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EXHIBIT 10.13
NEW ERA OF NETWORKS, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made and
entered into by and between Executive,(the "Employee") and New Era of Networks,
Inc. (the "Company"), effective as of the latest date set forth by the
signatures of the parties hereto below (the "Effective Date").
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company and
its shareholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its shareholders.
C. The Board believes that it is imperative to provide the Employee with
severance benefits upon Employee's termination of employment following a Change
of Control which provides the Employee with enhanced financial security and
provides incentive and encouragement to the Employee to remain with the Company
notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in Section 6
below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date that all
obligations of the parties hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans or
pursuant to other written agreements with the Company.
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3. Change of Control Severance Benefits.
(a) Involuntary Termination other than for Cause, Death or Disability
or Voluntary Termination for Good Reason Following A Change of Control. If,
within eighteen (18) months following a Change of Control, Employee's employment
is terminated involuntarily by the Company other than for Cause, death or
Disability or by the Employee pursuant to a Voluntary Termination for Good
Reason, then the Company shall provide Employee with the following benefits:
(i) Severance Payment. A cash payment in an amount equal to two
hundred percent (200%) of the Employee's Annual Compensation;
(ii) Equity Compensation Accelerated Vesting. One Hundred percent
(100%) of the unvested portion of any stock option, restricted stock or other
equity compensation covering shares of Company common stock or any stock of a
Company affiliate held by the Employee shall automatically be accelerated in
full so as to become completely vested.
(iii) Continued Employee Benefits. One hundred percent (100%)
Company-paid health, dental, vision, long-term disability and life insurance
coverage at the same level of coverage as was provided to such employee
immediately prior to the Change of Control (the "Company-Paid Coverage"). If
such coverage included the Employee's dependents immediately prior to the Change
of Control, such dependents shall also be covered at Company expense.
Company-Paid Coverage shall continue until the earlier of (i) 24 months from the
date of termination, or (ii) the date upon which the Employee and his dependents
become covered under another employer's group health, dental, vision, long-term
disability or life insurance plans that provide Employee and his dependents with
comparable benefits and levels of coverage; provided, however, that if and to
the extent Employee and his or her dependents cease to be eligible for COBRA
coverage due to the 18-month COBRA limit, the Company shall pay to Employee, in
lieu of such COBRA coverage, a cash amount equal to the premiums it would have
paid under COBRA had Employee and his or her dependents continued to be eligible
for such coverage.
(b) Voluntary Resignation; Termination For Cause. If the Employee's
employment terminates by reason of the Employee's voluntary resignation (and is
not a Voluntary Termination for Good Reason), or if the Employee is terminated
for Cause, then the Employee shall not be entitled to receive severance or other
benefits except for those (if any) as may then be established under the
Company's then existing severance and benefits plans or pursuant to other
written agreements with the Company.
(c) Disability; Death. If the Employee's employment with the Company
terminates as a result of the Employee's Disability, or if Employee's employment
is terminated due to the death of the Employee, then the Employee shall not be
entitled to receive severance or other benefits except for those (if any) as may
then be established under the Company's then existing severance and benefits
plans or pursuant to other written agreements with the Company.
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(d) Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the eighteen (18) month period
following a Change of Control, then the Employee shall be entitled to receive
severance and any other benefits only as may then be established under the
Company's existing severance and benefits plans or pursuant to other written
agreements with the Company.
4. Attorney Fees, Costs and Expenses. The Company shall promptly reimburse
Employee, on a monthly basis, for the reasonable attorney fees, costs and
expenses incurred by the Employee in connection with any action brought by
Employee to enforce his rights hereunder, regardless of the outcome of the
action.
