This SEPARATION
AGREEMENT (the “Agreement”) is entered into by and
between Progress Software Corporation (the “Company”)
and Joseph W. Alsop, an individual (the “Executive”).
This Agreement shall be effective on the Effective Date, as defined
in Section 6.2.
WHEREAS, the
Executive and the Company wish to terminate certain of the
Executive’s relationships with the Company amicably under the
terms and conditions set forth herein;
WHEREAS, the
Company recognizes the Executive’s key role as a founder of
the Company and his twenty-seven years of loyal service;
and
WHEREAS, the
Company recognizes that the Executive is receiving no monetary
severance and has resigned from his positions as President and CEO
and agreed, as provided below, not to stand for reelection to the
Board of Directors.
NOW, THEREFORE, in
consideration of the foregoing and of the respective covenants and
agreements set forth below, and intending to be legally bound, the
Company and the Executive agree as follows:
1.
Resignation from Employment; Departure from Board of
Directors
Both
parties acknowledge that the Executive’s service as President
and Chief Executive Officer ended effective on March 29, 2009.
The Executive shall remain employed by the Company to June 30,
2009 (the “Separation Date”) at his current base salary
and with his current benefits. During the remaining period of the
Executive’s employment, he shall provide transitional
assistance if reasonably requested by the Lead Independent Director
of the Board of Directors (the “Board”). Effective on
the Separation Date, the Executive resigns from his employment and
resigns from and relinquishes any right to service in or privileges
relating to
any and all
other positions that he holds with the Company (other than as a
shareholder and optionholder), and with any and all of the
Company’s subsidiaries and/or affiliates and, further, agrees
not to stand for re-election as a member of the Board at the 2009
Annual Meeting of the Shareholders.
The
Company shall provide the following:
The
Company, as of the Effective Date, shall accelerate the vesting of
all of the Executive’s unvested outstanding stock options as
listed on Exhibit A attached hereto and subject to the terms
of the respective Company stock option plans with respect to
treatment of options upon a sale, merger or other acquisition of
the Company, shall allow the Executive or his estate, beneficiary,
legal representative or legatee to exercise all of his outstanding
stock options until the earlier of their (a) original
expiration date as set forth on Exhibit A or
(b) March 31, 2014, with no exercise to be permitted
thereafter. In addition, the Company hereby acknowledges that all
stock options outstanding under all Company stock option plans
other than the 1992 Incentive and Nonqualified Stock Option Plan
and the 1994 Stock Incentive Plan may be transferred by the
Executive at any time from and after the Effective Date in
accordance with the applicable plan provisions and agrees to
cooperate in allowing the Executive to do so and permit any such
transferee to exercise the options during their terms as set forth
in the preceding sentence; provided that the transferee
agrees in writing to be bound by the terms of the Company stock
option plans and the provisions of this Section 2.1. The
Company also agrees to allow the Executive and any such transferee
to make use of its “cashless option exercise” process
and any other benefits afforded to other employees in tracking and
exercising stock options.
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Except as provided
in this Section 2.1, the Company shall not terminate or cancel
the stock options subject to this Section 2.1 (the
“Options”) or otherwise restrict the Executive’s
rights thereto without an order of a court of competent
jurisdiction finding that the Company has grounds to do so and
permitting such action, including, without limitation, an order of
rescission or such equitable relief as the court deems proper. In
the event that the Company files an action that alleges a breach of
this Agreement, the Executive’s right to exercise the Options
after such filing shall be subject to an obligation of the
Executive to place any proceeds from the sale of shares resulting
from such exercise (net of any sales commissions paid by the
Executive and tax withholding by the Company) in an interest
bearing escrow account at a federally insured and chartered bank of
his choice with offices in Massachusetts that is reasonably
acceptable to the Company (the “Escrow Agent”)
immediately upon such sale, with instructions to the Escrow Agent
to hold all such proceeds and interest in escrow until one of the
following: (i) a final judgment, all appeals having been
exhausted, awarding payment of a specified amount or no amount to
the Company, in which event the Escrow Agent shall pay such amount,
if any, to the Company and the balance, if any, to the Executive,
(ii) any final dismissal of such action with prejudice, all
appeals having been exhausted, and without the issuance of any
order making any directions with respect to such payment, in which
event the Escrow Agent shall pay all such amounts to the Executive,
or (iii) a direction concerning disposition made jointly by
the Executive and the Company, in which event the Escrow Agent
shall follow such direction. During the period when any such court
action is pending, the Executive also shall not have the right to
transfer any Options to any third party.
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2.2
Liability Insurance and Indemnification
The
Company, for a minimum of six (6) years following the
Separation Date, shall maintain, for the benefit of the Executive,
director and officer liability insurance (“D&O”) in
form at least as comprehensive as, and in an amount that is at
least equal to, that maintained by the Company for its officers and
directors at the same time during such period. In addition, the
Executive shall be indemnified by the Company against liability,
including costs and attorneys’ fees, as a current or former
director, officer and/or employee of the Company and any subsidiary
or affiliate of the Company to the extent set forth in the
Company’s By-Laws.
The
Company shall permit the Executive reasonable access to his office
during regular business hours and such other times as approved by
the Lead Independent Director of the Board of Directors, and shall
provide reasonable administrative support, primarily through the
services of his existing assistant, to the extent reasonably
available, through the Separation Date for the purpose of
transitioning matters and property to the Company, organizing his
own affairs, and removing his own property.
The
Company shall maintain and permit the Executive to use his existing
Company voicemail and email accounts through March 31, 2010.
