EXHIBIT 10.28
EMPLOYMENT AGREEMENT dated as of May 15, 1999, between
NETWORK-1 SECURITY SOLUTIONS, INC., a Delaware corporation with its principal
office located at 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Company"), and XXXXXX XXXXX residing at 00-00 00xx Xxxxxx, Xxxx Xxxxxx Xxxx,
Xxx Xxxx 00000 (the "Executive").
The Company desires to enter into this Agreement in order to
assure itself of the service of Executive, and Executive desires to accept
employment with the Company, upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:
SECTION 1. EMPLOYMENT. The Company hereby employs Executive,
and Executive hereby accepts employment by the Company, upon the terms and
conditions hereinafter set forth.
SECTION 2. TERM. The employment of Executive hereunder shall
be for a period commencing on the date hereof (the "Commencement Date") and
ending on May 15, 2001 (the "Term") or such earlier date upon which the
employment of the Executive shall terminate in accordance with the provisions
hereof. The period commencing on the Commencement Date and ending on the date of
termination of the Executive's employment hereunder shall be called the "Term of
Employment" for Executive, and the date on which the Executive's employment
hereunder shall terminate shall be called the "Termination Date.".
SECTION 3. DUTIES. During the Term of Employment, Executive
shall be employed as the Vice President of Professional Services of the Company
and shall perform such duties as are consistent therewith as the Board of
Directors of the Company (the "Board") shall designate. Executive shall use his
best efforts to perform well and faithfully the foregoing duties and
responsibilities.
SECTION 4. TIME TO BE DEVOTED TO EMPLOYMENT. During the Term
of Employment, Executive shall devote all of his business time, attention and
energies to the business of the Company (except for vacations to which he is
entitled pursuant to Section 6(b) and periods of illness or incapacity). During
the Term of Employment, Executive shall not engage in any business activity
which, in the reasonable judgment of the Board, conflicts with the duties of
Executive hereunder, whether or not such activity is pursued for gain, profit or
other pecuniary advantage.
SECTION 5. COMPENSATION.
The Company shall pay to Executive an annual base
salary (the "Base Salary") during the Term of Employment of $120,000 per annum,
payable in such installments (but not less often than monthly) as is generally
the policy of the Company with respect to its executive officers, which Base
Salary shall be subject to such increases as the Board, in its sole discretion,
may from time to time determine. Executive's Base Salary and performance shall
be reviewed at least annually by the Compensation Committee.
SECTION 6. BUSINESS EXPENSES; BENEFITS.
(a) The Company shall reimburse Executive, in
accordance with the practice from time to time for executive officers of the
Company, for all reasonable and necessary expenses and other disbursements
incurred by Executive for or on behalf of the Company in the performance of
Executive's duties hereunder. Executive shall provide such appropriate
documentation of expenses and disbursements as may from time to time be required
by the Company.
(b) During the Term of Employment, Executive shall be
entitled to four (4) weeks vacation per year.
(c) During the Term of Employment, Executive shall be
entitled to participate in the group health, life and disability insurance
benefits, and retirement plan benefits made available from time to time for its
employees generally.
SECTION 7. INVOLUNTARY TERMINATION.
(a) If Executive is incapacitated or disabled (such
condition being hereinafter referred to as a "Disability") in a manner that
would qualify Executive for benefits under the disability policy of the Company
(the "Disability Policy"), the Term of Employment and employment of the
Executive under this Agreement shall cease (such termination, as well as a
termination under Section 7(b), being hereinafter referred to as an "Involuntary
Termination") and Executive shall be entitled to receive the benefits payable
under the Disability Policy and in accordance with Section 9 hereof.
(b) If Executive dies during the Term of Employment,
the Term of Employment and Executive's employment hereunder shall cease as of
the date of the Executive's death and Executive shall be entitled to receive the
benefits payable in accordance with Section 9 hereof.
2
SECTION 8. TERMINATION BY THE COMPANY.
