Exhibit 10.26
Exhibit 10.26
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (as amended, restated, or otherwise modified from time to time, this "Agreement"), dated as of the 5th day of March, 2021 (the "Effective Date"), is entered into by and between Altair Engineering Inc., a Delaware corporation (the "Company"), and Mahalingam Srikanth (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive currently serves as a key employee of the Company and the Executive's services and knowledge are valuable to the Company;
WHEREAS, the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to provide enhanced severance protections to the Executive, subject to the terms and conditions of this Agreement;
WHEREAS, the Committee has recommended to the Board that it authorize the Company to enter into this Agreement; and
WHEREAS, the Board has authorized the Company to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto agree as follows:
commencing on the Effective Date and ending on (but including) the one-year anniversary of a Change in Control, (i) the Executive's employment is terminated by the Company without Cause (as defined below), or (ii) the Executive resigns employment for Good Reason (as defined below) (each, a "Qualifying Termination"), then subject to Section 3 and Section 4 below:
Exhibit 10.26
Executive's annual base salary rate, the Executive's annual base salary rate in effect immediately prior to the reduction that gave rise to the grounds for Good Reason.
The Salary Continuation Payments shall commence with the first payroll date following the effectiveness of the Release required by Section 4 hereof, with the first payment to include the amount of all Salary Continuation Payments that would have been paid from the date of the Qualifying Termination had they commenced as of such date; provided, however, in the event the period to consider and, if applicable, revoke the Release plus the first regular payroll date thereafter spans two calendar years, the first such payment shall be made on the later of the first regular payroll date of such second calendar year or the first payroll date following the effectiveness of the Release, but in no event later than March 15 of the calendar year immediately following the calendar year in which the Qualifying Termination occurs.
-2-
Exhibit 10.26
that the Executive was employed by the Company and the denominator of which is 365, and (2) less any advance received by the Executive with respect to the Executive's annual bonus for the Termination Year. For purposes of clause (i) of the immediately preceding sentence, if no target bonus amount has been determined for the Termination Year as of the date of the Qualifying Termination, the target amount of the Executive's annual bonus for the calendar year immediately preceding such Termination Year shall be substituted for the target amount of the Executive's annual bonus for the year in which the Qualifying Termination occurs.
Notwithstanding anything contained in this Agreement to the contrary, (i) in the event of a Change in Control referenced in clause (iii) of the definition of Change in Control in the Plan (i.e., an asset purchase transaction), the Executive's employment with the Company shall not be deemed to have been terminated if (x) the Executive becomes employed by the purchaser (or any affiliate thereof) immediately on or following the closing of such transaction on terms substantially similar to the terms of employment immediately prior to the Change in Control and
(y) the Company's obligations hereunder are assumed by such purchaser (or such affiliate), or such purchaser (or such affiliate) substitutes an alternative arrangement providing the Executive severance benefits substantially similar to those provided hereunder, and (ii) if, on the date the Executive's employment terminates, facts and circumstances exist that would have justified a termination for Cause, and such facts and circumstances are discovered after such termination, from and after the date of such discovery the Executive shall automatically cease to be eligible for any amount pursuant to Sections l(b), l(c), l(d), or l(e) hereof.
-3-
Exhibit 10.26
would tend to generate significant adverse publicity towards the Company; (v) the commission or plea of nolo contendere, by the Executive of a felony; or (vi) a breach by the Executive of the terms of the Non-Disclosure and Intellectual Proprietary Rights Agreement executed by the Executive (the "Non-Disclosure and Intellectual Proprietary Rights Agreement").
The Executive is required to provide the Company's CEO and General Counsel with written notice of the Good Reason condition within ninety (90) days of the initial existence of the condition, and the Company shall have thirty (30) days from receipt of such written notice to remedy the condition (the "Cure Period"). If the condition is not remedied within the Cure Period, the Executive must terminate employment with the Company within sixty (60) days of the end of the Cure Period for such termination to be for "Good Reason," and if the Executive does not terminate employment within sixty (60) days after the end of the Cure Period, Good Reason with respect to that condition shall be deemed irrevocably waived.
(x) consummation of such Change in Control, or (y) termination or abandonment of such Change in Control, or (B) on or within one (1) year following the occurrence of a Change in Control.
-4-
Exhibit 10.26
parachute payment," as that phrase is defined in Section 2800 of the Internal Revenue Code of 1986, as amended (the "Code"), then the Payments shall be either: (a) paid or allowed in full; or
(b) reduced (but not below zero) to the Reduced Amount, whichever of the foregoing amounts, taking into account the applicable federal, state and local income, employment and excise taxes (including, without limitation, the excise tax imposed upon the Executive under Section 4999 of the Code) results in the Executive's receipt on an after tax basis of the greater amount of Payments. For purposes of this section, the "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of all Payments without causing any Payment to be nondeductible by the Company because of Section 2800 of the Code or subjecting the Executive to an excise tax under Section 4999 of the Code. The Company may elect which and how much of the Payments shall be eliminated or reduced and shall notify the Executive promptly of such election. Any determination required under this Section 3 will be made in writing by the Company's legal counsel or independent public accountants immediately prior to a Change of Control or such other person or entity which the Company may select in its sole discretion (the "Firm"), whose determination will be conclusive and binding upon the Executive and the Company. For purposes of making the calculations required by this Section 3, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 2800 and 4999 of the Code. The Company and the Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section. The Company will bear all costs charged by the Firm in connection with any calculations contemplated by this Section 3.
