SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
September 23, 2017
Evolving Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
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001-34261 |
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84-1010843 |
9777 Pyramid Court, Suite 100, Englewood, Colorado 80112
(Address of principal executive offices)
Registrants telephone number, including area code: (303) 802-1000
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b 2 of the Securities Exchange Act of 1934 (§240.12b2 of this chapter).
Emerging Growth Company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Departure of Sr. Vice President of Finance, Richard A. Dinkel, and Appointment of Julie Gosal Hoarau as Sr. Vice President of Finance
Effective September 23, 2017, Richard A. Dinkel resigned as Sr. Vice President of Finance of Evolving Systems, Inc. (Company). Mr. Dinkel will remain with the Company in a non-executive capacity through September 30, 2017, after which he will provide consulting services to the Company on a transitional basis under a Consulting Services Agreement. A copy of the Consulting Services Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K.
Effective September 23, 2017, the Board of Directors appointed Julie Gosal Hoarau to Sr. Vice President of Finance and entered into an employment agreement with Mrs. Gosal Hoarau.
Mrs. Gosal Hoarau has over a decade of finance and accounting experience, an extensive background in financial planning, management and strategy, and a deep knowledge of the technology industry. She most recently served, from October 2012 to August 2017, as Director of Finance and Special Projects, and Product Owner, Commerce, for Shutterstock (NYSE: SSTK). Prior to this role, from April 2010 to October 2012, she served as VP, Finance and CFO at Scanbuy, Inc., a venture capital-backed developer of cloud-based mobile engagement solutions through QR codes. Earlier in her career, she held a number of financial accounting and business consulting positions at the accounting and tax services firm of KVB Partners. Mrs. Gosal Hoarau holds a CPA License and earned her Master of Science degree in Accounting (D.E.S.C.F) and a Bachelors in Business Administration (DUT GEA) from the University of Bordeaux.
Pursuant to the employment agreement, the Company and Mrs. Gosal Hoarau agreed to the following:
· Mrs. Gosal Hoarau will receive annual base salary of $175,000 and be eligible for incentive compensation of up to 40% of her base compensation upon achievement of quarterly and annual incentive compensation targets established by Evolving Systems Board of Directors.
· The Company agreed to award Mrs. Gosal Hoarau restricted stock for 7,500 shares of the Companys common stock and stock options to purchase 50,000 shares of the Companys common stock, vesting one-fourth on the one-year anniversary of the date of the grant and the balance vesting quarterly over a 3-year period. The stock awards will be made within 15 days of the commencement date of Mrs. Gosal Hoaraus employment.
· Mrs. Gosal Hoarau will be employed at will.
· If the Company terminates Mrs. Gosal Hoaraus employment for reasons other than cause or disability, or Mrs. Gosal Hoarau resigns for Good Reason, as defined in the employment agreement, the Company will pay Mrs. Gosal Hoarau severance equal to 6 months of her base salary (referred to in the employment agreement as Base Severance). The Company will also pay a proportionate amount of Mrs. Gosal Hoaraus health and dental insurance premiums, based upon the same proportion the Company paid at the time Mrs. Gosal Hoaraus employment was terminated, for a period of 6 months, or until Mrs. Gosal Hoarau obtains substitute insurance. Severance and insurance premium payments will be made in equal installments over the 6-month period, based upon the Companys normal payroll practices.
· In the event of the occurrence of a Change in Control, as defined in the employment agreement, 50% of Mrs. Gosal Hoaraus then unvested stock options, stock appreciation rights, shares of restricted stock and any other unvested equity awards, if any, will vest.
In addition, in the event the Company terminates Mrs. Gosal Hoaraus employment without Cause or Mrs. Gosal Hoarau resigns for Good Reason (each as defined in the employment agreement) within 180 days before or 365 days after a Change of Control, she will be entitled to receive Base Severance as well as additional severance (referred to in the employment agreement as Enhanced Severance) equal to 6 months of her base salary and 100% of her target incentive compensation in the year of termination. She will also be entitled to be reimbursed for expenses incurred for tax advice, in an amount not to exceed $2,500, and her unvested stock options, shares of restricted stock and any other unvested equity awards will vest in full.
· Mrs. Gosal Hoarau agreed that following termination of employment she will not compete with the Company (as defined in the employment agreement), or solicit or entice any employee of the Company to leave the employ of the Company or interfere with the Companys relationship with a customer during the period of time that Base Severance is paid, or, in the case of a Change of Control, during the extended period of Enhanced Severance.
· The Company also entered into the standard Indemnification Agreement approved by the Board of Directors for all officers and directors of the Company.
The full text of the employment agreement is attached as Exhibit 10.2 to this Current Report on Form 8-K. The Companys standard Indemnification Agreement was attached to the Companys Current Report on Form 8-K filed on July 31, 2014.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
d) Exhibits. The following exhibits are filed with this report.
Exhibit No. |
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Description |
10.1 |
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Consulting Services Agreement dated October 1, 2017, entered into between Evolving Systems, Inc. and Richard A. Dinkel |
10.2 |
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Employment Agreement dated September 23, 2017, entered into between Evolving Systems, Inc. and Julie Gosal Hoarau |
EXHIBIT INDEX
Exhibit No. |
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Description |
10.1 |
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10.2 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: September 26, 2017
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Evolving Systems, Inc. | |
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By: |
/s/ JULIE GOSAL HOARAU |
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Julie Gosal Horau |
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Sr. Vice President of Finance |
CONSULTING SERVICES AGREEMENT
THIS CONSULTING SERVICES AGREEMENT (this Agreement), dated as of the effective date shown on the signature page (Effective Date), is between Richard A. Dinkel, whose address is 5905 S. Meadow Lark Pl, Castle Rock, CO 80109 (CONSULTANT), and Evolving Systems, Inc., a corporation organized under the laws of the state of Delaware, having offices at 9777 Pyramid Court, Englewood, CO 80112 (EVOLVING SYSTEMS).
EVOLVING SYSTEMS wishes to engage CONSULTANT to provide certain consulting services. CONSULTANT wishes to perform services as a consultant for EVOLVING SYSTEMS.
In consideration of the above recitals and the mutual covenants and agreements contained in this Agreement, the parties agree as follows:
1. Engagement as CONSULTANT. EVOLVING SYSTEMS retains CONSULTANT to provide consulting services as described in Attachment A (the Authorization), and CONSULTANT agrees to perform such services, subject to the terms and conditions of this Agreement.
EVOLVING SYSTEMS agrees to give CONSULTANT as much advance notice as is reasonably feasible of meetings, and to work with CONSULTANT to schedule other consultations at convenient times.
2. Payment. CONSULTANT will be paid for services performed under this Agreement as specifically described in Attachment A. Subject to the conditions below, EVOLVING SYSTEMS will also reimburse CONSULTANT for reasonable pre-approved actual out-of-pocket expenses incurred by CONSULTANT in connection with the performance of services under this Agreement. Travel related expenses will be reimbursed in accordance with EVOLVING SYSTEMS travel policies. CONSULTANT will submit invoices or other documentation of the expense to EVOLVING SYSTEMS. EVOLVING SYSTEMS will pay CONSULTANT for services rendered and authorized expenses within ten (10) days after receipt of a statement submitted as provided above.
