EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of January 4, 1999, by and between
XXXXXXX SYSTEMS PLC, a public limited company incorporated under the laws of the
Republic of Ireland, and its subsidiaries, XXXXXXX SYSTEMS, INC. ("SSUS"),
XXXXXXX SYSTEMS CANADA, LTD. ("SSC"), XXXXXXX SYSTEMS (UK) LIMITED ("SSUK") and
XXXXXXX SYSTEMS AUST. PTY LTD ("SSA") (collectively, the "Companies"), and XXXX
X. XXXXX, a resident of Massachusetts (the "Executive");
WITNESSETH:
WHEREAS, each of the Companies wishes to employ the Executive as its
Executive Vice President, Global Sales and Marketing, to serve in such capacity
for all five Companies simultaneously; and
WHEREAS, the Executive wishes to be employed in this capacity by the
Companies, on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual obligations set forth
herein, the parties hereto hereby agree as follows:
1. Engagement. Each Company hereby employs the Executive to serve as Executive
Vice President, Global Sales and Marketing of each Company for the period
beginning on the date first above written and ending at the close of business on
January 5, 2000 or on such earlier date as the Executive's employment is
terminated pursuant to the terms hereof (hereinafter, the "Term"). The Executive
hereby accepts such employment for such Term, on the terms and conditions
hereinafter set forth.
2. Duties. During the Term, the Executive shall be responsible for the
management of the sales and marketing functions of the Companies and shall have
such duties and responsibilities as may be assigned to him by the President,
Chief Executive Officer or the Board of Directors of the Company (the "Board").
The Executive shall use his best efforts and shall act in good faith in
performing all duties reasonably required to be performed under this Agreement.
The Executive's principal place of business shall be in or near Boston,
Massachusetts, at the offices of SSUS located there.
3. Availability. While employed by the Companies pursuant to this Agreement, the
Executive shall devote his entire working time, attention and energies to the
Companies' business and shall not be engaged in any other business activity
without the express approval of the Board.
4. Expenses. Each Company shall reimburse the Executive, with reasonable
promptness upon presentation of itemized vouchers or receipts, for all ordinary
and necessary business expenses incurred by the Executive in the performance of
his duties hereunder to such Company. Air travel by the Executive for any
Company shall be by business class for international flights, by first class for
U.S. domestic flights with a scheduled duration of three hours or longer, and
otherwise by coach class; provided, however, that the Companies will, when
possible, provide the Executive with frequent flyer (or similar program) upgrade
coupons to enable the Executive to upgrade to first class on an as available
basis.
5. Compensation. As compensation for the services to be rendered hereunder, the
Companies agree as follows:
(a) The Companies will pay to the Executive, in bi-weekly installments, an
annual base salary of $250,000 during the Term. The Companies shall not be
obligated to pay the Executive a salary for any time after the last day of the
Term except as provided herein.
(b) Within 45 days of the end of each fiscal quarter during the Term, the
Executive shall receive a commission determined as follows. In each fiscal
quarter during the Term, the Companies shall determine the amount of each
commission paid or to be paid to each sales employee of the Companies with
respect to the efforts of such employee during such quarter. Each such
commission amount shall then be recalculated as if the percentage of the
applicable commission were 0.33% higher. For example, a 3% commission would be
recalculated as a 3.33% commission. The excess of the recalculated, higher
amount over the commission payable to the applicable employee shall be paid to
the Executive within 45 days of the end of the applicable fiscal quarter, as set
forth above. Notwithstanding the foregoing, if the applicable commission amount
is not payable in full with respect to calendar year 1999, then the 0.33%
additional amount shall be reduced in the same manner as the applicable
commission. For example, if a sales employee is entitled to a 3% commission on
the guaranteed minimum payments under a service bureau contract but will be paid
1.5% of such commission during calendar year 1999, the amount payable to the
Executive hereunder will be determined by adding 0.165% (half of 0.33%) to 1.5%.
(c) In no event shall the total amount paid to the Executive by the Company
pursuant to Sections 5(a) and (b) exceed $1,000,000.
(d) The Companies shall pay the Executive a one-time cash signing bonus of
$100,000.00 on May 1, 1999 provided that the Executive is an employee of the
Company at that date.
(e) The Executive shall be entitled to participate in the benefits package
of the Companies for United States employees, including comprehensive health
insurance. The Executive shall be entitled to three weeks of paid vacation per
year.
6. Stock Option. The Company shall grant to the Executive a non-qualified option
for the Company's Ordinary Shares in accordance with the terms specified in the
Stock Option Agreement between the Executive and Xxxxxxx Systems PLC of even
date herewith.
