EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is entered into as of January 8, 2002,
(the Effective Date) by and between eXcelon Corporation, a Delaware corporation with its principal
offices located at 00 Xxxx Xxxx, Xxxxxxxxxx, XX 00000 (together with its successors and assigns, the
"Company"), and Xxxxxx Xxx, an individual residing at 00 Xxxxxxxxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000
(the "Executive").
WHEREAS, the Executive is currently employed as the President of the Company;
WHEREAS, the Company desires to continue to employ the Executive and has offered such
employment to the Executive, and the Executive desires to continue to be employed by the Company and
has accepted employment by the Company as President, in accordance with the provisions contained in
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein,
the parties agree as follows:
1. TERM. The employment of the Executive pursuant to this Agreement shall commence on the
Effective Date and expire on the first anniversary of the Effective Date (the "Initial Term");
provided, however, that at the expiration of such Initial Term and of any one-year Renewal Term (as
described below), this Agreement shall automatically be extended for an additional one-year renewal
period (each a "Renewal Term"; the Initial Term, as extended by any such Renewal Term, being
hereinafter referred to as the "Term"), unless the Company shall notify the Executive, at least 90
days prior to such expiration, that it elects not to extend this Agreement. Notwithstanding the
foregoing, this Agreement may be earlier terminated in strict accordance with the provisions of
Section 5 of this Agreement.
2. EMPLOYMENT, ACCEPTANCE, DUTIES AND OTHER ACTIVITIES.
2.1. ACCEPTANCE. The Company agrees to employ the Executive during the Term, and the Executive
accepts such employment. As a condition precedent to the Company's obligations hereunder, the
Executive has entered into the attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND
DEVELOPMENTS AGREEMENT with the Company (the "Company Proprietary Rights Agreement"), which is
incorporated herein by reference.
DUTIES. During the Term, Executive shall serve as President , reporting to the CEO; shall have all
authorities, duties and responsibilities as are inherent in, or incident to, such offices; and shall
be assigned no duties or responsibilities that are materially inconsistent with, or that materially
impair his ability to discharge, his duties and responsibilities as President of the Company.
Notwithstanding any provision herein to the contrary, the President's duties will be defined by the
CEO.
2.2. OTHER ACTIVITIES. The Executive shall devote his full business time and attention and
his best efforts to the performance of his duties as an employee of the Company; PROVIDED, HOWEVER,
that the Executive may also engage in the following activities: (i) serving on the boards of a
reasonable number of business entities, trade associations and/or charitable organizations; (ii)
engaging in charitable activities and community affairs; (iii) accepting and fulfilling a reasonable
number of speaking engagements; and (iv) managing his personal investments and affairs; provided
that such activities do not in the aggregate materially interfere with the proper performance of the
Executive's duties and responsibilities as set forth in this Agreement.
3. ACCELERATION OF VESTING AND EXTENSION OF TIME FOR EXERCISE OF OPTIONS IN CERTAIN EVENTS.
(a) Upon the occurrence of any Change in Control, as defined in Section 5.6(b) below,
each option to acquire common stock, $.001 par value ("Common Stock") of the Company that is then
held by the Executive (each an "Option") shall vest immediately, so as to become fully exercisable.
(b) If the Company terminates the Executive's employment Without Cause during the
Initial Term or within twelve (12) months after a Change in Control, or if during either such period
the Executive voluntarily terminates his employment pursuant to Section 5.5(b) below, of if the
Company elects not to extend this agreement pursuant to Section 1, (i) each Option held by the
Executive shall vest immediately so as to become fully exercisable (to the extent not already fully
exercisable), and (ii) the expiration date by which any Option held by the Executive must be
exercised will automatically be extended to the first anniversary of the date of such termination.
4. TERMINATION OF EMPLOYMENT.
4.1. DEFINITION OF TERMS
(a) The Severance Amount shall be a lump sum equal to the sum of (i) the Executive's
then-current monthly salary multiplied by twelve (12), plus (ii) the amount of the maximum
Performance Bonus, including without limitation any and all commissions, pursuant to existing
compensation agreements in effect for the year in which such termination occurs which the Executive
could have earned if he remained in the employ of the Company and all performance goals and other
criteria were met (whether or not such goals or criteria are in fact met), plus (iii) all
compensation owing hereunder to the Executive as of the date of his termination, plus (iii) all
accrued benefits under any retirement plan adopted by the Company for the benefit of its employees.