3. Confidentiality; Ownership of Intellectual Property.
a. CONSULTANT acknowledges that he may be exposed to certain confidential and proprietary information and trade secrets of EVOLVING SYSTEMS and its customers during the course of performing services under this Agreement. CONSULTANT further acknowledges that his performance of services under this Agreement may result in certain inventions, discoveries or improvements or the creation of materials that are patentable, copyrightable or constitute trade secrets. In partial consideration of the terms of this Agreement, CONSULTANT agrees to execute and strictly observe the Non-Disclosure and Proprietary Information Agreement attached as Attachment B, (the Mutual Non-Disclosure Agreement). CONSULTANT agrees to promptly execute any additional agreements or documents at the request of EVOLVING SYSTEMS or a customer of EVOLVING SYSTEMS pertaining to the protection of confidential or proprietary information in connection with work performed by CONSULTANT under this Agreement.
b. Notwithstanding the above, CONSULTANT will continue to own all right, title and interest in all pre-existing materials and knowledge and know-how developed by CONSULTANT prior to the execution of this Agreement, as well as all materials, knowledge and know-how developed by CONSULTANT independently from CONSULTANTs performance under this Agreement. In addition, CONSULTANT may freely use and disclose, in the performance of work for others, his general skills, knowledge, experience and know-how, including, without limitation, general processes, concepts, methods, techniques, ideas and other residual information gained or learned in CONSULTANTs performance under this Agreement, but only to the extent CONSULTANT does not breach the confidentiality provisions described in Section 3(a).
c. Upon completion of each project, CONSULTANT will return to EVOLVING SYSTEMS all documents, programs and other materials pertaining to the project.
4. Independent Contractor.
a. CONSULTANT acknowledges and agrees that he is an independent contractor and not an employee of EVOLVING SYSTEMS. Nothing in this Agreement will be interpreted or construed as creating or establishing the relationship of an employer and employee between EVOLVING SYSTEMS and CONSULTANT.
b. CONSULTANT will not be entitled to any of the benefits which EVOLVING SYSTEMS may make available to its employees, including, but not limited to, group health or life insurance, profit-sharing or retirement benefits. CONSULTANT is not authorized to make any representation, contract or commitment on behalf of EVOLVING SYSTEMS unless specifically requested or authorized in writing to do so by an EVOLVING SYSTEMS officer. Subject to the confidentiality obligations described in this Agreement, CONSULTANT acknowledges and agrees that he is obligated to report as income all consideration that he receives under this Agreement, and that he will pay all self-employment and other taxes related to the consideration paid to him by the Company and that he is not entitled to unemployment insurance benefits. EVOLVING SYSTEMS will regularly report amounts paid to CONSULTANT as required by law. CONSULTANT agrees to indemnify EVOLVING SYSTEMS and hold it harmless to the extent any obligation imposed on EVOLVING SYSTEMS to pay withholding taxes or similar items or resulting from CONSULTANT being determined not to be an independent contractor.
c. CONSULTANT is free to enter into other activities to provide consulting services to other businesses, entities or individuals during the term of this Agreement, unless such activities would violate the provisions of this Agreement, would induce CONSULTANT to breach this Agreement or would prevent or restrict CONSULTANT from satisfying CONSULTANTs obligations under this Agreement. CONSULTANT agrees not to work for or be employed by or perform services to any third party, entity or individual that develops, markets or sells products to services that are in competition with EVOLVING SYSTEMS during the term of this Agreement.
5. Indemnification. Each party agrees to defend, indemnify, and hold the other party harmless from any claims, actions, demands, losses, liabilities, costs and expenses (including reasonable attorneys fees) to the extent arising from the gross negligence or willful misconduct of the other party, its employees or agents, which result in injury to persons or real property.
6. Limitation on Assignments and Subcontracts. CONSULTANT will not assign or subcontract any of his rights, obligations or duties under this Agreement or under any Authorization. Except as noted in an Authorization, all work relating to any Authorization under this Agreement will be performed personally by CONSULTANT. To the extent work is an Authorization permits CONSULTANT to engage the services of a third party, CONSULTANT will supervise and remain responsible for the performance of such work.
7. Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT DAMAGES, OR LOSS OF PROFITS, REVENUE, DATA OR USE, REGARDLESS OR ANY KNOWLEDGE OR NOTIFICATION OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING. SAVE IN RELATION TO (I) A BREACH OF THE CONFIDENTIALITY PROVISIONS CONTAINED IN THIS AGREEMENT, (II) FRAUD OR FRAUDULENT MISPRESENTATION, OR (III) ANY OTHER LIABILITY THAT CANNOT BE EXCLUDED AT LAW, THE TOTAL LIABILITY OF EACH PARTY, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE SHALL IN NO CIRCUMSTANCES EXCEED THE AMOUNT OF FEES PAID TO CONSULTANT UNDER THIS AGREEMENT.
8. Term. The term of this Agreement will commence with effect from 1 October 2017 to 31 March 2018. Either party may terminate this Agreement prior to expiration of the term by providing the other party with thirty (30) days written notice. Unless such termination is as a result of CONSULTANTs failure to perform his obligations, EVOLVING SYSTEMS will be obligated to pay CONSULTANTs compensation through the date of termination, and expenses incurred by CONSULTANT prior to the date of such termination. The termination of this Agreement will not prejudice the rights or remedies of EVOLVING SYSTEMS on account of any failure of CONSULTANT to perform his obligations under this Agreement.
9. Modification. This Agreement may not be modified, except in a written modification executed by CONSULTANT and an authorized officer of EVOLVING SYSTEMS. If any particular provision or portion of a provision of this Agreement is adjudicated to be unenforceable or invalid, the remainder of such agreement will be enforced as fully as possible and the unenforceable provision will be deemed to be modified to the limited extent required to permit its enforcement in the manner most closely approximating the intention of the parties expressed therein.
10. Governing Law, Jurisdiction and Venue. This Agreement will be construed under the laws of Colorado. Enforcement may be sought in Douglas County, Colorado, where the parties both consent to exclusive jurisdiction.
11. Notices. Any Authorization, statement, payment or other notices under this Agreement will be deemed given if delivered personally or by overnight courier service to the parties at the addresses stated above or such other address as either party may designate by notice as provided in this section.
12. Survival. The terms and provisions of Sections 3, 4, 5, 7 and 10 will survive the termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of October 1, 2017 (Effective Date).
EVOLVING SYSTEMS, INC. |
Richard A. Dinkel | |||
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By: |
/s/ JULIE GOSAL HOARAU |
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By: |
/s/ RICHARD A. DINKEL |
Name: |
Julie Gosal Hoarau |
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Name: |
Richard A. Dinkel |
Title: |
SVP Finance |
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Attachment A - Authorization
Richard A. Dinkel
Description of Services to be provided: CONSULTANT agrees to provide financial consulting services to EVOLVING SYSTEMS upon the companys request, including, but not limited to the following:
Non-Compensated Milestones: Targeted for end of September. For the avoidance of any doubt, no additional compensation will be granted for additional work performed on these milestones:
1. Lumata Valuation report approved (30 September 2017);
2. Lumata Opening entries (30 September 2017);
3. Manage, complete and transition the 2017 interim SOX audit (30 September 2017);
4. File the 2016 UK Statutory reports for Evolving Systems Ltd. and Evolving Systems Holdings Ltd. (30 September 2017);
Compensated Milestones:
1. File the 2017 USA tax return (14 October 2017);
2. Close and transition the September 2017 accounting period (preliminary close 13 October 2017, final close 20 October 2017);
3. Complete and transition the preparation of the Q3 2017 Tax Provision (initial 14 October 2017, final 20 October 2017);
4. Complete and transition the Q3 2017 10Q (23 October 2017);
5. Lumata 8-K/A (14 November 2017); and
6. Lumata Financial Statements on Netsuite (1 November 2017);
Compensation: As each Compensated Milestone is completed (1 through 6), EVOLVING SYSTEMS will pay the CONSULTANT $8,333.33 per milestone. The consultant will send the Company an invoice informing the Company that the milestone has been reached. Milestone payments are due at a NET 10 days term, payable within 10 days from the invoice date. As the milestones are completed, CONSULTANT will provide EVOLVING SYSTEMS with an accounting of the services provided and reimbursable expenses incurred.
