Severance Agreement - Novell Inc. and Jack L. Messman
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of January 7, 2005,
is made and entered by and between Novell, Inc., a Delaware corporation (the
"Company"), and Jack L. Messman (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company and has made
and is expected to continue to make major contributions to the short- and
long-term profitability, growth and financial strength of the Company;
WHEREAS, the Executive currently has an employment agreement with the
Company, dated May 22, 2001, (the "Employment Agreement") that provides for the
payment of certain severance and the receipt of certain benefits in the event of
the termination of the Executive's employment;
WHEREAS, the Board (as defined below) has determined that appropriate
alternative arrangements should be taken to encourage the continued attention
and dedication of Executive to his assigned duties without distraction;
WHEREAS, in consideration of the Executive's continued employment with the
Company and the Executive's agreement to waive any rights he may have to receive
severance compensation and benefits under his Employment Agreement, the Company
desires to provide Executive with certain compensation and benefits set forth in
this Agreement in order to ameliorate the financial and career impact on
Executive in the event the Executive's employment with the Company is terminated
for a reason related to, or unrelated to, a Change in Control (as defined below)
of the Company; and
WHEREAS, the Executive agrees to waive any rights he may have under his
Employment Agreement with respect to severance compensation and benefits.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth and intending to be legally bound hereby,
the Company and the Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "Base Pay" means the greater of (i) Executive's annual base
salary rate, exclusive of bonuses, commissions and other Incentive Pay, as in
effect immediately preceding Executive's Termination Date, or (ii) Executive's
highest annual base salary rate, exclusive of bonuses, commissions and other
Incentive Pay, as in effect in any of the three (3) full calendar years
preceding Executive's Termination Date.
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(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means a determination by the Board that Executive has
committed any of the following acts:
(i) the Executive has been convicted of a criminal violation
involving fraud, embezzlement or theft in connection with his duties or in
the course of his employment with the Company or any Subsidiary; or
(ii) the Executive has committed intentional wrongful
disclosure of secret processes or confidential information of the Company
or any Subsidiary; and any such act has been demonstrably and materially
harmful to the Company. For purposes of this subsection (ii), no act on
the part of the Executive will be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but will be deemed
"intentional" if done by the Executive not in good faith and without
reasonable belief that the Executive's action was in the best interest of
the Company.
Notwithstanding the foregoing, the Executive will not be deemed to have
been terminated for "Cause" under this subsection (ii) unless and until
there has been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three- quarters of the
members of the Board then in office at a meeting of the Board, finding
that, in the good faith opinion of the Board, the Executive has committed
an act constituting "Cause," as herein defined, and specifying the
particulars thereof in detail. Prior to any such determination, Executive
shall be provided with reasonable notice of such pending determination and
Executive, together with his counsel (if the Executive chooses to have
counsel present at such meeting), shall be provided with the opportunity
to be heard before the Board makes any such determination. Nothing herein
will limit the right of the Executive or his beneficiaries to contest the
validity or propriety of any such determination.
(d) "Change in Control" means the occurrence of any of the following
events:
(i) the acquisition by any individual, entity or group (within
the meaning of section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of the combined voting
power of the then outstanding Voting Stock of the Company; provided,
however, that for purposes of this Section 1(d)(i), the following
acquisitions will not constitute a Change in Control: (A) any issuance of
Voting Stock of the Company directly from the Company that is approved by
the Incumbent Board (as defined in Section 1(d)(ii), below), (B) any
acquisition by the Company of Voting Stock of the Company, (C) any
acquisition of Voting Stock of the Company by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
Subsidiary, or (D) any acquisition of Voting Stock of the Company by any
Person pursuant to a
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Business Combination that complies with clauses (A), (B) and (C) of
Section 1(d)(iii), below; and provided, further, that a Change in Control
will not occur if any Person becomes the beneficial owner of 25% or more
of the combined voting power of the Voting Stock of the Company solely as
a result of an issuance of Voting Stock described in clause (A) of this
Section 1(d)(i) or an acquisition of Voting Stock described in clause (B)
of this Section 1(d)(i) unless and until such Person thereafter acquires
beneficial ownership of Voting Stock of the Company that causes the
aggregate percent of the combined voting power of the Voting Stock of the
Company then owned beneficially by such Person to exceed the percent of
the combined voting power of Voting Stock of the Company owned
beneficially by such Person immediately after such issuance or acquisition
described in clause (A) or (B) of this Section 1(d)(i); or
(ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board," as modified by this Section 1(d)(ii)), cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a Director subsequent to the date
hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds of the
Directors then comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such nomination)
will be deemed to have then been a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest
(within the meaning of Rule 14a-11 of the Exchange Act) with respect to
the election or removal of Directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
(iii) consummation of a reorganization, merger or
consolidation, a sale or other disposition of all or substantially all of
the assets of the Company, or other transaction (each, a "Business
Combination"), unless, in each case, immediately following such Business
Combination, (A) all or substantially all of the individuals and entities
who were the beneficial owners of Voting Stock of the Company immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then
outstanding shares of Voting Stock of the entity resulting from such
Business Combination (including, without limitation, an entity which as a
result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries),
(B) no Person (other than the Company; such entity resulting from such
Business Combination; any employee benefit plan (or related trust)
sponsored or maintained by the Company, any Subsidiary or such entity
resulting from such Business Combination; or any Person who immediately
prior to such Business Combination beneficially owned directly or
indirectly 25% or more of the combined voting power of the voting stock of
the Company and whose ownership of such Voting Stock did not result in a
Change in Control under Section 1(d)(i)) beneficially owns, directly or
indirectly, 25% or more of the combined voting power of the then
outstanding
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shares of Voting Stock of the entity resulting from such Business
Combination, and (C) at least a majority of the members of the Board of
Directors of the entity resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business
Combination; or
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section
1(d)(iii).
