EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made as of the 7th day of September, 2006 between Moldflow Corporation , a Delaware corporation (the “Company”), and G. Fred Humbert (“Executive”).
WHEREAS , the Company desires to employ Executive and Executive desires to be employed by the Company on the terms contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment . The term of this Agreement shall extend from the date hereof (the “Commencement Date”) until the first anniversary of the Commencement Date and shall automatically be extended for one additional year on each anniversary thereafter unless, not less than 30 days prior to each such date, either party shall have given notice that it does not wish to extend this Agreement; provided, further, that following a Change in Control or Transfer of Business the term of this Agreement shall continue in effect for a period of not less than twelve (12) months beyond the month in which the Change in Control or Transfer of Business occurred. The term of this Agreement shall be subject to termination as provided in Paragraph 6 and may be referred to herein as the “Period of Employment.”
2. Position and Duties . During the Period of Employment, Executive shall serve as the Senior Vice President and General Manager of the Manufacturing Solutions business unit (“ MMS Business Unit ”) and shall have such duties as may from time to time be prescribed by the Chief Executive Officer or the Board of Directors of the Company (the “Board”). Executive shall devote his full working time and efforts to the business and affairs of the Company.
3. Compensation and Related Matters.
(a) Base Salary and Incentive Compensation . Executive’s initial annual base salary shall be $218,000. Executive’s base salary shall be redetermined annually by the Chief Executive Officer, the Board or a Committee thereof. The annual base salary in effect at any given time is referred to herein as “Base Salary.” The Base Salary shall be payable in a manner consistent with the general payroll policy of the Company. In addition to Base Salary, Executive shall be eligible to participate in such incentive compensation plans and Employee Benefit Plans as may be available to employees from time to time and as determined by the Chief Executive Officer or the Board of Directors. As used herein, the term “Employee Benefit Plans” includes, without limitation, each pension and retirement plan; supplemental pension, retirement and deferred compensation plan; savings and profit-sharing plan; stock ownership plan; stock purchase plan; stock option plan; life insurance plan; medical insurance plan; disability plan; and health and accident plan or arrangement established and maintained by the Company.
(b) Vacations . Executive shall be entitled to twenty (20) paid vacation days in each fiscal year, which shall be accrued ratably during the fiscal year, and Executive shall also be
entitled to all paid holidays given by the Company to its executives. Executive shall be entitled to additional vacation based on any policy of the Company that provides for additional vacation based on years of service or other criteria.
(c) Indemnification and Directors’ and Officers’ Insurance. During Executive’s employment and for the period of time following termination of the Executive for any reason during which time Executive could be subject to any claim based on his position in the Company, Executive shall receive the maximum indemnification protection from the Company as permitted by the Company’s by-laws and shall receive directors’ and officers’ insurance coverage equivalent to that which is provided to any other director or officer of the Company.
4. Unauthorized Disclosure . Executive acknowledges that in the course of his employment with the Company and the predecessor to the Company’s MMS Business Unit, he has and will continue to be brought into frequent contact with, has had and will continue to have access to and become informed of confidential and proprietary information of the Company’s and its affiliates’, and particularly the MMS Business Unit’s, business affairs, information, trade secrets, and other matters which are of a proprietary or confidential nature, including but not limited to, methods of operations, business opportunities, business methods and processes, price and cost information, finance, customer information, product and service development information, production methodologies and processes, business plans, various sales techniques, manuals, letters, notebooks, procedures, reports, products, processes, services, and other confidential information and knowledge (collectively the “Confidential Information”). Executive understands and acknowledges that such Confidential Information is confidential, and he agrees not to disclose such Confidential Information to anyone outside the Company except to the extent that (i) Executive deems such disclosure or use reasonably necessary or appropriate in connection with performing his duties on behalf of the Company; (ii) Executive is required by order of a court of competent jurisdiction (by subpoena or similar process) to disclose or discuss any Confidential Information, provided that in such case, Executive shall promptly inform the Company of such event, shall cooperate with the Company in attempting to obtain a protective order or to otherwise restrict such disclosure, and shall only disclose Confidential Information to the minimum extent necessary to comply with any such court order; or (iii) such Confidential Information becomes generally known to and available for use in the Company’s industry, other than as a result of any action or inaction by Executive. Executive further agrees that he will not during employment and/or at any time thereafter use such Confidential Information in competing, directly or indirectly, with the Company. At such time as Executive shall cease to be employed by the Company, he will immediately turn over to the Company all Confidential Information, including papers, documents, writings, electronically stored information, other property, and all copies of them provided to or created by him during the course of his employment with the Company. The foregoing provisions shall be binding upon Executive’s heirs, successors, and legal representatives and shall survive the termination of this Agreement for any reason.
