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Exhibit 10.15
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 t






