Exhibit 10.11
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made effective this 1st day of
January, 2003, by and between LEVEL 8 SYSTEMS, INC., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇, a resident of the State of New Jersey (the
"Employee").
In consideration of the mutual covenants, promises and conditions set forth in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Employee and Employee hereby
accepts such employment upon the terms and conditions set forth in this
Agreement.
2. Duties of Employee. Employee's title will be Chief Executive Officer and
Chief Technology Officer. Employee will be based in New Jersey. Employee
agrees to perform and discharge such other duties as may be assigned to
Employee from time to time by the Company to the reasonable satisfaction
of the Company, and such duties will be consistent with those duties
regularly and customarily assigned by the Company to the position of Chief
Executive Officer and Chief Technology Officer. In addition, Employee
shall serve as Chairman of the Board of Directors so long as he is elected
to such post by the Board of Directors according to the By-Laws of the
Company. Employee also agrees to comply with all of the Company's
policies, standards and regulations and to follow the instructions and
directives as promulgated by the Board of Directors of the Company.
Employee will devote Employee's full professional and business-related
time, skills and best efforts to such duties and will not, during the term
of this Agreement, be engaged (whether or not during normal business
hours) in any other business or professional activity, whether or not such
activity is pursued for gain, profit or other pecuniary advantage, without
the prior written consent of the Board of Directors of the Company. This
Section will not be construed to prevent Employee from (a) investing
personal assets in businesses which do not compete with the Company in
such form or manner that will not require any services on the part of
Employee in the operation or the affairs of the companies in which such
investments are made and in which Employee's participation is solely that
of an investor; (b) purchasing securities in any corporation whose
securities are listed on a national securities exchange or regularly
traded in the over-the-counter market, provided that Employee at no time
owns, directly or indirectly, in excess of one percent (1%) of the
outstanding stock of any class of any such corporation engaged in a
business competitive with that of the Company; or (c) participating in
conferences, preparing and publishing papers or books, teaching or joining
or participating in any professional associations or trade group.
3. Term. The term of this Agreement will be at-will, and can be terminated by
either party at any time, with or without cause, subject to the provisions
of Section 4 of this Agreement.
4. Termination.
(a) Termination by Company for Cause. The Company may terminate this
Agreement and all of its obligations hereunder immediately,
including the obligation to pay Employee severance, vacation pay or
any further benefits or remuneration, if any of the following events
occur:
(i) Employee materially breaches any of the terms or conditions
set forth in this Agreement and fails to cure such breach
within ten (10) days after Employee's receipt from the Company
of written notice of such breach (notwithstanding the
foregoing, no cure period shall be applicable to breaches by
Employee of Sections 6, 7 or 8 of this Agreement);
(ii) Employee commits any other act materially detrimental to the
business or reputation of the Company;
(iii) Employee engages in dishonest or illegal activities or commits
or is convicted of any crime involving fraud, deceit or moral
turpitude; or
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Exhibit 10.11
(iv) Employee dies or becomes mentally or physically incapacitated
or disabled so as to be unable to perform Employee's duties
under this Agreement even with a reasonable accommodation.
Without limiting the generality of the foregoing, Employee's
inability adequately to perform services under this Agreement
for a period of sixty (60) consecutive days will be conclusive
evidence of such mental or physical incapacity or disability,
unless such inability adequately to perform services under
this Agreement is pursuant to a mental or physical incapacity
or disability covered by the Family Medical Leave Act, in
which case such sixty (60) day period shall be extended to a
one hundred and twenty (120) day period.
(b) Termination by Company Without Cause. The Company may terminate Employee's
employment pursuant to this Agreement for reasons other than those stated
in Section 4(a) upon at least thirty (30) days' prior written notice to
Employee. In the event Employee's employment with the Company is
terminated by the Company without cause, the Company shall be obligated to
pay Employee a lump sum severance payment equal to one (1) year of
Employee's then base salary payable within thirty (30) days of the date of
termination. In addition, all Employee's then outstanding but unvested
stock options shall vest one hundred percent (100%). Other than the
severance payment and vesting of outstanding options set forth in this
Section 4(b), Employee will be entitled to receive no further remuneration
and will not be entitled to participate in any Company benefit programs
following his termination by the Company, whether such termination is with
or without cause. Furthermore, should Employee's employment with the
Company be terminated without cause, Employee shall be entitled to an
award of 200,000 shares of the Company's Common Stock. Employee shall not
be entitled to any further remuneration of any kind whatsoever for his
termination without cause.
