EXHIBIT 10.36
CHANGE IN CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT
This Change in Control Employment and Severance Agreement (the
"AGREEMENT") is entered into this 7 day of March, 2001, between ▇▇▇▇ ▇▇▇▇▇▇
("Executive") and ZAMBA CORPORATION, a Delaware corporation (the "COMPANY").
This Agreement is intended to provide Executive with the compensation and
benefits described herein upon the occurrence of specific events following a
Change in Control (as hereinafter defined).
Certain capitalized terms used in this Agreement are defined in Article
VII.
The Company and Executive hereby agree as follows:
ARTICLE I
EMPLOYMENT BY THE COMPANY
1.1 Executive is currently employed as the Executive Vice President of
Internal Operations of the Company.
1.2 This Agreement shall become effective upon the occurrence of a Change
in Control.
1.3 The Company and Executive each agree and acknowledge that Executive is
employed by the Company as an "at will" employee and that either Executive or
the Company has the right at any time to terminate Executive's employment with
the Company, with or without cause or advance notice, for any reason or for no
reason. The Company and Executive wish to set forth the compensation and
benefits which Executive shall be entitled to receive in the event that
Executive's employment with the Company terminates under the circumstances
described in Article II of this Agreement.
1.4 The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive's past services to the
Company, Executive's continued employment with the Company and Executive's
execution of the general waiver and release described in Section 4.3.
ARTICLE II
TRIGGERING EVENTS
2.1 INVOLUNTARY TERMINATION OF EMPLOYMENT DURING TERM
(a) If Executive's employment is involuntarily terminated by the
Company without Cause during the Term, such termination of employment will be a
Triggering Event, and the Company shall pay or provide Executive the
compensation and benefits described in Article III.
(b) If Executive's employment is involuntarily terminated by the
Company for Cause during the Term, such termination of employment will NOT be a
Triggering Event, and
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Executive will NOT be entitled to receive any compensation or benefits under the
provisions of this Agreement except as otherwise specifically set forth herein.
2.2 VOLUNTARY TERMINATION OF EMPLOYMENT DURING TERM.
(a) Executive may voluntarily terminate his employment with the
Company at any time during the Term. If Executive voluntarily terminates his
employment for Good Reason during the Term, such termination of employment will
be a Triggering Event, and the Company shall pay or provide Executive the
compensation and benefits described in Article III.
(b) If Executive voluntarily terminates his employment for any
reason other than Good Reason during the Term, such termination of employment
will NOT be a Triggering Event, and Executive will NOT be entitled to receive
any compensation or benefits under the provisions of this Agreement except as
otherwise specifically set forth herein.
2.3 DEATH OR DISABILITY DURING TERM. If Executive's employment with the
Company terminates on account of death or disability during the Term, such
termination of employment will be a Triggering Event, and the Company shall pay
or provide Executive the compensation and benefits described in Article III.
2.4 EMPLOYMENT THROUGH TERM. If Executive's employment continues through
the end of the Term, such continuation of employment will be a Triggering Event,
and the Company shall pay Executive the compensation and benefits described in
Article III.
ARTICLE III
COMPENSATION AND BENEFITS
3.1 RIGHT TO COMPENSATION AND BENEFITS. If a Triggering Event occurs
during the Term, Executive shall be entitled to receive the compensation and
benefits described in this Agreement subject to the restrictions and limitations
set forth in Article IV. If a Triggering Event does not occur during the Term,
Executive shall not be entitled to receive any compensation and benefits
described in this Agreement, except as otherwise specifically set forth herein.
3.2 SEVERANCE PAYMENT. Upon the occurrence of a Triggering Event or, if
later, upon the termination of Executive's employment with the Company during
the Term following a Triggering Event, Executive shall receive a lump sum
severance payment equal to the sum of (a) the amount of Executive's Base Salary
that would have been paid with respect to the period beginning on the date of
the Triggering Event and ending with the last day of the Term plus (b) six (6)
months of Base Salary. Such lump sum amount shall be paid no later than thirty
(30) days following the date of the Triggering Event or, if later, the date of
termination of Executive's employment with the Company and shall be subject to
all applicable tax withholding.
3.3 HEALTH INSURANCE COVERAGE. Upon the occurrence of a Triggering Event
or, if later, upon the termination of Executive's employment with the Company
during the Term following a Triggering Event, to the extent permitted by the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and by the
Company's group health insurance policy, Executive and his covered dependents
will be eligible to continue their health insurance benefits at their own
expense. If Executive elects COBRA continuation coverage, the Company shall pay
Executive's and covered
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dependents' COBRA continuation premiums for six (6) months following the date
Executive's coverage as an active employee under the Company's group health
policy ceases, provided that the Company's obligation to make such payments
shall terminate immediately if Executive becomes eligible for other health
insurance benefits at the expense of a new employer. Executive agrees to notify
the Company, in writing, immediately upon acceptance of any employment which
provides health insurance benefits. This Section 3.3 provides only for the
Company's payment of COBRA continuation premiums for the period specified above.
