheld in Employee's discretion.
(h) Other Termination Obligations.
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(1) Employee hereby acknowledges and agrees that all personal
property, including, without limitation, all books, manuals, records, reports,
notes, contracts, computer files, lists, blueprints, and other documents, or
materials, or copies thereof, proprietary information, and equipment furnished
to or prepared by Employee in the course of or incident to his employment,
including, without limitation, records and any other materials pertaining to the
Company's proprietary information, belong to the Company and shall be promptly
returned to the Company upon termination of the Period of Employment. Following
termination, the Employee will not retain any written or other tangible material
containing any Proprietary Information or information pertaining to the
Company's proprietary information.
(2) Upon termination of the Period of Employment, the Employee
shall be deemed to have resigned from all offices and directorships then held
with the Company or any Affiliated Company.
(3) Employee agrees that he will not, either directly or
indirectly, for a period of two (2) years following the termination of the later
of the Period of Employment or the Consultancy Period: (i) contact, for purposes
of soliciting employment, any employee of the Company; or, (ii) contact for the
purpose of inducing any termination or breach of any contractual relationship
with the Company, any individual or entity that has a contractual relationship
with the Company.
(4) Employee agrees to comply with the covenant not to compete as
set forth in such Section 3(i).
(i) Covenant not to Compete. During the Consultancy Period, Employee
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agrees not to compete with the business of the Company during such Consultancy
Period, anywhere within, from or into the countries listed in Exhibit A and
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from or into any additional countries where the Company does business at the
time of termination of Employee's employment. For purposes of this Section 3(i),
Employee shall be deemed to compete if he either as an employee, employer,
consultant, agent, principal, partner, stockholder, corporate officer, director
or in any other individual or representative capacity engages or participates,
or makes preparations to establish, any business that conducts the same or
substantially the same business as or is competitive with the business which is
conducted by the Company on the date of Employee's termination, including,
without limitation, work relating to Encina, Unikix,
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CICS/9000 and any activity engaged in by the Company during the twelve months
immediately preceding the date of termination of the Period of Employment or any
activity contemplated by the Company on the date of such termination. Nothing
contained in this Section 3(i) shall be construed to prohibit Employee from
purchasing and owning (directly or indirectly) up to one percent (1%) of the
capital stock or other securities of any corporation or other entity whose stock
or securities are traded on any national or regional securities exchange or the
national over-the-counter market and such ownership shall not constitute a
violation of this Section 3(i). In the event of a termination of the Period of
Employment pursuant to Section 3(c) or 3(d) above, the Company shall have the
option, exercisable on written notice to Employee within twenty (20) days
following such termination of the Period of Employment, to require Employee to
provide consulting services upon the same terms provided in Section 3(e) above,
including without limitation, Employee's duties not to compete with the Company
as provided herein.
4. Proprietary Information Agreement. As a condition to his employment
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with the Company, Employee shall execute and deliver a copy of the Company's
standard form Employee Proprietary Information and Inventions Agreement in
substantially the form of Exhibit B attached hereto and incorporated herein. Any
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breach by Employee of such agreement shall be deemed a breach of this Agreement
for purposes of Section 3(c) hereof. Employee's obligations under such Employee
Proprietary Information and Inventions Agreement shall survive any termination
of the Period of Employment.
5. Loan to Employee. The Company agrees to lend certain amounts to
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Employee as provided below, which loan need not be secured by assets of
Employee. Each loan will be evidenced by a full recourse promissory note in
substantially the form attached hereto as Exhibit C.