7. Ownership of Material Information. All right, title and interest of every
kind and nature whatsoever in and to discoveries, inventions, improvements,
patents (and applications therefor), copyrights, ideas, processes, developments,
know-how, laboratory notebooks, creations, properties and all other proprietary
rights arising from, or in any way related to, the Executive's employment
hereunder, whether developed by the Executive independently or jointly with
others ("Intellectual Property"), shall become and remain the exclusive property
of the Companies, and the Executive shall have no interest therein. The
Executive shall promptly disclose to the Companies and assign or transfer to the
Companies all rights in any Intellectual Property. If any Company elects to seek
patent or other protection with respect to any Intellectual Property, the
Executive shall, at such Company's expense, take all actions reasonably
requested by such Company to obtain such protection for the benefit of such
Company and to fully vest in such Company and its successors and assigns full
right and title to such Intellectual Property. Upon the termination of the
Executive's employment by the Companies for any reason, the Executive shall
return to each Company all property of such Company, including all copies of or
relating to any Intellectual Property, in the possession or under the control of
the Executive.
8. Confidentiality. The Executive shall not, during the term of his employment
by the Companies pursuant to this Agreement or thereafter, disclose to anyone
(except to the extent reasonably necessary for the Executive to perform his
duties hereunder or as may be required by law) any confidential information
concerning the business or affairs of any Company (or of any affiliate or
subsidiary of any Company), including but not limited to lists of and records
relating to customers, business plans, business negotiations, market
information, financial and cost information, and scientific and technical
information (whether of any Company or entrusted to any Company by a third party
under a confidentiality agreement or understanding) which the Executive shall
have acquired in the course of, or incident to, the performance of his duties
pursuant to the terms of this Agreement or pursuant to any prior dealings with
any Company or any affiliate or subsidiary of any Company. The Executive shall
hold in strictest confidence, as a fiduciary, any and all such confidential
information, and shall comply with all instructions of the Companies for
preservation of the confidentiality of such information. In the event of a
breach or threatened breach by the Executive of the provisions of this Section
8, the Companies shall be entitled to an injunction restraining the Executive
from disclosing, in whole or in part, such information or from rendering any
services to any person, firm, corporation, association or other entity to whom
such information has been disclosed or is threatened to be disclosed. Nothing
herein shall be construed as prohibiting the Companies from pursuing any other
remedies available to the Companies for such breach or threatened breach,
including the recovery of damages from the Executive. Nothing herein shall be
construed as prohibiting the Executive from disclosing to anyone any information
which is, or which becomes, available to the public (other than by reason of a
violation of this Section 8) or which is a matter of general business knowledge
or experience.
9. Termination for Cause.
(a) The Companies may terminate their employment of the Executive under
this Agreement for cause in the event that the President or the Board determines
that the Executive (i) has been convicted of, or entered a plea of nolo
contendere to, a crime of moral turpitude or a felony (whether or not in
conjunction with the performance by the Executive of his duties under this
Agreement), or (ii) has through willful misconduct or gross negligence engaged
in an act or course of conduct that causes material injury to any of the
Companies (or any affiliate or subsidiary of any of the Companies) (each of the
reasons specified in clauses (i) and (ii) hereof being referred to herein as
"Cause").
(b) Upon a termination of employment under Section 9(a), the Companies
shall be relieved of all further obligations under this Agreement.
Notwithstanding such termination of employment, the Executive shall continue to
be bound by the provisions of Sections 7, 8, 13 18.
10. Termination Without Cause or for Good Reason.
(a) If, during the Term of this Agreement, the employment of the Executive
is terminated (i) by the Companies other than pursuant to Section 9(a) or
Section 12 or (ii) by the Executive for Good Reason (as defined below), the
Executive shall be entitled to receive, upon such termination, a severance
payment in an amount equal to two times the annual salary set forth in Section
5(a) and, if such termination occurs prior to May 1, 1999, $100,000. Such
severance payment shall be payable in equal monthly installments over the
remaining months of calendar 1999, provided that the $100,000 payment due if
termination occurs prior to May 1, 1999 shall be paid on May 1, 1999. The
Company shall not be obligated to pay (i) any commission under Section 5(b) with
respect to the fiscal quarter in which a termination under this Section 10(a)
occurs, or thereafter, or (ii) any amount due to unused vacation time.
(b) For purposes of this Agreement, "Good Reason" means the occurrence,
without the Executive's written consent, of any of the events or circumstances
set forth in clauses (i) through (iii) below. Notwithstanding the occurrence of
any such event or circumstance, such occurrence shall not be deemed to
constitute Good Reason if, prior to the date of termination specified in the
Notice of Termination (as defined in Section 11) given by the Executive in
respect thereof, such event or circumstance so identified by the Executive as
"Good Reason" has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such
right of correction by the Companies shall only apply to the first Notice of
Termination for Good Reason given by the Executive).
