Executive Agreement - MathSoft Inc. and Charles J. Digate
EXECUTIVE AGREEMENT
EXECUTIVE AGREEMENT, dated as of July 28, 1997, by and between MathSoft,
Inc. (the "Company") and Charles J. Digate (the "Executive").
WHEREAS, the Executive is the President and Chief Executive Officer of the
Company and has made and is expected to continue to make major contributions to
the Company;
WHEREAS, the Company desires continuity of management; and
WHEREAS, the Executive is willing to continue to render services to the
Company subject to the conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Executive agree
as follows:
1. SALARY.
(a) As compensation for the services rendered by the Executive under this
Agreement, the Company shall pay to the Executive, for the fiscal year ended
June 30, 1998, a salary equal to $250,000 ("Salary"), payable to the Executive
in accordance with the Company's payroll practices in effect from time to time.
(b) In addition, the Executive shall be eligible to earn a bonus of up to
$100,000 for the fiscal year ended June 30, 1998, based on the Company's
achievement of a net income plan approved by the Board of Directors of the
Company, plus additional bonus payments based on specific objectives to be
agreed upon between the Executive and the Board of Directors of the Company from
time to time (collectively, "Bonus"). The Bonus, if earned, shall be payable to
the Executive in accordance with the Company's payroll practices in effect from
time to time.
2. NOTICE OF VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive agrees
to provide the Board of Directors of the Company with three months advance
written notice of his intention to terminate his employment with the Company.
3. MEMBERSHIP ON THE BOARD OF DIRECTORS. After any termination of the
Executive's employment with the Company, the Company may request that the
Executive serve as a non-executive member of the Board of Directors of the
Company. If the Executive agrees to serve in such a capacity following the
termination of his employment, the Executive shall be considered as maintaining
a "business relationship" with the Company during such period of service, and
any installments of any stock options held by the Executive on the termination
of his employment that are not exercisable and have not expired shall continue
to become exercisable in accordance with the terms of the relevant option
agreements and option plans during such period of service. When the Executive
ceases to be a non-executive member of the Board of
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Directors, he shall have three years to exercise any then-exercisable, unexpired
installments of any stock options held by the Executive on the Executive's last
date of service on the Board of Directors.
4. TERMINATION PRIOR TO A CHANGE OF CONTROL. If, prior to a "Change of
Control" (as such term is defined in Section 7(c) below), the Company terminates
the Executive's employment with the Company without "Cause" (as such term is
defined in Section 7(d) below), the Company shall:
(a) Continue to pay to the Executive, in accordance with the Company's
normal payroll practices and policies in effect from time to time (including any
required withholding), the Executive's current base salary (at the monthly base
salary rate in effect for such Executive immediately prior to the termination of
his employment) for eighteen (18) months following the termination of the
Executive's employment (the "Severance Payments"); provided, however, that the
Company shall not be obligated to make any payments pursuant to this Section
4(a) during any period in which the Executive is in violation of the terms of
his Confidential Information, Inventions and Non-Competition Agreement with the
Company.
(b) Provide the Executive with insurance substantially similar to that
which the Executive was receiving immediately prior to the termination of his
employment until the earlier of: (i) the date which is eighteen (18) months
following the termination of the Executive's employment; or (ii) the date the
Executive begins receiving substantially similar insurance from a subsequent
employer.
(c) Provide that the Executive shall have three years to exercise any
then-exercisable, unexpired installments of any stock options held by the
Executive on the Executive's last date of employment or if later, the date when
the Executive ceases to be a member of the Board of Directors of the Company.
5. CHANGE OF CONTROL. Upon a Change of Control, the Company shall cause
half of any unexercisable installments of any stock options held by the
Executive on the Change of Control that have not expired to become exercisable
on the Change of Control; provided, however, that such acceleration of
exercisability shall not occur to the extent that: (A) the Change of Control is
intended to be accounted for as a pooling of interests; and (B) the Company
concludes, after consulting with its independent accountants, that such
acceleration would prevent the Change of Control transaction from being
accounted for as a pooling of interests for financial accounting purposes. It is
understood and agreed that the acceleration of exercisability provided for in
this Section 5 shall be in addition to, and not in lieu of, any acceleration of
exercisability pursuant to the terms of the Executive's letter agreement dated
September 8, 1994 and the relevant option agreements and option plans.
