Exhibit 10.11

 

SEVERANCE AGREEMENT

 

This Agreement is made as of the 8th day of November 2000 between TANGRAM
ENTERPRISE SOLUTIONS, INC., a Pennsylvania corporation (“Tangram”), and Norman
L. Phelps (“Employee”) against the following background:

 

A. Employee is employed by Tangram as President and Chief Executive Officer.

 

B. Employee possesses knowledge, experience and skill that Tangram believes are
important for the future growth and success of Tangram.

 

C. The parties now wish to enter into this Agreement.

 

NOW, THEREFORE, intending to be legally bound hereby, and in consideration of
the mutual agreements contained herein, the parties hereto agree as follows:

 

1. Definitions. The following terms shall have the meanings assigned for
purposes of this Agreement:

 

(a) “Cause” means:

 

  (i)   conviction in a court of law for any felony offense which was committed
in connection with the Employee’s employment with Tangram or which materially
and adversely affects the reputation or business activities of Tangram,

 

  (ii)   willful misconduct which materially and adversely affects the
reputation or business activities of Tangram and which continues after written
notice by the Company to the Employee or

 

  (iii)   the Employee’s continuing material refusal to perform his duties as an
employee, other than under the circumstances contemplated by Section 1(c)(ii),
after receiving written notice from the Board of Directors of Tangram stating
with specificity the nature of such failure or such refusal and, if requested by
the Employee within ten days thereafter, the Employee’s opportunity to appear
before the Board of Directors to respond to such notice.

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(b) The term “Change in Control” means the first to occur of the following
events:

 

  (i)   any person or group of commonly controlled persons other than Safeguard
Scientifics, Inc. (“Safeguard”) or any affiliate of Safeguard, owns or controls,
directly or indirectly, 50 percent (50%) or more of the voting control of the
capital stock of Tangram following the date of this agreement;

 

  (ii)   following the date of this Agreement, the stockholders of Tangram
approve an agreement to merge or consolidate with another corporation or entity
other than any affiliate of Safeguard resulting (whether separately or in
conjunction with a series of transactions) in a change in ownership of 50
percent (50%) or more of the voting control value of the capital stock of
Tangram, or an agreement to sell or otherwise dispose of all or substantially
all of the Tangram’s assets (including, without limitation, a plan of
liquidation or dissolution), or otherwise approve of a fundamental alternation
in the nature of Tangram’s business; provided, however, a pledge, hypothecation
or other similar disposition made at the time the Tangram enters into a bona
fide financing transaction with a party which at the time of such transaction is
not an affiliate of the Tangram would not constitute a change in control.

 

(c) “Termination of Employment” means

 

  (i)   termination by Tangram of the employment of the Employee with Tangram
for any reason other than death, physical or mental incapacity or Cause or,

  (ii)   resignation of the Employee within six months after

  (1)   any material adverse change in the Employee’s duties or responsibilities

  (2)   the occurrence of a Change in Control, or

  (3)   a reduction in any component of employees compensation package (base
salary, bonus, benefits or other compensation).

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2. Termination of Employment. In the event of a Termination of Employment,
Tangram shall, in addition to any amounts due for periods prior to the
Termination of Employment:

 

(a) pay the Employee an amount equal to one (1) year of the Employee’s annual
salary at the rate in effect as of the effective date of the Termination of
Employment, payable in equal installments at such times as Tangram pays other
senior executives; provided that if a reduction in salary serves as the basis
for Termination of Employment in Section 1(c), then such salary shall be the
salary in effect prior to such reduction.

 

(b) pay the Employee a pro rata portion of the annual bonus to which the
Employee would otherwise, but for the Termination of Employment, have been
entitled for the year in which the Termination of Employment occurred
proportionate to the portion of the year the Employee was employed by Tangram
prior to the Termination of Employment; and

 

(c) for a period of one additional year following the Termination of Employment,
continue or cause to be continued, the following benefits will be provided at
the same cost and the same terms as in effect for other executives;

 

  (i)   Medical coverage (including dental and vision for Employee and any
previously covered dependents.)

  (ii)   Employee Life Insurance in the amount of $320K and Accidental Death and
Dismemberment benefits

  (iii)   Company paid Long Term Care coverage

  (iv)   Company paid Long Term Disability coverage

  (v)   Participation in the Company’s Flexible Spending Account program

  (vi)   Participation in the Company’s 401K plan, including the employer match

 

Should the Company enhance its benefit package during this period, the Employee
will also be eligible to participate in those programs at the same
cost/contribution required of active employees. If after the one-year severance
period the Employee wishes to remain on the medical/dental coverage, the
Employee will be eligible under COBRA.