-5-
Exhibit 10.26
this Agreement but for the covenants (the "Restrictive Covenants") contained in this Section 6. The Executive acknowledges and agrees that this Section 6 is intended to be an expansion of any and all obligations, covenants and agreements by the Executive with respect to the subject matter hereof and, to the extent of any conflict with this Section 6, the provisions which are more expansive, including, without limitation, with respect to scope and duration, shall apply. The Company and the Executive acknowledge and agree that nothing in this Agreement is intended to, and this Agreement shall not, in any way prohibit, limit or otherwise interfere with the Executive's protected rights under federal, state or local law to, without notice to the Company:
(i) communicate or file a charge with a government regulator; (ii) participate in an investigation or proceeding conducted by a government regulator; or (iii) receive an award paid by a government regulator for providing information. The Executive further understands and acknowledges that if the Executive files a lawsuit for retaliation against the Company related to the Executive reporting a suspected violation of law, the Executive may disclose the Company's trade secrets to the Executive's attorney and use such trade secret information in the related court proceeding, so long as the Executive: (i) files any document containing the Company's trade secrets under seal; and (ii) does not disclose the Company's trade secrets, except pursuant to court order.
-6-
Exhibit 10.26
licensee or other business relation of the Company or any subsidiary of the Company within the preceding twelve (12) month period), on the other hand.
(ii) the Restrictive Covenants are reasonable in scope and in all other respects, (iii) any violation of the Restrictive Covenants will result in irreparable injury to the Company, (iv) money damages would be an inadequate remedy at law for the Company in the event of a breach or threatened breach of any of the Restrictive Covenants by the Executive, and (v) specific performance in the form of injunctive relief would be an adequate remedy for the Company. lf the Executive breaches or threatens to breach a Restrictive Covenant, the Company shall be entitled, in addition to all other remedies, to seek an injunction restraining any such breach, without any bond or other security being required and without the necessity of showing actual damages. Without limitation of the foregoing, in the event the Executive breaches a Restrictive Covenant or any provision of the Non-Disclosure and Intellectual Proprietary Rights Agreement, in any material respect, the Company shall have the right to cease providing any amounts
-7-
Exhibit 10.26
payable pursuant to this Agreement (other than amounts payable pursuant to Section l(a) or Section l(f) of this Agreement) and promptly upon demand from the Company, the Executive shall return any such amount previously received, in each case, without payment of consideration therefor; the return (or forfeiture, as applicable) of such amounts shall not be deemed an election of remedies precluding the further exercise of remedies.
-8-
Exhibit 10.26
extension of time and written notice of the extension is given to the Executive within sixty (60) days after receipt of the written request for review. After considering all materials presented by the Executive, the Committee will provide its written determination on review. lf the Committee's determination on review is to deny the claim in any respect, the written determination shall set forth: (i) the specific reason or reasons for such denial; (ii) the specific reference to pertinent provisions of this Agreement on which such denial is based; and (iii) a statement that the Executive shall be provided upon request and free of charge reasonable access to and copies of all documents, records and other information relating to the claim.
lf to the Company to:
Altair Engineering Inc. 1820 East Big Beaver Road Troy, Michigan 48083
Attn: Chief Executive Officer and General Counsel
-9-
Exhibit 10.26
With a copy to:
Lowenstein Sandler LLP 1251 Avenue of the Americas New York, New York 10020
Attn: Peter H. Ehrenberg, Esq.
If to the Executive, to the Executive at the offices of the Company with a copy to the Executive at the Executive's home address, set forth in the records of the Company.
Any person named above may designate another address or fax number by giving notice in accordance with this Section to the other persons named above.
-10-
Exhibit 10.26
purposes of Section 409A. In no event may the Executive, directly or indirectly, designate the calendar year of payment. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive's lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit. Notwithstanding anything contained herein to the contrary, the Executive shall not be considered to have terminated employment with the Company for purposes of this Agreement unless the Executive would be considered to have incurred a "termination of employment" from the Company within the meaning of Treasury Regulation §1.409A-l(h)(l)(ii). In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Section 409A or damages for failing to comply with Section 409A.
-11-
Exhibit 10.26
G) Advice of Counsel. Both parties hereto acknowledge that they have had the advice of counsel before entering into this Agreement, have fully read this Agreement and understand the meaning and import of all the terms hereof.
[Remainder of page intentionally left blank.]
-12-
Exhibit 10.26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
ALTAIR ENGINEERING INC.
By: /s/ Raoul Maitra
Name: Raoul Maitra
Title: Chief Legal Officer
EXECUTIVE
/s/ M. Srikanth
Mahalingam Srikanth