In addition, the consultant will earn an additional sum of $10,000 in total paid ratably every month over a 6 month period (or $1,666.67 monthly), as compensation for time spent assisting the Company with additional questions.
Travel time to the Englewood Office will not be chargeable unless specifically agreed to in writing by EVOLVING SYSTEMS.
Miscellaneous:
EVOLVING SYSTEMS will provide CONSULTANT with a laptop computer. CONSULTANT will provide all other basic office supplies. EVOLVING SYSTEMS will provide, or reimburse CONSULTANT for, any specialized equipment required to perform a particular project. EVOLVING SYSTEMS will reimburse CONSULTANT for monthly cell phone and data plan expenses specifically related to performing services under this Agreement.
CONSULTANT: Richard A. Dinkel |
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/s/ RICHARD A. DINKEL |
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By: Richard A. Dinkel |
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EVOLVING SYSTEMS, INC. |
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By: |
/s/ JULIE GOSAL HOARAU |
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Julie Gosal Hoarau |
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Title: |
SVP Finance |
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Attachment B
MUTUAL NONDISCLOSURE AGREEMENT
THIS AGREEMENT is entered into between RICHARD A. DINKEL and EVOLVING SYSTEMS, INC. as of the Effective Date noted on the signature page.
RECITALS
The parties contemplate entering into a business relationship (Purpose) during which one party (Disclosing Party) may disclose to the other party (Receiving Party) certain confidential or proprietary information; and
With respect to the information exchanged between the parties, the parties agree as follows:
1. Definition of Confidential Information. Confidential Information means information, including, but not be limited to, performance, sales, financial, contractual and special marketing information, ideas, technical data, and concepts originated by the Disclosing Party and furnished to a Receiving Party, whether orally, in writing or any other medium, which information the Disclosing Party desires to protect against unrestricted disclosure or competitive use which (i) has not previously been published or otherwise disclosed to the general public, (ii) has not previously been made available without restriction to the Receiving Party or others, (iii) is marked as, indicated as, or could be reasonably construed to be confidential or proprietary.
2. Obligation to Maintain Confidentiality and Limitation on Use. The Receiving Party will:
a. hold the Confidential Information in confidence, exercising a degree of care not less than the care used by such party to protect its own proprietary or confidential information that it does not wish to disclose, and in no event less than a reasonable degree of care;
b. restrict disclosure of the Confidential Information solely to those Representatives with a need to know and not disclose it to any other person;
c. advise those Representatives of their obligations with respect to the Confidential Information; and
d. use the Confidential Information only in connection with the Purpose and reproduce such Confidential Information only to the extent necessary for such Purpose.
The term Representatives means the Affiliates of either party and the respective directors, officers, employees, attorneys, consultants and other agents and advisors of either party or of the Affiliates of either party. An Affiliate means any entity that directly or indirectly controls, is controlled by or is under common control with a party, whether such control arises through the ownership of voting stock, by contract, or otherwise. Each party will be responsible for any breach of this Agreement by its respective Representatives and will take all reasonably necessary measures to restrain its Representatives from unauthorized disclosure or use of Confidential Information.
3. Exclusions. The Receiving Party will have no obligation to preserve the confidential nature of any information which:
a. was previously known to such party free of any obligation to keep it confidential; or
b. is or becomes publicly available by means other than unauthorized disclosure; or
c. is developed by or on behalf of such party independent of any Confidential Information furnished under this Agreement; or
d. is received from a third party whose disclosure does not violate any confidentiality obligation.
4. Mandatory Disclosure Exemption. In the event the Receiving Party or its employees need (for securities law purposes) to make disclosures of Confidential Information or become legally compelled (by oral questions, interrogatories, requests for information or documents, subpoenas, civil investigative demands or otherwise) to disclose any Confidential Information of the Disclosing Party, the Receiving Party will provide the Disclosing Party with prompt written notice so that (a) the Disclosing Party can work with the Receiving Party to limit the disclosure to the greatest extent possible consistent with legal obligations (it being understood that disclosure of the name of the other party will never be made without that partys prior written consent) or (b) the Disclosing Party may seek a protective order or other appropriate remedy, or if the Disclosing Party so directs, the Receiving Party will exercise its reasonable best efforts to obtain a protective order or other appropriate remedy at the Disclosing Partys reasonable expense. Failing the entry of a protective order or other appropriate remedy or receipt of a waiver hereunder, the Receiving Party will furnish only that portion of the Confidential Information which it is
advised by its counsel is legally required to be furnished and will exercise its reasonable best efforts to obtain reliable assurance that confidential treatment will be accorded such Confidential Information.
5. No Rights Granted. All Confidential Information and all tangible forms of such information received under this Agreement by the Receiving Party will remain the property of Disclosing Party. Nothing contained in this Agreement will be construed as (i) requiring Disclosing Party to disclose, or Receiving Party to accept, any particular information, or (ii) granting to Receiving Party a license, either express or implied, under any patent, copyright, trade secret, or other intellectual property rights now or hereafter owned, obtained or licensable by Disclosing Party. Neither this Agreement, nor the disclosure of Confidential Information under this Agreement will constitute or imply any promise or any commitment by either party with respect to any other present or future transaction. Each party agrees that it will not modify or create other works with the other partys Confidential Information, or reverse engineer or decompile or disassemble any software programs contained therein.
6. No Warranty. All Confidential Information is provided As Is, without warranty of any kind. In particular, the parties do not warrant, assure or guarantee that the information disclosed constitutes a non-infringement of other third-party trademarks, patents, copyrights, mask works or any other intellectual property right in the information disclosed. Receiving Party agrees that Disclosing Party will not have liability or responsibility for any errors or omissions in, or any business decisions made by Receiving Party in reliance on, any Confidential Information disclosed by Disclosing Party under this Agreement.
7. Remedies. Each party agrees that the Disclosing Party would be irreparably injured by a breach of this Agreement by the Receiving Party or its Representatives and that the Disclosing Party will be entitled to equitable relief, including injunctive relief and specific performance, in the event of any breach of the provisions of this Agreement. Such remedies will not be deemed to be the exclusive remedies for a breach of this Agreement, but will be in addition to all other remedies available at law or in equity.
8. Compliance with Export Regulations. Each Party agrees that it will not export or re-export outside the United States, either directly or indirectly, any Confidential Information without first obtaining the prior written approval of the Disclosing Party, which may entail obtaining clearance or licensing by a governmental authority.
9. Term. The term of this Agreement will commence on the Effective Date and will continue for the term of the Consulting Services Agreement entered into between the parties (the Term). A partys obligations to protect Confidential Information which it has received during the Term will survive for a period of three (3) years after the date of disclosure of such Confidential Information; provided, however, that a partys obligation to protect any Confidential Information which is a trade secret under applicable law will continue as long as such Confidential Information remains a trade secret under applicable law.
10. Governing Law. This Agreement will be governed by and construed under the laws of the State of Colorado. Each party irrevocably consents to the jurisdiction and venue of the state and federal courts located in Douglas County, Colorado.