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(a) Line of Credit. Employee shall be extended a line of credit for
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a maximum of Five Million Dollars ($5,000,000.00) (the "Line of Credit"). All
advances are subject to the review of and approval by the Company's Chief
Financial Officer. Funds shall be advanced upon written notice for funds by
Employee to Company (the "Advance"). All funds together with interest from the
date of the Advance shall accrue at the applicable federal rate on the date of
the Advance, compounded semiannually and shall be due and payable within ninety
(90) days upon the earlier of (i) the date the prior 30 day average fair market
value of a share of the Common Stock of the Company increases by at least 50%
over the fair market value of a share of the Company's Common Stock on the date
of the Advance and (ii) the date of termination of employment pursuant to
Section 3. For purposes of this Section 5, the fair market value of a share of
the Common Stock of the Company shall mean the closing price for a share for the
last market trading day prior to the time of the determination (or, if no
closing price was reported on that date, on the last trading date on which a
closing price was reported) on the stock exchange determined by the Company to
be the primary market for the Common Stock as reported in The Wall Street
Journal or such other source as the Company deems reliable.
6. Additional Bonus. Provided that the employee continues to be employed
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by the Company, an additional bonus amount will be paid at the end of each
calendar quarter in the amount of $9,053.83 for the duration of this agreement.
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7. Assignment; Successors and Assigns. Employee agrees that he will not
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assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or
involuntarily, or by operation of law, any rights or obligations under this
Agreement, nor shall Employee's rights be subject to encumbrance or the claims
of creditors. Any purported assignment, transfer, or delegation shall be null
and void. Nothing in this Agreement shall prevent the consolidation of the
Company with, or its merger into, any other corporation, or the sale by the
Company of all or substantially all of its properties or assets, or the
assignment by the Company of this Agreement and the performance of its
obligations hereunder to any successor in interest or any Affiliated Company.
Subject to the foregoing, this Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, legal representatives,
successors, and permitted assigns, and shall not benefit any person or entity
other than those enumerated above. Without limitation of the foregoing, any
such successor in interest (including an entity which acquires substantially all
the assets and the business of the Company) in such acquisition transaction or
any Affiliated Company shall be bound by all of the terms and conditions of this
Agreement.
8. Notices. All notices or other communications required or permitted
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hereunder shall be made in writing and shall be deemed to have been duly given
if delivered by hand or mailed, postage prepaid, by certified or registered
mail, return receipt requested, and addressed to the Company at:
BEA Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Chief Financial Officer
or to the Employee at: Xxxxxxx X. Xxxxxxx III
c/o Morrison & Xxxxxxxx
755 Page Mill Rd.
Palo Alto, CA. 94304
Notice of change of address shall be effective only when done in accordance with
this Section.
9. Entire Agreement. The terms of this Agreement are intended by the
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parties to be the final expression of their agreement with respect to the
employment of Employee by the Company and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement shall constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
10. Amendments; Waivers. This Agreement may not be modified, amended, or
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terminated except by an instrument in writing, signed by the Employee and by a
duly authorized representative of the Company other than Employee. By an
instrument in writing similarly
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executed, either party may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform, provided, however, that such waiver shall not operate as a
waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power provided
herein or by law or in equity.
11. Severability; Enforcement. If any provision of this Agreement, or the
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application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable, or void, the
remainder of this Agreement and such provisions as applied to other persons,
places, and circumstances shall remain in full force and effect. It is the
intention of the parties that the covenants contained in Section 3(i) shall be
enforced to the greatest extent in time, area, and degree of participation as is
permitted by the law of that jurisdiction whose law is found to be applicable to
any acts allegedly in breach of these covenants.
12. Governing Law. The validity, interpretation, enforceability, and
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performance of this Agreement shall be governed by and construed in accordance
with the law of the State of California.
13. Employee Acknowledgment. Employee acknowledges (i) that he has
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consulted with or has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement and has been advised to do so by the
Company, and (ii) that he has read and understands the Agreement, is fully aware
of its legal effect, and has entered into it freely based on his own judgment.
14. Exclusive. Both parties agree that this Agreement shall provide the
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exclusive remedies for any breach by the Company of its terms.
The parties have duly executed this Agreement as of the date first
written above.
