EXHIBIT 10.24
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DRAFT FOR DISCUSSION PURPOSES ONLY
July ___, 2002
CONFIDENTIAL
M__._______
[ADDRESS]
[ADDRESS]
[ADDRESS]
Re: Severance Agreement
Dear __________:
The following letter (the "Severance Agreement") amends and restates
certain benefits and obligations relating to your employment with ▇▇▇▇▇▇'▇, Inc.
(the "Company"), including severance benefits to which you would be entitled in
the event of the termination of your employment as [TITLE] of the Company. By
signing below, you agree to amend and restate that Severance Agreement dated
____________, 20___ between you and the Company.
1. SEVERANCE PAYMENTS - In the event the Company terminates your
employment (except as noted below), and provided that you execute and
return an acceptable release of all claims in favor of the Company,
you will receive payment equal to three (3) months' salary at your
then current rate, payable over three (3) months in accordance with
the Company's regular payroll schedule. In the alternative, following
a Change of Control (as defined below) of the Company, you will
receive a total payment equal to twelve (12) months' salary at your
then current rate in the event that you are terminated by the Company
at any time during the twelve (12) months following completion of such
Change of Control. The severance payments will be payable over twelve
(12) months in accordance with the Company's regular payroll schedule.
The period of time of severance payments set forth in this paragraph
shall be referred to herein as the "Severance Payment Period."
Notwithstanding anything in this paragraph, you will not be entitled
to any payments in the event you resign or the Company terminates your
employment for Cause (as defined below).
2. TAX PAYMENTS. In the event that any payment or distribution by the
Company to or for the benefit of you (whether paid or payable or
distributed or distributable pursuant to the terms of this Severance
Agreement or otherwise, but determined without regard to any
additional payments under this paragraph) (a "Payment") is determined
to be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, or any interest or
penalties are incurred by you with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the
Company shall pay to you an additional payment (a "Gross-Up Payment")
in an amount such that after payment by you of all taxes (including
any interest or penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, you retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon such Payments.
3. ADDITIONAL EMPLOYEE BENEFITS. In addition to the severance payments
described in Section 1 above, if the Company terminates your
employment without Cause, you will be eligible for the following:
a. If after termination you elect COBRA continuation coverage
for health insurance, the Company will pay the difference in
premiums between what you paid while employed at the Company
and the actual cost of the COBRA premiums, until the earlier
of the date you are no longer eligible for COBRA or the
conclusion of the Severance Payment Period.
b. Bonus Payment: You will also be entitled to receive the pro
rata portion of your bonus for the then-current fiscal year,
calculated by determining the maximum bonus for which you
would be eligible for such full fiscal year and multiplying
such amount by the number of days in such fiscal year
through the date of termination divided by 365. For purposes
of determining the maximum bonus for which you would be
eligible, such maximum bonus is currently set at fifty
percent (50%) of your base salary for the fiscal year ending
March 31, 2003; in the event that at any point in a
subsequent fiscal year, the Company has not yet specified a
bonus plan for you, then the maximum bonus to which you were
entitled in the previous fiscal year will apply for the
purposes of this paragraph.
4. EMPLOYEE RESTRICTIONS. We each recognize that due to the nature of
your employment, and your relationship with the Company, you have and
will continue to have access to, will continue to acquire, and will
continue to assist in developing, Proprietary Information (as defined
below) and additional confidential information with respect to its
present and prospective services, technologies, systems, clients,
customers, agents, and sales and marketing methods. You acknowledge
that such information is of central importance to the Company's
business and that disclosure of it to or its use by others could cause
substantial loss to the Company. We each also recognize that an
important part of your duties will be to develop good will for the
Company through your personal contact with the Company's clients, and
that there is a danger that this good will, a proprietary asset of the
Company, may follow if and when your relationship with the Company is
terminated.
a. You agree that during the term of your employment with the
Company and at any time thereafter, you will not disclose
any Proprietary Information of the Company without the prior
written consent of the President or Board of Directors of
the Company, which may be withheld in their sole and
absolute discretion, except in connection with your duties
to the Company (the "Nondisclosure Agreement"). You also
agree that in connection with this Nondisclosure Agreement,
you are also bound by the provisions of Sections
4(c)(i)-4(c)(ii) below. You further acknowledge and agree
that the Company's conduct in providing you with Proprietary
Information in exchange for your Nondisclosure
Agreement gives rise to the Company's interest in
restraining you from competing against the Company as set
forth in Section 4(c)(i)-4(c)(ii) below (the "Non-Compete
Agreement"), and that your agreement to the Non-Compete
Agreement is designed to enforce your Nondisclosure
Agreement. You further acknowledge that all Records (as
defined below) are and shall remain the exclusive property
of the Company, and agree that upon termination of your
employment with the Company you shall return all Records in
your possession.