This Section 3.3 is not intended to affect, nor does it affect, the rights of
Executive, or Executive's covered dependents, under any applicable law with
respect to health insurance continuation coverage.
3.4 STOCK OPTION ACCELERATION. Executive's stock options which are
outstanding as of the date of the Triggering Event (the "Stock Options") shall
become fully vested and exercisable upon the occurrence of a Triggering Event or
upon the termination of Executive's employment during the Term which does not
otherwise constitute a Triggering Event, notwithstanding the then existing
provisions of the relevant Stock Option agreements, which provisions are
expressly modified by this Agreement. The period of time during which the Stock
Options shall remain exercisable, and all other terms and conditions of the
Stock Options, shall be as specified in the relevant Stock Option agreements.
3.5 MITIGATION. Except as otherwise specifically provided herein,
Executive shall not be required to mitigate damages or the amount of any payment
provided under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be reduced by
any compensation earned by Executive as a result of employment by another
employer or by retirement benefits after the date of the Triggering Event, or
otherwise.
ARTICLE IV
LIMITATIONS AND CONDITIONS ON BENEFITS; AMENDMENT OF AGREEMENT
4.1 OTHER SEVERANCE BENEFITS; WITHHOLDING OF TAXES. The benefits provided
under this Agreement are in lieu of any other benefit provided under any
employment contract or severance plan of the Company in effect at the time of a
Triggering Event. The Company shall withhold appropriate federal, state or local
income and employment taxes from any payments hereunder.
4.2 OBLIGATIONS OF EXECUTIVE. During the Term, Executive agrees not to
personally solicit any of the Company's employees to become employed elsewhere
or provide the names of such employees to any other company which Executive has
reason to believe will solicit such employees.
4.3 EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF CERTAIN BENEFITS.
Prior to the receipt of any benefits under Section 3.2 above, Executive shall
execute an effective employee agreement and release in the form attached hereto
as Exhibit A. Such employee agreement and release shall specifically relate to
all of Executive's rights and claims in existence at the time of its execution.
It is understood that Executive has twenty-one (21) days to consider whether to
execute such employee agreement and release and Executive may revoke such
employee agreement and release within seven (7) days after execution of such
employee agreement and release. If Executive does not execute such employee
agreement and release within the twenty-one (21) day period, or if Executive
revokes such employee agreement and release within the seven (7) day period, no
benefits shall be payable under Section 3.2 above. Nothing in this Agreement
shall limit the scope or time of applicability of such employee agreement and
release once it is executed and not timely revoked.
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4.4 CERTAIN ADDITIONAL PAYMENTS. If it shall be determined, either by the
Company or by a final determination of the Internal Revenue Service, 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 (including, without limitation, the value ascribed to option
acceleration pursuant to Section 3.4 above) or otherwise (the "Payments"), would
cause Executive to become subject to the excise tax imposed by Section 4999 of
the Code (the "Excise Tax"), then the Company shall pay to Executive, within the
later of ninety (90) days of the date of the Triggering Event or ninety (90)
days of the date of determination referred to above, an additional amount (the
"Gross-Up Payment") such that the net amount retained by Executive, after
deduction of any Excise Tax and any federal (and state and local) income and
employment taxes on the Gross-Up Payment, shall be equal to the Payments. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal, state and local income taxes at the highest nominal
marginal rate of federal, state and local income taxation in the calendar year
in which the Gross-Up Payment is made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes. If the Excise Tax is subsequently determined, whether by the Company or
by a final determination of the Internal Revenue Service, to be less than the
amount taken into account to determine the amount of the Gross-Up Payment, then
Executive shall repay to the Company at that time the portion of the Gross-Up
Payment attributable to such reduction (plus an amount equal to any tax
reduction, whether of the Excise Tax, any applicable income tax, or any
applicable employment tax, which Executive may enjoy as a result of such initial
repayment). If the Excise Tax is subsequently determined, whether by the Company
or by a final determination of the Internal Revenue Service, to be more than the
amount taken into account to determine the amount of the Gross-Up Payment, then
the Company shall pay to Executive an additional amount, which shall be
determined using the same methods as were used for calculating the Gross-Up
Payment, with respect to such excess. For purposes of this Section 4.4, a
determination of the Internal Revenue Service as to the amount of Excise Tax for
which Executive is liable shall not be treated as final until the time that
either (i) the Company agrees to acquiesce in the determination of the Internal
Revenue Service or (ii) the determination of the Internal Revenue Service has
been upheld in a court of competent jurisdiction and the Company decides not to
appeal such judicial decision or such decision is not appealable. If the Company
chooses to contest the determination of the Internal Revenue Service, then all
costs, attorneys' fees, and other expenses shall be paid by the Company.