COMPANY: EMPLOYEE:
BEA SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxx III
_________________________________ _______________________________
Title: VP Legal & Secretary
________________________________ Xxxxxxx X. Xxxxxxx III
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EXHIBIT A
to
EMPLOYMENT AGREEMENT
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England
France
Germany
Japan
United States
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EXHIBIT B
September, 1999
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
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(Rev. 9/23/98)
In consideration of my employment by BEA Systems, Inc., a Delaware
corporation (the "Company"), I hereby agree to certain restrictions placed by
the Company on my use and development of information and technology of the
Company, as more fully set out below.
1. Proprietary Information.
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(a) Confidential Restrictions. I understand that, in the course of my
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work as an employee of the Company, I may have access to Proprietary
Information (as defined below) concerning the Company. I acknowledge
that the Company has developed, compiled, and otherwise obtained,
often at great expense, this information, which has great value to the
Company's business. I agree to hold in strict confidence and in trust
for the sole benefit of the Company all Proprietary Information and
will not disclose any Proprietary Information, directly or indirectly,
to anyone outside of the Company, or use, copy, publish, summarize, or
remove from Company premises such information (or remove from the
premises any other property of the Company) except (i) during my
employment to the extent necessary to carry out my responsibilities as
an employee of the Company or (ii) after termination of my employment,
as specifically authorized in writing by a duly authorized officer of
the Company. I further understand that the publication of any
Proprietary Information through literature or speeches must be
approved in advance in writing by a duly authorized officer of the
Company.
(b) Proprietary Information Defined. I understand that the term
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"Proprietary Information" in this Agreement means all information and
any idea whether disclosed to, learned by or developed by me,
pertaining in any manner to the business of the Company or to the
Company's affiliates, consultants, or business associates, unless (i)
the information is or becomes publicly known through lawful means;
(ii) the information was rightfully in my possession or part of my
general knowledge prior to my employment by the Company; or (iii) the
information is disclosed to me without confidential or proprietary
restriction by a third party who rightfully possesses the information
(without confidential or proprietary restriction) and did not learn of
it, directly or indirectly, from the Company. I understand that this
definition includes information or ideas in any form, tangible or
intangible, including without limitation, all documents, books,
papers, drawings, models, sketches, and other data of any kind and
description, including electronic data recorded or retrieved by any
means, that have been or will be given to me by the Company (or any
affiliate of it), as well as written or verbal instructions or
comments. I further understand that the Company considers the
following information to be included, without limitation, in the
definition of
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Proprietary Information: (A) schematics, techniques, employee
suggestions, development tools and processes, computer printouts,
computer programs, design drawings and manuals, electronic codes,
formulas and improvements; (B) information about costs, profits,
markets, sales, customers, potential customers targeted by the Company
and bids; (C) plans for future development and new product concepts,
business marketing plans; and (D) corporate organization, personnel
files, salary ranges and information about the compensation, equity
and benefits provided to other employees.
(c) Information Use. I agree that I will maintain at my work area or in
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other places under my control only such Proprietary Information that I
have a current "need to know," and that I will return to the
appropriate person or location or otherwise properly dispose of
Proprietary Information once my need to know no longer exists. I agree
that I will not make copies of information unless I have a legitimate
need for such copies in connection with my work.
(d) Prior Actions and Knowledge. I hereby represent and warrant that
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from the time of my first contact or communication with the Company I
have held in strict confidence and in trust for the sole benefit of
the Company all Proprietary Information and have not disclosed any
Proprietary Information, directly or indirectly, to anyone outside of
the Company, or used, copied, published, or summarized any Proprietary
Information except to the extent permitted by Section 1(a) above.
Except as disclosed on Schedule A to this Agreement, I do not know
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anything about the Company's business or Proprietary Information,
other than information I have learned from the Company in the course
of being hired.