(i) the assignment to the Executive of duties inconsistent in any
material respect with the Executive's position (including status, offices,
titles and reporting requirements), authority or responsibilities in effect
as of January 15, 1999, or any other action or omission by the Companies
which results in a material diminution in such position, authority or
responsibilities;
(ii) the failure of the Companies to obtain the agreement, in a form
reasonably satisfactory to the Executive, from any successor to the
Companies to assume and agree to perform this Agreement; or
(iii) any failure of the Companies or any successor to pay or provide
to the Executive any portion of the Executive's compensation or benefits
due under this Agreement within fourteen days of the date such compensation
is due, or any material breach by the Companies of this Agreement.
(c) Termination of employment under this Section 10 shall terminate all
other obligations of the Companies hereunder, except the obligations of the
companies under this Section 10, but shall not terminate the Executive's
obligations under Sections 7, 8 and 13 and shall not modify the terms of any
stock option between the Executive and the Companies.
11. Notice of Termination. Any termination of the Executive's employment by the
Companies or by the Executive under Sections 9 or 10 hereof shall be
communicated by a written notice to the other party hereto (the "Notice of
Termination"), given in accordance with Section 16. Any Notice of Termination
shall: (a) indicate the specific termination provision (if any) of this
Agreement relied upon by the party giving such notice, (b) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (c) specify the date of termination, which date may
not be less than 15 days or more than 120 days after the date of delivery of
such Notice of Termination. In the event of a Notice of Termination by the
Executive, the Company may, in its discretion, reduce the period prior to the
date of termination by notice to the Executive.
12. Death or Inability to Perform of the Executive. In the event that the
Executive, during the period while employed under this Agreement, shall die or
at any time become unable to carry out his duties under this Agreement, the
Companies may terminate this Agreement and be relieved of all further
obligations hereunder. Termination of employment under this Section 12 shall not
terminate the Executive's obligations under Sections 7, 8 and 13.
13. Non-Competition.
(a) The Executive hereby agrees that, except as provided in Section 13(b),
during the term of his employment by the Companies pursuant to this Agreement
and for a period of one year following the termination of his employment under
this Agreement prior to December 31, 1999 pursuant to Section 10(a), he will
not, directly or indirectly and in any way, whether as principal or as director,
officer, employee, consultant, agent, partner or stockholder to another entity
(other than by the ownership of a passive investment interest of not more than
5% in a company with publicly traded equity securities), (i) own, manage,
operate, control, be employed by, participate in, or be connected in any manner
with the ownership, management, operation or control of any business competing
with any business of the Companies in which Executive participated during the
two years immediately preceding such termination, (ii) interfere with, solicit
on behalf of another or attempt to entice away from the Companies (or any
affiliate or subsidiary of any of the Companies) (x) any project, financing or
customer that any of the Companies (or any affiliate or subsidiary of any of the
Companies) has under contract (including unfulfilled purchase orders), or any
letter of supply or other supplier contract or arrangement entered into by any
of the Companies (or any affiliate or subsidiary of any of the Companies), and
all extensions, renewals and resolicitations of such contracts or arrangements,
(y) any contract, agreement or arrangement that any Companies (or any affiliate
or subsidiary of any of the Companies) is actively negotiating with any other
party, or (z) any prospective business opportunity that any of the Companies (or
any affiliate or subsidiary of any of the Companies) has identified at the time
of termination as being actively pursued by such of the Companies, or (iii) for
himself or another, attempt to hire, or assist in or facilitate in any way the
solicitation of any employee any of the Companies (or any affiliate or
subsidiary of any of the Companies), or any employee of any person, firm or
other entity, the employees of which any of the Companies (or any affiliate or
subsidiary of any of the Companies) has agreed not to hire or endeavor to hire.
(b) In the event that the Executive's employment is terminated pursuant to
Section 10(a), the Executive shall have the option, exercisable at any time by
written notice to the Companies received prior to the date of termination set
forth in the Notice of Termination, to be relieved of his obligations under
clause (i) of Section 13(a), but not clauses (ii) and (iii) of Section 13(a).
Upon the giving of such notice by the Executive, the Companies shall be relieved
and discharged of all payment obligations to the Executive arising under Section
10(a) and payable on or after the date of such notice.
(c) Because of the Executive's knowledge of the Companies' business, in the
event of the Executive's actual or threatened breach of the provisions of this
Section 13 any of, the Companies shall be entitled to, and the Executive hereby
consents to, an injunction restraining the Executive from any of the foregoing.