The Executive agrees to promptly forward all voicemails and emails
pertaining to business of the Company to whoever is designated by
the Company to receive them. Nothing in this Agreement shall be
construed to limit the Company’s right to include an
automated greeting for voicemails and an automated reply to any
email that provide notice that the Executive is no longer employed
by the Company.
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The
Executive on request of the Company shall deliver to the Company
the laptop computer and BlackBerry PDA device (together, the
“Devices”) that the Executive normally uses. The
Company may remove from the Devices any and all materials, messages
and other information that the Company reasonably and in good faith
determines relate to the business of the Company. The Company shall
permit the Executive a reasonable opportunity to consult and
cooperate with the Company concerning such removal. If the Company
initiates a removal process, it shall use reasonable diligence to
complete such process as promptly as can reasonably be expected
under the circumstances. No later than five (5) days after the
later of (i) the Separation Date; or (ii) the completion
of any removal process that the Company undertakes, the Company
shall return the Devices to the Executive and shall transfer
ownership of the Devices to the Executive.
The
Executive will be paid all accrued but unused vacation through the
Separation Date no later than the second normal payroll cycle
following the Separation Date.
4.
Covenants of the Executive
4.1
Return and Protection of Company Property
The
Executive agrees to return to the Company all Company documents and
property (except as set forth above) no later than seven
(7) days following the Executive’s return from his
current trip, and to abide by the terms of his Employee Proprietary
Information and Confidentiality Agreement signed as of July 9,
1998 (the “Proprietary Information
Agreement”).
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The
Executive agrees to make himself available to the Company after the
Separation Date either by telephone or in person upon reasonable
notice and with reasonable accommodation to the Executive’s
personal and business affairs, to assist the Company (which shall
include for purposes of this Section 4.2 any subsidiary or
other affiliate) in connection with any matter relating to services
performed by the Executive on behalf of the Company prior to the
Separation Date, including, without limitation, to assist in the
transition of his duties to the Company’s new Chief Executive
Officer. The Executive, also upon reasonable notice and with
reasonable accommodation to his personal and business affairs,
further agrees to cooperate with the Company in the defense or
prosecution of any claims or actions now in existence or which may
be brought or threatened in the future against or on behalf of the
Company, its directors, shareholders, officers, or employees and
which relates to the aforesaid services, including without
limitation, by meeting with the Company’s counsel and
appearing to testify truthfully in any proceeding without the
necessity of a subpoena. The Company shall reimburse the Executive
for his reasonable documented travel expenses incurred in
connection with such cooperation. Notwithstanding the aforesaid,
the Executive’s obligations set forth above shall not apply
to any matter in which the Executive’s interests are
materially adverse to those of the Company. To the extent that any
services requested by the Company pursuant to this Section 4.2
(“Cooperation Services”) exceed fifteen
(15) hours, the Company shall compensate the Executive at an
hourly rate of $500; provided that the following Cooperation
Services shall not be subject to a compensation right nor shall
they be counted toward such fifteen (15) hours: (i) time
spent testifying in any proceeding and any related travel and
waiting time; and (ii) time spent assisting the Company in
connection with any then threatened or pending
litigation,
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investigation
or regulatory proceeding in which the Executive is a party, subject
or target, or in which the Executive has been informed by an
adverse party or governmental agency that he will be a party,
subject or target. Reimbursements of expenses shall be paid within
thirty (30) days of the Company’s receipt of an invoice
from the Executive or his designee for the same. Any reimbursement
in one calendar year shall not affect the amount that may be
reimbursed in any other calendar year and a reimbursement (or right
thereto) may not be exchanged or liquidated for another benefit or
payment. Any business expense reimbursements subject to
Section 409A of the Code shall be made no later than the end
of the calendar year following the calendar year in which such
business expense is incurred by Executive. The Executive shall
submit any such expense requests in a sufficiently timely manner so
as to permit the Company to comply with the previous
sentence.
4.3
Non-Competition; Non-Solicitation
The
Executive recognizes the highly competitive nature of the
Company’s business and that the Executive’s position
with the Company and access to and use of the Company’s
confidential records and proprietary information renders the
Executive special and unique. The Executive further acknowledges
that he has the opportunity to obtain additional equity in the
Company pursuant to Section 2.1. The Executive hereby agrees
that for the shorter of five (5) years from the Separation
Date or one (1) year from the exercise or termination, by
voluntary relinquishing to the Company or other cancellation or
termination in accordance with the terms of the applicable Company
stock option plans (but not, for the avoidance of doubt, due to any
transfer of options by the Executive as described in
Section 2.1 without the subsequent exercise or termination of
such transferred options), of all of his stock options in the
Company (the “Restricted Period”), he shall not,
directly or indirectly, own, manage, operate, join,
control,
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participate in,
invest in or otherwise be connected or associated with, in any
manner, including as an officer, director, employee, independent
contractor, stockholder, member, partner, consultant, advisor,
agent, proprietor, trustee or investor, any Competing Business with
operations in the United States; provided , however, that
(i) ownership of two percent (2%) or less of the stock or
other securities of a publicly traded corporation and
(ii) passive ownership of less than a five percent (5%)
interest as a limited partner of a venture capital fund, private
equity fund or similar investment vehicle, or ownership of shares
in a mutual fund shall not constitute a breach of this
Section 4.5, in each case under this clause (ii), with respect
to which the Executive has no role in the review, selection or
management of any investments. For purposes hereof, the phrase,
“Competing Business,” shall mean any business or
venture listed on Schedule A, or any other business or venture
that has significant product activity in any of the areas listed in
Schedule B, provided, however, that a business or venture
which imbeds or resells products or technology from the companies
listed on Schedule A or from companies in the product areas
listed in Schedule B but which itself has no significant
product activity in the area shall not be considered a Competing
Business.
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