11. Entire Agreement. This Agreement constitutes the entire understanding between the parties with respect to Confidential Information provided in connection with the Purpose and supersedes all prior agreements between the parties with respect to Confidential Information provided in connection with Purpose. No amendment or modification of this Agreement will be valid or binding on the parties unless made in writing and executed on behalf of each party by its duly authorized representative. If any provision of this Agreement is found to be unenforceable, the remainder will be enforced as fully as possible and the unenforceable provision will be deemed to be modified to the limited extent required to permit its enforcement in a manner most closely approximating the intention of the parties as expressed in this Agreement.
12. Notices. All notices and other communications provided for or permitted under this Agreement will be in writing, made by hand delivery; first class mail, postage prepaid, return receipt requested; or by reliable overnight courier addressed to a party at the address indicated in this Agreement. Notices will be deemed delivered when received by the party being notified, or, if sent via first class mail as above, will be deemed delivered four days after such remittance.
13. Assignment. Neither this Agreement nor any of the rights and obligations created in this Agreement may be assigned, in whole or in part, by either party, without the prior written consent of the other party. Any assignment contrary to the foregoing is void. This Agreement will be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns.
14. Administrative Ease. The parties agree that this Agreement may be executed in counterparts, and that such counterpart signatures will be considered effective if provided by PDF or facsimile transmission.
Each party has caused this Agreement to be executed on its behalf as of the 1st day of October, 2017 (Effective Date).
RICHARD A. DINKEL |
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/s/ RICHARD A. DINKEL |
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EVOLVING SYSTEMS, INC. |
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By: |
/s/ JULIE GOSAL HOARAU |
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Julie Gosal Hoarau |
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Title: SVP Finance |
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this Agreement) is entered into effective September 23, 2017 (the Effective Date), by JULIE GOSAL HOARAU (Executive) and EVOLVING SYSTEMS, INC. (the Company).
RECITALS
A. Executive wishes to be employed by the Company and provide services to the Company in return for certain compensation; and
B. WHEREAS, the Company and Executive desire to enter into this Agreement.
Accordingly, in consideration of the mutual promises and covenants contained in this Agreement and for other good and valuable consideration, the sufficiency of which is acknowledged, the parties agree to the following:
1. DEFINITIONS.
1.1 Affiliates means, with respect to the Company, any entity which, directly or indirectly, is controlled by or is under common control with the Company. For purposes of this Agreement, Control means (i) the possession, directly or indirectly, of more than 50% of the voting power to elect directors, in the case of a corporation, or members of a comparable governing body in the case of a limited liability company, firm, joint-venture, association or other entity; (ii) with respect to a partnership, a general partner thereof or a person having management rights comparable to those of a general partner.
1.2 Board of Directors or Board means the Board of Directors of the Company.
1.3 Cause will be limited to mean the following:
(i) Willful misfeasance or nonfeasance by Executive that materially injures the reputation, business or business relationships of the Company or its Affiliates, or any of their respective officers, directors or employees and such action or failure is not remedied or reasonable steps to effect such remedy are not commenced within thirty (30) days following receipt of written notice;
(ii) Any act involving moral turpitude or conviction of a crime other which reflects in some material fashion unfavorably upon the business or business relationships of the Company, its Affiliates, or any of its officers, directors or employees;
(iii) The willful and continued failure to perform substantially the Executives duties or to follow the reasonable direction of the CEO, CFO or the Board within thirty (30) business days after receipt by Executive of written notice of such failure, other than by reason of Disability (as defined below) or approved leave of absence; or
(iv) Willful or prolonged absence from work by Executive, other than by reason of Disability or approved leave of absence, whether paid or unpaid.
1.4 Change of Control will mean the occurrence of any of the following:
(i) the date any person or group acquires ownership of stock of the Company that, together with stock held by the person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; (b) a liquidation or dissolution of the Company; or (c) the sale of all or substantially all (greater than seventy five percent (75%)) of the fair market value of the assets of the Company.
(ii) the acquisition by any person, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of beneficial ownership within the meaning of Rule 13-d promulgated under the Securities Exchange Act of more than fifty percent (50%) of either the then- outstanding shares of the Companys common stock or the combined voting power of the Companys then-outstanding voting securities entitled to vote generally in the election of directors (hereinafter referred to as the ownership of a Controlling Interest) excluding, for this purpose, any acquisitions by (a) the Company or its Affiliates; or (b) any employee benefit plan of the Company or its Affiliates; or any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing fifty percent (50%) percent or more of the total voting power of the stock of such corporation; or
(iii) individuals who constitute the majority of the Board as of the date of this Agreement (the Incumbent Board) cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a member of the Board after the date of this Agreement whose election, or nomination for election by holders of the Companys securities, was approved by the vote of at least a majority of the individuals then constituting the Incumbent Board will be considered a member of the Incumbent Board.
1.5 Code will mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.
1.6 Disability will mean the earliest of the date on which Executive is deemed disabled under: (i) the long- term disability policy maintained by the Company; (ii) Code Section 22(e)(3); or (iii) the determination of the Social Security Administration. Notwithstanding the foregoing, Executive will not be considered to have suffered a Disability under subparagraph (ii) above if Executive timely provides medical certification from a qualified licensed physician that Executive is able to perform the essential functions of Executives position, with or without reasonable accommodation.
1.7 Good Reason will mean the occurrence of any of the following without Executives prior written consent:
(i) the removal of Executive as Senior Vice President of Finance of the Company, assignment to Executive of any duties or responsibilities materially inconsistent with Executives position, including any material diminution of Executives status, title, authority, duties or responsibilities or any other action that results in a material diminution in such status, title, authority, duties or responsibilities;
(ii) the requirement that Executive report within a management structure that adds a layer of management between Executive and the CEO or CFO;
(iii) the requirement that Executive work regularly from a location that is farther than fifty (50) miles from the Executives home office address 810 Orienta Avenue, Mamaroneck, NY 10543;
(iv) the reduction by five percent (5%) or more of Executives base salary or the reduction by five percent (5%) or more of the aggregate of Executives base salary and Incentive Compensation target cumulatively during any one year period, without Executives consent, or any action that materially adversely affects Executives overall compensation and benefits package, provided that the Company may change the benefits package if those changes are made on a non- discriminatory basis for all employees who participate in the benefits plans available to Executive; or
(v) the failure of the Company to pay to Executive any portion or installment of any salary, Incentive Compensation or deferred compensation within fourteen (14) days of the date such compensation is due.
1.8 Termination Date will mean Executives last day of employment, regardless of whether termination is on account of death, Disability, with or without Cause, or a resignation with or without Good Reason.
2. EMPLOYMENT BY THE COMPANY.
2.1 POSITION. Subject to the terms set forth in this Agreement, the Company agrees to employ Executive in the position of Senior Vice President of Finance, and Executive hereby accepts such employment and position. During the term of Executives employment with the Company, Executive will devote Executives best efforts and substantially all of Executives business time and attention to the business of the Company.
2.2 DUTIES. Executive will report to the CEO or CFO and will perform such duties as are normally associated with Executives position as are assigned to Executive from time to time. Executive will perform Executives duties under this Agreement at Executives home office address or other locations as agreed upon by Executive and the Company.
2.3 TERM. The term of this Agreement will run from the Effective Date until such time as it is terminated in accordance with the terms of this Agreement.