(c) Termination by Employee for Cause. In the event there occurs a substantial
change in the Employee's job duties, there is a decrease in or a failure
to provide the compensation or vested benefits under this Agreement or
there is a Change in Control (as defined below) of the Company, Employee
shall have the right to resign his employment and will be entitled to
receive a severance payment equal to an award of 200,000 shares of the
Company's common stock. For avoidance of doubt, this award shall be in
lieu of the 200,000 common stock shares awarded Employee under Section
4(b) above. In addition, all Employee's then outstanding but unvested
stock options shall vest one hundred percent (100%). Employee shall have
thirty (30) days from the date written notice is given to Employee about
either (a) a change in his duties or (b) the announcement and closing of a
transaction resulting in a Change in Control of the Company to resign or
this Section 4(c) shall not apply. In the event Employee resigns from the
Company for any other reason, Employee will not be entitled to receive or
accrue any further Company benefits or other remuneration under this
Agreement, and Employee specifically agrees that he will not be entitled
to receive any severance pay.
For purposes of this Section 4, a Change in Control shall be deemed to have
occurred if any of the following occur:
(i) the merger of consolidation of the Company with or into
another unaffiliated entity, or the merger of another
unaffiliated entity into the Company or another subsidiary
thereof with the effect that immediately after such
transaction the stockholders of the Company immediately prior
to such transaction hold less than fifty percent (50%) of the
total voting power of all securities generally entitled to
vote in the election of directors, managers or trustees of the
entity surviving such merger or consolidation;
(ii) the sale or transfer of more than fifty-one percent (51%) of
the Company's then outstanding voting stock (other than a
restructuring event which results in the continuation of the
Company's business by an affiliated entity) to unaffiliated
person or group (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended); or
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Exhibit 10.11
(iii) the adoption by the stockholders of the Company of a plan
relating to the liquidation or dissolution of the Company.
5. Compensation and Benefits.
(a) Annual Salary. During the term of this Agreement and for all
services rendered by Employee under this Agreement, the Company will
pay Employee a base salary of Two Hundred Thousand Dollars
($200,000.00) per annum in equal bi-monthly installments. Such
annual salary will be subject to adjustments by any increases given
in the normal course of business.
(b) Incentive Compensation. Employee shall be eligible to receive
incentive compensation in the form of a cash bonus, the amount of
such cash bonus is explained on Exhibit C, upon the Company reaching
sales goals for the calendar year as set forth in the operating plan
for the Company which was approved by the Board of Directors. Said
bonus will be payable after the annual accounts have been presented
to the Compensation Committee. Exhibit C attached hereto provides
the benchmarks associated with achieving the Incentive Compensation.
6. Vacation. Employee shall be eligible for four (4) weeks of paid vacation
annually, provided that such vacation is scheduled at such times that do
not interfere with the Company's legitimate business needs.
7. Other Benefits. Employee will be entitled to such fringe benefits as may
be provided from time-to-time by the Company to its employees, including,
but not limited to, group health insurance, life and disability insurance,
and any other fringe benefits now or hereafter provided by the Company to
its employees, if and when Employee meets the eligibility requirements for
any such benefit. The Company reserves the right to change or discontinue
any employee benefit plans or programs now being offered to its employees;
provided, however, that all benefits provided for employees of the same
position and status as Employee will be provided to Employee on an equal
basis.
8. Business Expenses. Employee will be reimbursed for all reasonable expenses
incurred in the discharge of Employee's duties under this Agreement
pursuant to the Company's standard reimbursement policies.
9. Withholding. The Company will deduct and withhold from the payments made
to Employee under this Agreement, state and federal income taxes, FICA and
other amounts normally withheld from compensation due employees.
10. Non-Disclosure of Proprietary Information. Employee recognizes and
acknowledges that the Trade Secrets (as defined below) and Confidential
Information (as defined below) of the Company and its affiliates and all
physical embodiments thereof (as they may exist from time-to-time,
collectively, the "Proprietary Information") are valuable, special and
unique assets of the Company's and its affiliates' businesses. Employee
further acknowledges that access to such Proprietary Information is
essential to the performance of Employee's duties under this Agreement.
Therefore, in order to obtain access to such Proprietary Information,
Employee agrees that, except with respect to those duties assigned to him
by the Company, Employee shall hold in confidence all Proprietary
Information and will not reproduce, use, distribute, disclose, publish or
otherwise disseminate any Proprietary Information, in whole or in part,
and will take no action causing, or fail to take any action necessary to
prevent causing, any Proprietary Information to lose its character as
Proprietary Information, nor will Employee make use of any such
information for Employee's own purposes or for the benefit of any person,
firm, corporation, association or other entity (except the Company) under
any circumstances.