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(b) The SEVERANCE BENEFITS shall be all allowances and benefits being provided by the
Company to the Executive at the date of his termination, including, but not limited to, medical and
dental insurance benefits; PROVIDED, HOWEVER, that if, and only if, the allowances and benefits
being provided to the Executive on the date the Executive terminates cannot be provided under the
terms of such plans (and such plans cannot be amended by the Board of Directors of the Company to
provide such benefits and allowances without adversely affecting the tax treatment thereof to the
Company or the participants thereunder), the Company shall pay to the Executive, his spouse, his
estate or his legal representative, as the case may be, the value of such allowances and benefits in
a lump sum payment within thirty (30) days after the date the Executive terminates.
4.2. TERMINATION UPON DEATH. The Term of employment of the Executive under this Agreement shall
terminate upon the death of the Executive.
4.3. TERMINATION UPON DISABILITY.
(a) If, during the Term of his employment, the Executive suffers a Disability (as
hereinafter defined) for a period of three (3) consecutive months or more, the Company may, after
the expiration of such three-month period and prior to the Executive resuming his full-time duties
hereunder, terminate the employment of the Executive upon prior written notice to the Executive
which notice shall specify a date (which may be the date of such notice or any later date) as of
which such termination is to become effective (the "Disability Termination Date"). In that event,
Executive shall receive the Severance Amount payable in one lump sum on the effective date of such
termination and the Severance Benefits for a period of twelve (12) months following the termination
of the Executive's employment. Subsequent to the Disability Termination Date, the Executive or his
legal representatives shall be entitled to receive any benefits which may be payable under all
disability insurance policies and disability plans provided by the Company, without offset for any
other insurance or disability payments to which the Executive may be entitled under insurance
policies owned by him.
(b) For purposes of this SUBSECTION 5.3, "Disability" shall mean any mental or
physical condition or incapacity which prevents the Executive from substantially discharging his
duties and responsibilities as an officer of the Company. In the event of a disagreement between the
Company and the Executive as to whether the Executive suffers from a Disability, the Executive shall
submit to the physical or mental examination of a physician licensed under the laws of the State of
Massachusetts who shall be mutually selected by the Executive (or his legal representative) and the
Company, and such physician shall make the determination of whether the Executive suffers from any
Disability. In the absence of fraud or bad faith, the determination of such physician shall be final
and binding upon the Company and the Executive. The entire cost of any such examination shall be
borne by the Company.
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4.4. TERMINATION FOR CAUSE. In the event of termination of the Executive's employment for Cause, all
compensation of the Executive and any other rights the Executive may have under this Agreement shall
cease upon the termination date of his employment, the Executive shall receive no Severance Amount,
no Severance Benefits and no further payments or benefits shall be paid or payable to the Executive
by the Company for any period thereafter, except to the extent that Executive shall have accrued
benefits under any retirement plan adopted by the Company for the benefit of its employees and
except for all compensation owing hereunder to the Executive as of the date of termination for
Cause. For purposes of this Agreement, "Cause" shall mean
(a) being convicted of criminal conduct constituting a felony offense, other than a
traffic offense, whether or not related to the Executive's employment;
(b) gross and repeated negligence in the performance of the Executive's duties on
behalf of the Company which results in a material detriment to the Company and is not cured or
corrected within thirty (30) days after the Executive's receipt of written notice from the Company
referring to this paragraph and describing with specificity the conduct or omission constituting
gross negligence;
(c) fraud or embezzlement with respect to funds of the Company, as determined by the
Board;
(d) the Executive's failure to comply with lawful instructions not inconsistent with
Executive's rights under this Agreement given to the Executive by the Board of Directors or CEO
which is not cured or corrected within thirty (30) days after the Executive's receipt of written
notice from the Company referring to this paragraph and describing with specificity the instructions
with which the Executive did not comply;
(e) the Executive's material failure to comply with reasonable policies, directives,
standards and regulations adopted by the Company which not inconsistent with Executive's rights
under this Agreement, including, without limitation, the Company's policies regarding xxxxxxx
xxxxxxx, except any such failure, that, if capable of cure, is remedied by the Executive within
thirty (30) days after the Executive's receipt of written notice from the Company referring to this
paragraph and describing with specificity the failure of the Executive to comply;
(f) material breach by the Executive of the Company Proprietary Rights Agreement; and
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(g) any intentional act by the Executive that would reasonably be expected to have,
and that does have, a material adverse effect on the goodwill or reputation of the Company or on its
relationships with its customers or employees.