(e) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1986, as amended.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Constructive Termination Associated With a Change in Control"
means the termination of the Executive's employment with the Company by
Executive as a result of the occurrence of one of the following events as a
result of a Change in Control:
(i) without the Executive's express written consent, the
failure to elect or reelect or otherwise to maintain the Executive in the
office or the position, or an equivalent office or position, of or with
the Company and/or a Subsidiary (or any successor thereto by operation of
law of or otherwise), as the case may be, which the Executive held
immediately prior to a Change in Control, or the removal of the Executive
as a Director of the Company and/or a Subsidiary (or any successor
thereto) if the Executive has been a Director of the Company and/or a
Subsidiary immediately prior to the Change in Control;
(ii) without the Executive's express written consent, the
failure of the Company to remedy any of the following within ten (10)
business days after receipt by the Company of written notice thereof from
the Executive: (A) an adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to the
position with the Company and any Subsidiary which the Executive held
immediately prior to the Change in Control, (B) a reduction in the
aggregate of the Executive's Base Pay and Incentive Pay, or (C) the
termination or denial of the Executive's rights to Employee Benefits or a
reduction in the scope or value thereof;
(iii) without the Executive's express written consent, a
determination by the Executive (which determination will be conclusive and
binding upon the parties hereto provided it has been made in good faith
and in all events will be presumed to have been made in good faith unless
otherwise shown by the Company by clear and convincing evidence) that a
change in circumstances has occurred following a Change in Control,
including, without limitation, a change in the scope of the business or
other activities for which the Executive was responsible immediately prior
to the Change in Control, which has
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rendered the Executive unable to carry out, has hindered the Executive's
performance of, or has caused the Executive to suffer a reduction in, any
of the authorities, powers, functions, responsibilities or duties attached
to the position held by the Executive immediately prior to the Change in
Control, which situation is not remedied within ten (10) business days
after written notice to the Company from the Executive of such
determination;
(iv) without the Executive's express written consent, the
liquidation, dissolution, merger, consolidation or reorganization of the
Company or transfer of all or substantially all of its business and/or
assets, unless the successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to which all or
substantially all of its business and/or assets have been transferred (by
operation of law or otherwise) assumes all duties and obligations of the
Company under this Agreement pursuant to Section 15(a);
(v) without the Executive's express written consent, a
requirement by the Company that the Executive have his principal location
of work changed to any location that is in excess of thirty-five (35)
miles from the location thereof immediately prior to the Change in
Control, or that the Executive travel away from his office in the course
of discharging his responsibilities or duties hereunder at least 20% more
(in terms of aggregate days in any calendar year or in any calendar
quarter when annualized for purposes of comparison to any prior year) than
was required of the Executive in any of the three (3) full years
immediately prior to the Change in Control; or
(vi) without limiting the generality or effect of the
foregoing, without the Executive's express written consent, any material
breach of this Agreement by the Company or any successor thereto which is
not remedied by the Company within ten (10) business days after receipt by
the Company of written notice from the Executive of such breach.
In no event shall the termination of Executive's employment with the
Company on account of the Executive's death or Disability or because the
Executive engaged in conduct constituting Cause be deemed to be a Constructive
Termination Associated With a Change in Control.
(h) "Constructive Termination Prior to a Change in Control" means
the termination of Executive's employment with the Company by the Executive as a
result of:
(i) the failure to elect or reelect or otherwise to maintain
the Executive as the President and Chief Executive Officer of the Company,
or the removal of or failure to nominate the Executive as a Director of
the Company (or any successor thereto);
(ii) the failure of the Company to remedy any of the following
within thirty (30) calendar days after receipt by the Company of written
notice
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thereof from the Executive: (A) a materially adverse change in the nature
or scope of the authorities, powers, functions, responsibilities or duties
attached to the Executive's position with the Company, (B) a reduction in
Executive's Base Pay, unless pursuant to a voluntary reduction by
Executive or a reduction affecting all senior Company management, (C) the
termination or denial of the Executive's rights to Employee Benefits or a
material reduction in the scope thereof unless pursuant to a reduction
affecting all senior Company management, or (D) a reduction in Executive's
Incentive Pay opportunity below 100% of the Executive's Base Pay, unless
pursuant to a voluntary reduction by Executive or a reduction affecting
all senior Company management;
(iii) a requirement by the Company that the Executive have his
principal location of work changed to any location that is in excess of
thirty-five (35) miles from the location thereof without his prior written
consent; or
(iv) without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto which is not remedied by the Company within 30 calendar
days after receipt by such party of written notice from the Executive
specifying the grounds for such breach in reasonable detail.
In no event shall the termination of Executive's employment with the
Company on account of the Executive's death or Disability or because the
Executive engaged in conduct constituting Cause be deemed to be a
Constructive Termination Prior to a Change in Control.
(i) "Disability" means the Executive becomes permanently disabled
within the meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for, or applicable to, the
Executive.
(j) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement income and
welfare benefit policies, plans, programs or arrangements in which the Executive
is entitled to participate, including, without limitation, any stock option,
performance share, performance unit, stock purchase, stock appreciation,
savings, pension, supplemental executive retirement, or other retirement income
or welfare benefit, deferred compensation, incentive compensation, group or
other life, health, medical/hospital or other insurance (whether funded by
actual insurance or self-insured by the Company or a Subsidiary), disability,
salary continuation, expense reimbursement and other employee benefit policies,
plans, programs or arrangements that may now exist or any equivalent successor
policies, plans, programs or arrangements that may be adopted hereafter by the
Company or a Subsidiary, providing perquisites, benefits and service credit for
benefits at least as great in the aggregate as are payable thereunder.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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(l) "Incentive Pay" means the greater of: (i) Executive's maximum
Target Bonus for which Executive was eligible during the period that includes
the Termination Date, or (ii) the highest aggregate bonus or incentive payment
paid to Executive during any of the three (3) full calendar years prior to his
Termination Date. For purposes of this definition, "Target Bonus" means the
annual bonus, incentive, commission or other sales incentive compensation, or
comparable incentive payment opportunity which, in the sole discretion of the
Company, is deemed to constitute a Target Bonus, in addition to Base Pay, for
which Executive was eligible to receive, but did not receive prior to his
Termination Date, in regard to services rendered in the year covered by
Executive's Termination Date and is to be made pursuant to any bonus, incentive,
profit-sharing, performance, discretionary pay or similar agreement, policy,
plan, program or arrangement (whether or not funded) of the Company or a
Subsidiary, or any successor thereto. For purposes of this definition,
"Incentive Pay" does not include any stock option, stock appreciation, stock
purchase, restricted stock or similar plan, program, arrangement or grant, one
time bonus or payment (including, but not limited to, any sign-on bonus), any
amounts contributed by the Company for the benefit of Executive to any qualified
or nonqualified deferred compensation plan, whether or not provided under an
arrangement described in the prior sentence, or any amounts designated by the
parties as amounts other than Incentive Pay.
(m) "Involuntary Termination Associated With a Change in Control"
means the termination of Executive's employment related to a Change in Control:
(i) by the Company for any reason other than Cause, the Executive's death or the
Executive's Disability, or (ii) on account of a Constructive Termination
Associated with a Change in Control.
(n) "Involuntary Termination Prior to a Change in Control" means the
termination of Executive's employment unrelated to a Change in Control: (i) by
the Company for any reason other than Cause, the Executive's death or the
Executive's Disability, or (ii) on account of a Constructive Termination Prior
to a Change in Control.
(o) "Restricted Business" means,
(i) if the Executive is entitled to severance benefits under
this Agreement on account of an Involuntary Termination Prior to a Change
in Control, (A) the design, development, manufacture, marketing or support
of local or wide area network products, computer operating systems,
applications products, software products or services that enable
organizations to more effectively conduct business using the Web, or any
other software products of the type designed, developed, manufactured,
sold or supported by the Company or as proposed to be designed, developed,
manufactured, sold or supported by the Company pursuant to a development
project that is actually being pursued during the term of this Agreement;
(B) any business that performs technology and consulting services that
help businesses develop and accelerate their transition to Internet-based
e-business solutions and processes, or management services that assist
businesses in improving their operating processes; or (C) any business
that
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competes directly or indirectly with the hardware, software or consulting
businesses of the Company.
