Exhibit 10.16
AGREEMENT RELATING TO EMPLOYMENT
Agreement dated June 1, 1994, by and between Frontier Software
Development, Inc., a Delaware corporation ("Frontier") and Xxxx Xxxxxxx, a
founder of Frontier ("Xx. Xxxxxxx").
INTRODUCTION AND BACKGROUND
Xx. Xxxxxxx is one of the founders of Frontier and in that capacity
over the past ten years has worked diligently, for long hours and for relatively
low pay.
As a result of Xx. Xxxxxxx'x efforts, in the past year Frontier has
begun to experience growth and income as its products have started to become
sought after in the marketplace.
In recognition of Xx. Xxxxxxx'x efforts and desiring to continue to
retain Xx. Xxxxxxx'x services, the Board of Directors of Frontier has authorized
the granting of the benefits described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties, intending to be legally bound, agree as follows:
1. TITLE AND DUTIES. Frontier hereby employs Xx. Xxxxxxx to serve Frontier
in the capacities of Chairman and Chief Executive Officer. In accordance with
such position Xx. Xxxxxxx will have appropriate responsibilities, duties and
authority for the management of Frontier, sufficient for the accomplishment of
the goals set for him by the Board of Directors to whom he shall be responsible.
Xx. Xxxxxxx shall use his best efforts in directing the business of Frontier
with the objective of providing maximum profit and return on invested capital;
establishing current and long-range objectives, plans and policies subject to
the approval of the Board, and representing Frontier with its major customers,
the financial community and the public.
The term of this Agreement will be for five (5) years
commencing on June 1, 1994 and shall be automatically renewed for additional
one-year periods thereafter unless either Frontier of Xx. Xxxxxxx gives the
other written notice of non-renewal at least twelve (12) months prior to the
expiration of the original term or any renewal term hereof.
Xx. Xxxxxxx'x salary and bonuses will be determined by the
Board of Directors on an annual basis based on the condition and prospects of
Frontier and the achievements of Xx. Xxxxxxx. Xx. Xxxxxxx will be eligible for
annual merit increases in accordance with Frontier's compensation plan.
2. BONUS PLAN. Xx. Xxxxxxx will participate in Frontier's executive
incentive plan with a target level bonus of 40% and a maximum bonus of 50% of
base salary as outlined in Frontier's executive incentive plan as from time to
time in effect.
3. BENEFITS. Frontier will provide Xx. Xxxxxxx with and shall pay for
$2,000,000 in life insurance. In addition Xx. Xxxxxxx will be eligible for and
receive all Frontier benefits, including but not limited to, disability
insurance at no less than 100% of salary, eight (8) weeks of paid vacation, and
Frontier's medical, dental and vision care plans providing for family coverage
as from time to time in effect.
4. DEATH OF XX. XXXXXXX. If Xx. Xxxxxxx'x employment terminates by reason
of death, Frontier will have no severance obligations to Xx. Xxxxxxx aside from
the foregoing Frontier provided life insurance; provided, however, if the
proceeds of such life insurance are not available to Xx. Xxxxxxx'x beneficiaries
for any reason, then Frontier will pay such beneficiaries an amount which is
equivalent to Xx. Xxxxxxx'x Xxxxxxxxx Pay (as defined below) as if Xx. Xxxxxxx
were terminated without Due Cause.
5. DISABILITY. If Xx. Xxxxxxx'x employment terminates because Xx. Xxxxxxx
is Disabled, then Frontier will pay Xx. Xxxxxxx an amount equal to (a) his base
salary minus (b) any payments he actually receives under the disability policy
provided for him by Frontier. This amount will be paid monthly until he is no
longer Disabled. In addition during such period Frontier will provide Xx.
Xxxxxxx with all benefits in effect prior to his termination. As used herein the
terms "Disabled" and "Disability" shall have the meanings set forth in the
disability income insurance policy provided for Xx. Xxxxxxx by Frontier.
6. TERMINATION WITHOUT DUE CAUSE. In the event that Xx. Xxxxxxx is
terminated by Frontier without Due Cause, as defined herein, Frontier's sole
liability to Xx. Xxxxxxx will be to pay the amounts set forth in this Section.
Specifically Frontier will pay Xx. Xxxxxxx Severance Pay for a period of three
(3) years as follows: (a) for the first twelve (12) month period following such
termination an amount equal to the greater of (i) $175,000 and (ii) Xx.
Xxxxxxx'x base salary as of the date of termination, and (b) for each subsequent
period of twelve (12) months an amount equal to 120% of the amount of Xx.
Xxxxxxx'x Severance Pay for the immediately preceding twelve (12) months.