Notwithstanding the foregoing, a refusal by the Executive to move the Executive's residence
away from the Boston area at the Company's request will not constitute a failure to comply under
this paragraph.
4.5. VOLUNTARY TERMINATION BY EXECUTIVE.
(a) The Executive may voluntarily terminate his employment at any time upon ninety
(90) days written notice to the Company. In such case, the Executive shall receive no Severance
Amount, no Severance Benefits and no further payments or benefits shall be paid or payable to the
Executive by the Company for any period after such termination of employment, except to the extent
that Executive shall have accrued benefits under any plan adopted by the Company for the benefit of
its employees generally and except for all compensation owing hereunder to the Executive as of the
date of voluntary termination.
(b) Notwithstanding the foregoing, within 90 days after an Event of Constructive
Termination (as hereinafter defined) the Executive may terminate employment and within thirty (30)
days thereafter, the Company shall pay the Executive (i) the Severance Amount in a single lump sum,
and (ii) Severance Benefits for a period of twelve (12) months. An "Event of Constructive
Termination" shall mean (w) a relocation of the Executive's principal workplace to a location more
than 50 miles from the location of such workplace on the Effective Date without the Executive's
express written consent; (x) a reduction in Executive's base salary and target bonus (as determined
by the Compensation Committee) without the express written consent of the Executive; or a reduction
in duties below that of a divisional president comparable in size to Object Design in May 2001.
4.6. TERMINATION BY THE COMPANY DUE TO A CHANGE IN CONTROL.
(a) If the Company terminates the Executive's employment within twelve (12) months
after a Change in Control (as hereinafter defined), (i) the Executive shall receive the Severance
Amount payable in one lump sum on the effective date of such termination and the Severance Benefits
for a period of twelve (12) months following the termination of the Executive's employment, (ii) the
vesting of all options to purchase common stock $.001 par value, ("Common Stock") of the Company
then held by the Executive (each an "Option") shall be fully accelerated such that all such Options
shall be fully exercisable; and (iii) any other provision of the applicable form of option or stock
option plan notwithstanding, the time within which the Executive may exercise such Option shall be
extended to the first anniversary of the date of termination of the Executive's employment, unless
such extension would cause the option to lose its characterization as an ISO.
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(b) For purposes of this Agreement, a "Change of Control" shall mean the occurrence
after the Effective Date of any of the following: (i) the acquisition by an entity, person, group or
organization of more than 50% of either (x) the then-outstanding shares of common stock of the
Company or (y) the combined voting power of the election of directors for the Company; and/or (ii)
the sale of substantially all of the Company's assets or a merger or sale of stock wherein the
holders of the Company's capital stock immediately prior to such sale do not hold at least a
majority of the outstanding capital stock of the Company or its successor immediately following such
sale; and/or (iii) individuals who, as of the date hereof, constitute the Board of Directors (the
"Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors;
provided, however, that any individual becoming a director subsequently to the date hereof whose
election, or nomination for election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the Board of Directors.
(c) The Company shall require any successor via a Change in Control (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.