(ii) if the Executive is entitled to severance benefits under
this Agreement on account of an Involuntary Termination Associated With a
Change in Control, any business function with a direct competitor of the
Company that is substantially similar to the business function performed
by the Executive with the Company immediately prior to his Termination
Date.
(p) "Restricted Territory" means the counties, towns, cities or
states of any country in which the Company operates or does business.
(q) "Severance Period" means the twelve (12) month period after the
Executive's Termination Date.
(r) "Subsidiary" means any Company controlled affiliate.
(s) "Termination Date" means the last day of Executive's employment
with the Company.
(t) "Termination of Employment" means, except as provided in the
following sentence, the termination of Executive's active employment
relationship with the Company on account of an Involuntary Termination Prior to
a Change in Control or an Involuntary Termination Associated With a Change in
Control. For purposes of the non-solicitation provision of Section 11 of the
Agreement, the term "Termination of Employment" shall mean the termination of
Executive's employment relationship with the Company for any reason, including,
but not limited to, the Executive's Involuntary Termination Prior to a Change in
Control, Involuntary Termination Associated With a Change in Control, voluntary
termination, termination on account of Disability, or termination by the Company
for Cause.
(u) "Voting Stock" means securities entitled to vote generally in
the election of directors.
2. Termination Prior to a Change in Control.
(a) Involuntary Termination Prior to a Change in Control. In the
event Executive's employment is terminated on account of an Involuntary
Termination Prior to a Change in Control, Executive shall be entitled to the
benefits provided in subsection (b) of this Section 2.
(b) Compensation and Benefits Upon Involuntary Termination Prior to
a Change in Control. In the event a termination described in subsection (a) of
this Section 2 occurs, the Company shall pay and provide to the Executive after
his Termination Date:
(i) (A) 2 times Base Pay, plus (B) 2 times Incentive Pay, for
the Severance Period, payable in equal installments, consistent with the
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Company's past payroll practices, commencing with the first payroll period
that occurs after Executive's Termination Date. Notwithstanding the
foregoing, the Executive may determine, in his sole discretion and at any
time, that the amounts payable under this subsection (i) shall be paid to
him in a lump sum, as opposed to installments over the Severance Period.
(ii) Executive shall receive his pro rated Incentive Pay for
the year in which his Termination of Employment occurs. The pro rated
Incentive Pay shall be based on the Executive's Incentive Pay for the year
in which Executive's Termination Date occurs, multiplied by a fraction,
the numerator of which is the number of days during which Executive was
employed by the Company in the year of his termination and the denominator
of which is 365. Such pro rated Incentive Pay shall be paid to Executive
in equal installments over the Severance Period, consistent with the
Company's past payroll practices, commencing with the first payroll period
that occurs after Executive's Termination Date. Notwithstanding the
foregoing, the Executive may determine, in his sole discretion and at any
time, that the amounts payable under this subsection (ii) shall be paid to
him in a lump sum, as opposed to installments over the Severance Period.
(iii) For a period of twelve (12) months following his
Termination Date, Executive shall continue to receive the medical and
dental coverage in effect on his Termination Date (or generally comparable
coverage) for himself and, where applicable, his spouse and dependents, as
the same may be changed from time to time for employees generally, as if
Executive had continued in employment during such period; or, as an
alternative, the Company may elect to pay Executive cash in lieu of such
coverage in an amount equal to Executive's after-tax cost of continuing
comparable coverage, where such coverage may not be continued by the
Company (or where such continuation would adversely affect the tax status
of the plan pursuant to which the coverage is provided). If the Executive
does not receive the cash payment described in the preceding sentence, the
Company shall take all commercially reasonable efforts to provide that the
COBRA health care continuation coverage period under section 4980B of the
Code, shall commence immediately after the foregoing twelve (12) month
benefit period, with such continuation coverage continuing until the
earlier of (i) the end of the applicable COBRA health care continuation
coverage period or (ii) the date on which Executive is covered by the
medical and dental coverage of his successor employer, if any.
(iv) With respect to any Company stock options held by the
Executive as of the date of such Involuntary Termination Prior to a Change
in Control, the Company shall accelerate the vesting of that portion of
the Executive's stock options, if any, which would have vested and become
exercisable within the one (1) year period after the Executive's
Termination Date, such options, plus any other options that previously
became exercisable and have not expired or been exercised, to remain
exercisable, notwithstanding anything in any other agreement governing
such options, for the longer of (A) a period of six
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(6) months after the Executive's Termination Date, or (B) the period set
forth in the award agreement covering the option; provided, however, that
in no event will the option be exercisable beyond its original term.
(v) With respect to any shares of Company common stock held by
the Executive that are, at the time of such Involuntary Termination Prior
to a Change in Control, subject to the Company's repurchase right upon
termination of the Executive's employment ("Restricted Stock"), the
Company shall waive such repurchase right as to the number of shares of
Restricted Stock that would have vested within the one (1) year period
after the Executive's Termination Date.
(vi) To cover the cost of outplacement assistance services for
Executive that are actually provided by an outplacement agency selected by
Executive, for which the Company provides prior approval, with such
approval not to be unreasonably withheld, in an amount not to exceed
twenty percent (20%) of the Executive's Base Pay.
(vii) Executive shall receive any amounts earned, accrued or
owing but not yet paid to Executive as of his Termination Date, payable in
a lump sum, and any benefits accrued or earned in accordance with the
terms of any applicable benefit plans and programs of the Company.
3. Termination Associated With a Change in Control.
(a) Involuntary Termination Associated With a Change in Control. In
the event Executive's employment is terminated after, or in connection with, a
Change in Control, on account of (i) an Involuntary Termination Associated With
a Change in Control within the two year period after the Change in Control, (ii)
an Involuntary Termination Associated With a Change in Control that occurs (A)
not more than six (6) months prior to the date on which a Change in Control
occurs or (B) following the commencement of any discussion with a third person
that ultimately results in a Change in Control, or (iii) voluntarily by the
Executive for any reason (other than for death, Disability, or under
circumstances in which the Executive engaged in conduct that would constitute
Cause) during the thirty (30) day period immediately following the first
anniversary of the first occurrence of a Change in Control, Executive shall be
entitled to the benefits provided in subsection (b) of this Section 3. If
Executive is entitled to benefits described in this Section 3 by reason of
clause (a)(ii) above, Executive shall receive the compensation and benefits
described in Section 2(b) above after his Termination of Employment, in
accordance with the provisions of Section 2(b), regardless of whether the Change
in Control actually occurs, and Executive shall receive the additional
compensation and benefits described in Section 3(b) below only if the Change in
Control is consummated and shall receive such additional amounts after the
consummation of the Change in Control, in accordance with the provisions of
Section 3(b) below. For purposes of subsection 3(a)(ii)(B) above, to be eligible
to receive amounts described in Section 3(b) below, the Change in Control must
be consummated within the twelve (12) month period following Executive's
Termination Date, except in circumstances pursuant to which the consummation of
the Change in Control is delayed,
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through no failure of the Company or the third person, by a governmental or
regulatory authority or agency with jurisdiction over the matter, or as a result
of other similar circumstances. In such a circumstance, the remaining of the
twelve (12) month period shall be tolled and shall recommence upon termination
of the delaying event.
