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Exhibit 10.16
MANAGEMENT CHANGE IN CONTROL AGREEMENT
MANAGEMENT CHANGE IN CONTROL AGREEMENT entered into this 23rd day of
July, 1997, by and among Concord Communications, Inc., a Massachusetts
corporation ("Concord"), and the undersigned employee of Concord, Ferdinand
Engel (the "Employee").
WITNESSETH:
WHEREAS, Concord and the Employee desire to set forth certain terms and
conditions relating to benefits to be afforded to Employee upon the occurrence
of a Change in Control (as hereinafter defined) of Concord;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. SEVERANCE AND OPTION ACCELERATION. (a) During the Term (as
hereinafter defined), if within six (6) months of a Change in Control of
Concord, Concord (or any successor corporation) terminates (each, a "Termination
Event") the Employee's employment without Cause (as hereinafter defined) or the
Employee voluntarily terminates his employment for Good Reason (as hereinafter
defined), the Employee shall receive a single severance payment in cash in an
amount equal to six months' base annual salary (at the rate being paid to him
immediately prior to such termination) (the "Severance Benefit"). The Employee
shall not be entitled to continue to receive (i) any other salary or bonus in
the event of a termination for any reason or (ii) any other employee benefits
(other than those specified in the following sentence) in the event of a
termination for any reason. Notwithstanding the foregoing, Concord shall
continue to pay Concord's share of the Employee's health insurance in accordance
with Concord's general policies for a period of six months following any
Termination Event.
(b) "Good Reason" means the occurrence of one or more of the
following events during the Term and following a Change in Control:
(i) Without the Employee's express written consent,
Concord shall reduce the Employee's duties and
responsibilities from those assigned to the Employee
immediately prior to the Change in Control; or
(ii) Without the Employee's express written consent,
Concord shall require the Employee to have his principal
location of work changed to any location which is in excess of
60 miles from the location thereof immediately prior to the
Change in Control; or
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(iii) Without the Employee's express written consent,
Concord shall materially reduce the Employee's benefits under
existing benefit plans, unless there is a concurrent reduction
uniformly among all persons entitled to such benefits.
(c) Effective upon the date immediately following any Change in
Control of Concord, the "Full Vest" date(s) set forth in each of the Employee's
then outstanding Notice of Option Grant shall be automatically accelerated by
twenty-four (24) months. Notwithstanding the foregoing, if within twenty-four
(24) months after a Change in Control there is a Termination Event, all of the
Employee's unvested options (but only such options as have been granted to the
Employee by Concord as of the date of the Change in Control or such options as
have been exchanged by the Employee for new options in any acquiring company at
the time of a Change in Control) shall automatically become fully vested as of
the date of such Termination Event. This Section 1 shall modify and supersede
Section 3 of each of the Employee's Notice of Option Grants.
(d) For purposes of this Agreement, a "Change in Control" shall
have occurred if at any time any of the following events shall occur:
(A) Concord is merged, consolidated or reorganized
into or with another corporation or other legal person, and as
a result of such merger, consolidation or reorganization less
than a majority of the combined voting power of the
then-outstanding securities of the combined corporation or
person immediately after such transaction are held in the
aggregate by the holders of the combined voting power of the
then-outstanding securities entitled to vote generally in the
election of directors of Concord ("Voting Stock") immediately
prior to such transaction;
(B) Concord sells or otherwise transfers all or
substantially all of its assets to any other corporation or
other legal person, and less than a majority of the combined
voting power of the then-outstanding securities of such
corporation or person immediately after such sale or transfer
is held in the aggregate by the holders of the Voting Stock of
Concord immediately prior to such sale or transfer;
(C) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Exchange Act of 1934 (the
"1934 Act"), disclosing that any person (as the term "person"
is used in Section 13(d)(3) or Section 14(d)(2) of the 1934
Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the 1934 Act) of securities
representing 33% or more of the Voting Stock; or
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(D) Concord files a report or proxy statement with
the Securities and Exchange Commission pursuant to the 1934
Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a
change in control of Concord has or may have occurred or will
or may occur in the future pursuant to any then-existing
contract or transaction.
PROVIDED, HOWEVER, that notwithstanding the foregoing provisions of this Section
1, a "Change in Control" shall not be deemed to have occurred for purposes of
this Agreement solely because (i) Concord, (ii) an entity in which Concord
directly or indirectly beneficially owns 50% or more of the voting securities,
(iii) any Concord sponsored employee stock ownership plan or any other employee
benefit plan of Concord, or (iv) any corporation or legal person approved by the
Board of Directors prior to the occurrence of the event that, absent such
approval by the Board of Directors, would have constituted a Change in Control,
either files or becomes obligated to file a report or a proxy statement under or
in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the 1934 Act,
disclosing beneficial ownership by it of shares of Voting Stock, whether in
excess of 33% or otherwise, or because Concord reports that a change in control
of Concord has or may have occurred or will or may occur in the future by reason
of such beneficial ownership.