(a) TERMINATION FOR CAUSE. The Company may terminate
the Term of Employment and the employment of the Executive hereunder at any time
for Cause (as hereinafter defined) (such termination being referred to herein as
a "Termination For Cause") by giving Executive written notice of such
termination, effective immediately upon the giving of such notice to the
Executive. As used in this Agreement, "Cause" means the Executive's (a)
commission of an act (i) constituting a felony or (ii) involving fraud, moral
turpitude, theft or dishonesty which is not a felony and which materially
adversely affects the Company or could reasonably be expected to materially
adversely affect the Company, (b) repeated failure to be reasonably available to
perform his duties, which, if curable, shall not have been cured within 10
business days of written notice thereof from the Company, (c) repeated failure
to follow the lawful directions of the Company's Chief Executive Officer, which,
if curable, shall not have been cured within 30 business days of written notice
thereof from the Company, (d) material breach of any agreement with the Company
(including any provisions of this or any agreement between Executive and the
Company) which, if curable, shall not have been cured within 30 business days of
written notice thereof from the Company or (e) voluntary resignation (except as
set forth in paragraph 9(d) hereof).
(b) TERMINATION OTHER THAN FOR CAUSE. The Company may
terminate this Agreement and the employment of Executive other than for cause as
defined in Section 8(a) above (such termination shall be defined as a
"Termination Other Than for Cause") by giving Executive written notice of such
termination, which notice shall be effective upon the giving of such notice or
such later date set forth therein.
SECTION 9. EFFECT OF TERMINATION.
(a) Upon the termination of the Term of Employment
and Executive's employment hereunder due to Termination for Cause (as defined in
Section 8(a) above), neither Executive nor his beneficiary or estate shall have
any further rights or claims against the Company under this Agreement, except to
receive (i) the unpaid portion, if any, of the Base Salary provided for in
Section 5, computed on a pro rata basis to the Termination Date (based on the
actual number of days elapsed over the actual number of days elapsed over the
year in which such termination occurs), (ii) any unpaid accrued benefits of
Executive, (iii) reimbursement for any expenses for which Executive shall not
have been reimbursed as provided in Section 6(a), and (iv) Executive's rights
under the vested portion of any stock options granted by the Company.
(b) Upon the termination of Executive's employment
hereunder due to an Involuntary Termination, neither Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement except the right to receive (i) the amounts set
forth in Section 9 (a), and (ii) the vesting of all stock options granted to
Executive (the "Options") that would have vested in the year of Involuntary
Termination and one-half of the Options that would have vested in the year
following the year of Involuntary Termination.
3
(c) Upon the termination of Executive's employment
upon a Termination Other Than for Cause (as defined in Section 8(b) above),
neither Executive nor his beneficiary nor his estate shall have any rights or
claims against the Company except to receive (i) the amounts set forth in 9(b)
(including Options), and (ii) the lesser of (A) six months Base Salary as in
effect at the time of the Termination Other Than for Cause or (B) Executive's
Base Salary for the balance of the term of this Agreement.
(d) For purposes of this Section 9, if Executive is
asked to assume any duties or the material reduction of duties, either of which
is substantially inconsistent with the position of Vice President of
Professional Services of the Company, Executive, upon 30 days notice to the
Board of Directors setting forth in reasonable detail the respects in which
Executive believes such assignment or duties are substantially inconsistent with
the level of Executive's position, may resign from the Company and such
resignation will be treated as a Termination Other Than For Cause pursuant to
this Section 9.
SECTION 10. INSURANCE. The Company may, for its own benefit,
in its sole discretion, maintain "key-man" life and disability insurance
policies covering Executive. Executive will cooperate with the Company and
provide such information or other assistance as the Company may reasonably
request in connection with the Company's obtaining and maintaining such
policies.