4.7. TERMINATION WITHOUT CAUSE OR ELECTION NOT TO EXTEND. In the event that the Executive's
employment under this Agreement is terminated Without Cause (as hereinafter defined) during the
Initial Term, or if the Company elects not to extend this Agreement pursuant to Section 1, the
Company shall pay the Executive, on the date of such termination: (a) the Severance Amount in a
single lump sum and (b) the Severance Benefits for a period of twelve (12) months. Termination
Without Cause shall mean any termination by the Company of Executive's employment under this
Agreement, other than (a) termination upon death in accordance with Section 4.2, (b) termination
upon Disability in accordance with Section 5.3, (c) termination for Cause in accordance with Section
4.4, or (d) constructive termination of the Executive pursuant to Section 4.5(b) above.
5. INDEMNIFICATION.
5.1. The Company agrees that (i) if the Executive is made a party, or is threatened to be
made a party, to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer, employee, agent,
manager, consultant or representative of the Company, or is or was serving at the request of the
Company or in connection with his service under this Agreement or the Prior Agreement, as a director
officer, employee, agent, manager, consultant or representative of another person, or (ii) if any
claim is made, or is threatened to be made, that arises out of or relates to the Executive's service
in any of the foregoing capacities, then the Executive shall promptly be indemnified and held
harmless by the Company to the fullest extent legally permitted, against any and all costs, expenses
liabilities and losses (including, without limitation, judgments, interest, expenses of
investigation, penalties, fines, ERISA excise taxes or penalties, reasonable attorneys' fees, and
amounts paid or to be paid in settlement) incurred or suffered by Executive in connection therewith
and such indemnification shall continue as to the Executive even if he has ceased to be a director,
officer, employee, agent, manager, consultant or representative of the Company and shall inure to
the benefit of the Executive's heirs, executors, administrators and legal representatives.
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5.2. The Company agrees to advance to the Executive all costs and expenses incurred by him
in connection with any event described in this Section 6 to the fullest extent legally permitted
within fifteen (15) days after receiving written notice requesting such an advance, which notice (a)
shall include an undertaking by the Executive to repay the amount advanced if he or she is
ultimately determined not to be entitled to indemnification against such costs and expenses and (b)
shall be accompanied by reasonable documentation of the costs and expenses for which advancement is
sought. No amendment by the Company at any time on or after the Effective Date of the provisions of
the Company's certificates of incorporation or bylaws shall be effective to reduce any of the
Executive's rights to indemnification, or advancement of costs and expenses, under this Section 6.
5.3. During the Term and for a period of six (6) years thereafter, a directors and
officers' liability insurance policy (or policies) shall be kept in place providing comprehensive
coverage to the Executive to the extent that such coverage is then provided by the Company for any
other present or former senior executive or director of the Company with respect to such senior
executive's or director's service as such.
5.4. The provisions of this section shall survive the termination or expiration of this
Agreement, irrespective of the reasons for such termination or expiration.
6. ARBITRATION OF DISPUTES. The parties hereto shall use their best efforts to settle
amicably any disputes, differences, or controversies arising between them arising out of or in
accordance with this Agreement. However, in the event any such disputes, differences, or
controversies are not so settled, the same shall be submitted to, and finally settled by,
arbitration in accordance with the Rules of American Arbitration Association by one or more
arbitrators appointed in accordance with said Rules. Arbitration initiated by either party shall be
held in Boston, Massachusetts. The arbitrator(s) shall have the power to award attorneys' fees to
the prevailing party in their sole discretion. Judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may be.
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7. ATTORNEYS' FEES. In the event a party seeks to enforce any provision of this Agreement
and receives injunctive relief or other equitable relief from a court of competent jurisdiction
which is final and not subject to appeal, such party shall be entitled to recover its reasonable
attorneys' fees and costs incurred with respect to obtaining such relief from the other party. The
provisions of this section are not intended to modify the provisions of Sections 6 and 7 hereof.
8. OTHER PROVISIONS.
8.1. AMOUNTS PAYABLE; WITHHOLDING TAXES. THE COMPANY'S OBLIGATION TO PAY EXECUTIVE THE
AMOUNTS PROVIDED AND TO MAKE THE ARRANGEMENTS PROVIDED HEREUNDER SHALL NOT BE SUBJECT TO SET-OFF,
COUNTERCLAIM OR RECOUPMENT OF AMOUNTS OWED BY EXECUTIVE TO THE COMPANY OR ANY OF ITS AFFILIATES. The
amounts payable by the Company hereunder shall be less any federal, state or local withholding taxes
and social security.