4.5 AMENDMENT OR TERMINATION. This Agreement may be amended or terminated
only upon the mutual written consent of the Company and Executive.
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ARTICLE V
OTHER RIGHTS AND BENEFITS NOT AFFECTED
5.1 NONEXCLUSIVITY. Nothing in the Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus, incentive
or other plans, programs, policies or practices provided by the Company and for
which Executive may otherwise qualify, nor shall anything herein limit or
otherwise affect such rights as Executive may have under any stock option or
other agreements with the Company; PROVIDED, HOWEVER, that in accordance with
Section 4.1 above, any benefits provided hereunder shall be in lieu of any other
severance payments to which Executive may otherwise be entitled, including,
without limitation, under any employment contract or severance plan, and
benefits under this Agreement shall be offset to the extent necessary to give
effect to this proviso. Except as otherwise expressly provided herein, amounts
which are vested benefits or which Executive is otherwise entitled to receive
under any plan, policy, practice or program of the Company at or subsequent to
the effective date of a Change in Control shall be payable in accordance with
such plan, policy, practice or program.
5.2 EMPLOYMENT STATUS. This Agreement does not constitute a contract of
employment, nor does it impose on Executive any obligation to remain as an
employee or on the Company any obligation (i) to retain Executive as an
employee, (ii) to change the status of Executive as an at will employee, or
(iii) to change the Company's policies regarding termination of employment.
ARTICLE VI
NON-ALIENATION OF BENEFITS
No benefit hereunder shall be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt to do so
shall be void.
ARTICLE VII
DEFINITIONS
For purposes of the Agreement, the following terms shall have the meanings
set forth below:
7.1 "AGREEMENT" means this Change in Control Severance Agreement.
7.2 "BASE SALARY" means Executive's salary (excluding bonus, any other
incentive or other payments and stock option exercises) at the rate paid by the
Company in consideration for Executive's service on the day prior to the
effective date of a Change in Control or at such higher rate as may be in effect
during the Term and which is includable in the gross income of Executive for
federal income tax purposes or which would have been includable in gross income
except for an election either under Section 125 or 402(e)(3) of the Code or
under the terms of a nonqualified deferred compensation arrangement sponsored by
the Company.
7.3 "CAUSE" means either of the following: (i) an intentional or grossly
negligent act by Executive causing material harm to the Company or (ii)
Executive's conviction of, or plea of "guilty" or "no contest" to, a felony.
7.4 "CHANGE IN CONTROL" means the consummation of any one of the following
events: (i) a sale of all or substantially all of the assets of the Company;
(ii) a merger or consolidation in which
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the Company is not the surviving corporation (other than a transaction the
principal purpose of which is to change the state of the Company's incorporation
or a transaction in which the voting securities of the Company are exchanged for
beneficial ownership of at least fifty percent (50%) of the voting securities of
the controlling acquiring corporation); (iii) a merger or consolidation in which
the Company is the surviving corporation and less than fifty percent (50%) of
the voting securities of the Company which are outstanding immediately after the
consummation of such transaction are beneficially owned, directly or indirectly,
by the persons who owned such voting securities immediately prior to such
transaction; (iv) any transaction or series of related transactions after which
any person (as such term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934), other than any employee benefit plan (or related trust) sponsored
or maintained by the Company or any subsidiary of the Company, becomes the
beneficial owner of voting securities of the Company representing fifty percent
(50%) or more of the combined voting power of all of the voting securities of
the Company; or (v) the liquidation or dissolution of the Company.
7.5 "CODE" means the Internal Revenue Code of 1986, as amended.
7.6 "COMPANY" means Zamba Corporation, a Delaware corporation, and any
successor thereto.
7.7 "DISABILITY" means a disability which qualifies Executive as disabled
for purposes of receiving benefits under the Company's long term disability plan
applicable to Executive.