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6. TERMINATION FOLLOWING A CHANGE OF CONTROL.
(a) If, at any time after a Change in Control, the Company terminates the
Executive's employment without Cause or the Executive terminates his employment
with the Company for "Good Reason" (as such term is defined in Section 6(b)
below), the Company shall:
(1) Continue to pay to the Executive, in accordance with the Company's
normal payroll practices and policies in effect from time to time
(including any required withholding), (i) the Executive's current base
salary (at the monthly base salary rate in effect for such Executive
immediately prior to the termination of his employment) for eighteen
(18) months following the termination of the Executive's employment
(the "Severance Payments").
(2) Provide the Executive with insurance substantially similar to that
which the Executive was receiving immediately prior to the termination
of his employment until the earlier of: (i) the date which is eighteen
(18) months following the termination of the Executive's employment;
or (ii) the date the Executive begins receiving substantially similar
insurance from a subsequent employer.
(3) Provide that the Executive shall have three years to exercise any
then-exercisable, unexpired installments of any stock options held by
the Executive on the Executive's last date of employment or, if later,
the date when the Executive ceases to be a member of the Board of
Directors of the Company.
(b) For purposes of Section 6, "Good Reason" shall mean the occurrence of
one or more of the following events following a Change of Control: (i) the
assignment to the Executive of any duties inconsistent with his position,
authority, duties or responsibilities immediately prior to the Change of Control
or any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities; (ii) a reduction in the
aggregate of the Executive's base or incentive compensation or the termination
of the Executive's rights to any employee benefits immediately prior to the
Change of Control, except to the extent any such benefit is replaced with a
substantially similar benefit, or a reduction in scope or value thereof; or
(iii) a relocation of the Executive's place of business which results in the
one-way commuting distance for the Executive increasing by more than 40 miles
from the location thereof immediately prior to the Change of Control (PROVIDED,
HOWEVER, that travel consistent with past practices for business purposes shall
not be considered "commuting" for purposes of this clause (iii)); or (iv) a
failure by the Company to obtain the agreement referenced in Section 7(f).
7. GENERAL.
(a) Notwithstanding anything else to the contrary herein: (i) the Company's
obligation to provide any of the amounts and benefits set forth in this
Agreement shall be subject to, and conditioned upon, the Executive's execution
of a full release of claims satisfactory to the Company releasing the Company
and its affiliates, subsidiaries, divisions, directors, employees
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and agents from any claims arising from or related to the Executive's employment
or severance from employment with the Company, including any claims arising from
this Agreement, such release to be substantially in the form of EXHIBIT A hereto
(the "Release"); (ii) the Company shall not be obligated to provide any of the
amounts and benefits set forth in this Agreement until any applicable period
within which the Executive may revoke the Release has expired; and (iii) any
amounts and benefits set forth in this Agreement shall be reduced by any and all
other severance or other amounts or benefits paid or payable to the Executive as
a result of the termination of his employment.
(b) In the event the Executive's employment with the Company is terminated
by the Company for any reason other than without Cause, or the Executive
terminates his employment with the Company for any reason other than Good
Reason, the Executive shall not be entitled to any severance benefits or other
considerations described herein.
(c) For purposes of this Agreement, "Change of Control" shall mean the
closing of: (i) a merger, consolidation, liquidation or reorganization of the
Company into or with another Company or other legal person, after which merger,
consolidation, liquidation or reorganization the capital stock of the Company
outstanding prior to consummation of the transaction is not converted into or
exchanged for or does not represent more than 50% of the aggregate voting power
of the surviving or resulting entity; (ii) the direct or indirect acquisition by
any person (as the term "person" is used in Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) of more than 50% of the voting
capital stock of the Company, in a single or series of related transactions; or
(iii) the sale, exchange, or transfer of all or substantially all of the
Company's assets (other than a sale, exchange or transfer to one or more
entities where the stockholders of the Company immediately before such sale,
exchange or transfer retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the entities to which the assets were
transferred).
(d) For purposes of this Agreement, "Cause" shall mean: (i) the commission
of the Executive of a felony, either in connection with the performance of his
obligations to the Company or which adversely affects the Executive's ability to
perform such obligations; (ii) gross negligence, dishonesty or breach of
fiduciary duty; or (iii) the commission by the Executive of an act of fraud or
embezzlement which results in loss, damage or injury to the Company, whether
directly or indirectly.