(e) Notwithstanding anything to the contrary in this Agreement, if
the Employee is a Disqualified Individual (as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code")) and if any portion of
any acceleration of vesting, payment or transfer of property under this
Agreement would be an Excess Parachute Payment (as defined in Section 280G of
the Code) but for the application of this sentence, then the amount of such
acceleration, payment or transfer otherwise payable to the Employee pursuant to
this Agreement shall be reduced to the minimum extent necessary (but in no event
to less than zero) so that no portion of such payment, as so reduced,
constitutes an Excess Parachute Payment; provided, however, that no reduction
shall be made if the net economic effect would be disadvantageous to the
Employee, taking into account all the facts and circumstances including any tax
savings resulting from the reduction.
2. TERMINATION. (a) Concord may, immediately and unilaterally,
terminate the Employee's employment hereunder for "Cause" at any time. As used
in this Agreement, the term "Cause" shall mean:
(i) the Employee's willful and substantial
misconduct with respect to the business and affairs of
Concord, or any subsidiary or affiliate thereof;
(ii) the Employee's gross neglect of duties,
dishonesty, deliberate disregard of any material rule or
policy of Concord or the commission by the Employee of any
other action with the intent to injure Concord, or any
subsidiary or affiliate thereof;
(iii) the Employee's commission of an act involving
embezzlement or fraud or commission of a felony; or
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(iv) the commission of an act which induces any
customer of Concord to breach a contract or purchase order
with Concord, or any subsidiary or affiliate thereof.
In the event of a termination for "Cause" as described herein, the
Employee shall not be entitled to severance or other termination benefits,
including, without limitation, the benefits described in Section 1 herein.
(b) The Employee's employment shall automatically terminate upon
his death and may be terminated by Concord due to his disability. If the
Employee dies or his employment is terminated due to disability during the Term,
then Employee shall be eligible for such benefits as shall apply to employees of
Concord generally under such circumstances at the time of such termination.
As used in this Agreement, the term "disability" shall mean the
occurrence of a mental or physical condition which renders the Employee
incapable of performing his duties for a total of six consecutive months.
(c) The Employee understands that, prior to any Change in Control,
Concord may terminate the Employee with or without "Cause" at any time and that
upon any such termination the Employee shall not be entitled to any severance or
other termination benefits. Following any Change in Control, Concord may also
terminate the Employee with or without "Cause" at any time subject to the
Employee's rights and Concord's obligations specified in this Agreement.
3. NO OBLIGATION OF EMPLOYMENT. Employee understands that the
employment relationship between Employee and Concord will be "at will" and that
Concord may terminate such relationship with or without Cause or for any reason
or no reason.
4. NONCOMPETITION AGREEMENT. Employee shall execute concurrently
herewith the form of Noncompetition Agreement attached hereto as EXHIBIT A.
5. CONSENT AND WAIVER BY THIRD PARTIES. The Employee hereby r
epresents and warrants that he has obtained all waivers and/or consents from
third parties which are necessary to enable him to execute and perform this
Agreement without being in conflict with any other agreement, obligation or
understanding with any such third party.
6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts and this Agreement shall be deemed to be performable in
Massachusetts.
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7. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement for any reason shall be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement and this Agreement shall
be construed to the maximum extent permitted by law.
8. WAIVERS AND MODIFICATIONS. This Agreement may be modified, and
the rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 8. No waiver by either party of any
breach by the other or any provision hereof shall be deemed to be a waiver of
any later or other breach thereof or as a waiver of any other provision of this
Agreement. This Agreement sets forth all of the terms of the understandings
between the parties with reference to the subject matter set forth herein and
may not be waived, changed, discharged or terminated orally or by any course of
dealing between the parties, but only by an instrument in writing signed by the
party against whom any waiver, change, discharge or termination is sought.
9. ASSIGNMENT. The Employee may not assign any of his rights or
delegate any of his duties or obligations under this Agreement. The rights and
obligations of Concord under this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and assigns of Concord.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties relating to the subject matter hereof and
supersedes and cancels all agreements, written or oral, made prior to the date
hereof between the Employee and Concord relating to the subject matter hereof;
provided, however, that the Employee's existing option agreements, as modified
hereby, shall remain in effect.
11. NOTICES. All notices hereunder shall be in writing and shall
fbe delivered in person or mailed by certified or registered mail, return
receipt requested, addressed as follows:
If to Concord, to: Concord Communications, Inc.
33 Boston Post Road West
Marlboro, MA 01752
Attention: John A. Blaeser
With a copy to:
Louis J. Marett, Esq.
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, MA 02110; and
If to the Employee, at the Employee's address set forth on the
signature page hereto.
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12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
13. SECTION HEADINGS. The descriptive section headings herein
have been inserted for convenience only and shall not be deemed to define,
limit, or otherwise affect the construction of any provision hereof.