However, nothing herein shall be construed as prohibiting the Companies from
pursuing any other available remedies for such breach or threatened breach,
including the recovery of damages from the Executive. The Executive agrees that
the provisions of this Section 13 are necessary and reasonable to protect the
Companies in the conduct of its business. If any restriction contained in this
Section 13 shall be deemed to be invalid or unenforceable by reason of the
extent, duration or geographic scope thereof, then the extent, duration, and
geographic scope of such restriction shall be deemed to be reduced to the
fullest extent, duration and geographic scope permitted by law and enforceable.
14. Capacity. The Executive represents and warrants to the Companies that he is
not now under any enforceable obligation, of a contractual nature or otherwise,
to any person, firm, corporation, association or other entity that is
inconsistent or in conflict with this Agreement or which would prevent, limit or
impair in any way the performance by him of his obligations hereunder.
15. Withholding. The Executive acknowledges that salary and all other
compensation payable under this Agreement shall be subject to withholding for
income and other applicable taxes to the extent required by applicable law, as
determined by the Companies in their reasonable judgment.
16. Waivers and Amendments. No act, delay, omission or course of dealing on the
part of any party hereto in exercising any right, power or remedy hereunder
shall operate as, or be construed as, a waiver thereof or otherwise prejudice
such party's rights, powers and remedies under this Agreement. This Agreement
may be amended only by a written instrument signed by the Executive and a duly
authorized officer of each of the Companies.
17. Notice. Any and all notices referred to herein shall be sufficient if
furnished in writing and delivered by hand, by facsimile transmission or by
overnight delivery service maintaining records of receipt, to the respective
parties at the following addresses:
If to the Companies:
Xxxxxxx Systems
Xxx Xxx xxXxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: 781-270-6503
Attention: President
If to the Executive:
Xx. Xxxx X. Xxxxx
x/x Xxxxxxxxxxx Xxxx, Xx., Xxx.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: 617-227-5777
or to such other address or addresses as any party may from time to time
designate by notice given to the others as aforesaid. Notices shall be effective
when delivered.
18. Arbitration; Jurisdiction. Except for disputes arising under or in
connection with Sections 7, 8, and 13, all disputes arising under or in
connection with this Agreement or concerning in any way the Executive's
employment shall be submitted exclusively to arbitration in Boston,
Massachusetts, under the Commercial Arbitration Rules of the American
Arbitration Association then in effect, and the decision of the arbitrator shall
be final and binding upon the parties. Judgment upon the award rendered may be
entered and enforced in any court having jurisdiction. The parties hereto
consent to personal jurisdiction of any state or Federal court sitting in the
District of Massachusetts, in order to enforce any arbitration judgment or the
rights of the Companies under Sections 7, 8 and 13, and waive any objection that
such forum is inconvenient. Each party hereby consents to service of process in
any such action by U.S. mail or other commercially reasonable means of receipted
delivery. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to the choice of
law provisions thereof.
19. Assignability. The rights and obligations contained herein shall be binding
on and inure to the benefit of the successors and assigns of the Companies. The
Executive may not assign any of his rights or obligations hereunder without the
express written consent of the Companies.
20. Miscellaneous. This Agreement, the stock option agreement described in
Section 6 above and all existing stock option agreements between the Executive
and the Companies set forth all, and are intended by each party to be an
integration of all, of the promises, agreements and understandings between the
parties hereto with respect to the subject matter hereof. This Agreement may be
executed in multiple counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one agreement binding on
the parties hereto. Each provision of this Agreement shall be considered
severable and if for any reason any provision that is not essential to the
effectuation of the basic purpose of the Agreement is determined to be invalid
or contrary to any existing or future law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement that are valid.
21. Headings; Construction. Headings contained in this Agreement are inserted
for reference and convenience only and in no way define, limit, extend or
describe the scope of this Agreement or the meaning or construction of any of
the provisions hereof. As used herein, unless the context otherwise requires,
the single shall include the plural and vice versa, words of any gender shall
include words of any other gender, and "or" is used in the inclusive sense.
22. Survival of Terms. If this Agreement is terminated for any reason, the
provisions of Sections 5(b), 7, 8, 10, 13 and 18 shall survive and the Executive
and the Companies, as the case may be, shall continue to be bound by the terms
thereof to the extent provided therein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
XXXXXXX SYSTEMS PLC
XXXXXXX SYSTEMS, INC.
XXXXXXX SYSTEMS CANADA, LTD.
XXXXXXX SYSTEMS (UK) LIMITED
XXXXXXX SYSTEMS AUST. PTY LTD
/s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx III
Xxxx X. Xxxxx Name: Xxxx X. Xxxxx III
Title: President and Chief Executive Officer