(e) Notwithstanding anything to the contrary in this Agreement, if the
Company determines in its sole discretion after consultation with its tax and
accounting advisors that the Executive is a Disqualified Individual (as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"))
and that any portion of any payment or distribution by the Company to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a "Payment")
would be an Excess Parachute Payment (as defined in Section 280G of the Code)
but for the application of this sentence, then the amount of all such Payments
otherwise payable to the Executive pursuant to this Agreement shall be reduced
to the minimum extent necessary (but in no event to less than zero) so that no
portion of any Payment, as so reduced, constitutes an Excess Parachute Payment.
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For purposes of this reduction, no portion of any Payment shall be taken into
account to the extent that such Payment, in the opinion of the Company, after
consultation with its tax and accounting advisors, does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code.
(f) Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the Company and any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or otherwise) of
the Company; PROVIDED, HOWEVER, that the Company shall obtain the written
agreement of any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) of the Company to be bound by the
provisions of this Agreement as if such successor were the Company and for
purposes of this Agreement, any such successor of the Company shall be deemed to
be the "Company" for all purposes.
(g) Nothing in this Agreement shall create any obligation on the part of
the Company or any other person to continue the employment of the Executive. If
the Executive elects to receive the severance and benefits set forth in this
Agreement by executing the Release, the Executive shall not be entitled to any
other salary continuation, severance or other termination benefits in the event
of his cessation of employment with the Company.
(h) Nothing herein shall affect the Executive's obligations under any key
employee, non-competition, confidentiality, option or similar agreement between
the Company and the Executive currently in effect or which may be entered into
in the future.
(i) This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts. This Agreement constitutes the
entire Agreement between the Executive and the Company concerning the subject
matter hereof and supersedes any prior negotiations, understandings or
agreements concerning the subject matter hereof, whether oral or written, and
may be amended or rescinded only upon the written consent of the Company and the
Executive. The invalidity or unenforceability of any provision of this Agreement
shall not affect the other provisions of this Agreement and this Agreement shall
be construed and reformed to the fullest extent possible. The Executive may not
assign any of his rights or obligations under this Agreement; the rights and
obligations of the Company under this Agreement shall inure to the benefit of,
and shall be binding upon, the successors and assigns of the Company. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
The Company:
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MATHSOFT, INC.
By: /s/ Robert P. Orlando
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Name: ROBERT P. ORLANDO
Title: VICE PRESIDENT OF FINANCE AND C.F.O.
The Executive:
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/s/ Charles J. Digate
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Charles J. Digate
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EXHIBIT A
AGREEMENT/WAIVER
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It is hereby agreed by and between ____________________ (the "Executive")
and MathSoft, Inc. (the "Company"), for good and sufficient consideration more
fully described below, that:
1. CONSIDERATION. The Company will provide the Executive with the amounts
and benefits described in Section __ of the Severance Agreement entered into by
the Company and the Executive, dated ___________, 1997 (the "Severance
Agreement"), subject to the terms and conditions of such Severance Agreement.
The Executive understands that payment of and all such amounts and benefits are
conditioned upon the Executive signing this Agreement.
2. SETTLEMENT OF AMOUNTS DUE THE EXECUTIVE. The Executive agrees that the
amounts set forth above in Section 1, together with any amounts previously
provided to the Executive by the Company, shall be complete and unconditional
payment, settlement, satisfaction and accord with respect to all obligations and
liabilities of the Company and any of its affiliated companies (including their
respective successors, assigns, shareholders, officers, directors, employees
and/or agents) to the Executive, and all claims, causes of action and damages by
the Executive against the Company and/or any such other parties regarding the
Executive's employment with and termination from employment with the Company,
including, without limitation, all claims for back wages, salary, draws,
commissions, bonuses, vacation pay, equity compensation, expenses, compensation,
severance pay, attorney's fees, compensatory damages, exemplary damages, or
other costs or sums.
