EX-10.2



 






EXHIBIT 10.2




EMPLOYMENT AGREEMENT




     This Employment Agreement (this “Agreement”) is entered into by and between Knova
Software, Inc., a Delaware corporation (“Knova” or the “Company”) and Thomas J. Muise (the
“Executive”), on this 23rd day of June 2005 (the “Effective Date”).



     1. Duties and Scope of Employment.



          (a) Position. For the term of his employment under this Agreement, the Company agrees
to employ Executive in the position of Chief Financial Officer reporting to the Chief Executive
Officer.




          (b) Obligations to the Company. During the term of his employment, Executive shall
devote his full business efforts and time to the Company; provided, however, that nothing herein
shall prohibit Executive from rendering charitable services of any nature to any person or
organization to the extent such services do not materially impact the ability of Executive to
fulfill his obligations to the Company. Executive shall be permitted to serve as a member of the
board of directors of the companies listed on Exhibit A attached hereto, which list may be
supplemented with additional board memberships at the Executive’s request and the prior written
consent of the Company’s Board of Directors (the “Board of Directors”). Executive shall comply
with the Company’s policies and rules, as they may be in effect from time to time during the term
of his employment.




          (c) No Conflicting Obligations. Executive represents and warrants to the Company that
he is under no obligations or commitments, whether contractual or otherwise, that are inconsistent
with his obligations under this Agreement. Executive represents and warrants that he will not use
or disclose, in connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other person has any
right, title or interest and that his employment by the Company as contemplated by this Agreement
will not infringe or violate the rights of any other person or entity. Executive represents and
warrants to the Company that he has returned, to his knowledge, all property and confidential
information belonging to any prior employers.




          (d) Effective Date. Executive shall commence full-time Employment under the terms of
this Agreement on the Effective Date.




     2. Cash and Incentive Compensation.



          (a) Salary. The Company shall pay Executive as compensation for his services a base
salary at a gross monthly rate of $14,583.33 (an annualized base salary of $175,000.00), payable in
accordance with the Company’s standard payroll schedule. The Compensation Committee of the Board
of Directors shall review Executive’s Base Compensation on at least an annual basis. The
compensation specified in this Section 2(a), together with any increases in such compensation that
the Company may grant from time to time, is referred to in this Agreement as “Base Compensation.”




 









 








          (b) Annual Bonus. For each fiscal year during his employment, Executive shall have
the opportunity to earn an annual performance bonus based on reasonable criteria set forth in an
incentive bonus plan established by the Compensation Committee of the Board of Directors and the
Chief Executive Officer of the Company (“CEO”) after consultation with Executive (the “Annual
Bonus”). Upon full attainment of the performance criteria established by the Compensation
Committee, the Annual Bonus will be equal to $52,500, but for less than full achievement of such
performance criteria, the Annual Bonus shall be a lesser amount in accordance with a specific
formula determined by the CEO after consultation with Executive. Except as otherwise provided in
this Agreement, Executive’s receipt of the Annual Bonus shall be contingent upon Executive’s
continued employment through the end of the bonus period with respect to which it is payable;
provided, Executive shall have the right to any pro rata portion of the Annual Bonus in the event
his employment terminates prior to the end of such bonus period. The Annual Bonus shall be
determined in good faith by the Company as soon as practicable after the end of each bonus period
with respect to which it is payable. The determinations of the Company with respect to the Annual
Bonus shall be final and binding on Executive. The Company’s incentive bonus plan will be reviewed
periodically by the CEO and Compensation Committee of the Board of Directors.




     3. Executive Benefits. During the term of his employment, Executive shall be eligible
to participate in any employee benefit plans maintained by the Company for similarly situated
employees, subject in each case to the generally applicable terms and conditions of the plan in
question and to the determinations of any person or committee administering such plan.



     4. Paid Time Off. During the term of his employment, Executive shall be eligible for
three (3) weeks of paid time off per year in accordance with the Company’s standard accrual and
other policies, as such policies may be amended from time to time.