2.4 COMPANY POLICIES AND BENEFITS. The employment relationship between the parties will be subject to the Companys personnel policies and procedures as they may be adopted, revised or deleted from time to time in the Companys sole discretion. Subject to any specific exceptions or conditions set forth in Section 3, Executive will be eligible to participate on substantially the same basis as similarly situated Executives in the Companys benefit plans and programs in effect from time to time during Executives employment; provided, however, that participation and awards under any equity compensation or equity Incentive Compensation plan or program will be determined by the Board on an individual, case-by-case basis. All matters of eligibility for coverage or benefits under any benefit plan or program will be determined in accordance with the provisions of such plan or program. The Company reserves the right to change, alter, or terminate any benefit plan or program in its sole discretion; provided, however, that no such change, alteration or termination will change any vested or accrued benefits or rights of Executive. Notwithstanding the foregoing, in the event that the terms of this Agreement expressly provide Executive with benefits that differ from the Companys generally available benefits, then the terms of this Agreement will control.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. Executive will receive for Executives services to be rendered under this Agreement an initial annualized base salary of one hundred seventy five thousand dollars ($175,000) (the Base Salary), subject to annual review and adjustment from time to time by the Board. The Base Salary will be payable in accordance with Companys standard payroll practices.
3.2 INCENTIVE COMPENSATION. Executive will be eligible for quarterly and annual incentive compensation (Incentive Compensation) of forty percent (40%) of Executives then-current Base Salary, as determined by the CEO and the Board in its sole discretion based on an incentive compensation plan to be established annually in writing by the Board. The Incentive Compensation will be calculated based on performance goals measured at the end of the applicable quarter/year. The Company will pay earned quarterly and annual Incentive Compensation at the time(s) determined by the Company, but in no event later than March 15 of the calendar year following the year in which Executives right to the Incentive Compensation arises.
3.3 EXPENSE REIMBURSEMENT. The Company will reimburse Executive for reasonable business expenses incurred by Executive during the period Executive is employed by the Company, in accordance with the Companys standard expense reimbursement policy.
3.4 PAID TIME OFF. Executive will have paid time off in accordance with Exhibit A, which will be scheduled at a time acceptable to both the Executive and the Company.
3.5 BENEFITS. As provided in Section 2.4, Executive will receive benefits in accordance with the Companys standard benefits plan and policies, outlined in the Employee Handbook as amended from
time to time. In addition, Executive will be entitled to receive the additional benefits set forth on Exhibit A hereto.
4. NON-COMPETITION; NON-SOLICITATION; CONFIDENTIALITY.
4.1 NON-COMPETITION. Executive acknowledges that Executive will gain extensive and valuable experiences and knowledge in the business conducted by the Company and its Affiliates and will have extensive contacts with customers of the Company and its Affiliates. Accordingly, in consideration of the mutual promises contained in this Agreement, Executive covenants and agrees with the Company that, during the term of this Agreement and for a period of six (6) months or, if Executive receives Enhanced Severance Benefits under Section 7.4, twelve (12) months, following the Executives Termination Date, Executive will not compete directly or indirectly with the Company or its Affiliates and will not during such period make public statements in derogation of the Company or its Affiliates. Competing directly or indirectly with the Company and its Affiliates will mean engaging or having a material interest, directly or indirectly, as owner, employee, officer, director, partner, venturer, stockholder, capital investor, consultant, agent, principal, advisor or otherwise, either alone or in association with others, in the operation of any entitys division or group which (a) provides campaign management systems for telecommunications carriers similar to those provided by the Company and/or (b) is engaged in such other businesses for telecommunication carriers as the Company is actively engaged in at the time of Executives termination of employment. Competing directly or indirectly with the Company or its Affiliates, as used in this Agreement, will not include having an ownership interest as an inactive investor, which for purposes of this Agreement will mean the beneficial ownership of less than five percent (5%) of the outstanding shares of any series or class of securities of any competitor of the Company, which shares are publicly traded in the securities markets. This Section 4.1 will cease to apply in the event the Company is in breach of any obligations to provide severance benefits in accordance with Section 7.2 and/or Section 7.4 and fails to cure such breach within twenty (20) days of receiving written notice of such breach from Executive. Executive agrees that any violation of this Section 4.1 by Executive, as determined by a court of law, will result in termination of the Companys obligations to provide severance benefits under this Agreement and in the event of such termination, Executive will be required to repay to the Company any such severance benefits previously received.
4.2 NON-SOLICITATION. Executive acknowledges that Executive will have extensive contacts with employees and customers of the Company. Accordingly, in consideration of the mutual promises contained in this Agreement, Executive covenants and agrees that during the term of this Agreement, and for a period of six (6) months or, if Executive receives Enhanced Severance Benefits under Section 7.4, twelve (12) months, following Executives Termination Date, Executive will not (i) solicit, raid, entice or induce any employee of the Company or its Affiliates to leave the employ of the Company or its Affiliates; (ii) interfere with the relationship of the Company or its Affiliates with any such employees, including, but not limited to, hiring such employee; or (iii) personally target or solicit customers of the Company or its Affiliates to purchase products or services in competition with the Companys or its Affiliates products or services or to terminate a relationship with the Company or its Affiliates. This Section 4.2 will cease to apply in the event the Company is in breach of any obligations to provide severance benefits in accordance with Section 7.2 and/or Section 7.4 and fails to cure such breach within twenty (20) days of receiving notice of such breach from Executive. Executive agrees that any violation of this Section 4.2 by Executive, as determined by a court of law, will result in termination of the Companys obligations to provide severance benefits hereunder and in the event of such termination, Executive will be required to repay to the Company any such severance benefits previously received.
4.3 CONFIDENTIALITY. Executive acknowledges that Executive will have access to certain information related to the business, operations, future plans and customers of the Company and its Affiliates, the disclosure or use of which could cause the Company substantial losses and damages. Accordingly, Executive acknowledges and affirms the terms and conditions of the Proprietary Information Agreement signed by Executive, which is incorporated by reference.
5. OUTSIDE ACTIVITIES. Except with the prior written consent of the Board, Executive will not, while employed by the Company, undertake or engage in any other employment, occupation, consulting, advisory, or other business enterprise or business activities that would interfere with Executives responsibilities and the performance of Executives duties under this Agreement with the exception that engaging in charitable, civic, community activities and serving of boards of directors of charitable or civic organizations will not constitute interference, provided the time spent in such activities does not negatively impact Executives performance of Executives duties under this Agreement.
6. NO CONFLICT WITH EXISTING OBLIGATIONS. Executive represents that Executives performance of all the terms of this Agreement and as an executive of the Company does not and will not breach any agreement or obligation of any kind made prior to Executives employment by the Company, including agreements or obligations Executive may have with prior employers or entities for which Executive has provided services. Executive has not entered into, and Executive agrees that Executive will not enter into, any agreement or obligation, either written or oral, that conflicts with Executives obligations hereunder.
7. TERMINATION OF EMPLOYMENT. The parties acknowledge that Executives employment relationship with the Company is at-will. Either Executive or the Company may terminate the employment relationship at any time, with or without Cause. The provisions in this Section 7 govern the amount of compensation, if any, to be provided to Executive upon termination of Executives employment and do not alter Executives at- will status.