(b) Compensation and Benefits Upon Involuntary Termination
Associated With a Change in Control. Subject to the provisions of Section 5
hereof, in the event a termination described in subsection (a) of this Section 3
occurs, the Company shall pay and provide to the Executive after his Termination
Date:
(i) Lump sum payment equal to (A) 3 times Base Pay, plus (B) 3
times Incentive Pay. Payment shall be made within thirty (30) days after
Executive's Termination Date (or the end of the revocation period for the
Release, if later).
(ii) Executive shall receive his pro rated Incentive Pay for
the year in which his Termination of Employment occurs. The pro rated
Incentive Pay shall be based on the Executive's Incentive Pay for the year
in which Executive's Termination Date occurs, multiplied by a fraction,
the numerator of which is the number of days during which Executive was
employed by the Company in the year of his termination and the denominator
of which is 365. Such pro rated Incentive Pay shall be paid to Executive
in a lump sum within thirty (30) days after the effective date of the
termination (or the end of the revocation period for the Release, if
later).
(iii) For a period of thirty-six (36) months following his
Termination Date, Executive shall continue to receive the medical and
dental coverage in effect on his Termination Date (or generally comparable
coverage) for himself and, where applicable, his spouse and dependents, as
the same may be changed from time to time for employees generally, as if
Executive had continued in employment during such period; or, as an
alternative, the Company may elect to pay Executive cash in lieu of such
coverage in an amount equal to Executive's after-tax cost of continuing
comparable coverage, where such coverage may not be continued by the
Company (or where such continuation would adversely affect the tax status
of the plan pursuant to which the coverage is provided). If the Executive
does not receive the cash payment described in the preceding sentence, the
Company shall take all commercially reasonable efforts to provide that the
COBRA health care continuation coverage period under section 4980B of the
Code, shall commence immediately after the foregoing thirty-six (36) month
benefit period, with such continuation coverage continuing until the
earlier of (i) the end of the applicable COBRA health care continuation
coverage period or (ii) the date on which Executive is covered by the
medical and dental coverage of his successor employer, if any.
(iv) Lump sum payment equal to the total amount that Executive
would have received under the Company's 401(k) plan as a Company match if
Executive was eligible to participate in the Company's 401(k) plan for
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the thirty-six (36) month period after his Termination Date and he
contributed the maximum amount to the plan for the match. Payment shall be
made within thirty (30) days after Executive's Termination Date (or the
end of the revocation period for the Release, if later).
(v) Lump sum payment equal to the total premiums that the
Company would have paid under Executive's split-dollar life insurance
policy, if any, that is in effect immediately prior to his Termination
Date, if Executive was employed by the Company for the thirty-six (36)
month period following Executive's Termination Date; provided, however,
that if the remaining length of the term of the split-dollar arrangement
pursuant to which the Company must make premium payments is less than the
foregoing thirty-six (36) month period, Executive shall only receive a
lump sum payment equal to the remaining Company premiums for the term of
the arrangement. Payment shall be made within thirty (30) days after
Executive's Termination Date (or the end of the revocation period for the
Release, if later). Notwithstanding the foregoing, no payment shall be
made to Executive pursuant to this subsection (v) if on the Executive's
Termination Date, either Executive does not have a split-dollar life
insurance policy with the Company or the Company has no obligations to
make premium contributions to Executive's split-dollar life insurance
policy.
(vi) Lump sum payment equal to twenty percent (20%) of the
Executive's Base Pay in order to cover the cost of outplacement assistance
services for Executive. Payment shall be made within thirty (30) days
after Executive's Termination Date (or the end of the revocation period
for the Release, if later).
(vii) Executive shall receive any amounts earned, accrued or
owing but not yet paid to Executive as of his Termination Date, payable in
a lump sum, and any benefits accrued or earned in accordance with the
terms of any applicable benefit plans and programs of the Company.
(c) Notwithstanding any provision to the contrary in any applicable
plan, program or agreement, upon the occurrence of a Change in Control, all
stock options, Restricted Stock and other equity rights held by the Executive
will become fully vested and/or exercisable, as the case may be, on the date on
which the Change in Control occurs, and all stock options held by the Executive
shall remain exercisable, notwithstanding anything in any other agreement
governing such options, for the longer of (i) a period of thirty-six (36) months
after the Executive's Termination Date, or (ii) the period set forth in the
award agreement covering the option; provided, however, that in no event will
the option be exercisable beyond its original term.
4. Termination of Employment on Account of Disability, Cause or Death.
Notwithstanding anything in this Agreement to the contrary, if Executive's
employment terminates on account of Disability, Executive shall be entitled to
receive disability benefits under any disability program maintained by the
Company that covers Executive, and Executive shall not be considered to have
terminated employment under this
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Agreement and shall not receive benefits pursuant to Sections 2 and 3 hereof. If
Executive's employment terminates on account of Cause or because of his death,
Executive shall not be considered to have terminated employment under this
Agreement and shall not receive benefits pursuant to Sections 2 and 3 hereof.
5. Release. Notwithstanding the foregoing, no payments shall be made or
benefits provided under Section 3(b) unless Executive executes, and does not
revoke, the Company's standard written release, substantially in the form as
attached hereto as Annex A, (the "Release"), of any and all claims against the
Company and all related parties with respect to all matters arising out of
Executive's employment by the Company (other than entitlements under the terms
of this Agreement or under any other plans or programs of the Company in which
Executive participated and under which Executive has accrued or become entitled
to a benefit) or a termination thereof.
6. Enforcement. Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide any benefit required
to be made or provided hereunder on a timely basis, the Company will pay
interest on the amount or value thereof at an annualized rate of interest equal
to the so- called composite "prime rate" as quoted from time to time during the
relevant period in the Eastern Edition of The Wall Street Journal. Such interest
will be payable as it accrues on demand. Any change in such prime rate will be
effective on and as of the date of such change.
7. Certain Additional Payments by the Company.
(a) The provisions of this Section 7 shall apply notwithstanding
anything in this Agreement to the contrary. Subject to subsection (b) below, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would constitute an "excess parachute payment" within
the meaning of section 280G of the Code, the Company shall pay Executive an
additional amount (the "Gross-Up Payment") such that the net amount retained by
Executive after deduction of any excise tax imposed under section 4999 of the
Code, and any federal, state and local income tax, employment tax, excise tax
and other tax imposed upon the Gross-Up Payment, shall be equal to the Payment.
(b) Notwithstanding subsection (a), and notwithstanding any other
provisions of this Agreement to the contrary, if the net after-tax benefit to
Executive of receiving the Gross-Up Payment does not exceed the Safe Harbor
Amount (as defined below) by more than 10% (as compared to the net-after tax
benefit to Executive resulting from elimination of the Gross-Up Payment and
reduction of the Payments to the Safe Harbor Amount), then (i) the Company shall
not pay Executive the Gross-Up Payment and (ii) the provisions of subsection (c)
below shall apply. The term "Safe Harbor Amount" means the maximum dollar amount
of parachute payments that may be paid under section 280G of the Code without
imposition of an excise tax under section 4999 of the Code.