 

(d) The Employee will not accrue any vacation, sick, or personal time during the
severance period. However, the Employee will be reimbursed for any accrued,
unused vacation for the year prior to the Termination of Employment.

 

(e) Only in the event of a Change of Control, vest all of the unvested option
shares granted to the Employee under the then outstanding stock option awards.

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3. Agreement Not to Compete. In the event of a Termination of Employment, the
Employee shall not, during a period of one year following his Termination of
Employment, participate without the written consent of Tangram as an employee,
officer, consultant, director, advisor or otherwise in the management or
operation of any business enterprise that engages in direct competition with any
business conducted by Tangram at the time of the Termination of Employment. The
limitations of this paragraph shall not apply to the mere ownership of
securities in any enterprise.

 

4. Confidentiality. The Employee agrees that during and after his employment
with Tangram the Employee will not divulge or appropriate to the Employee’s own
use or the use of others any secret or confidential information or knowledge
pertaining to the business of Tangram obtained during the Employee’s employment
by Tangram unless the information is first disclosed to him by a person not
currently or previously associated with Tangram or becomes publicly known
through no fault of the Employee.

 

5. Effect of Agreement. The special severance arrangements set forth in this
Agreement shall be in lieu of any other severance compensation then provided by
Tangram, its successors or assigns. If the employment of the Employee by Tangram
is terminated in a fashion that does not constitute a Termination of Employment,
the Employee shall have no rights, benefits or obligations under this Agreement
other than to comply with Section 5, provided, however, that this Agreement
shall not limit any other rights or benefits to which he may be entitled as a
result of the Employee’s termination.

 

6. Arbitration. Any disputes between Employee and Tangram in any way concerning
this Agreement, any breach of this Agreement, or this Agreement’s enforcement,
including the applicability of this paragraph, shall be submitted at the
initiative of either party to mandatory arbitration before a single arbitrator
and conducted pursuant to the rules of the American Arbitration Association then
in effect, or its successor, provided, however, that this paragraph does not
apply to, and the parties shall not be required to arbitrate any dispute or
controversy regarding the employee’s duties and obligations described in
paragraph 3 of this Agreement. The arbitrator shall be selected by joint
agreement of the employee and Tangram, but if they do not so agree within 20
days of the date of request for Arbitration, the selection shall be made
pursuant to the rules of the American Association of Arbitration then in effect,
or its successor. The decision of the arbitrator may be entered as judgement in
any court of the State of North Carolina. The Parties agree that the provision
of North Carolina Uniform Arbitration Act, N.C. Gen. Stat. § 1-567.1 et. seq.
shall apply to any controversy arising between them relating to this Agreement
or the failure or refusal to perform the whole or part hereof, provided however,
that neither this paragraph nor the North Carolina Uniform Arbitration Act shall
apply to and the parties shall not be required to arbitrate any dispute or
controversy regarding the Employee’s duties and obligations described in
paragraph 3 of this Agreement.

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7. Withholding of Taxes. Tangram may withhold from any payments under this
Agreement all federal, state or local taxes as shall be required pursuant to any
law, regulation or ruling.

 

8. Notices. Any notices or other communications under this Agreement shall be
sufficient if in writing and delivered in person or sent by fax (with
confirmation), reputable overnight delivery or registered or certified mail to
the Employee at the last address the Employee has filed in writing with Tangram
or, in the case of Tangram, at its principal executive offices.

 

9. Entire Agreement. This Agreement constitutes the entire agreement between the
parties in connection with the subject matter hereof, supersedes any and all
prior agreements or understanding between the parties with respect to the
subject matter hereof and may only be changed by agreement in writing between
the parties.

 

10. Assignment. This Agreement shall be binding upon the parties hereto, the
heirs and legal representatives of the Employee and successors and assigns of
Tangram. Tangram shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of Tangram, by agreement in form and substance satisfactory
to the Employee, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that Tangram would be required to perform it
if no such succession had taken place.

 

11. Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the substantive laws of the State of North Carolina.

 

TANGRAM ENTERPRISE SOLUTIONS, INC.

 

By:

 

/s/ Carl Wilson

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Name:

 

Carl Wilson

Title:

 

Chairman, Compensation Committee

     

 

/s/ Norman L. Phelps

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Norman L. Phelps