(e) Third Party Information. I recognize that the Company has received
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and in the future will receive from third parties their confidential
or proprietary information subject to a duty on the Company's part to
maintain the confidentiality of such information and to use it only
for certain limited purposes. I agree that I owe the Company and such
third parties, during the term of my employment and thereafter, a duty
to hold all such confidential or proprietary information in the
strictest confidence and not to disclose it to any person, firm, or
corporation (except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party)
or to use it for the benefit of anyone other than for the Company or
such third party (consistent with the Company's agreement with such
third party) without the express written authorization of a duly
authorized officer of the Company.
(f) Interference with Business. I hereby acknowledge that pursuit of the
--------------------------
activities forbidden by this paragraph 1(f) would necessarily involve
the use or disclosure of Proprietary Information in breach of
paragraph 1(a), but that proof of such breach would be extremely
difficult. To forestall such disclosure, use, and breach, I agree that
for the term of this Agreement and for a period of one (1) year after
termination of my employment with the Company, I shall not, for myself
or any third party, directly or indirectly (i) divert or attempt to
divert from the Company (or any affiliate of it that might be formed)
any business of any kind in which it is
12
engaged, including, without limitation, the solicitation of or
interference with any of its suppliers or customers or (ii) solicit,
recruit or encourage to leave their employment or recommend for
employment any person employed by the Company. Furthermore, I agree
that during the period of my employment with the Company I shall not
engage in any business activity that is or may be competitive with the
Company, except where I can prove that the action was taken without
the use in any way of Proprietary Information. I understand that this
paragraph 1(f) does not prevent me from working for a competitor
following termination of my employment with the Company as long as I
am able to and do comply with the provisions of this Agreement.
2. Inventions.
----------
(a) Defined; Statutory Notice. I understand that during the term of my
-------------------------
employment, there are certain restrictions on my development of
technology, ideas, and inventions, referred to in this Agreement as
"Invention Ideas." The term Invention Ideas means all ideas,
processes, inventions, technology, designs, formulas, discoveries,
patents, copyrights, and trademarks, and all improvements, rights, and
claims related to the foregoing, that are conceived, developed, or
reduced to practice by me alone or with others except to the extent
that California Labor Code Section 2870 lawfully prohibits the
assignment. I understand that Section 2870(a) provides:
Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in
an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without
using the employer's equipment, supplies, facilities, or trade secret
information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or
demonstrably anticipated research or development of the
employer.
(2) Result from any work performed by the employee for the
employer.
(b) Disclosure. I agree to maintain adequate and current written records
----------
on the development of all Invention Ideas and to disclose promptly to
the Company all Invention Ideas and relevant records, which records
will remain the sole property of the Company. I further agree that all
information and records pertaining to any idea, process, invention,
technology, design, formula, discovery, patent, copyright or
trademark, that I do not believe to be an Invention Idea, but is
conceived, developed, or reduced to practice by me (alone or with
others) during my period of employment or during the one-year period
following termination of my employment, shall be promptly disclosed to
the Company (such disclosure to be received in confidence). The
Company shall examine such information to determine if in fact it is
an Invention Idea subject to this Agreement.
13
(c) Assignment. I agree to assign to the Company, without further
----------
consideration, my entire right, title, and interest (throughout the
United States and in all foreign countries), free and clear of all
liens and encumbrances, in and to each Invention Idea, which shall be
the sole property of the Company, whether or not copyrightable or
patentable. In the event any Invention Idea shall be deemed by the
Company to be copyrightable or patentable or otherwise registrable, I
will assist the Company (at its expense) in obtaining letters patent
or other applicable registrations thereon and I will execute all
documents and do all other things (including testifying at the
Company's expense) necessary or proper to accomplish such
registrations thereon and to vest the Company with full title thereto.
Should the Company be unable to secure my signature on any document
necessary to apply for, prosecute, obtain, or enforce any patent,
copyright, or other right or protection relating to any Invention
Idea, whether due to my mental or physical incapacity or any other
cause, I hereby irrevocably designate and appoint the Company and each
of its duly authorized officers and agents as my agent and attorney-
in-fact, to act for and in my behalf and stead, to execute and file
any such document, and to do all other lawfully permitted acts to
further the prosecution, issuance, and enforcement of patents,
copyrights, or other rights or protection with the same force and
effect as if executed and delivered by me.