8.2. EXCISE TAX. To the extent that payments or other benefits to the Executive pursuant to
this Agreement (together with any other payments, benefits or stock awards received by the Executive
in connection with a Change in Control) would result in triggering the provisions of the Sections
280G and 4999 of the Internal Revenue Code of 1986, as amended, or other comparable federal, state
or local tax laws, the Company shall pay the Executive such an additional amount as is necessary
(after taking into account all federal, state and local taxes (including any interest and penalties
imposed with respect to such taxes) , including any income or excise tax payable by Executive as a
result of the receipt of such additional amount) to place Executive in the same after-tax position
(including federal, state and local taxes) he or she would have been in had no such excise or
similar purpose tax been paid or incurred. Such payment shall be determined by independent
accountants agreed upon by the Company and the Executive and shall be made as soon as practicable
after the time that any payments set forth in Section 6 hereof are due.
8.3. NOTICES. Any notice or other communication required or permitted hereunder shall be in
writing and shall be deemed given when delivered personally or sent by facsimile transmission (with
confirmation) or, if sent by regular mail, three days after the date of deposit in the United States
mails addressed as follows:
(a) if to the Company, to: eXcelon Corporation
00 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
(b) if to the Executive, to: Xxxxxx Xxx
00 Xxxxxxxxxxxx Xxxxx, Xxxxxxxxxxxx, XX
00000
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or to such other address as either party may from time to time provide to the other by notice as
provided in this section.
8.4. BENEFICIARIES/REFERENCES. The Executive shall be entitled, to the extent permitted
under applicable law, to select and change a beneficiary or beneficiaries to receive any
compensation or benefit under this Agreement, following the Executive's death by giving the Company
written notice thereof. In the event of the Executive's death or a judicial determination of his
incompetence, references in this Agreement to the Executive shall be deemed, where appropriate, to
refer to his beneficiary, transferee, estate or other legal representative.
8.5. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding
between the Company and the Executive, and supersedes all prior negotiations, agreements (including
the Prior Agreement), arrangements, and understandings, both written or oral, between the Company
and the Executive with respect to the subject matter and the Term of this Agreement.
8.6. WAIVER OR AMENDMENT.
(a) The waiver by either party of a breach or violation of any term or provision of
this Agreement by the other party shall not operate or be construed as a waiver of any subsequent
breach or violation of any provision of this Agreement or of any other right or remedy.
(b) No provision in this Agreement may be amended unless such amendment is set forth
in a writing that specifically refers to this Agreement and is signed by the Executive and the
Company.
8.7. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts without regard to its conflict of laws rules.
8.8. ASSIGNMENT. This Agreement shall inure to the benefit of, and shall be binding upon,
each of the Company and the Executive and their respective heirs, personal representatives, legal
representatives, successors and assigns.
8.9. SEVERABILITY. The invalidity of any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall not affect the enforceability of the remaining
portions of this Agreement or any part hereof. If any part of this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed as if such invalid
part had not been inserted.
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8.10. SECTION HEADINGS. The section and subsection headings contained in this Agreement are
for reference purposes only and shall not affect any way the meaning, construction or interpretation
of any or all of the provisions of this Agreement.
8.11. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the
separate parties hereto in separate counterparts, each of which shall be deemed to constitute an
original and all of which shall be deemed to be one and the same instrument.
8.12. AUTHORITY TO EXECUTE. The undersigned officer represents and warrants that he or she
has full power and authority to enter into this Agreement on behalf of the Company, and that the
execution, delivery and performance of this Agreement have been authorized by the Board of Directors
of the Company. Upon the Executive's acceptance of this Agreement by signing and returning it to the
Company, this Agreement will become binding upon the Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
written above.
EXECUTIVE EXCELON CORPORATION
By: /s/ Xxxxxx Xxxxxxx
By: /s/ Xxxxxx Xxx --------------------------------
---------------------------- Xxxxxx Xxxxxxx
Xxxxxx Xxx Chief Executive Officer
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