14. TERM. The term of this Agreement (the "Term") shall commence
upon the date hereof and terminate upon the earlier of (i) twenty-four (24)
months following any Change in Control of Concord, (ii) the date prior to any
Change in Control of Concord that the Employee for any reason ceases to be an
employee of Concord and (iii) the date following any Change in Control of
Concord that the Employee is terminated for Cause or voluntary terminates his
employment (other than for Good Reason).
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
CONCORD COMMUNICATIONS, INC.
By: /s/ JOHN A. BLAESER
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Name: John A. Blaeser
Title: President
EMPLOYEE
/s/ FERDINAND ENGEL
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Name: Ferdinand Engel
Address: 21 Joseph Road
Northboro, MA 01532
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EMPLOYEE NONCOMPETITION AGREEMENT
In consideration and as a condition of my continued employment, I
hereby agree with Concord Communications, Inc. ("Concord") as follows:
1. During the period of my employment by Concord (the "Employment
Period"), I will devote my full working time and best efforts to the business of
Concord. Further, (i) for as long as I am an employee of Concord and (ii) for
the period beginning as of the date of the occurrence of a Change in Control
through and including the date to occur which is six months following the date
upon which I am no longer an employee of Concord, I agree that I will not,
directly or indirectly, alone or as a partner, officer, director, employee or
stockholder of any entity (except that I may own not more than 1% of the
outstanding shares of any publicly-traded company), engage in any business
activity which is in competition with the products or services being developed,
manufactured or sold by Concord. The provisions of clause (ii) of the preceding
sentence shall (A) apply only if following a Change in Control my employment
with Concord shall have been terminated (1) without cause or for cause pursuant
to Section 2 of my Management Change in Control Agreement of even date herewith
or (2) for "Good Reason" (as that term is defined in my Management Change in
Control Agreement) and (B) not apply if I shall have voluntarily terminated my
employment with Concord. The period following the termination of my employment
during which the restrictions described above shall apply (the "Post-employment
Period") shall be extended by the length of any period of time during the
Post-employment Period during which I am in violation of this paragraph. Nothing
contained herein shall exclude me from participating in civic, charitable,
religious or non-profit activities so long as such activities do not interfere
with the performance of my duties to Concord.
2. I agree that any breach of this Agreement by me will cause
irreparable damage to Concord and that in the event of such breach Concord shall
have, in addition to any and all remedies of law, the right to an injunction,
specific performance or other equitable relief to prevent the violation of my
obligations hereunder. I further agree and acknowledge that the post-employment
non-competition provision set forth in Paragraph 1 hereof, and the remedies set
forth in this paragraph, are necessary and reasonable to protect the business of
Concord.
3. I understand that this Agreement does not create an obligation
on Concord or any other person or entity to continue my employment.
4. No claim of mine against Concord shall serve as a defense
against Concord's enforcement of any provision of this Agreement.
5. I hereby represent that I am not a party to, or bound by the
terms of, any agreement with any previous employer, other than Concord, or other
party to refrain from using or disclosing any trade secret or confidential or
proprietary information in the course of my employment with Concord or to
refrain from competing, directly or indirectly, with the business of such
previous employer or any other party, which would prevent me from performing
services to or for Concord in any material way. I further represent that my
performance of all the terms of this Agreement and as an employee of Concord
does not and will not breach any agreement to
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keep in confidence proprietary information, knowledge or data acquired by me in
confidence or in trust prior to my employment with Concord, and I will not
disclose to Concord or induce Concord to use any confidential or proprietary
information or material belonging to any previous employer or others. I have not
entered into, and I agree I will not enter into, any agreement, either written
or oral, in conflict with the terms of this Agreement.
6. Any waiver by Concord of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
7. I hereby agree that each provision herein shall be treated as a
separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses herein.
Moreover, if one or more of the provisions contained in this Agreement shall for
any reason be held to be excessively broad as to scope, activity, subject or
otherwise so as to be unenforceable at law, such provision or provisions shall
be construed by the appropriate judicial body by limiting or reducing it or
them, so as to be enforceable to the maximum extent compatible with the
applicable law as it shall then appear.
8. My obligations under this Agreement shall survive the
termination of my employment regardless of the manner of such termination.
9. The term "Concord" as used herein shall also include Concord's
subsidiaries, subdivisions or affiliates. Concord shall have the right to assign
this Agreement to its successors and assigns, and all covenants and agreements
hereunder shall inure to the benefit of and be enforceable by said successors or
assigns.
10. This Agreement shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts. Any claims or legal
actions by one party against the other arising out of the relationship between
the parties contemplated herein (whether or not arising under this Agreement)
shall be governed by the laws of the Commonwealth of Massachusetts and shall be
commenced and maintained in any state or federal court located in Massachusetts,
and both parties hereby submit to the jurisdiction and venue of any such court.
11. Capitalized terms used herein and not otherwise defined shall
have the meanings provided in the Management Change in Control Agreement of even
date herewith.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the 23rd day of July, 1997.
/s/ FERDINAND ENGEL
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Name: Ferdinand Engel