(d) Exclusions. Except as disclosed in Schedule A attached hereto and
---------- ----------
incorporated herein, there are no ideas, processes, inventions,
technology, writings, programs, designs, formulas, discoveries,
patents, copyrights, or trademarks, or improvements to the foregoing,
that I wish to exclude from the operation of this Agreement. To the
best of my knowledge, there is no existing contract in conflict with
this Agreement or any other contract to assign ideas, processes,
inventions, technology, writings, programs, designs, formulas,
discoveries, patents, copyrights, or trademarks, or improvements
thereon, that is now in existence between me and any other person or
entity.
(a) License for Other Inventions. If, in the course of my employment,
-----------------------------
with the Company, I incorporate into Company property an invention
owned by me or in which I have an interest, the Company is granted a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
to make, modify, use and sell my invention as part of and in
connection with the Company property.
(e) Post-Termination Period. I acknowledge that because of the
-----------------------
difficulty of establishing when something is first conceived or
developed by me, or whether it results from access to Proprietary
Information or the Company's equipment, facilities, and data, I agree
that any idea, process, invention, technology, writing, program,
design, formula, discovery, patent, copyright, or trademark, or any
improvement, rights, or claims related to the foregoing, shall be
presumed to be an Invention Idea if it is conceived, developed, used,
sold, exploited, or reduced to practice by me or with my aid within
one (1) year after my termination of employment with the Company. I
can rebut the above presumption if I prove that the idea, process,
invention, technology, writing, program, design, formula,
14
discovery, patent, copyright, or trademark, or improvement, right or
claim, is not an Invention Idea as defined in paragraph 2(a).
(f) California Labor Code. I understand that nothing in this Agreement is
---------------------
intended to expand the scope of protection provided me by Sections
2870 through 2872 of the California Labor Code.
3. Former or Conflicting Agreements. During my employment with the
--------------------------------
Company, I will not disclose to the Company, or use, or induce the Company to
use, any proprietary information or trade secrets of others. I represent and
warrant that I have returned all property and confidential information belonging
to all prior employers, if any. I further represent and warrant that my
employment by the Company and my performance of the terms of this Agreement will
not breach any agreement to keep in confidence proprietary information acquired
by me in confidence or in trust prior to my employment by the Company. I have
not entered into, and I agree I will not enter into, any oral or written
agreement in conflict with my obligations under this Agreement.
4. Government Contracts. I understand that the Company has or may enter
--------------------
into contracts with the government under which certain intellectual property
rights will be required to be protected, assigned, licensed, or otherwise
transferred and I hereby agree to execute such other documents and agreements as
are necessary to enable the Company to meet its obligations under any such
government contracts.
5. Termination. I hereby acknowledge and agree that all personal property,
-----------
including, without limitation, all source code listings, books, manuals,
records, models, drawings, reports, notes, contracts, lists, blueprints, and
other documents or materials or copies thereof, all equipment furnished to or
prepared by me in the course of or incident to my employment, and all
Proprietary Information belong to the Company and will be promptly returned to
the Company upon termination of my employment with the Company. Following my
termination, I will not retain any written or other tangible material containing
any Proprietary Information or information pertaining to any Invention Idea. I
understand that my obligations contained herein will survive the termination of
my employment and that I will continue to make all disclosures required of me by
paragraph 2(b). In the event of the termination of my employment, I agree, if
requested by the Company, to sign and deliver the Termination Certificate
attached as Schedule B hereto and incorporated herein. I agree that after the
----------
termination of my employment with the Company, I will not enter into any
agreement that conflicts with my obligations under this Agreement and will
inform any subsequent employers of my obligations under this Agreement.