SECTION 11. DISCLOSURE OF INFORMATION. Executive will not,
either during the Term of Employment or at any time thereafter, divulge,
publish, communicate, furnish or make accessible to anyone any knowledge or
information with respect to the Company's confidential, secret or proprietary
products, technology, methods, plans, materials and processes, or with respect
to any other confidential, secret or proprietary aspects of the business,
activities or products of the Company including, without limitation, (a)
software programs, source code, object code, product development information,
research and development projects or other technical data pertaining to the
Company's products (whether or not subject to patent, trademark or copyright
protection) or (b) any customer or client lists, telephone leads, prospects
lists, sales figures and forecasts, purchase costs, financial projections,
advertising and marketing plans and business strategies and plans; except as
such items set forth in clauses (a) and (b) above may already be in the public
domain through no fault of Employee (all of the foregoing items set forth in
clauses (a) and (b) being referred to herein collectively as "Confidential
Property"). Upon the termination of the Term of Employment, Executive shall
return to the Company all property (including Confidential Property) of the
Company (or any subsidiary or affiliate thereof) then in the possession of
Executive and all books, records, computer tapes or discs and all other material
containing non-public information concerning the business, clients or affairs of
the Company or any subsidiary or affiliate thereof.
4
SECTION 12. RIGHT TO INVENTIONS. Executive shall promptly
disclose, grant and assign to the Company for its sole use and benefit any and
all marks, designs, logos, inventions, improvements, technical information and
suggestions relating in any way to the business conducted by the Company, which
he may develop or which may be acquired by Executive during the Term of
Employment (whether or not during usual working hours), together with all
trademarks, patent applications, letters, patent, copyrights and reissues
thereof that may at any time be granted for or upon any such xxxx, design, logo,
invention, improvement or technical information (collectively, "Inventions"). In
connection therewith, Executive shall (at the Company's sole cost and expense)
take all actions reasonably necessary or desirable to assign and/or confirm the
assignment of any Invention to the Company.
SECTION 13. RESTRICTIVE COVENANT.
(a) The Company is in the business of developing,
marketing, licensing and supporting network software security products and also
provides consulting in network security, network design, troubleshooting and
engineering. Executive acknowledges and recognizes that the Business has been
conducted, and sales of its products have been made, throughout the United
States, and Executive further acknowledges and recognizes the highly competitive
nature of the industry in which the Business is involved. Accordingly, in
consideration of the premises contained herein, and the consideration to be
received hereunder, Executive shall not, during the Non-Competition Period (as
defined below): (i) directly or indirectly engage, whether or not such
engagement shall be as a partner, stockholder, affiliate or other participant,
in any Competitive Business (as defined below), or represent in any way any
Competitive Business, whether or not such engagement or representation shall be
for profit, (ii) interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any other person or entity,
including, without limitation, any customer, supplier, employee or consultant of
the Company, (iii) induce any employee of the Company to terminate his
employment with the Company or to engage in any Competitive Business in any
manner described in the foregoing clause (i) (as well as an officer or director
of any Competitive Business), or (iv) affirmatively assist or induce any other
person or entity to engage in any Competitive Business in any manner described
in the foregoing clause (i) (as well as an officer or director of any
Competitive Business). Anything contained in this Section 13 to the contrary
notwithstanding, an investment by Executive in any publicly traded company in
which Executive and his affiliates exercise no operational or strategic control
and which constitutes less than 5% of the capital of such entity shall not
constitute a breach of this Section 13.
(b) As used herein, "Non-Competition Period" shall
mean the period commencing on the date hereof and terminating on the Termination
Date; provided, however, that if the Term of Employment shall have been
terminated pursuant to Section 8 (a) for cause, then "Non-Competition Period"
shall mean the period commencing on the date hereof and ending on the second
anniversary of the Termination Date. "Competitive Business" shall mean any
business in any State of the United States engaged in the development, marketing
and licensing of network software security products, or in any other line of
business in which the
5
Company was engaged or had a formal plan to enter as of the Termination Date,
provided, however, during the period beginning on the Termination Date and
ending on the second anniversary thereof, Executive shall not be precluded from
engaging in consulting services in the computer industry, including, but not
limited to, network design, trouble shooting and engineering.