7.8 "GOOD REASON" means that any one of the following actions has been
taken by the Company without Executive's express written consent and such action
has not been promptly reversed within thirty (30) days following written notice
from Executive to the Company: (i) a material reduction in Executive's job
responsibilities given Executive's prior position and responsibilities with the
Company, it being deemed that a position with a different title but providing
similar activities, given the size of the combined company, shall not be
considered a material reduction in Executive's job responsibilities; (ii) any
reduction in Executive's compensation and aggregate benefits as in effect
immediately prior to such reduction; (iii) relocation of Executive's workplace
to a facility or location more than twenty-five (25) miles from Executive's
workplace immediately prior to such relocation; (iv) any purported termination
of Executive's employment which is not effected by reason of death, disability,
or Cause; (v) the failure or refusal of a successor to the Company to assume the
Company's obligations under this Agreement, as provided in Section 8.7 below; or
(vi) a material breach by the Company or any successor to the Company of any of
the material provisions of this Agreement
7.9 "TERM" means the period beginning on the effective date of a Change in
Control and ending thirteen (13) months thereafter.
7.10 "TRIGGERING EVENT" means an event described in Section 2.1(a),
2.2(a), 2.3 or 2.4 above. No other event shall be a Triggering Event for
purposes of this Agreement.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 NOTICES. Any notices provided hereunder must be in writing and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by telex or facsimile)
or the third day after mailing by first class mail, to the Company at its
primary office location and to Executive at his address as listed in the
Company's payroll records. Any payments made by the Company to Executive under
the terms of this Agreement shall be delivered to Executive either in person or
at his address as listed in the Company's payroll records.
8.2 SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
8.3 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
8.4 COMPLETE AGREEMENT. This Agreement, including Exhibit A, constitutes
the entire agreement between Executive and the Company and it is the complete,
final, and exclusive embodiment of their agreement with regard to this subject
matter. It is entered into without reliance on any promise or representation
other than those expressly contained herein.
8.5 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.
8.6 HEADINGS. The headings of the Articles and Sections hereof are
inserted for convenience only and shall neither be deemed to constitute a part
hereof nor to affect the meaning thereof.
8.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not delegate any of his duties hereunder and he may not assign any
of his rights hereunder without the written consent of the Company, which
consent shall not be withheld unreasonably.
8.8 ATTORNEYS' FEES. If either party hereto brings any action to enforce
his or its rights hereunder, the prevailing party in any such action shall be
entitled to recover his or its reasonable attorneys' fees and costs incurred in
connection with such action.
8.9 CHOICE OF LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State of
Minnesota.
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8.10 CONSTRUCTION OF PLAN. In the event of a conflict between the text of
the Agreement and any summary, description or other information regarding the
Agreement, the text of the Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year written above.
ZAMBA CORPORATION, ▇▇▇▇ ▇▇▇▇▇▇
A DELAWARE CORPORATION EXECUTIVE
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: CFO
Exhibit A: Employee Agreement and Release
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EXHIBIT A
EMPLOYEE AGREEMENT AND RELEASE
I UNDERSTAND AND AGREE COMPLETELY TO THE TERMS SET FORTH IN THE FOREGOING
AGREEMENT.
Except as otherwise set forth in this Agreement, I hereby release, acquit
and forever discharge the Company, its parents and subsidiaries, and their
officers, directors, agents, servants, employees, shareholders, successors,
assigns and affiliates, of and from any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed (other than any
claim for indemnification I may have as a result of any third party action
against me based on my employment with the Company), arising out of or in any
way related to agreements, events, acts or conduct at any time prior to and
including the date I sign this Agreement, including but not limited to: all such
claims and demands directly or indirectly arising out of or in any way connected
with my employment with the Company or the termination of that employment,
including but not limited to, claims of intentional and negligent infliction of
emotional distress, any and all tort claims for personal injury, claims or
demands related to salary, bonuses, commissions, stock, stock options, or any
other ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law or cause of action including, but
not limited to, the federal Civil Rights Act of 1964, as amended; the federal
Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal
Americans with Disabilities Act of 1990; state laws comparable to the foregoing
federal laws; tort law; contract law; wrongful discharge; discrimination; fraud;
defamation; emotional distress; and breach of the implied covenant of good faith
and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify me
pursuant to the Company's Indemnification Agreement.
I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under the ADEA. I also acknowledge that the consideration
given for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (A) my waiver and release do not apply to any rights or claims that may
arise after the date I sign this Agreement; (B) I have the right to consult with
an attorney prior to executing this Agreement; (C) I have twenty-one (21) days
to consider this Agreement (although I may choose to voluntarily execute this
Agreement earlier); (D) I have seven (7) days following the execution of this
Agreement by the parties to revoke the Agreement; and (E) this Agreement shall
not be effective until the date upon which the revocation period has expired,
which shall be the eighth day after this Agreement is executed by me, provided
that the Company has also executed this Agreement by that date ("Effective
Date").
By:________________________________
Date:______________________________
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