2. NO IMPLIED EMPLOYMENT RIGHTS. I RECOGNIZE THAT NOTHING IN THIS
-----------------------------
AGREEMENT SHALL BE CONSTRUED TO IMPLY THAT MY EMPLOYMENT IS GUARANTEED FOR ANY
PERIOD OF TIME. EXCEPT AS OTHERWISE AGREED IN A WRITTEN AGREEMENT SIGNED BY A
DULY AUTHORIZED OFFICER OF THE COMPANY, MY EMPLOYMENT IS FOR AN INDEFINITE
DURATION, AND EITHER THE COMPANY OR I CAN TERMINATE OUR EMPLOYMENT
15
RELATIONSHIP AT ANY TIME, WITHOUT NOTICE, AND FOR ANY REASON, WITH OR
WITHOUT CAUSE.
6. Remedies. I recognize that nothing in this Agreement is intended to
--------
limit any remedy of the Company under the California Uniform Trade Secrets
Act and that I could face possible criminal and civil actions, resulting in
imprisonment and substantial monetary liability, if I misappropriate the
Company's trade secrets. In addition, I recognize that my violation of this
Agreement could cause the Company irreparable harm, the amount of which may
be extremely difficult to estimate, thus, making any remedy at law or in
damages inadequate. Therefore, I agree that the Company shall have the
right to apply to any court of competent jurisdiction for an order
restraining any breach or threatened breach of this Agreement and for any
other relief the Company deems appropriate. This right shall be in addition
to any other remedy available to the Company in law or equity.
7. Miscellaneous Provisions.
------------------------
(a) Assignment. I agree that the Company may assign to another
----------
person or entity any of its rights under this Agreement.
(b) Governing Law; Severability. The validity, interpretation,
---------------------------
enforceability, and performance of this Agreement shall be
governed by and construed in accordance with the laws of the State
of California. If any provision of this Agreement, or application
thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable, void
or unconscionable, such provision shall be enforced to the
greatest extent permitted by law and the remainder of this
Agreement and such provision as applied to other persons, places,
and circumstances shall remain in full force and effect.
(c) Entire Agreement. The terms of this Agreement are the final
----------------
expression of my agreement with respect to the subject matter hereof
and may not be contradicted by evidence of any prior or
contemporaneous agreement. This Agreement shall constitute the
complete and exclusive statement of its terms and no extrinsic
evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding involving this Agreement.
(a) Amendment; Waivers. This Agreement can be amended or terminated
-------------------
only by a written agreement signed by a duly authorized officer of the
Company and me. No failure to exercise or delay in exercising any
right under this Agreement shall operate as a waiver thereof.
(d) Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of me, my heirs, executors, administrators,
and successors, as well as the Company's successors and assigns.
(e) Application of this Agreement. I hereby agree that my
-----------------------------
obligations set forth in Sections 1 and 2 hereof and the definitions
of Proprietary Information and Invention Ideas contained therein shall
be equally applicable to Proprietary
16
Information and Invention Ideas relating to any work performed by
me for the Company prior to the execution of this Agreement.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY NOTED ON SCHEDULE A TO THIS AGREEMENT ANY PROPRIETARY INFORMATION,
IDEAS, PROCESSES, INVENTIONS, TECHNOLOGY, WRITINGS, PROGRAMS, DESIGNS, FORMULAS,
DISCOVERIES, PATENTS, COPYRIGHTS, OR TRADEMARKS, OR IMPROVEMENTS, RIGHTS, OR
CLAIMS RELATING TO THE FOREGOING, THAT I DESIRE TO EXCLUDE FROM THIS AGREEMENT.