7.1 STANDARD TERMINATION PAYMENTS.
a. Salary and Reimbursements. Regardless of the reason for termination, the Company will pay Executive on the first regularly scheduled payroll date following Executives Termination Date any Base Salary accrued but unpaid as of Executives Termination Date, the value of any accrued paid time off unused by Executive as of Executives Termination Date, and any unpaid Expense Reimbursement, so long as the Expense Reimbursement complies with the Company guidelines for such requests.
b. Incentive Compensation. In the event Executives employment with the Company terminates for any reason (including death or Disability) before the end of any quarterly or annual performance period on which the Incentive Compensation is based, Executive will be paid a pro-rata portion of Executives Incentive Compensation (based on the number of days Executive was employed in the applicable quarter with regard to the quarterly Incentive Compensation and the number of days Executive was employed in the calendar year with respect to the annual Incentive Compensation) of the Incentive Compensation that is earned for the quarter/year in which Executives employment with the Company terminated, such amounts to be paid on the date the Company would otherwise have paid the Incentive Compensation if Executives employment with the Company had not terminated. If the Incentive Compensation is considered compensation for purposes of any Company-sponsored qualified retirement plan, the right to defer such Incentive Compensation will continue to be governed by such plan or plans, with the terms of such plan or plans incorporated into this Agreement by reference. Except as otherwise provided in Section 7.4(b)(i), Executive will not be eligible to be paid Incentive Compensation for any subsequent performance period.
7.2 SEVERANCE BENEFITS TERMINATION WITHOUT CAUSE/RESIGNATION FOR GOOD REASON.
a. Companys Right to Terminate. The Company will have the right to terminate Executives employment under this Agreement for any of the following reasons:
(i) upon Executives Disability in accordance with Section 7.5;
(ii) for Cause, by giving notice as described in Section 7.6;
(iii) without Cause.
b. Executives Right to Terminate. Executive will have the right to resign Executives employment with the Company at any time as well as following an event constituting Good Reason.
c. Severance Benefits. In the event that the Company terminates Executives employment without Cause or Executive resigns for Good Reason, Executive will receive, in addition to the Standard Termination Payments, the following:
(i) Base Severance Payments. Provided that Executive delivers to the Company a fully executed and complete release, without revocation, in favor of the Company and its Affiliates, and in form and substance satisfactory to the Company (the Release) within sixty (60) days of Executives Termination Date (the Execution Deadline), the Company will provide to Executive an amount equal to six (6) months of Executives then-current Base (Base Severance Payments). The Base Severance Payments will be payable in equal installment payments over the six (6) month period starting retroactively from the Termination Date in accordance with the Companys regular bi-weekly paydays, or if different, in accordance with the Companys customary payroll practices.
(ii) COBRA Benefits. In the event Executive elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) in accordance with the COBRA materials that will be provided to Executive by the Company or the Companys third party COBRA administrator, the Company will pay the Companys portion (based upon the Companys monthly premium subsidy immediately prior to the Termination Date) of Executives COBRA premium for the same medical, dental and vision benefit plan coverage (Group Health Plan Coverage) Executive and Executives dependents had as of the Termination Date for a period of six (6) months, or until Executive elects to receive group medical, dental and vision insurance from another source, whichever occurs first. Payment of COBRA premiums will be made by the Company on Executives behalf directly to the Group Health Plans COBRA administrator. Executive will be mailed a COBRA packet at his last known address. Such packet will contain additional information about Executives COBRA rights and responsibilities.
(iii) Severance Benefits Contingent on Execution of Release. Notwithstanding the foregoing, any Base Severance Payments that are otherwise payable before the Execution Deadline will be withheld pending Executives execution and delivery of the Release and will be paid on the payroll date immediately following the Execution Deadline. For the avoidance of doubt, Executive will forfeit the right to receive any Base Severance Payments or COBRA Benefits if Executive fails to deliver the Release by the Execution Deadline. For this forfeiture to take effect, the Release will not materially alter Executives rights to receive any payments or benefits under this Agreement; enlarge Executives obligations under this Agreement, including without limitation, Executives covenants of non-competition and non-solicitation; or impose material new obligations on Executive.
d. Compliance with Code Section 409A. The Company and Executive intend that (i) payments under Section 7.2(c)(i) will be made on account of an involuntary separation from service within the meaning of Treasury Regulation section 1.409A-1(n)(1) or a separation from service for good reason within the meaning of Treasury Regulation section 1.409A-1(n)(2), (ii) amounts paid under Section 7.2(c)(i) constitute separation pay exempt from Internal Revenue Code Section 409A under Treasury Regulation section 1.409A-1(b)(9)(iii), and (iii) Payments under Section 7.2(c)(ii) will be exempt from Code Section 409A as a non-taxable fringe benefit to Executive, but neither party will be liable to the other in the event any such payment receives different tax treatment. In the event any of these payments is determined to be deferred
compensation subject to Internal Revenue Code Section 409A, the payments will comply with Section 7.9.
7.3 CHANGE IN CONTROLVESTING OF STOCK OPTIONS. Immediately upon the occurrence of a Change in Control, fifty percent (50%) of Executives then unvested stock options, stock appreciation rights, shares of restricted stock and any other unvested equity awards, if any, will vest.
7.4 RESIGNATION FOR GOOD REASON OR TERMINATION WITHOUT CAUSE IN CONNECTION WITH A CHANGE OF CONTROLENHANCED SEVERANCE BENEFITS.
a. Timing. In the event that the Company terminates Executives employment without Cause or Executive resigns for Good Reason within one hundred eighty (180) days before or three hundred and sixty five (365) days after a Change of Control, Executive will receive the Enhanced Severance Benefits set forth in Section 7.4(b), provided that if the Executive resigns for Good Reason Executive provides written notice to the Company of the existence of such Good Reason within thirty (30) days of the initial existence of such condition (or, if later, the date on which Executive becomes aware of the existence of such condition); (ii) the Company is provided a period to cure the event or condition giving rise to Good Reason, which cure right extends until the later of fifteen (15) days (A) from the date of receipt of the notice from Executive or (B) the date on which the Change of Control occurs (the Cure Period), and the Company fails to do so within the Cure Period; and (iii) Executive resigns from Executives employment for such Good Reason within five (5) days of the expiration of the Cure Period.
b. Enhanced Severance Benefits. If the Company terminates Executive without Cause within one hundred eighty (180) days before or three hundred and sixty five (365) days after a Change of Control or Executive resigns with Good Reason pursuant to Section 7.4(a), Executive will be entitled to receive all Standard Termination Payments described in Section 7.1, the Base Severance Payments described in Section 7.2(c)(i) and the COBRA Benefits described in Section 7.2(c)(ii). In addition, Executive will be entitled to the following:
(i) Enhanced Severance Payments. In addition to the Severance Benefits described in section 7.2, the Company will pay Executive an additional sum equal to (a) six (6) months of Executives then-current annual Base Salary; (b) one hundred percent (100%) of the amount of the annual Incentive Compensation target (excluding any commission targets) for the calendar year immediately preceding the calendar year in which Executives Termination Date occurs or for the calendar year in which Executives Termination Date occurs, whichever is greater; (c) in lieu of continuing to provide life or disability insurance for Executive, twelve (12) times the monthly premium or premiums for disability and life insurance coverage of Executive paid by the Company immediately before Executives Termination Date; and (d) an additional six (6) months of COBRA Benefits described in Section 7.2(c)(ii) (collectively, the Enhanced Severance Payments). The Enhanced Severance Payments will commence in accordance with Section 7.4(c), Section 7.4(d) and Section 7.9, and will be commence immediately following the last payment of Standard Termination Payments to Executive and be made in equal installment payments in accordance with the Companys regular bi-weekly paydays, or if different, in accordance with the Companys customary payroll practices.