b. During your employment with the Company, you will not,
directly or indirectly, participate in the ownership,
management, operation, financing or control of, or be
employed by or consult for or otherwise render services to,
any person, corporation, firm, or other entity that competes
with the Company in the state of Texas, or in any other
state in the United States, or in any country in the world,
in the conduct of the business of the Company as conducted
or as proposed to be conducted, nor shall you engage in any
other activities that conflict with my obligations to the
Company. Notwithstanding the foregoing, you are permitted to
own up to 1% of any class of securities of any corporation
in competition with the Company that is traded on a national
securities exchange or through Nasdaq.
c. You agree that during the Severance Payment Period under
Section 1 above, or, in the event you resign or are
terminated by the Company for Cause, for 12 months following
such resignation or termination for Cause:
i. You will not directly or indirectly, in any
jurisdiction where the Company is operating as of the
date of your termination, whether as a partner,
proprietor, employee, consultant, agent or otherwise,
participate or engage in any business with any of the
following companies without the prior written consent
of the Company:
a. OneSource
b. Factiva
c. Multex/MarketGuide
ii. You will be restricted from employment with the units
of Bloomberg, Dun & Bradstreet, Reuters, ▇▇▇▇-Elsevier,
Thomson, InfoUSA, Dow ▇▇▇▇▇ or Yahoo, as well as any
new entities, that are actively engaged in the
provision of business information to users on a paid,
subscription basis; provided that in order to enforce
this non-competition restriction as against any
additional entity other than those set forth in
Sections (c)(i) above or this paragraph (an "Additional
Entity"), the Company shall have given notice to you of
the inclusion of such Additional Entity to the
restricted employer list at least thirty (30) days
prior to the date on which you were terminated;
provided that if the existence of such new company does
not become generally known within the business
community until within 30 days of the date of your
termination, the Company shall have thirty (30) days
from the earlier of the date on which it became aware
of the existence of such entity, or the date on which
it should reasonably have become aware of the existence
of such entity based on publicly available information,
to inform you of the application of this provision to
such entity.
d. You agree that during the Severance Payment Period under
Section 1 above, or, in the event you resign or are
terminated by the Company for Cause, for 12 months following
such resignation or termination for Cause, you shall not, at
any time, directly or indirectly:
i. For your own account, or for the account of others,
interfere with, solicit, or accept for yourself, or for
the benefit of anyone other than the Company, as
measured at the time of your termination, any of the
clients or customers of the Company, or perform any
services of any competitive nature in connection with
said clients or customers for anyone other than the
Company. The restrictions will not prohibit you from
soliciting clients or customers of the Company with
respect to the provision of products or services that
are in no way competitive with any products and/or
services offered by the Company at such time.
ii. Urge any client or customer of the Company to
discontinue business, in whole or in part, or not do
business, with the Company.
iii. Solicit, hire or arrange to hire any person who at the
time of such hire or within three (3) months prior to
the time of such hire was an employee of the Company,
for yourself or for any business entity with which you
may be, or may be planning to be, affiliated or
associated with, or otherwise interfere with the
retention of employees that the Company desires to
retain as such.
e. You expressly acknowledge and agree (i) that the
restrictions set forth in this entire Section 4 are
reasonable, in terms of scope, duration, geographic area,
and otherwise, (ii) that the protections afforded to the
Company hereunder are necessary to protect its legitimate
business interests, and (iii) that the agreement to observe
such restrictions form a material part of the consideration
for this Severance Agreement.
5. DEFINITIONS.
a. "Cause" is defined as any of the following, if they occur
during the period of your employment with the Company:
i. You have been or are guilty of (i) a criminal offense
involving moral turpitude, (ii) criminal or dishonest
conduct pertaining to the business or affairs of the
Company (including, without limitation, fraud and
misappropriation), (iii) any act or omission the
intended or likely consequence of which is material
injury to the Company's business, property or
reputation, which act or omission continues uncured for
a period of ten (10) days after you have received
written notice from the Company, and (iv) gross
negligence or willful misconduct which continues
uncured for a period of ten (10) days after you have
received written notice from the Company;
ii. You persist, for a period of ten (10) days after
written notice from the Company, in a course of conduct
reasonably determined by the Company to be in material
violation of your duties to the Company, including
without limitation duties of care, loyalty and/or
fiduciary duties;
iii. Your death; or
iv. The continuous and uninterrupted inability to perform
your duties on behalf of the Company, by reason of
accident, illness, or disease, for a period of sixty
(60) days from the first day of such inability to
perform his duties.
b. "Change of Control" is defined as follows:
i. The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 35% or more of either (A) the
then-outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (B) the
combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that, for
purposes of this Section, the following acquisitions
shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any
acquisition by the Company, or (iii) any acquisition by
any employee benefit plan (or related trust) sponsored
or maintained by the Company or any affiliated company.
ii. Individuals who, as of the date hereof, constitute the
Board (the Incumbent Board") 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 shareholders,
was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered as though such individual were 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 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.