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(c) The provisions of this subsection (c) shall apply only if the
Company is not required to pay Executive a Gross-Up Payment as a result of
subsection (b) above. If the Company is not required to pay Executive a Gross-Up
Payment as a result of the provisions of subsection (b), the Company will apply
a limitation on the Payment amount as set forth in subsection (i) below (a
"Parachute Cap") if the application of the Parachute Cap is beneficial to
Executive, according to the following provisions:
(i) If subsection (ii) does not apply, the aggregate present
value of the Payments under Section 3 of this Agreement ("Agreement
Payments") shall be reduced (but not below zero) to the Reduced Amount.
The "Reduced Amount" shall be an amount expressed in present value which
maximizes the aggregate present value of Agreement Payments without
causing any Payment to be subject to the limitation of deduction under
section 280G of the Code. For purposes of this Section 7, "present value"
shall be determined in accordance with section 280G(d)(4) of the Code.
(ii) It is the intention of the parties that the Parachute Cap
apply only if application of the Parachute Cap is beneficial to Executive.
Therefore, if the net amount that would be retained by Executive under
this Agreement without the Parachute Cap, after payment of any excise tax
under section 4999 of the Code, exceeds the net amount that would be
retained by Executive with the Parachute Cap, then the Company shall not
apply the Parachute Cap to Executive's payments. In that event, neither
the Parachute Cap nor the Gross-Up Payment will apply to Executive.
(d) All determinations to be made under this Section 7 shall be made
by the nationally recognized independent public accounting firm used by the
Company immediately prior to the Change in Control ("Accounting Firm"), which
Accounting Firm shall provide its determinations and any supporting calculations
to the Company and Executive within ten days of Executive's termination date. If
any Gross-Up Payment is required to be made, the Company shall make the Gross-Up
Payment within ten days after receiving the Accounting Firm's calculations. Any
such determination by the Accounting Firm shall be binding upon the Company and
Executive.
(e) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in this Section 7 shall be borne
solely by the Company.
8. No Mitigation Obligation. The Company hereby acknowledges that it will
be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date. Accordingly, the payment
of the severance compensation by the Company to the Executive in accordance with
the terms of this Agreement is hereby acknowledged by the Company to be
reasonable, and the Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor will any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise.
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9. Legal Fees and Expenses. In the event of a Change in Control, it is the
intent of the Company that the Executive not be required to incur legal fees and
the related expenses associated with the interpretation, enforcement or defense
of the Executive's rights under this Agreement by litigation or otherwise
because the cost and expense thereof would detract from the benefits intended to
be extended to the Executive hereunder. Accordingly, if a Change in Control
occurs and it should appear to the Executive that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes or threatens to take any action to declare
this Agreement void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, the Executive the
benefits provided or intended to be provided to the Executive under Section 3(b)
of the Agreement, the Company irrevocably authorizes the Executive from time to
time to retain counsel of the Executive's choice, at the expense of the Company
as hereafter provided, to advise and represent the Executive in connection with
any such interpretation, enforcement or defense, including without limitation
the initiation or defense of any litigation or other legal action, whether by or
against the Company or any Director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship will exist between the
Executive and such counsel. Without respect to whether the Executive prevails,
in whole or in part, in connection with any of the foregoing, the Company will
pay and be solely financially responsible for any and all attorneys' and related
fees and expenses incurred by the Executive in connection with any of the
foregoing; provided that, in regard to such matters, the Executive has not acted
frivolously, in bad faith or with no colorable claim of success. Such expenses
will be paid by the Company as they are incurred by Executive.
10. Confidentiality. The Executive hereby covenants and agrees that he
will not disclose to any person not employed by the Company, or use in
connection with engaging in competition with the Company, any confidential or
proprietary information (as defined below) of the Company. For purposes of this
Agreement, the term "confidential or proprietary information" will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available (other than by the Executive's breach of this Section
10) or generally known to persons engaged in businesses similar or related to
those of the Company. Confidential or proprietary information will include,
without limitation, the Company's financial matters, customers, employees,
industry contracts, strategic business plans, product development (or other
proprietary product data), marketing plans, consulting solutions and processes,
and all other secrets and all other information of a confidential or proprietary
nature which is protected by the Uniform Trade Secrets Act. For purposes of the
preceding two sentences, the term "Company" will also include any Subsidiary
(collectively, the "Restricted Group"). The foregoing obligations imposed by
this Section 10 will not apply (i) in the course of the business of and for the
benefit of the Company, (ii) if such confidential or proprietary information has
become, through no fault of the Executive, generally known to the public, or
(iii) if the Executive is required by law to make
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disclosure (after giving the Company notice and an opportunity to contest such
requirement).
11. Covenants Not to Compete and Not to Solicit. In the event of
Executive's Termination of Employment, the Company's obligations to provide
severance pay as provided in Sections 2 and 3 shall be expressly conditioned
upon the Executive's covenants not to compete and not to solicit as provided
herein. In the event the Executive breaches his obligations to the Company as
provided herein, the Company's obligations to make severance payments to
Executive pursuant to Sections 2 and 3 shall cease, without prejudice to any
other remedies that may be available to the Company.
(a) Covenant Not to Compete. For a period of one (1) year following
Executive's Termination Date, the Executive shall not directly or indirectly,
engage in (whether as employee, consultant, proprietor, partner, director or
otherwise), or have any ownership interest in, or participate in a financing,
operation, management or control of, any person, firm, corporation or business
that is a Restricted Business in a Restricted Territory without the prior
written consent of the Board. For this purpose, ownership of no more than 5% of
the outstanding Voting Stock of a publicly traded corporation shall not
constitute a violation of this provision.
(b) Covenant Not to Solicit.
(i) If Executive is receiving compensation and benefits under
Section 2(b) above, then, for a period of one (1) year following
Executive's Termination Date, Executive shall not: (i) solicit, encourage
or take any other action which is intended to induce any other employee of
the Company to terminate his employment with the Company; or (ii)
interfere in any manner with the contractual or employment relationship
between the Company and any such employee of the Company. The foregoing
shall not prohibit Executive or any entity with which Executive may be
affiliated from hiring a former employee of the Company, provided that
such hiring results exclusively from such former employee's affirmative
response to a general recruitment effort.
(ii) If Executive is receiving compensation and benefits under
Section 3(b) above (or subsequently becomes entitled to severance under
section 3(b) above because of a termination described in Section
3(a)(ii)), then, for a period of two (2) years following Executive's
Termination Date, Executive shall not: (i) solicit, encourage or take any
other action which is intended to induce any other employee of the Company
to terminate his employment with the Company; or (ii) interfere in any
manner with the contractual or employment relationship between the Company
and any such employee of the Company. The foregoing shall not prohibit
Executive or any entity with which Executive may be affiliated from hiring
a former employee of the Company, provided that such hiring results
exclusively from such former employee's affirmative response to a general
recruitment effort.