5. Covenants . Executive acknowledges and agrees that in his capacity of General Manager of the MMS Business Unit and his prior capacity as a lead salesperson of the MMS Business Unit and its predecessor, he has learned significant Confidential Information about the products and services of the MMS Business Unit and that his duties on behalf of the MMS Business Unit have required him to learn significant Confidential Information about the business of the
Company. Executive further acknowledges and agrees that installing the MMS Business Unit’s products and services at customer sites requires close integration of all of the company’s products and services with customers’ manufacturing processes and that, as a result, Executive additionally has learned Confidential Information about the Company’s customers. The Executive recognizes that attempting to sell products and services that compete with the company’s products and services inevitably would require the Executive to use and disclose Confidential Information. In consideration for Executive’s employment by the Company under the terms provided in this Agreement and as a means to aid in the performance and enforcement of the terms of the provisions of Paragraph 4, Executive agrees that during the term of Executive’s employment with the Company and for a period of twelve (12) months thereafter, regardless of the reason for termination of employment, Executive will not directly or indirectly:
(a) solicit or induce any present or future employee of the Company or any affiliate of the Company to accept employment with Executive or with any business, operation, corporation, partnership, association, agency, or other person or entity with which Executive may be associated, and Executive will not knowingly employ or cause any business, operation, corporation, partnership, association, agency, or other person or entity with which Executive may be associated to employ any present or future employee of the Company without providing the Company with ten (10) days’ prior written notice of such proposed employment; and
(b) (i) solicit the business or patronage of any customer of the Company for any other person or entity, (ii) divert, entice, or otherwise take away from the Company the business or patronage of any customer of the Company or attempt to do so, or (iii) solicit or induce any customer of the Company to terminate or reduce its relationship with the Company.
Should Executive violate any of the provisions of this Paragraph, then in addition to all other rights and remedies available to the Company at law or in equity, the duration of this covenant shall automatically be extended for the period of time from which Executive began such violation until he permanently ceases such violation.
6. Termination . Except for termination as specified in Subparagraph 6(a), any termination of Executive’s employment by the Company or any such termination by Executive shall be communicated by written notice of termination to the other party hereto (“ Notice of Termination ”). Executive’s employment hereunder may be terminated without any breach of this Agreement under the following circumstances:
(a) Death . Executive’s employment hereunder shall terminate upon his death.
(b) Disability . If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall have been unable to perform the material duties of his position for one hundred eighty (180) calendar days in the aggregate in any twelve (12) month period, the Company may terminate Executive’s employment hereunder.
(c) Termination by Company For Cause . At any time during the Period of Employment, the Company may terminate Executive’s employment hereunder for Cause if such termination is approved by not less than a majority of the Board. For purposes of this Agreement, “Cause” shall mean: (A) conduct by Executive constituting a material act of willful
misconduct in connection with the performance of his duties; (B) criminal or civil conviction of Executive, a plea of nolo contendere by Executive or conduct by Executive that would reasonably be expected to result in material injury to the reputation of the Company if he were retained in his position with the Company; (C) continued, willful and deliberate non-performance by Executive of his duties hereunder (other than by reason of Executive’s physical or mental illness, incapacity or disability) which has continued for more than thirty (30) days following written notice of such non-performance from the Board; or (D) a breach by Executive of any of the provisions contained in Paragraphs 4 and 5 of this Agreement.