Payments of Severance Pay will be made at such time as Frontier makes its normal
payroll payments. Notwithstanding the foregoing, Xx. Xxxxxxx'x Xxxxxxxxx Pay
will be discontinued if Xx. Xxxxxxx secures comparable alternative employment as
to position and pay. During the period in which Frontier is required to make
payments of Severance Pay to Xx. Xxxxxxx Frontier will continue to provide to
Xx. Xxxxxxx all benefits, reimbursement of expenses for his company car,
reimbursement for full out-placement assistance by a counselor of Xx. Xxxxxxx'x
choice up to a maximum of $25,000 reimbursement, and reimbursement for
reasonable travel and expenses (to the extent not reimbursed by others)
connected with Xx. Xxxxxxx'x efforts to seek comparable employment.
7. TERMINATION FOR DUE CAUSE. In the event that Xx. Xxxxxxx is terminated
for Due Cause he will not be entitled to any severance payment and Frontier will
have all of the rights and remedies available to it at law and in equity.
"Due Cause", as used herein, shall mean that (a) Xx. Xxxxxxx has
committed a willful, serious act, such as embezzlement, against Frontier
intending to enrich himself at the expense of Frontier or, (e) the conviction of
Xx. Xxxxxxx of a felonious crime, but not a
-2-
misdemeanor, involving moral turpitude. For purposes of this paragraph, no act,
or failure to act, on Xx. Xxxxxxx'x part shall be considered "willful" unless
done, or omitted to be done, by Xx. Xxxxxxx, not in good faith and without
reasonable belief that Xx. Xxxxxxx'x action or omission was in the best interest
of Frontier.
Notwithstanding the foregoing, Xx. Xxxxxxx shall not be deemed to
have been terminated for Due Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the unanimous
affirmative vote of all of the members of the Board of Directors (exclusive of
Xx. Xxxxxxx) at a meeting of the Board called and held for the purpose (after
reasonable notice to Xx. Xxxxxxx and an opportunity for Xx. Xxxxxxx, together
with his counsel, to be heard before the Board) finding that in the good faith
opinion of the Board Xx. Xxxxxxx was guilty of conduct set forth above and
specifying the particulars thereof in detail.
8. TERMINATION BY XX. XXXXXXX FOR GOOD REASON. If in anticipation of or
following a Change in Control of Frontier, or following an investment of at
least $1,000,000 by investors in Frontier or following an initial public
offering of Frontier's stock, Xx. Xxxxxxx terminates his employment for Good
Reason he shall be paid the Severance Pay described above. As used herein the
term "Change in Control" shall mean any event as a result of which the
stockholders of Frontier immediately prior to such Change in Control would not
immediately after such Change in Control beneficially own voting securities
representing in the aggregate more than 50% of the combined voting power of the
voting securities of the surviving entity, by the members of the Board of
Directors of Frontier immediately prior to the Change in Control would not
immediately after the Change in Control constitute a majority of the Board of
Directors of the subsequent corporation or entity. As used herein the term "Good
Reason" shall mean:
(a) Without Xx. Xxxxxxx'x express written consent, the
assignment to Xxxxxxx of any duties inconsistent with his positions,
duties, responsibilities and status with Frontier immediately prior to
a Change in Control, as defined above, or a change in his reporting
responsibilities, title or offices as in effect immediately prior to a
Change in Control, or a reduction in job responsibilities or authority
to a position subordinate to that provided for in this Agreement or any
removal of Xx. Xxxxxxx from or any failure to re-elect him to any of
such positions, except in connection with the termination of his
employment for Due Cause, disability or retirement or as a result of
his death or by Xx. Xxxxxxx other than for Good Reason;
(b) A reduction in Xx. Xxxxxxx'x base salary or benefits or a
breach of Frontier's obligations undertaken in this Agreement.
9. COMPANY CAR. Frontier will provide Xx. Xxxxxxx with or will reimburse
Xx. Xxxxxxx for the cost of leasing a company car of make and model comparable
to that provided to senior executives of companies in the computer hardware or
software industries. Frontier will reimburse Xx. Xxxxxxx for all operating
expenses, maintenance and fees, including automobile insurance. In the event Xx.
Xxxxxxx'x employment is terminated Frontier will at its expense purchase and
transfer to Xx. Xxxxxxx title to such company car.
-3-
10. Frontier shall require any successor to all or substantially all of the
business or assets of Frontier to assume and agree to perform this agreement in
the same manner and to the same extent that Frontier would be required to
perform it if no such succession had taken place.
11. The laws of the Commonwealth of Massachusetts shall apply to the
construction, interpretation and enforcement of this Agreement.
FRONTIER SOFTWARE
DEVELOPMENT, INC. XX. XXXXXXX:
By: /s/ XXXXXXXX XXXXX /s/ XXXX XXXXXXX
------------------------------ ------------------------------
Xxxx Xxxxxxx
Title: PRESIDENT
-------------------------
-4-