For purposes of this Agreement, the term "Trade Secrets" means
information, including, but not limited to, any technical or nontechnical
data, formula, pattern, compilation, program, device, method, technique,
drawing, process, financial data, financial plan, product plan, list of
actual or potential customers or suppliers, or other information similar
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Exhibit 10.11
to any of the foregoing, which derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can derive economic
value from its disclosure or use. For purposes of this Agreement, the term
"Trade Secrets" does not include information that Employee can show by
competent proof (i) was known to Employee and reduced to writing prior to
disclosure by the Company (but only if Employee promptly notifies the
Company of Employee's prior knowledge); (ii) was generally known to the
public at the time the Company disclosed the information to Employee;
(iii) became generally known to the public after disclosure by the Company
through no act or omission of Employee; or (iv) was disclosed to Employee
by a third party having a bona fide right both to possess the information
and to disclose the information to Employee. The term "Confidential
Information" means any data or information of the Company, other than
trade secrets, which is valuable to the Company and not generally known to
competitors of the Company. The provisions of this Section 6 will apply to
Trade Secrets for so long as such information remains a trade secret and
to Confidential Information during Employee's employment with the Company
and for a period of two (2) years following any termination of Employee's
employment with the Company for whatever reason.
11. Non-Solicitation Covenants. Employee agrees that during Employee's
employment by the Company and for a period of one (1) year following the
termination of Employee's employment for whatever reason, Employee will
not, directly or indirectly, on Employee's own behalf or in the service of
or on behalf of any other individual or entity, divert, solicit or attempt
to divert or solicit any individual or entity (i) who is a client of the
Company at any time during the six (6)-month period prior to Employee's
termination of employment with the Company ("Client"), or was actively
sought by the Company as a prospective client, and (ii) with whom Employee
had material contact while employed by the Company to provide similar
services or products as such provided by Employee for the Company to such
Clients or prospects. Employee further agrees and represents that during
Employee's employment by the Company and for a period of one (1) year
following any termination of Employee's employment for whatever reason,
Employee will not, directly or indirectly, on Employee's own behalf or in
the service of, or on behalf of any other individual or entity, divert,
solicit or hire away, or attempt to divert, solicit or hire away, to or
for any individual or entity which is engaged in providing similar
services or products to that provided by the Company, any person employed
by the Company for whom Employee had supervisory responsibility or with
whom Employee had material contact while employed by the Company, whether
or not such employee is a full-time employee or temporary employee of the
Company, whether or not such employee is employed pursuant to written
agreement and whether or not such employee is employed for a determined
period or at-will. For purposes of this Agreement, "material contact"
exists between Employee and a Client or potential Client when (1) Employee
established and/or nurtured the Client or potential Client; (2) the Client
or potential Client and Employee interacted to further a business
relationship or contract with the Company; (3) Employee had access to
confidential information and/or marketing strategies or programs regarding
the Client or potential Client; and/or (4) Employee learned of the Client
or potential Client through the efforts of the Company providing Employee
with confidential Client information, including but not limited to the
Client's identify, for purposes of furthering a business relationship.
12. Existing Restrictive Covenants. Except as provided in Exhibit B, Employee
has not entered into any agreement with any employer or former employer
(a) to keep in confidence any confidential information or (b) to not
compete with any former employer. Employee represents and warrants that
Employee's employment with the Company does not and will not breach any
agreement which Employee has with any former employer to keep in
confidence confidential information or not to compete with any such former
employer. Employee will not disclose to the Company or use on its behalf
any confidential information of any other party required to be kept
confidential by Employee.
13. Return of Proprietary Information. Employee acknowledges that as a result
of Employee's employment with the Company, Employee may come into the
possession and control of Proprietary Information, such as proprietary
documents, drawings, specifications, manuals, notes, computer programs, or
other proprietary material. Employee acknowledges, warrants and agrees
that Employee will return to the Company all such items and any copies or
excerpts thereof, and any other properties, files or documents obtained as
a result of Employee's employment with the Company, immediately upon the
termination of Employee's employment with the Company.