(ii) Tax Advice Reimbursement. An amount, not to exceed $2,500, to reimburse Executive for tax advice services during the period that extends through the last day of the second calendar year following the calendar year in which Executives Termination Date occurs, to be paid within sixty (60) days following six (6) months after Executives Termination Date and receipt by the Company of documentation from Executive substantiating the tax advice services to be reimbursed.
(iii) Vesting of All Stock Options and Rights. All of Executives unvested stock options, stock appreciation rights, shares of restricted stock and any other unvested equity awards will vest. The remaining provisions of Executives stock options, stock appreciation rights, restricted stock and other equity awards, as governed by the applicable stock or equity incentive plan of the Company, will continue in full force and effect, provided, however, that vested options and stock appreciation rights will lapse if not exercised before midnight on the day that is twelve (12) months after the Executives Termination Date, or earlier in accordance with the expiration of the term of the option or stock appreciation right.
c. Compliance with Code Section 409A: Termination Date after Change in Control. The Company and Executive intend that payments under Section 7.4(b)(i) made in the event Executives Termination Date occurs within three hundred and sixty five (365) days after a Change of Control will constitute payments on account of an involuntary separation from service as described in Section 7.2(d) up until the lesser of: (a) two times (2x) the Executives annualized compensation based upon the annual rate of pay in effect for the taxable year preceding the termination (including any Incentive Compensation paid), adjusted for any increase for the year of termination if such increase was expected to continue indefinitely; and (b) the maximum amount that may be taken into account under a qualified plan pursuant to Code section 401(a)(17) for the year in which the Executive terminates employment (the lesser of (a) and (b) referred to herein as the Limit). In the event the Enhanced Severance Pay exceeds the Limit, the remaining payments will constitute deferred compensation subject to Code Section 409A and will be subject to the delayed payment restrictions of Section 7.9. In any event, neither party will be liable to the other if any such payment receives different tax treatment.
d. Compliance with Code Section 409A: Termination Date before Change in Control. The Company and Executive intend that (i) in the event Executives Termination Date occurs within one hundred eighty (180) days before a Change in Control, the Base Severance Payments paid on account of the Executives Termination Date will constitute payments on account of an involuntary separation from service as described in Section 7.2(d) up until the Limit, and amounts in excess of the Limit will constitute deferred compensation subject to Code Section 409A and will be subject to the delayed payment restrictions of Section 7.9, and (ii) the Enhanced Severance Payments made upon the subsequent Change in Control will constitute deferred compensation subject to Code Section 409A and will be subject to the delayed payment restrictions of Section 7.9. In any event, neither party will be liable to the other if any such payment receives different tax treatment.
7.5 TERMINATION UPON DEATH OR DISABILITY OF EXECUTIVE.
a. Upon Executives death while employed pursuant to this Agreement, this Agreement will automatically terminate.
b. Subject to applicable state and federal law, the Company will at all times have the right, upon thirty (30) days written notice to Executive, to terminate this Agreement based on Executives Disability.
c. In the event Executives employment is terminated due to Executives death or Disability, the Company will pay to Executive or Executives heirs or estate all Standard Termination Payments together with any other compensation and benefits payable to Executive through the Executives Termination Date under any compensation or benefit plan, program or arrangement during such period. In addition, if Executive, or if Executive is deceased, a participant on Executives health insurance plan, elects COBRA coverage, the Company will pay its third party administrator the full cost of COBRA coverage for twelve (12) months from the Executives Termination Date.
7.6 Notice; Effective Date of Termination.
a. Termination of Executives employment pursuant to this Agreement will be effective on the earliest of:
(i) excluding a termination due to Executives death or Disability, the date on which the Company gives notice to Executive of Executives termination, with or without Cause, unless the Company specifies a later date, in which case, termination will be effective as of such later date;
(ii) the date of Executives death;
(iii) ten (10) days after the Company gives notice to Executive of Executives termination on account of Executives Disability; or
(iv) thirty (30) days after Executive gives written notice to the Company of Executives resignation, provided that the Company may set a termination date at any time between the date of notice and the 30th day thereafter (i.e., the effective date of resignation, but for this Section 7.6(a)), in which case the Executives resignation will be effective as of such earlier date (the date on which Executives resignation becomes effective, the Actual Resignation Effective Date).
b. In the event that notice of a termination is given orally, at the other partys request, the party giving notice must provide written confirmation of such notice within five (5) business days of the request. In the event of a termination for Cause, written confirmation will specify the subsection(s) of the definition of Cause being relied on by the Company to support the decision to terminate for Cause, to afford Executive a reasonable opportunity to effect a cure, if permitted and possible under the applicable subsections of the definition of Cause. In the event of a resignation for Good Reason, written confirmation will specify the subsection(s) of the definition of Good Reason being relied on by Executive to support the decision to resign for Good Reason, to afford the Company a reasonable opportunity to cure under the applicable subsections of the definition of Good Reason.
7.7 COOPERATION WITH THE COMPANY AFTER TERMINATION OF EMPLOYMENT. Notwithstanding anything to the contrary contained herein, payment of the amounts specified in this Agreement is conditional upon Executive reasonably cooperating with the Company in connection with any Change in Control or proposed Change in Control and all matters relating to Executives employment with the Company, assisting the Company as reasonably requested in transitioning Executives responsibilities to Executives replacement, and Executive being available to answer questions and provide transition assistance to the Company through the end of the period during which Severance Benefits or Enhanced Severance Benefits are to be paid. Following Executives Termination Date, such assistance will be provided at mutually acceptable times, and in reasonable amounts, taking into account other commitments that Executive may have. Executive agrees to use Executives best efforts to minimize any conflicts with other commitments to facilitate this assistance. The Company agrees to reimburse Executive for reasonable out of pocket, pre-approved expenses incurred in providing such assistance.
7.8 APPLICATION OF SECTION 280G. In the event that it is determined that the Severance Benefit payable to Executive pursuant to Section 7 of this Agreement, when added to any other payment or benefit to Executive from the Company (including the acceleration of equity awards pursuant to Section 7.4(b)(iii)) that would be considered a parachute payment (a Parachute Payment), within the meaning of section 280G of the Code, would cause Executive to be considered to receive an excess parachute payment within the meaning of section 280G of the Code (an Excess Parachute Payment), the amount payable to Executive pursuant to Section 7 of this Agreement will be reduced to the maximum amount that, when added to any other Parachute Payments made to Executive, could be paid to Executive without causing Executive to receive an Excess Parachute Payment. Notwithstanding the foregoing, the Severance Benefit payable to Executive pursuant to Section 7 of this Agreement will not be reduced if (i) the net amount payable to Executive without the reduction described in the preceding sentence, but reduced by all Federal, state and local income and employment taxes payable by Executive on the Severance Benefit payable pursuant to this Agreement and all other Parachute Payments plus the excise tax payable on the Excess Parachute Payment pursuant to Section 4999 of the Code, is greater than (ii) the net amount that would be payable to Executive
with the reduction described in the preceding sentence and reduced by all Federal, state and local income and employment taxes payable by Executive on the Severance Benefit payable pursuant to this Agreement and all other Parachute Payments. For purposes of this Section 7.8, Executive will be deemed to pay Federal income tax and employment taxes at the highest marginal rate of Federal income and employment taxation in the calendar year in which the Excess Parachute Payment would occur and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executives residence in the calendar year in which the Excess Parachute Payment would be made, net of the reduction in Federal income taxes that Executive may obtain from the deduction of such state and local income taxes. In addition, all determinations to be made under this Section 7.8 will be made by the Companys independent public accountant (the Accounting Firm) immediately before the date the Severance Benefit under Section 7 is to be paid. The Accounting Firm will provide its determinations and any supporting calculations and work papers both to the Company and to Executive within ten (10) days of such date, and any such determination by the Accounting Firm will be binding upon the Company and Executive.