Date:_____________________________ _______________________________________
Employee Name
/s/ Xxxxxxx X. Xxxxxxx III
_______________________________________
Employee Signature
17
SCHEDULE A
----------
EMPLOYEE'S DISCLOSURE
---------------------
1. Proprietary Information. Except as set forth below, I acknowledge that at
-----------------------
this time I know nothing about the business or Proprietary Information of
BEA Systems, Inc., a Delaware corporation (the "Company"), other than
information I have learned from the Company in the course of being hired:
2. Prior Inventions. Except as set forth below, there are no ideas, processes,
----------------
inventions, technology, writings, programs, designs, formulas, discoveries,
patents, copyrights, or trademarks, or any claims, rights, or improvements
to the foregoing, that I wish to exclude from the operation of this
Agreement:________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Date:_____________________________ ______________________________________
Employee Name
/s/ Xxxxxxx X. Xxxxxxx III
______________________________________
Employee Signature
18
SCHEDULE B
----------
TERMINATION CERTIFICATE CONCERNING
BEA SYSTEMS, INC.
PROPRIETARY INFORMATION AND INVENTIONS
--------------------------------------
This is to certify that I have returned all personal property of BEA
Systems, Inc., a Delaware corporation (the "Company"), including, without
limitation, all source code listings, books, manuals, records, models, drawings,
reports, notes, contracts, lists, blueprints, and other documents and materials,
Proprietary Information, and equipment furnished to or prepared by me in the
course of or incident to my employment with the Company, and that I did not make
or distribute any copies of the foregoing.
I further certify that I have reviewed the Employee Proprietary Information
and Inventions Agreement signed by me and that I have complied with and will
continue to comply with all of its terms, including, without limitation, (i) the
reporting of any idea, process, invention, technology, writing, program, design,
formula, discovery, patent, copyright, or trademark, or any improvement, rights,
or claims related to the foregoing, conceived or developed by me and covered by
the Agreement and (ii) the preservation as confidential of all Proprietary
Information pertaining to the Company. This certificate in no way limits my
responsibilities or the Company's rights under the Agreement.
On termination of my employment with the Company, I will be employed by
_____________________ [Name of New Employer] [in the ______________ division]
and I will be working in connection with the following projects:
[generally describe the projects]
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Date:___________________________ _________________________________________
Employee Name
_________________________________________
Employee Signature
19
Exhibit C - PROMISSORY NOTE
(Advance)
$5,000,000 September 1, 0000
Xxx Xxxx, Xxxxxxxxxx
Pursuant to the terms of that certain Employment Agreement dated September
1, 1999 (the "Employment Agreement") between the undersigned Xxxxxxx X. Xxxxxxx
III ("Maker") and BEA Systems, Inc., a Delaware corporation (the "Company") at
its address 0000 Xxxxx Xxxxx Xxxxxx Xxx Xxxx, XX 00000, Maker, for value
received, promises to pay to the Company the principal sum of $5,000,000 with
interest from the date hereof at a rate of 7% per annum, compounded semiannually
on the unpaid balance of such principal sum.
Such principal and interest shall be due and payable within ninety (90)
days upon the earlier of (i) the date on which the prior 30 day average fair
market value of a share of the Common Stock of the Company increases by at least
50% over the fair market value of a share of the Company's Common Stock on the
date of hereof, and (ii) the date of termination of employment of Maker pursuant
to Section 3 of the Employment Agreement. The fair market value of a share of
the Common Stock of the Company shall be calculated as set forth in the
Employment Agreement. In the event of a Corporate Transaction as defined in the
Employment Agreement, all outstanding amounts due hereunder shall be forgiven
immediately prior to the consummation of such Corporate Transaction and this
Note shall be cancelled.
This Note evidences the Company's loan to the undersigned pursuant to the
terms of Section 5(a) of the Employment Agreement.
Interest shall be computed on the basis of a year of 360 days. All amounts
payable under this Note are payable in lawful money of the United States,
without notice, demand, offset or deduction. For purposes of interest accrual,
checks will constitute payment upon receipt.
The following occurrence shall constitute an "Event of Default" under this
Note: Maker shall fail to pay any payment of principal or interest, within ten
(10) days of receipt of notice of failure to pay amounts when due in accordance
with the terms hereof.