5. Limitation on Payments. In the event that the severance and other
benefits provided for in this Statement or otherwise payable or provided to the
Employee (i) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for
this Section 5, would be subject to the excise tax imposed by Section 4999 of
the Code (the "Excise Tax"), then the Employee's severance benefits hereunder
Section 3 shall be either
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to the Excise
Tax,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by the
Employee on an after-tax basis, of the greatest amount of severance benefits,
notwithstanding that all or some portion of such severance benefits may be
taxable under Section 4999 of the Code. Unless the Company and the Employee
otherwise agree in writing, any determination required under this Section 5
shall be made in writing in good faith by the accounting firm serving as the
Company's independent public accountants immediately prior to the Change of
Control (the "Accountants"). In the event of a reduction in benefits hereunder,
the Employee shall be given the choice of which benefits to reduce. For purposes
of making the calculations required by this Section 5, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Employee shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section. The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 5.
6. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) Annual Compensation. "Annual Compensation" means an amount equal
to the greater of (A) the sum of Employee's (i) annual Company salary at the
highest rate in effect in
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the twelve months immediately preceding the Change of Control, and (ii) 100% of
the Employee's annual target bonus as in effect immediately prior to the Change
of Control, or (B) the highest annual W-2 gross income reflected on Form W-2
issued by the Company for the three calendar years (or such lesser number of
years as Employee has worked for the Company) preceding the year in which the
Change of Control occurs, annualized for any partial years of employment.
(b) Cause. "Cause" shall mean (i) an act of personal dishonesty taken
by the Employee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee, (ii)
Employee being convicted of a felony, (iii) a willful act by the Employee which
constitutes gross misconduct and which is injurious to the Company, (iv)
following delivery to the Employee of a written demand for performance from the
Company which describes the basis for the Company's reasonable belief that the
Employee has not substantially performed his duties, continued violations by the
Employee of the Employee's obligations to the Company which are demonstrably
willful and deliberate on the Employee's part.
(i) Change of Control. "Change of Control" means the occurrence
of any of the following events:
(1) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (25%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets.
(2) The acquisition by any Person or Group of Persons as
Beneficial Owner (as such terms are defined in the Securities Exchange Act of
1934, as amended), directly or indirectly, other than George F. (Rick) Adam,
Jr., of securities of the Company representing a majority of the total voting
power represented by the Company's then outstanding voting securities.
(3) A majority of the Board of Directors of the Company in
office at the beginning of any thirty-six (36) month period is replaced during
the course of such thirty-six (36) month period (other than by voluntary
resignation of individual directors in the ordinary course of business) and such
replacement was not initiated by the Board of Directors of the Company as
constituted at the beginning of such thirty-six (36) month period.
(c) Disability. "Disability" shall mean that the Employee has been
unable to perform his Company duties as the result of his incapacity due to
physical or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Employee or the Employee's
legal representative (such Agreement as to acceptability not to be unreasonably
withheld).
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Termination resulting from Disability may only be effected after at least 30
days' written notice by the Company of its intention to terminate the Employee's
employment. In the event that the Employee resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(d) Voluntary Termination for Good Reason. "Voluntary Termination for
Good Reason" shall mean the Employee voluntarily resigns after the occurrence of
any of the following (i) without the Employee's express written consent, a
material reduction of the Employee's duties, title, authority or
responsibilities; provided, however, that a reduction in duties, title,
authority or responsibilities solely by virtue of the Company being acquired and
made part of a larger entity (e.g., when the Chief Financial Officer of the
Company remains as such following a Change of Control and is not made the Chief
Financial Officer of the acquiring corporation) shall not by itself constitute
grounds for a "Voluntary Termination for Good Reason;" (ii) without the
Employee's express written consent and without good business reasons, a material
reduction in facilities and perquisites; (iii) a reduction in the base salary of
the Employee; (iv) a material reduction in executive benefits including bonuses;
(v) the relocation of the Employee to a facility or a location more than
twenty-five (25) miles from the Employee's then present location; (vi) the
failure of the Company to obtain the assumption of this agreement by any
successors contemplated in Section 7(a) below; or (vii) any act or set of facts
or circumstances which would, under Colorado case law or statute constitute a
constructive termination of the Employee.