3. RELEASE.
(a) In exchange for the amounts and benefits described in Section 1 and
other good and valuable consideration, receipt of which is hereby acknowledged,
the Executive and his representatives, agents, estate, successors and assigns,
absolutely and unconditionally hereby release and forever discharge the Company,
its affiliated companies and/or their successors, assigns, directors,
shareholders, officers, employees and/or agents, both individually and in their
official capacities, (the "Releasees"), from any and all actions or causes of
action, suits, claims, complaints, contracts, liabilities, agreements, promises,
debts and damages, whether existing or contingent, known or unknown, which arise
out of the Executive's employment with or termination from employment with the
Company. This release is intended by the Executive to be all encompassing and to
act as a full and total release of any claims that the Executive may have or has
had against the Releasees, including, but not limited to, any federal, state or
local law or regulation dealing with either employment or employment
discrimination such as those laws or regulations concerning discrimination on
the basis of age, race, color, religion, creed, sex, sexual orientation,
national origin, ancestry, marital status, physical or mental disability, any
veteran status or any military service or application for any military service;
any contract, whether oral or written, express or implied; or common law.
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(b) The Executive agrees not only to release and discharge the Releasees
from any and all claims as stated above that the Executive could make on his own
behalf or on behalf of others, but also those claims which might be made by any
other person or organization on behalf of the Executive, and the Executive
specifically waives any right to become, and promises not to become, a member of
any class in a case in which a claim or claims against the Releasees are made
involving any matters which arise out of the Executive's employment with or
termination from employment with the Company. Nothing in this Agreement is to be
construed as an admission by the Releasees of any liability or unlawful conduct
whatsoever.
4. WAIVER OF RIGHTS AND CLAIMS UNDER THE AGE DISCRIMINATION AND EMPLOYMENT
ACT OF 1967.
(a) The Executive has been informed that since he is 40 years of age or
older, he has or might have specific rights and/or claims under the Age
Discrimination and Employment Act of 1967. In consideration for the amounts
described in Section 1 hereof, the Executive specifically waives such rights
and/or claims to the extent that such rights and/or claims arose prior to the
date this Agreement was executed.
(b) The Executive was advised by the Company of his right to consult with
an attorney prior to executing this Agreement.
(c) The Executive was further advised when he was presented by the Company
with the original draft of this Agreement on _______, 199_, that he had at least
21 days within which to consider its terms and to consult with or seek advice
from an attorney or any other person of his choosing, until the close of
business on __________, 199_.
5. CONFIDENTIALITY. The Executive agrees he shall not divulge or publish,
directly or indirectly, any information whatsoever regarding the substance,
terms or existence of the Severance Agreement or this Agreement and/or any
discussions or negotiations relating to the Severance Agreement or this
Agreement to any person or organization, except to his immediate family members,
counsel or accountant, and unless required under law or court order.
6. REPRESENTATIONS AND GOVERNING LAW.
(a) This Agreement represents the complete and sole understanding between
the parties, supersedes any and all other agreements and understandings, whether
oral or written, except for the [list key employee, non-competition, option or
confidentiality agreements] entered into by the Company and Executive, and the
Severance Agreement, which remain in full force and effect. This Agreement may
not be modified, altered or rescinded except upon written consent of the Company
and Executive. The invalidity or unenforceability of any provision of this
Agreement shall not affect the other provisions of this Agreement, but this
Agreement shall be revised, construed and reformed to the fullest extent
possible to effectuate the purposes of this Agreement. This Agreement shall be
binding upon and inure to the benefit of the Company and the Executive and their
respective heirs, successors and assigns. The parties agree that the
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Company will not have an adequate remedy if the Executive fails to comply with
Sections 3, 4, and 5 hereof and that damages will not be readily ascertainable,
and that in the event of such failure, the Executive shall not oppose any
application by the Company requiring a decree of specific performance or an
injunction enjoining a breach of this Agreement. If the Executive breaches any
of his obligations hereunder, he shall forfeit all right to payments pursuant to
Section 1.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without giving effect to the
principles of conflicts of law thereof.
(c) The Executive represents that he has read the foregoing Agreement,
fully understands the terms and conditions of such Agreement, and is voluntarily
executing the same. In entering into this Agreement, the Executive does not rely
on any representation, promise or inducement made by the Releasees, with the
exception of the consideration described in this document.
7. EFFECTIVE DATE. The Executive may revoke this Agreement during the
period of seven (7) days following its execution by the Executive, and this
Agreement shall not become effective or enforceable until this revocation period
has expired.
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The Company:
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MATHSOFT, INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
Date: ____________________________________
The Executive:
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Charles J. Digate