iii. Consummation of (x) a reorganization, merger or
consolidation of the Company with or into another
corporation, or (y) or the sale or other disposition of
all or substantially all of the assets of the Company
to another corporation (any event in (x) or (y) being a
"Business Combination"), in each case, unless,
immediately following such Business Combination, (A)
all or substantially all of the individuals and
entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such
Business Combination beneficially own directly or
indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of
the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a
corporation that, 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) in
substantially the same proportions as their ownership
immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (B) no
person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation
resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business
Combination or the combined voting power of the
then-outstanding voting securities of such corporation,
except to the extent that such ownership existed prior
to the Business Combination, and (C) at least a
majority of the members of the board of directors of
the corporation 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 shareholders of the Company of a
complete liquidation or dissolution of the Company.
c. "Record" is defined as the Company's assets, including its:
i. files, accounts, records, customer lists, logbook,
documents, drawings, models, plans, specifications,
manuals, books, forms, notes, reports, memoranda,
studies, surveys, software, flow charts, data, computer
programs, listing of source code, calculations,
recordings, catalogues, compilations of information,
correspondence, confidential data of customers and all
copies, abstracts or summaries of the foregoing in any
storage medium, as well as computers, computer
equipment, laptops, instruments, tools, storage
devices, disks, equipment and all other physical items
related to the business of the Company (other than
merely personal items of a general professional
nature), whether of a public nature or not, and whether
prepared by the employee or not.
d. "Proprietary Information" is defined as follows: any
confidential business or technical information or trade
secrets of the Company which an employee acquires while
employed by the Company, whether or not conceived of,
developed or prepared by the employee or at his direction
and includes:
i. Any information or compilation of information
concerning the Company's financial position, financing,
purchasing, accounting, marketing, merchandising,
sales, salaries, pricing, investments, costs, profits,
plans for future development, employees, prospective
employees, research, development, formulae, patterns,
strategy, inventions, plans, specifications, devices,
products, procedures, processes, operations,
techniques, software, computer programs or data;
ii. Any information or compilation of information
concerning the identity, plans, requirements,
preferences, practices and methods of doing business on
specific customers, suppliers, prospective customers
and prospective suppliers of the Company;
iii. Any other information or "know how" which is related to
any product, process, service, business or research of
the Company; and
iv. Any information which the Company acquires from another
party and treats as its proprietary information or
designates as "Confidential," whether or not owned or
developed by the Company.
v. The identity, skills and compensation of employees,
contractors, and consultants.
vi. Information related to inventions owned by the Company
or licensed from third parties.
Notwithstanding the foregoing, "Proprietary
Information" does not include any of the following:
1. Information which is publicly known or which is
generally employed by the trade, whether on or
after the date that an employee first acquires the
information;
2. General information or knowledge which an employee
would have learned in the course of similar work
elsewhere in the trade; or
3. Information which an employee can prove was known
by the employee before the commencement of the
employee's engagement by the Company.
6. CHOICE OF LAW; ARBITRATION - This Severance Agreement shall be
governed by the laws of the State of Texas. Any disputes arising
hereunder or otherwise related to your employment shall be resolved
via arbitration pursuant to the rules of the American Arbitration
Association to be held in Austin, Texas.
7. SEVERABILITY.
a. Both parties acknowledge and agree that each agreement and
covenant set forth herein constitutes a separate agreement
independently supported by good and adequate consideration
and that each such agreement shall be severable from the
other provisions of this Agreement and shall survive this
Agreement.
b. You specifically agree that the Non-Compete Agreement is to
be enforced to the fullest extent permitted by law.
Accordingly, if a court of competent jurisdiction determines
that the scope and/or operation of any provision of the
Non-Compete Agreement is too broad to be enforced as
written, the Company and you intend that the court should
reform such provision to such narrower scope and/or
operation as it determines to be enforceable, provided,
however, that such reformation applies only with respect to
the operation of such provision in the particular
jurisdiction with respect to which such determination was
made. If, however, any provision of the Non-Compete
Agreement is held to be illegal, invalid, or unenforceable
under present or future law, and not subject to reformation,
then (i) such provision shall be fully severable, (ii) this
Agreement shall be construed and enforced as if such
provision was never a part of this
Agreement, and (iii) the remaining provisions of this
Agreement shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable
provision or by its severance.
8. GENERAL. This Severance Agreement is entered into in consideration of
your continued employment with the Company, the Company's current and
continued disclosure to you of Proprietary Information, the
specialized training that you are receiving as a result of your
employment with the Company, and the restrictions described in Section
4. The severance arrangements described herein are the sole benefits
to which you may be entitled to in the event of the termination of
your employment, and this Severance Agreement supersedes any prior
oral or written communications with respect thereto, with the
exception that it amends and restates the Severance Agreement entered
into between you and the Company on _____ ____, 200__. Each of the
Company's obligations to provide payments and benefits upon severance
described herein are conditioned upon your execution of a release of
any claims that you may have against the Company arising out of your
employment. This Severance Agreement does not create any right to
continuing employment with the Company, and your employment
relationship shall continue to be on an at-will basis.
[NAME], the Board of Directors and I appreciate you service to
▇▇▇▇▇▇'▇ and look forward to your continuing contribution to our success. Please
sign where indicated below to indicate your agreement to the terms of this
Severance Agreement.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman and CEO
ACCEPTED AND AGREED
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[TITLE]