7. Successors.
(a) Company's Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term "Company" shall
include any successor to the Company's business and/or assets which executes and
delivers the assumption agreement described in this Section 7(a) or which
becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
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8. Notice.
(a) General. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or one day following mailing via Federal Express or similar
overnight courier service. In the case of the Employee, mailed notices shall be
addressed to him at the home address which he most recently communicated to the
Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for Cause or
by the Employee pursuant to a Voluntary Termination for Good Reason shall be
communicated by a notice of termination to the other party hereto given in
accordance with Section 8(a) of this Agreement. Such notice shall indicate the
specific termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the termination
date (which shall be not more than 30 days after the giving of such notice). The
failure by the Employee to include in the notice any fact or circumstance which
contributes to a showing of Voluntary Termination for Good Reason shall not
waive any right of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his rights hereunder.
9. Confidentiality; Non-Solicitation.
(a) Confidentiality. While Employee is employed by the Company, and
thereafter while Employee receives severance benefits hereunder, the Employee
shall not directly or indirectly disclose or make available to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
any Confidential Information (as defined below). Upon termination of a
Employee's employment with the Company, all Confidential Information in the
Employee's possession that is in written or other tangible form (together with
all copies or duplicates thereof, including computer files) shall be returned to
the Company and shall not be retained by the Employee or furnished to any third
party, in any form except as provided herein; provided, however, that the
Employee shall not be obligated to treat as confidential, or return to the
Company copies of any Confidential Information that (i) was publicly known at
the time of disclosure to the Employee, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Company by any person or entity, or (iii) is lawfully disclosed
by the Employee by a third party. For purposes of this Agreement, the term
"Confidential Information" shall mean information disclosed to the Employee or
known by the Employee as a consequence of or through his or her relationship
with the Company, about the customers, employees, business methods, public
relations methods, organization, procedures or finances, including, without
limitation, information of or relating to customer lists, of the Company and its
affiliates. In addition, each Employee shall be subject to the Company's
policies regarding proprietary Inventions Agreement (the "Proprietary
Information Agreement") in the form in effect immediately prior to a Change of
Control.
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(b) Non-Solicitation. In addition to each Employee's obligations under
the Proprietary Information Agreement, while Employee is receiving severance
benefits hereunder, Employee shall not, either on the Employee's own account or
jointly with or as a manager, agent, officer, employee, consultant, partner,
joint venturer, owner or shareholder or otherwise on behalf of any other person,
firm or corporation, directly or indirectly solicit or attempt to solicit away
from the Company any of its officer or employees or offer employment to any
person who is an officer or employee of the Company; provided, however, that a
general advertisement to which an employee of the Company responds shall in no
event be deemed to result in a breach of this Section 9(b).
(c) Breach; Violation. In the event that Employee breaches or violates
any provision of Sections 9(a) or 9(b) hereof, the Employee shall thereupon
forfeit any right and interest of the Employee to receive payments or benefits
hereunder, and the Company shall thereupon have no further obligation to provide
such payments or benefits to the Employee hereunder.
(d) Survival of Provisions. The provisions of this Section 9 shall
survive the termination or expiration of the applicable Employee's employment
with the Company and shall be fully enforceable thereafter. If it is determined
by a court of competent jurisdiction in any state that any restriction in this
Section 9 is excessive in duration or scope or is unreasonable or unenforceable
under the laws of that state, it is the intention of the parties that such
restriction may be modified or amended by the court to render it enforceable to
the maximum extent permitted by the law of that state.
10. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee shall not be required to
mitigate the value of any benefits contemplated by this Agreement, nor shall any
such benefits be reduced by any earnings or benefits that the Employee may
receive from any other source.
(b) Waiver. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(c) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. This Agreement and the Proprietary
Information Agreement represent the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes all prior arrangements
and understandings regarding same.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Colorado.
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(e) Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(f) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will constitute
one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year set
forth below.
NEON
By:
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Title:
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Date:
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EMPLOYEE
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Date:
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