     5. Equity.



          (a) Grant of Stock Options. Subject to the approval of the Company’s Compensation
Committee and, if required, Board of Directors, Executive shall be granted a stock option to
purchase 88,000 shares of the Company’s common stock under the Knova Software, Inc. 2000 Stock
Incentive Plan (the “Plan”), subject to adjustment for stock dividends, stock splits,
recapitalizations and the like. Such option shall be granted as soon as reasonably practicable
after the Effective Date of this Agreement. The per share exercise price of the option will be
equal to the closing price of the Company’s stock on the date of grant. The term of such option
shall be ten (10) years, subject to earlier expiration in the event of the termination of
Executive’s service with the Company. Subject to the terms of the Plan and the Grant Agreement (as
defined below), during your employment with the Company the option will vest and become exercisable
as follows: (a) 25% of the option shares will become exercisable in a lump sum on the one year
anniversary of the Effective Date; and (b) the remaining 75% will become exercisable in thirty six
(36) equal, successive monthly installments commencing on the thirteen month anniversary of the
Effective Date.




          (b) Exercise of Options. The stock options granted pursuant to Section 5(a) above
shall be subject to the Company’s standard form of stock option agreements




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(the “Grant Agreement”), copies of which must be executed by Executive as a condition of the
grant and exercise.




     6. Expenses. During the term of his employment, Executive shall be authorized to
incur necessary and reasonable travel, entertainment and other business expenses in connection with
his duties hereunder. The Company shall reimburse Executive for such expenses upon presentation of
an itemized account and appropriate supporting documentation, all in accordance with the Company’s
generally applicable policies.



     7. Term of Employment.



          (a) Basic Rule. Executive’s employment with the Company shall be “at will,” and
either Executive or the Company may terminate Executive’s employment at any time, for any reason,
with or without Cause. Any contrary representations, which may have been made to Executive shall
be superseded by this Agreement. This Agreement shall constitute the full and complete agreement
between Executive and the Company on the “at will” nature of Executive’s employment, which may only
be changed in an express written agreement signed by Executive and a duly authorized member of the
Board of Directors. Executive’s employment shall terminate automatically in the event of his death
or permanent disability.




          (b) Rights Upon Termination. Except as expressly provided in Sections 7 and 8, upon
the termination of Executive’s employment, Executive shall only be entitled to the compensation,
benefits and reimbursements described in Sections 2, 3, 4 and 6 for the period preceding the
effective date of the termination. The payments in full under this Agreement shall discharge all
responsibilities of the Company to Executive.




          (c) Termination of Agreement. This Agreement shall terminate when all obligations of
the parties hereunder have been satisfied. The termination of this Agreement shall not limit or
otherwise affect any of Executive’s obligations under Section 10, which shall survive the
termination of this Agreement.




     8. Termination Benefits. If Executive’s employment with the Company is terminated at
any time by the Company without Cause or by Executive for Good Reason, then Executive shall be
entitled to receive the following severance and other benefits:


(a) Severance. The Company shall continue to pay Executive’s Base Compensation until the
earlier of the following dates: (A) the date which is six (6) months from the date of termination,
or (B) the date that Executive accepts other full time employment (as applicable, the “Severance
End Date”). In addition, within fifteen (15) days after the termination, Executive shall be
entitled to receive payment of a prorata portion of the Annual Bonus amount for the calendar year
of termination.




          (b) Health Benefits. In the event Executive elects to continue his health insurance
coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the
termination of his employment, then the Company shall pay Executive’s monthly premium under COBRA
until the Severance End Date.




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          (c) Option Acceleration. In the event that Executive’s employment is terminated
within twelve (12) months following a Change in Control, as defined below, 50% of his outstanding,
unvested options as of the date of termination shall immediately vest, provided, however, that if
the date of termination is on or prior to the first year anniversary of the Effective Date, then
the options granted in Section 5(a) above will be deemed to have vested on a monthly basis over 48
months commencing on the Effective Date.




          (d) Definitions.




               (i) Cause. For all purposes under this Agreement, “Cause” shall mean:



                    (a) Any material breach of this Agreement or the Employee Proprietary Information Agreement
between Executive and the Company;



                    (b) Commission of any act of gross negligence, willful misconduct or fraud with respect to the
Company or any of its affiliates causing material harm to the business, assets or reputation of the
Company or any of its affiliates;



                    (c) Conviction (including plea of no contest) of a felony or crime involving moral turpitude;



                    (d) Executive’s unauthorized use or disclosure of the confidential information or trade
secrets of the Company or any of its affiliates which use causes material harm to the Company or
any of its affiliates; or



                    (e) Material misappropriation of the assets of the Company.