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Exhibit 10.11
14. Proprietary Rights. During the course of Employee's employment with the
Company, Employee may make, develop or conceive of useful processes,
machines, compositions of matter, computer software, algorithms, works of
authorship expressing such algorithm, or any other discovery, idea,
concept, document or improvement which relates to or is useful to the
Company's Business (the "Inventions"), whether or not subject to copyright
or patent protection, and which may or may not be considered Proprietary
Information. Employee acknowledges that all such Inventions will be "works
made for hire" under United States copyright law and will remain the sole
and exclusive property of the Company. Employee also hereby assigns and
agrees to assign to the Company, in perpetuity, all right, title and
interest Employee may have in and to such Inventions, including without
limitation, all copyrights, and the right to apply for any form of patent,
utility model, industrial design or similar proprietary right recognized
by any state, country or jurisdiction. Employee further agrees, at the
Company's request and expense, to do all things and sign all documents or
instruments necessary, in the opinion of the Company, to eliminate any
ambiguity as to the ownership of, and rights of the Company to, such
Inventions, including filing copyright and patent registrations and
defending and enforcing in litigation or otherwise all such rights.
Employee will not be obligated to assign to the Company any Invention made by
Employee while in the Company's employ which does not relate to any business or
activity in which the Company is or may reasonably be expected to become
engaged, except that Employee is so obligated if the same relates to or is based
on Proprietary Information to which Employee will have had access during and by
virtue of Employee's employment or which arises out of work assigned to Employee
by the Company. Employee will not be obligated to assign any Invention which may
be wholly conceived by Employee after Employee leaves the employ of the Company,
except that Employee is so obligated if such Invention involves the utilization
of Proprietary Information obtained while in the employ of the Company. Employee
is not obligated to assign any Invention that relates to or would be useful in
any business or activities in which the Company is engaged if such Invention was
conceived and reduced to practice by Employee prior to Employee's employment
with the Company. Employee agrees that any such Invention is set forth on
Exhibit "A" to this Agreement.
15. Remedies. Employee agrees and acknowledges that the violation of any of
the covenants or agreements contained in Sections 6, 7, and 10 of this
Agreement would cause irreparable injury to the Company, that the remedy
at law for any such violation or threatened violation thereof would be
inadequate, and that the Company will be entitled, in addition to any
other remedy, to temporary and permanent injunctive or other equitable
relief without the necessity of proving actual damages or posting a bond.
16. Severability. In case one or more of the provisions contained in this
Agreement is for any reason held to be invalid, illegal or unenforceable
in any respect, the parties agree that it is their intent that the same
will not affect any other provision in this Agreement, and this Agreement
will be construed as if such invalid or illegal or unenforceable provision
had never been contained herein. It is the intent of the parties that this
Agreement be enforced to the maximum extent permitted by law.
17. Entire Agreement. This Agreement embodies the entire agreement of the
parties relating to the subject matter of this Agreement and supersedes
all prior agreements, oral or written, regarding the subject matter
hereof. No amendment or modification of this Agreement will be valid or
binding upon the parties unless made in writing and signed by the parties.
18. Governing Law. This Agreement is entered into and will be interpreted and
enforced pursuant to the laws of the State of New Jersey. The parties
hereto hereby agree that the appropriate forum and venue for any disputes
between any of the parties hereto arising out of this Agreement shall be
any federal court in the state where the Employee has his principal place
of residence and each of the parties hereto hereby submits to the personal
jurisdiction of any such court. The foregoing shall not limit the rights
of any party to obtain execution of judgment in any other jurisdiction.
The parties further agree, to the extent permitted by law, that a final
and unappealable judgment against either of them in any action or
proceeding contemplated above shall be conclusive and may be enforced in
any other jurisdiction within or outside the United States by suit on the
judgment, a certified exemplified copy of which shall be conclusive
evidence of the fact and amount of such judgment.
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Exhibit 10.11
19. Surviving Terms. Sections 4, 6, 7, 10, 11 and 14 of this Agreement shall
survive termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
COMPANY: EMPLOYEE:
▇▇▇▇▇ ▇ SYSTEMS, INC.
By:
-----------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title:
EXHIBIT A
INVENTIONS
Employee represents that there are no Inventions.
---------------------
Employee Initials
EXHIBIT B
EXISTING RESTRICTIVE COVENANTS
EXHIBIT C
INCENTIVE COMPENSATION
Variable Compensation Plan for ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
OTC: $400,000
TARGETED REVENUES: $13,279,000
Revenue Range
From To Variable % Variable $
--------------------------------------- ---------- ----------------
$ 15,934,801 130% $ 520,000
$ 14,606,900 $ 15,934,800 120% $ 480,000
$ 13,411,790 $ 14,474,110 105% $ 420,000
$ 12,615,050 $ 13,279,000 100% $ 400,000
$ 10,623,200 $ 12,482,260 80% $ 320,000
$ 9,295,300 $ 10,490,410 70% $ 280,000
$ 7,967,400 $ 9,162,510 60% $ 240,000
$ 6,639,500 $ 7,834,610 50% $ 200,000
$ - $ 6,639,499 25% $ 100,000
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