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(c) Interpretation. The covenants contained herein are intended to
be construed as a series of separate covenants, one for each county, town, city
and state or other political subdivision of a Restricted Territory. Except for
geographic coverage, each such separate covenant shall be deemed identical in
terms to the covenant contained in the preceding subsections. If, in any
judicial proceeding, the court shall refuse to enforce any of the separate
covenants (or any part thereof) deemed included in such subsections, then such
unenforceable covenant (or such part) shall be deemed to be eliminated from this
Agreement for the purpose of those proceedings to the extent necessary to permit
the remaining separate covenants (or portions thereof) to be enforced.
(d) Reasonableness. In the event that the provisions of this Section
11 shall ever be deemed to exceed the time, scope or geographic limitations
permitted by applicable laws, then such provisions shall be reformed to the
maximum time, scope or geographic limitations, as the case may be, permitted by
applicable laws.
12. Employment Rights. Nothing expressed or implied in this Agreement will
create any right or duty on the part of the Company or the Executive to have the
Executive remain in the employment of the Company or any Subsidiary prior to or
following any Change in Control.
13. Withholding of Taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any applicable law, regulation or
ruling.
14. Term of Agreement. This Agreement shall continue in full force and
effect for the duration of Executive's employment with the Company; provided,
however, that after the termination of Executive's employment during the term of
this Agreement, this Agreement shall remain in effect until all of the
obligations of the parties hereunder are satisfied or have expired.
15. Successors and Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance reasonably satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of the
Company and any successor to the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all of the
business or assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor will thereafter be deemed the
"Company" for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors,
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heirs, distributees and legatees. This Agreement will supersede the provisions
of any employment or other agreement between the Executive and the Company that
relate to any matter that is also the subject of this Agreement, and such
provisions in such other agreements will be null and void.
(c) This Agreement is personal in nature and neither of the parties
hereto will, without the consent of the other, assign, transfer or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in
Sections 15(a) and 15(b). Without limiting the generality or effect of the
foregoing, the Executive's right to receive payments hereunder will not be
assignable, transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by the Executive's will or by
the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 15(c), the Company will have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.
16. Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed by the recipient), or five
(5) business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three (3) business
days after having been sent by a nationally recognized courier service for
overnight/next-day delivery, such as FedEx, UPS, or the United States Postal
Service, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive office and to the Executive at his principal
residence, or to such other address as any party may have furnished to the other
in writing and in accordance herewith, except that notices of changes of address
will be effective only upon receipt.
17. Governing Law. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the Commonwealth of Massachusetts, without giving
effect to the principles of conflict of laws of such Commonwealth.
18. Validity. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid, unenforceable
or otherwise illegal, the remainder of this Agreement and the application of
such provision to any other person or circumstances will not be affected, and
the provision so held to be invalid, unenforceable or otherwise illegal will be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid or legal.
19. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No
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<PAGE>
agreements or representations, oral or otherwise, expressed or implied with
respect to the subject matter hereof have been made by either party that are not
set forth expressly in this Agreement. References to Sections are to references
to Sections of this Agreement. Any reference in this Agreement to a provision of
a statute, rule or regulation will also include any successor provision thereto.
Whenever used herein, the masculine includes the feminine.
20. Survival. Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under Sections 2, 3, 7,
9, 10, and 11 will survive any termination or expiration of this Agreement or
the termination of the Executive's employment for any reason whatsoever.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
NOVELL, INC.
By:
/s/ Alan J. Friedman
Name: Alan J. Friedman
Title: Senior Vice President, People
EXECUTIVE
/s/ Jack L. Messman
Jack L. Messman
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Annex A
SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE
THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the
"Agreement") is made as of this ___ day of __________, ____, by and between
Novell, Inc. (the "Company") and _______________ ("Executive").
WHEREAS, Executive formerly was employed by the Company as ________;
WHEREAS, Executive and Company entered into the Severance Agreement, dated
____ ____, 200_, (the "Severance Agreement") which provides for certain benefits
in the event that Executive's employment is terminated on account of a reason
set forth in the Severance Agreement;
WHEREAS, Executive and the Company mutually desire to terminate
Executive's employment on an amicable basis, such termination to be effective
_________ ____, ____ ("Date of Resignation"); and
WHEREAS, in connection with the termination of Executive's employment, the
parties have agreed to a separation package and the resolution of any and all
disputes between them.
NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the
Company as follows:
1. (a) Executive, for and in consideration of the commitments of the
Company as set forth in paragraph 6 of this Agreement, and intending to be
legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company,
its affiliates, subsidiaries and parents, and its officers, directors,
employees, and agents, and its and their respective successors and assigns,
heirs, executors, and administrators (collectively, "Releasees") from all causes
of action, suits, debts, claims and demands whatsoever in law or in equity,
which Executive ever had, now has, or hereafter may have, whether known or
unknown, or which Executive's heirs, executors, or administrators may have, by
reason of any matter, cause or thing whatsoever, from the beginning of
Executive's employment to the date of this Agreement, and particularly, but
without limitation of the foregoing general terms, any claims arising from or
relating in any way to Executive's employment relationship with the Company, the
terms and conditions of that employment relationship, and the termination of
that employment relationship, including, but not limited to, any claims arising
under the Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act, Title VII of The Civil Rights Act of 1964, the Americans with
Disabilities Act, the Family and Medical Leave Act of 1993, the Employee
Retirement Income Security Act of 1974, [STATE FAIR EMPLOYMENT PRACTICE LAW],
and any other claims under any federal, state or local common law, statutory, or
regulatory provision, now or hereafter recognized, and
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any claims for attorneys' fees and costs. This Agreement is effective without
regard to the legal nature of the claims raised and without regard to whether
any such claims are based upon tort, equity, implied or express contract or
discrimination of any sort.
(b) To the fullest extent permitted by law, and subject to the
provisions of paragraph 11 below, Executive represents and affirms that (i)
[OTHER THAN _______,] Executive has not filed or caused to be filed on
Executive's behalf any claim for relief against the Company or any Releasee and,
to the best of Executive's knowledge and belief, no outstanding claims for
relief have been filed or asserted against the Company or any Releasee on
Executive's behalf; (ii) [OTHER THAN _______,] Executive has not reported any
improper, unethical or illegal conduct or activities to any supervisor, manager,
department head, human resources representative, agent or other representative
of the Company, to any member of the Company's legal or compliance departments,
or to the ethics hotline, and has no knowledge of any such improper, unethical
or illegal conduct or activities; and (iii) Executive will not file, commence,
prosecute or participate in any judicial or arbitral action or proceeding
against the Company or any Releasee based upon or arising out of any act,
omission, transaction, occurrence, contract, claim or event existing or
occurring on or before the date of this Agreement.
2. The Company, for and in consideration of the commitments of the
Executive as set forth in this Agreement, and intending to be legally bound,
does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Executive from all claims,
demands or causes of action arising out of facts or occurrences prior to the
date of this Agreement, but only to the extent the Company knows or reasonably
should know of such facts or occurrence and only to the extent such claim,
demand or cause of action relates to a violation of applicable law or the
performance of Executive's duties with the Company; provided, however, that this
release of claims shall not in any case be effective with respect to any claim
by the Company alleging a breach of the Executive's obligations under this
Agreement.