               (ii) Change of Control. For all purposes under this Agreement, “Change of Control”
shall mean:



                    (a) The closing of a consolidation or merger of the Company with or into any other corporation
or corporations in which the holders of the Company’s outstanding shares immediately before such
consolidation or merger do not, immediately after such consolidation or merger, retain stock
representing a majority of the voting power of the surviving corporation of such consolidation or
merger;



                    (b) The approval by the Company shareholders of a plan of complete liquidation of the Company;



                    (c) A sale of all or substantially all of the assets of the Company; or



                    (d) Any transaction (or series of related transactions involving a person or entity, or group
of affiliated persons or entities) in which in excess of fifty percent (50%) of the Company’s
outstanding voting power is transferred.



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               (iii) Good Reason. For all purposes under this Agreement, “Good Reason” shall mean any
of the following are undertaken without Executive’s prior written consent:



                    (a) Any material and substantial adverse change in the Executive’s title, position or
authority within the Company;



                    (b) Any material decrease in Executive’s compensation package or benefits;




                    (c) The death or permanent disability of Executive;




                    (d) A relocation of your business office to a location more than fifty (50) miles from
the location at which you performed your duties as of the effective date of the Change of
Control, except for required travel by you on the Company’s business to an extent
substantially consistent with your business travel obligations prior to the effective date
of the Change of Control.




                    (e) A material breach by the Company of any provision of a material agreement between
you and the Company concerning the terms and conditions of your employment provided,
however, that Executive shall first provide the Company’s CEO or Board of Directors with
detailed, written notice of breach and afford the Company a thirty (30) day opportunity to
cure such breach.



               (e) Release. In partial consideration of Executive’s receipt of any benefits under
this Section 8, Executive shall execute a Release (the “Release”), in a form mutually acceptable to
both the Company and the Executive, which shall among other terms and conditions include a release
of Executive’s rights and claims in existence at the time of such execution of the Release and
shall exclude any continuing obligations the Company may have to Executive following his
termination of employment under this Agreement, any stock option agreement or any other agreement
providing for obligations to survive his termination of employment.



     9. Limitation on Payments.



             (a) Limitation. In the event that the accelerated vesting, severance and other
benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute
payments” within the meaning of Section 280G of the Internal Revenue Code (the “Code”) and (ii)
would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
Executive’s accelerated vesting, severance and other benefits under this Agreement shall be either
(x) delivered in full or, (y) delivered in a manner that would result in no portion of such
benefits being subject to the Excise Tax (with cash payments being reduced before stock option
compensation), 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 Executive on an
after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of
such benefits may be taxable under Section 4999 of the Code.




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          (b) Determination by Accountants. Unless the Company and Executive otherwise agree in
writing, any determination required under this Section 9, including whether and to what extent the
payments to Executive shall be reduced and the assumptions to be utilized in arriving at such
determination, shall be made by the nationally recognized certified public accounting firm used by
the Company immediately prior to the Change of Control or, if such firm declines to serve, such
other nationally recognized certified public accounting firm as may be designated by Executive (the
“Accountants”). Such determination shall be made as soon as practicable following the Change of
Control. The Accountants shall provide detailed supporting calculations both to the Company and
Executive at such time as is requested by the Company. For purpose of making the calculations
required by this Section 9, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the
application of Section 280G and 4999 of the Code. The Company and Executive shall furnish to the
Accountants such information and documents as the Accountants may reasonably request in order to
make a determination under this Section 9. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations by this Section 9.




     10. Non-Disclosure; Restrictive Covenants.



          (a) As a condition of employment, Executive has entered into a Proprietary Information
Agreement with the Company, which is incorporated herein by reference (the “Proprietary Information
Agreement”).