7.9 DEFERRED COMPENSATION SUBJECT TO CODE SECTION 409A. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement that constitute deferred compensation within the meaning of Code Section 409A will not commence in connection with Executives termination of employment unless and until Executive has also incurred a separation from service (as such term is defined in Treasury Regulation Section 1.409A-1(h) (Separation From Service), unless the Company reasonably determines that such amounts may be provided to Executive without causing Executive to incur additional tax under Code Section 409A. It is intended that each installment of Severance Benefits provided for in this Agreement is a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that Severance Benefits set forth in this Agreement satisfy, to the greatest extent possible, the exceptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A- 1(b)(9). If the Company (or, if applicable, the successor entity thereto) determines that any payments or benefits constitute deferred compensation under Code Section 409A and Executive is, on the termination of service, a specified Executive of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences to Executive under Section 409A, the timing of the payments and benefits will be delayed until the earlier to occur of: (a) the date that is six (6) months and one day after Executives Separation From Service, or (b) the date of Executives death (such applicable date, the Specified Executive Initial Payment Date). On the Specified Executive Initial Payment Date, the Company (or the successor entity thereto, as applicable) will (i) pay to Executive a lump sum amount equal to the sum of the payments and benefits that Executive would otherwise have received through the Specified Executive Initial Payment Date if the commencement of the payment of such amounts had not been so delayed pursuant to this Section 7.9 and (ii) commence paying the balance of the payments and benefits in accordance with the applicable payment schedules set forth in this Agreement.
8. GENERAL PROVISIONS.
8.1 NOTICES. Any notice required or permitted under this Agreement will be given in writing by delivery in hand, express courier or by postage prepaid, United States first class mail; registered or certified mail, return receipt requested; facsimile at the partys specified address; or as otherwise specified by a party. Notice will be effective upon receipt.
8.2 RIGHT TO INJUNCTIVE RELIEF. Executive agrees and acknowledges that a violation of the covenants contained in Section 4 of this Agreement will cause irreparable damage to the Company, and that it is and will be impossible to estimate or determine the damage that will be suffered by the Company in the event of breach by Executive of any such covenant. Therefore, Executive further agrees that, in the event of any violation or threatened violation of such covenants, the Company will be entitled to an injunction issued by any court of competent jurisdiction restraining such violation or threatened violation by Executive, such right to an injunction to be cumulative and in addition to whatever other remedies the Company may have.
8.3 PARTIAL INVALIDITY/SEVERABILITY/NO AMENDMENT OF EXISTING AGREEMENTS. Executive acknowledges that the periods of time and geographic area of restrictions imposed by Section 4 are fair and reasonable and are reasonably required for the protection of the Company. If any part or parts of Section 4 will be held to be unenforceable or invalid, the remaining parts thereof will nevertheless continue to be valid and enforceable as though the invalid portion or portions were not a part hereof. If any of the provisions of Section 4 relating to the scope of restrictions, periods of time or geographic area of restriction will be deemed to exceed the scope of restrictions, maximum periods of time or area which a court of competent jurisdiction would deem enforceable, the scope of restrictions, time and area will, for purposes of Section 4, be deemed to be the maximum scope, time periods and area which a court of competent jurisdiction would deem valid and enforceable. If any other paragraph or subparagraph of this Agreement will be unenforceable under any applicable law, the remainder of this Agreement will remain in full force and effect. Except as specifically provided herein, nothing in this Agreement is intended to modify any existing agreements between the Company and Executive with regard to the matters in Section 4.
8.4 WAIVER. If either party should waive any breach of any provisions of this Agreement, such party will not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement. It is agreed that no delay or omission to exercise any right, power or remedy accruing to either party, upon any breach, default or noncompliance by the other party under this Agreement will impair any such right, power or remedy, nor will it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on either partys part of any breach, default or noncompliance under this Agreement or any waiver on such partys part of any provisions or conditions of the Agreement must be in writing and will be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement by law, or otherwise afforded to either party, will be cumulative and not alternative.
8.5 WITHHOLDING. All amounts payable hereunder will be reduced by any and all federal, state, and local taxes imposed upon the Executive that are required to be paid or withheld by the Company.
8.6 COMPLETE AGREEMENT. This Agreement constitutes the entire agreement between Executive and the Company with regard to the subject matter hereof. This Agreement is the complete, final, and exclusive embodiment of the parties agreement with regard to this subject matter and supersedes any prior oral discussions or written communications and agreements, including but not limited to any Previous Agreements. This Agreement is entered into without reliance on any promise or representation other than those expressly contained herein, and it cannot be modified or amended except in writing signed by Executive and an authorized officer of the Company. The parties may enter into separate agreement(s) related to stock options, stock awards or other matters relative to Executives service with the Company or its affiliates. These separate agreements govern (or may govern) other aspects of the relationship between the parties, have or may have provisions that survive termination of Executives employment under this Agreement, may be amended or superseded by the parties without regard to this Agreement and are enforceable according to their terms without regard to the enforcement provision of this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in separate counterparts, including facsimile, PDF, or other electronic 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.
8.8 HEADINGS. The headings of the sections hereof are inserted for convenience only and will not be deemed to constitute a part hereof nor to affect the meaning thereof.
8.9 SUCCESSORS AND ASSIGNS. The Company may assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any company or other entity with or into which the
Company may hereafter merge, consolidate, or be acquired by, or to which the Company may transfer all or substantially all of its assets. Executive may not assign or transfer this Agreement or any rights or obligations hereunder, other than to Executives estate upon Executives death.
8.10 CHOICE OF LAW/VENUE. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal, substantive laws of the State of Colorado, as applied to agreements made and to be performed solely within the State of Colorado and without regard to the principles of conflicts of laws of the State of Colorado or of any other jurisdiction that would result in the application of the laws of any other jurisdiction to this Agreement. Any action brought to enforce this Agreement will be brought in Colorado in a court of competent jurisdiction.
8.11 ATTORNEYS FEES. In any action brought to enforce this Agreement, the substantially prevailing party in such dispute will be entitled to recover from the losing party all reasonable fees, costs and expenses of enforcing any right of such substantially prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys, which will include, without limitation, all fees, costs and expenses of appeals.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first written above.
Company:
EVOLVING SYSTEMS, INC.
By: |
/s/ THOMAS THEKKETHALA |
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Thomas Thekkethala |
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Title: President & CEO |
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Executive: JULIE GOSAL HOARAU |
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/s/ JULIE GOSAL HOARAU |
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[Signature Page to Employment Agreement]
Exhibit A
1. Paid Time Off. Paid Time Off (PTO) will be 4 weeks per year. Executive will be expected to record PTO in accordance with standard Company policy and all other provisions of the Companys PTO policy will apply.
2. Benefits. Executive will be eligible to participate in the Companys benefit plans available for Company employees as outlined in the Employee Handbook.
3. Initial Equity Award: 50,000 Stock options and 7500 Restricted Stock Awards in Evolving Systems, Inc. These will vest ratably over a 4 year period with Cliff vesting: one-fourth of the options and restricted stock awards will vest on the one year anniversary of the grant and the balance will vest quarterly over the remaining three-year period. The exercise price for options will be the closing price on the date of grant which will be within 15 days of the Employees Start Date.