Upon the occurrence of any Event of Default hereunder, the entire unpaid
principal balance of this Note (including accrued interest) shall, at the option
of the Company and without notice or demand of any kind to Maker or any other
person, immediately become due and payable, and the Company shall have and may
exercise any and all rights and remedies available to it at law or in equity.
Maker promises to pay on demand all reasonable out-of-pocket costs of and
expenses of the Company in connection with the collection of amounts due
hereunder,
1
including, without limitation, attorneys' fees incurred in connection therewith,
whether or not any lawsuit is ever filed with respect thereto.
Maker and any endorsers or guarantors of this Note for themselves, their
heirs, legal representatives, successors and assigns, respectively, severally
waive diligence, presentment, protest and demand and also notice of protest,
demand, dishonor and nonpayment of this Note.
This Note shall inure to the benefit of the Company and its successors and
assigns. The obligations of Maker hereunder shall not be assignable without the
consent of the Company.
This Note shall be governed by and construed in accordance with the laws of
the State of California. If there is a lawsuit on this Note, the parties agree
to submit to the jurisdiction of the courts of Santa Xxxxx County, California.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Note as
of the date first above written.
MAKER
-------------------------
2
Exhibit E
AMENDMENT
TO
BEA SYSTEMS, INC.
1997 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Amendment is made and dated as of September 1, 1999 by and between BEA
Systems, Inc., a Delaware corporation (the "Company") and Xxxxxxx X. Xxxxxxx
("Optionee") with respect to unvested stock options that have been previously
granted, between the Company and Optionee (the "Agreement") granted under the
Company's 1997 Stock Incentive Plan (the "Plan"):
RECITALS
WHEREAS, the Company and Optionee now desire to amend Stock Option
Agreements to provide for the full vesting of the Options upon a Change in
Control (as defined in the Plan) of the Company provided that both of the
conditions, as specified below, are met:
1. That the initiation (Memo of Understanding or other document that
binds both parties) of a business combination resulting in a Change in
Control occurs 6 months from the effective date of this Agreement.
2. That there is a substantive change of responsibilities after or as a
result of a Change in Control, regardless of when the Change in
Control occurs.
NOW THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Vesting of Right to Exercise Option. The Vesting Schedule of the
-----------------------------------
Agreement, as set forth in the Notice of Stock Option Grant related thereto, is
hereby amended in its entirety to read as follows:
"Vesting Schedule:
Twenty-five percent (25%) of the Number of Shares shall vest and may
be exercised upon the first anniversary of the Date of Grant and an
additional 1/48th of the Number of Shares shall vest and may be exercised
upon the monthly anniversary of the Date of Grant thereafter; provided,
however, that all of the Number of Shares shall vest immediately if, as a
result of a Change in Control or Corporate Transaction (as defined in
the Plan) which takes place after March 1, 2000, Optionee's employment is
terminated by the Company or a successor company without "Cause" or
voluntarily by the Optionee with "Good Reason" following the Corporate
Transaction or Change in Control.
For the purposes of this Agreement "Cause" and "Good Reason" has the
meanings set forth in Optionee's Employment Agreement dated September 1,
1999.
2. Agreement Continues. Except as specifically modified herein, the terms
-------------------
and conditions of the Agreement shall remain in full force and effect.
3. Definitions. Capitalized terms used herein shall have the meanings set
-----------
forth in the Agreement, unless otherwise specifically defined herein.
4. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed on
its behalf, and Optionee has hereunto set Optionee's hand as of the day and year
first above written.
BEA SYSTEMS, INC.,
a Delaware corporation
By: Xxxxxx X. Xxxxxxx
--------------------------------
Title: V.P., Legal and Secretary
-----------------------------
Optionee:
/s/ Xxxxxxx X. Xxxxxxx III
-----------------------------------
Xxxxxxx X. Xxxxxxx III
Address:
---------------------------