3. In consideration of the Company's agreements as set forth in paragraph
6 herein, Executive agrees to be comply with the limitations described in
Sections 10 and 11 of the Severance Agreement.
4. Executive further agrees and recognizes that Executive has permanently
and irrevocably severed Executive's employment relationship with the Company,
that Executive shall not seek employment with the Company or any affiliated
entity at any time in the future, and that the Company has no obligation to
employ him in the future.
5. Executive further agrees that Executive will not disparage or subvert
the Company, or make any statement reflecting negatively on the Company, its
affiliated corporations or entities, or any of their officers, directors,
employees, agents or representatives, including, but not limited to, any matters
relating to the operation or management of the Company, Executive's employment
and the termination of Executive's employment, irrespective of the truthfulness
or falsity of such statement.
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6. In consideration for Executive's agreement as set forth herein, the
Company agrees:
(i) [TO PAY TO EXECUTIVE A LUMP SUM PAYMENT EQUAL TO (A) 3 TIMES
BASE PAY (AS DEFINED IN THE SEVERANCE AGREEMENT), PLUS (B) 3 TIMES INCENTIVE PAY
(AS DEFINED IN THE SEVERANCE AGREEMENT). PAYMENT SHALL BE MADE WITHIN THIRTY
(30) DAYS AFTER THE EFFECTIVE DATE OF EXECUTIVE'S DATE OF RESIGNATION (OR THE
END OF THE REVOCATION PERIOD SET FORTH IN THIS AGREEMENT, IF LATER).
(ii) TO PAY EXECUTIVE EXECUTIVE'S PRO RATED INCENTIVE PAY (AS
DEFINED IN THE SEVERANCE AGREEMENT) FOR THE YEAR IN WHICH EXECUTIVE'S DATE OF
RESIGNATION OCCURS. SUCH PRO RATED INCENTIVE PAY SHALL BE PAID TO EXECUTIVE IN A
LUMP SUM WITHIN THIRTY (30) DAYS AFTER THE EFFECTIVE DATE OF THE TERMINATION (OR
THE END OF THE REVOCATION PERIOD SET FORTH IN THIS AGREEMENT, IF LATER).
(iii) [FOR A PERIOD OF THIRTY-SIX (36) MONTHS FOLLOWING EXECUTIVE'S
DATE OF RESIGNATION, EXECUTIVE SHALL CONTINUE TO RECEIVE THE MEDICAL AND DENTAL
COVERAGE IN EFFECT ON EXECUTIVE'S DATE OF RESIGNATION (OR GENERALLY COMPARABLE
COVERAGE) FOR EXECUTIVE AND, WHERE APPLICABLE, EXECUTIVE'S SPOUSE AND
DEPENDENTS, AS THE SAME MAY BE CHANGED FROM TIME TO TIME FOR EMPLOYEES
GENERALLY, AS IF EXECUTIVE HAD CONTINUED IN EMPLOYMENT DURING SUCH PERIOD] OR
[PAY EXECUTIVE CASH IN A LUMP SUM PAYMENT EQUAL TO EXECUTIVE'S AFTER-TAX COST OF
CONTINUING COMPARABLE MEDICAL AND DENTAL COVERAGE FOR THE THIRTY-SIX (36) MONTH
PERIOD FOLLOWING EXECUTIVE'S DATE OF RESIGNATION.] [THE COMPANY SHALL TAKE ALL
COMMERCIALLY REASONABLE EFFORTS TO PROVIDE THAT THE COBRA HEALTH CARE
CONTINUATION COVERAGE PERIOD UNDER SECTION 4980B OF THE CODE, SHALL COMMENCE
IMMEDIATELY AFTER THE FOREGOING THIRTY-SIX (36) MONTH BENEFIT PERIOD, WITH SUCH
CONTINUATION COVERAGE CONTINUING UNTIL THE EARLIER OF (I) THE END OF THE
APPLICABLE COBRA HEALTH CARE CONTINUATION COVERAGE PERIOD OR (II) THE DATE ON
WHICH EXECUTIVE IS COVERED BY THE MEDICAL AND DENTAL COVERAGE OF EXECUTIVE'S
SUCCESSOR EMPLOYER, IF ANY.]
(iv) TO PAY TO EXECUTIVE A LUMP SUM PAYMENT EQUAL TO THE TOTAL
AMOUNT THAT EXECUTIVE WOULD HAVE RECEIVED UNDER THE COMPANY'S 401(K) PLAN AS A
COMPANY MATCH IF EXECUTIVE WAS ELIGIBLE TO PARTICIPATE IN THE COMPANY'S 401(K)
PLAN FOR THE THIRTY-SIX (36) MONTH PERIOD AFTER EXECUTIVE'S DATE OF RESIGNATION
AND EXECUTIVE CONTRIBUTED THE MAXIMUM AMOUNT TO THE PLAN FOR THE MATCH. PAYMENT
SHALL BE MADE WITHIN THIRTY (30) DAYS AFTER THE EXECUTIVE'S DATE OF RESIGNATION
(OR THE END OF THE REVOCATION PERIOD SET FORTH IN THIS AGREEMENT, IF LATER).
(v) [TO PAY TO EXECUTIVE A LUMP SUM PAYMENT EQUAL TO THE TOTAL
PREMIUMS THAT THE COMPANY WOULD HAVE PAID UNDER EXECUTIVE'S SPLIT-DOLLAR LIFE
INSURANCE POLICY, IF ANY, THAT IS IN EFFECT IMMEDIATELY PRIOR TO EXECUTIVE'S
DATE OF RESIGNATION, IF EXECUTIVE WAS EMPLOYED BY THE COMPANY FOR THE THIRTY-SIX
(36) MONTH PERIOD FOLLOWING EXECUTIVE'S DATE OF RESIGNATION. PAYMENT SHALL BE
MADE WITHIN THIRTY (30) DAYS AFTER THE EFFECTIVE DATE OF EXECUTIVE'S DATE OF
RESIGNATION (OR THE END OF THE REVOCATION PERIOD SET FORTH IN THIS AGREEMENT, IF
LATER)]. [NOTE: THE FOREGOING ONLY APPLIES IF EXECUTIVE HAS A SPLIT-DOLLAR
ARRANGEMENT WITH THE COMPANY AND THE COMPANY IS REQUIRED TO MAKE PREMIUM
CONTRIBUTIONS ON EXECUTIVE'S DATE OF
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RESIGNATION. THE TOTAL MONTHS COVERED BY THE PREMIUMS WILL BE REDUCED IF THE
TERM OF THE POLICY IS SHORTER THAN THAT PROVIDED FOR EXECUTIVE.]
(vi) TO PAY TO EXECUTIVE A LUMP SUM PAYMENT EQUAL TO TWENTY PERCENT
(20%) OF THE EXECUTIVE'S BASE PAY IN ORDER TO COVER THE COST OF OUTPLACEMENT
ASSISTANCE SERVICES FOR EXECUTIVE. PAYMENT SHALL BE MADE WITHIN THIRTY (30) DAYS
AFTER THE EFFECTIVE DATE OF EXECUTIVE'S DATE OF RESIGNATION (OR THE END OF THE
REVOCATION PERIOD SET FORTH IN THIS AGREEMENT, IF LATER).