          (b) Because the Executive acknowledges and agrees that, in conjunction with his employment
with the Company, he will have access to confidential and trade secret information of the Company,
the following restrictive covenant is necessary to protect the interests and continued success of
the Company. Except as otherwise expressly consented to in writing by the Company, during the time
period that begins on the Effective Date and ends twelve (12) months from the date of termination
of Executive’s employment (the “Restricted Period”), the Executive shall not, directly or
indirectly, acting as an employee, owner, shareholder, partner, joint venturer, officer, director,
agent, salesperson, consultant, advisor, investor or principal of any corporation or other business
entity:




               (i) request or otherwise attempt to induce or influence, directly or indirectly, any customer
or supplier, or prospective customer or supplier, of the Company, or other persons sharing a
business relationship with the Company, to cancel, limit or postpone their business with the
Company, or otherwise take action which might be to the material disadvantage of the Company; or



               (ii) hire or solicit for employment or other business relationship, or induce or actively
attempt to influence, any employee, officer , director or other business associate of the Company
to terminate his or her employment or discontinue such person’s consultant, contractor or other
business association with the Company.



          (c) If the Executive violates any of the restrictions contained in this section, the
Restricted Period shall be increased by the period of time from the commencement of any such
violation until the time such violation shall be cured by the Executive to the





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satisfaction of the Company, and the Company may withhold any and all payments otherwise due
and owing to the Executive under this Agreement, if any, other than Base Salary.




          (d) The Executive acknowledges that, due to the nature of the Company’s business, the scope of
the provisions set forth in Section 10(b) are reasonable and necessary for the protection of the
business and goodwill of the Company. The Executive agrees that any breach of Section 10 will
cause the Company substantial harm and therefore, in the event of any such breach, in addition to
such other remedies that may be available, the Company shall have the right to seek a temporary
restraining order, preliminary injunctive relief and permanent injunctive relief.




     11. Successors.



          (a) Company’s Successors. This Agreement shall be binding upon any successor (whether
direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
to all or substantially all of the Company’s business and/or assets. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s business and/or assets
that becomes bound by this Agreement.




          (b) Executive’s Successors. This Agreement and all rights of Executive hereunder
shall inure to the benefit of, and be enforceable by, Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.




     12. Miscellaneous Provisions.



          (a) Notice. 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 when mailed
by overnight courier, U.S. registered or certified mail, return receipt requested and postage
prepaid. In the case of Executive, 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) Modifications and Waivers. 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 Executive and by an authorized officer of the Company (other than Executive). 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. This Agreement supercedes any prior offer letters, employment
agreements or the like previously entered into between the Executive and the Company. No other
agreements, representations or understandings (whether oral or written) which are not expressly set
forth in this Agreement have been made or entered into by either party with respect to the subject
matter of this Agreement. This Agreement, the Proprietary Information Agreement, and any stock
option agreement and Company stock plan between





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Executive and the Company contain the entire understanding of the parties with respect to the
subject matter hereof.




          (d) Withholding Taxes. All payments made under this Agreement shall be subject to
reduction to reflect taxes or other charges required to be withheld by law.




          (e) Choice of Law and Jurisdiction. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the State of California,
without giving effect to any choice or conflict of law provision or rule (whether in the State of
California or any other jurisdiction) that would cause the application of laws of any jurisdictions
other than those of the State of California. The parties hereby consent to the exclusive
jurisdiction of the state and federal courts located within the County of Santa Clara, California
for the resolution of all disputes arising under this Agreement or otherwise related to the
employment of the Executive with the Company.




          (f) 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.




          (g) No Assignment. This Agreement and all rights and obligations of Executive
hereunder are personal to Executive and may not be transferred or assigned by Executive at any
time. The Company may assign its rights under this Agreement to any entity that assumes the
Company’s obligations hereunder in connection with any sale or transfer of all or a substantial
portion of the Company’s assets to such entity.




          (h) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.




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     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 first above written.



	 	 	 	 	 
	 	 	EXECUTIVE
	 
	 	 	 	 
	 	 	 
	 	 	THOMAS J. MUISE
	 
	 	 	 	 
	 	 	KNOVA SOFTWARE, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Bruce Armstrong, CEO






SIGNATURE PAGE TO EMPLOYMENT AGREEMENT





 









 








EXHIBIT A




CURRENT BOARD MEMBERSHIPS




None.