(d) Termination Without Cause . At any time during the Period of Employment, the Company may terminate Executive’s employment hereunder without Cause if such termination is approved by a majority of the Company’s Board of Directors. Any termination by the Company of Executive’s employment under this Agreement which does not constitute a termination for Cause under Subparagraph 6(c) or result from the death or disability of the Executive under Subparagraph 6(a) or (b) or result from a Transfer of Business (as defined herein), shall be deemed a termination without Cause. If the Company provides notice to Executive under Paragraph 1 that it does not wish to extend the Period of Employment, such action shall be deemed a termination without Cause.
(e) Termination by Executive . At any time during the Period of Employment, Executive may voluntarily terminate his employment hereunder. At any time after the earlier to occur of a Change of Control (as defined herein) or a Transfer of Business (as defined herein), Executive may terminate his employment hereunder for Good Reason upon thirty (30) days’ written notice to the Company describing with particularity the Executive’s basis for asserting Good Reason unless the Company cures the Good Reason within thirty (30) days of receipt. If Executive provides notice to the Company under Paragraph 1 that he does not wish to extend the Period of Employment, such action shall be deemed a voluntary termination by Executive and one without Good Reason. For purposes of this Agreement, “Good Reason” shall mean: (A) a substantial diminution or other substantive adverse change, not consented to by Executive, in the nature or scope of Executive’s responsibilities, authorities, powers, functions or duties; (B) any removal, during the Period of Employment, from Executive of his title as set forth in paragraph 2 of this Agreement; (C) an involuntary reduction in Executive’s Base Salary except for across-the-board reductions similarly affecting all or substantially all management employees; (D) a breach by the Company of any of its other material obligations under this Agreement and the failure of the Company to cure such breach within thirty (30) days after written notice thereof by Executive; (E) the involuntary relocation of the Company’s offices at which Executive is principally employed or the involuntary relocation of the offices of Executive’s primary workgroup to a location more than thirty (30) miles from such offices, or the requirement by the Company that Executive be based anywhere other than the Company’s offices at such location on an extended basis, except for required travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations; or (F) the failure of the Company to obtain the agreement from any successor to the Company to assume and agree to perform this Agreement as required by Paragraph 10.
(f) Date of Termination . “Date of Termination” shall mean: (A) if Executive’s employment is terminated by his death, the date of his death; (B) if Executive’s employment is terminated under Subparagraph 6(b) or under Subparagraph 6(c), the date on which Notice of
Termination is given; (C) if Executive’s employment is terminated by the Company under Subparagraph 6(d), thirty (30) days after the date on which a Notice of Termination is given; and (D) if Executive’s employment is terminated by Executive under Subparagraph 6(e), thirty (30) days after the date on which a Notice of Termination is given, unless the Company cures the Good Reason event, if any, prompting the Executive to issue a Notice of Termination.
7. Compensation Upon Termination or During Disability .
(a) If Executive’s employment terminates by reason of his death, the Company shall, within ninety (90) days of death, pay in a lump sum amount to such person as Executive shall designate in a notice filed with the Company or, if no such person is designated, to Executive’s estate, Executive’s accrued and unpaid Base Salary, plus accrued vacation, to the date of his death, plus his accrued and unpaid incentive compensation, provided that any bonus payment, if any, under Subparagraph 3(a) that is earned with respect to any financial period but which has not yet been authorized for payment by the Board of Directors or any committee thereof, which shall be paid if and when it is so authorized by the Board of Directors. Upon the death of Executive, (i) all stock options that are granted to the Executive on or after the date of this Agreement, which would otherwise vest over the next twelve (12) months shall immediately vest in Executive’s estate or other legal representatives and become exercisable, and Executive’s estate or other legal representatives shall have twelve (12) months from the Date of Termination or the rem