(vii) EXECUTIVE SHALL RECEIVE ANY AMOUNTS EARNED, ACCRUED OR OWING
BUT NOT YET PAID TO EXECUTIVE AS OF EXECUTIVE'S DATE OF RESIGNATION, PAYABLE IN
A LUMP SUM, AND ANY BENEFITS ACCRUED OR EARNED IN ACCORDANCE WITH THE TERMS OF
ANY APPLICABLE BENEFIT PLANS AND PROGRAMS OF THE COMPANY.
EXCEPT AS SET FORTH IN THIS AGREEMENT, IT IS EXPRESSLY AGREED AND UNDERSTOOD
THAT RELEASEES DO NOT HAVE, AND WILL NOT HAVE, ANY OBLIGATIONS TO PROVIDE
EXECUTIVE AT ANY TIME IN THE FUTURE WITH ANY PAYMENTS, BENEFITS OR
CONSIDERATIONS OTHER THAN THOSE RECITED IN THIS PARAGRAPH, OR THOSE REQUIRED BY
LAW, OTHER THAN UNDER THE TERMS OF ANY BENEFIT PLANS WHICH PROVIDE BENEFITS OR
PAYMENTS TO FORMER EMPLOYEES ACCORDING TO THEIR TERMS.]
7. Executive understands and agrees that the payments, benefits and
agreements provided in this Agreement are being provided to him in consideration
for Executive's acceptance and execution of, and in reliance upon Executive's
representations in, this Agreement. Executive acknowledges that if Executive had
not executed this Agreement containing a release of all claims against the
Company, Executive would only have been entitled to the payments provided in the
Company's standard severance pay plan for employees.
8. Executive acknowledges and agrees that the Company previously has
satisfied any and all obligations owed to him under any employment agreement or
offer letter Executive has with the Company and, further, that this Agreement
supersedes any employment agreement or offer letter Executive has with the
Company, and any and all prior agreements or understandings, whether written or
oral, between the parties shall remain in full force and effect to the extent
not inconsistent with this Agreement, and further, that, except as set forth
expressly herein, no promises or representations have been made to him in
connection with the termination of Executive's employment agreement, if any, or
offer letter, if any, with the Company, or the terms of this Agreement.
9. Executive agrees not to disclose the terms of this Agreement to anyone,
except Executive's spouse, attorney and, as necessary, tax/financial advisor.
Likewise, the Company agrees that the terms of this Agreement will not be
disclosed except as may be necessary to obtain approval or authorization to
fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed
hereunder constitutes a material breach of this Agreement.
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10. Executive represents that Executive does not presently have in
Executive's possession any records and business documents, whether on computer
or hard copy, and other materials (including but not limited to computer disks
and tapes, computer programs and software, office keys, correspondence, files,
customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies
thereof) (collectively, the "Corporate Records") provided by the Company and/or
its predecessors, subsidiaries or affiliates or obtained as a result of
Executive's prior employment with the Company and/or its predecessors,
subsidiaries or affiliates, or created by Executive while employed by or
rendering services to the Company and/or its predecessors, subsidiaries or
affiliates. Executive acknowledges that all such Corporate Records are the
property of the Company. In addition, Executive shall promptly return in good
condition any and all Company owned equipment or property, including, but not
limited to, automobiles, personal data assistants, facsimile machines, copy
machines, pagers, credit cards, cellular telephone equipment, business cards,
laptops and computers. As of the Date of Resignation, the Company will make
arrangements to remove, terminate or transfer any and all business communication
lines including network access, cellular phone, fax line and other business
numbers.
11. Nothing in this Agreement shall prohibit or restrict Executive from:
(i) making any disclosure of information required by law; (ii) providing
information to, or testifying or otherwise assisting in any investigation or
proceeding brought by, any federal regulatory or law enforcement agency or
legislative body, any self-regulatory organization, or the Company's [DESIGNATED
LEGAL, COMPLIANCE OR HUMAN RESOURCES OFFICERS]; or (iii) filing, testifying,
participating in or otherwise assisting in a proceeding relating to an alleged
violation of any federal, state or municipal law relating to fraud, or any rule
or regulation of the Securities and Exchange Commission or any self-regulatory
organization.
12. The parties agree and acknowledge that the agreement by the Company
described herein, and the settlement and termination of any asserted or
unasserted claims against the Releasees, are not and shall not be construed to
be an admission of any violation of any federal, state or local statute or
regulation, or of any duty owed by any of the Releasees to Executive.
13. Executive agrees and recognizes that should Executive breach any of
the obligations or covenants set forth in this Agreement, the Company will have
no further obligation to provide Executive with the consideration set forth
herein, and will have the right to seek repayment of all consideration paid up
to the time of any such breach. Further, Executive acknowledges in the event of
a breach of this Agreement, Releasees may seek any and all appropriate relief
for any such breach, including equitable relief and/or money damages, attorney's
fees and costs.
14. Executive further agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as to an equitable accounting of all earnings, profits
and other benefits arising from any
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violations of this Agreement, which rights shall be cumulative and in addition
to any other rights or remedies to which the Company may be entitled.
15. This Agreement and the obligations of the parties hereunder shall be
construed, interpreted and enforced in accordance with the laws of the
Commonwealth of Massachusetts.
16. Executive certifies and acknowledges as follows:
(a) That Executive has read the terms of this Agreement, and that
Executive understands its terms and effects, including the fact that Executive
has agreed to RELEASE AND FOREVER DISCHARGE the Company and each and everyone of
its affiliated entities from any legal action arising out of Executive's
employment relationship with the Company and the termination of that employment
relationship;
(b) That Executive has signed this Agreement voluntarily and
knowingly in exchange for the consideration described herein, which Executive
acknowledges is adequate and satisfactory to him and which Executive
acknowledges is in addition to any other benefits to which Executive is
otherwise entitled;
(c) That Executive has been and is hereby advised in writing to
consult with an attorney prior to signing this Agreement;
(d) That Executive does not waive rights or claims that may arise
after the date this Agreement is executed;
(e) That the Company has provided him with a period of [TWENTY-ONE
(21)] or [FORTY-FIVE (45)] days within which to consider this Agreement, and
that Executive has signed on the date indicated below after concluding that this
Separation of Employment Agreement and General Release is satisfactory to him;
and
(f) Executive acknowledges that this Agreement may be revoked by him
within seven (7) days after execution, and it shall not become effective until
the expiration of such seven (7) day revocation period. In the event of a timely
revocation by Executive, this Agreement will be deemed null and void and the
Company will have no obligations hereunder.
[SIGNATURE PAGE FOLLOWS]
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Intending to be legally bound hereby, Executive and the Company executed
the foregoing Separation of Employment Agreement and General Release this ______
day of _______,____.
_____________________________ Witness:________________________
[EXECUTIVE]
NOVELL, INC.
By:___________________________ Witness:________________________
Name:
Title:
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