(c) Executive understands that the foregoing
restrictions may limit his ability to earn a livelihood in a business similar to
the business of the Company, but he nevertheless believes that he has received
and will receive sufficient consideration and other benefits as an employee of
the Company and as otherwise provided hereunder and pursuant to other agreements
between the Company and Executive to justify clearly such restrictions which, in
any event (given his education, skills and ability), Executive does not believe
would prevent him from earning a living.
SECTION 14. ENFORCEMENT; SEVERABILITY; ETC. It is the desire
and intent of the parties that the provisions of this Agreement shall be
enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, if any
particular provision of this Agreement shall be adjudicated to be invalid or
unenforceable, such provision shall be deemed amended to (a) delete therefrom
the portion thus adjudicated to be invalid or unenforceable, such deletion to
apply only with respect to the operation of such provision in the particular
jurisdiction in which such adjudication is made or (b) otherwise to render it
enforceable in such jurisdiction.
SECTION 15. REMEDIES. Executive acknowledges and understands
that the provisions of this Agreement are of a special and unique nature, the
loss of which cannot be adequately compensated for in damages by an action at
law, and that the breach or threatened breach of the provisions of this
Agreement would cause the Company irreparable harm. In the event of a breach or
threatened breach by Executive of the provisions of this Agreement, the Company
shall be entitled to an injunction restraining him from such breach. Nothing
contained in this Agreement shall be construed as prohibiting the Company from
or limiting the Company in pursuing any other remedies available for any breach
or threatened breach of this Agreement.
SECTION 16. NOTICES. All notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given and delivered if personally delivered or
if sent by a nationally-recognized overnight courier, by telecopy, or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:
if to the Company, to: Network-1 Security Solutions, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxx, President and
Chief Executive Officer
6
with copies to: Xxxxxxx Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxx Xxxxxxxx, Esq.
if to Executive, to: Xxxxxx Xxxxx
00-00 00xx Xxxxxx
Xxxx Xxxxxx Xxxx
Xxx Xxxx, XX 00000
or to such other address as the party to whom notice is to be given may have
furnished to the other party or parties in writing in accordance herewith. Any
such notice or communication shall be deemed to have been received (a) in the
case of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
SECTION 17. BINDING AGREEMENT; BENEFIT. The provisions of this
Agreement will be binding upon, and will inure to the benefit of, the respective
heirs, legal representatives, successors and assigns of the parties.
SECTION 18. GOVERNING LAW. This Agreement will be governed by,
construed and enforced in accordance with, the laws of the State of
Massachusetts (without giving effect to principles of conflicts of laws).
SECTION 19. WAIVER OF BREACH. The waiver by either party of a
breach of any provision of this Agreement must be in writing and shall not
operate or be construed as a waiver of any other breach.
SECTION 20. ENTIRE AGREEMENT; AMENDMENTS. This Agreement
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements or understandings between the
parties with respect thereto. This Agreement may be amended only by an agreement
in writing signed by the parties.
SECTION 21. HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
7
SECTION 22. ASSIGNMENT. This Agreement is personal in its
nature and the parties shall not, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder; provided,
however, that the Company may assign this Agreement to any of its subsidiaries
and affiliates.
SECTION 23. GENDER. Any reference to the masculine gender
shall be deemed to include the feminine and neuter genders unless the context
otherwise requires.
SECTION 24. COUNTERPARTS. This Agreement may be executed in
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Employment Agreement as of the date first written above.
NETWORK-1 SECURITY SOLUTIONS, INC.
By: /s/ Avi X. Xxxxx
---------------------------
Avi X. Xxxxx, President and
Chief Executive Officer
/s/ Xxxxxx Xxxxx
---------------------------
Xxxxxx Xxxxx
8
