1
EMPLOYMENT AGREEMENT
XXXXX X. XXXX
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 29th day of
May 1997, by and among BROADWAY & SEYMOUR, INC. ("Employer"), and XXXXX X.
XXXX, an individual having an address at 00 Xxxxxx Xxxxx, Xxxx Xxxxxxxx, XX
00000 ("Employee").
Background Statement
Employer wishes to hire Employee, and Employee wishes to serve, as the
Vice President and Chief Financial Officer of Employer. This Agreement sets
forth the parties' agreement with respect to Employee's employment in such
capacities.
Statement of Agreement
NOW, THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, and the mutual duties and obligations set forth herein, and
intending to be legally bound, the parties hereto agree as follows:
1. Employment. Employer hereby agrees to employ Employee and Employee
herby agrees to serve Employer upon the terms and conditions set forth in this
Employment Agreement in the capacities of a Vice President and Chief Financial
Officer, with the duties and responsibilities of such positions to be
determined from time to time by the Chief Executive Officer and/or the Board of
Directors of Employer.
2. Term. The term of this Employment Agreement shall begin on July 1,
1997, and end on June 30, 1999, and shall automatically renew for successive
one-year terms unless one party notifies the other of its intention to cancel 90
days prior to the expiration of the then current term.
3. Compensation, Incentives and Employee Benefits.
(a) Base Salary. Employer shall pay to the Employee for his performance
of services hereunder a base salary ("Base Salary"), which for the first year
of employment hereunder shall be at a rate of Two Hundred Thousand and No/100
Dollars ($200,000.00) per year, subject to applicable withholding for taxes.
The Employee's Base Salary rate shall be reviewed by Employer annually and may
be adjusted from time to time only with the approval of the Chief Executive
Officer and the Compensation Committee of the Board of Directors of Employer.
From and after the effective date of any such change, the increased rate shall
become the Base Salary rate applicable thereafter. Base Salary shall be paid
in accordance with Employer's general payroll practices as established from
time to time.
1
2
(b) Annual Bonus Compensation. In respect of each fiscal year during
the term of this Agreement, commencing with the fiscal year beginning
January 1, 1997, Employee shall be eligible to participate in any annual bonus
compensation program for executives of Employer generally that may be approved
by the Compensation Committee of the Board of Directors, on such terms and to
such extent as may be determined by the Compensation Committee based on
Employer's business success and Employee's performance during the year. In any
event, Employer shall pay Employee a $25,000 bonus on each of December 30, 1997
and June 30, 1998 which, in the discretion of the Compensation Committee, may be
in addition to or in lieu of any bonus compensation payable under the bonus
compensation program described above.
(c) Stock Options.
(i) Upon execution and delivery by the parties of this Agreement,
Employer shall award to Employee options (the "Options") to purchase
20,000 shares of Employer's common stock, $.01 par value ("Common Stock"),
pursuant to Employer's 1996 Stock Option Plan (the "Stock Option Plan").
The Options shall be exercisable with respect to one-third of the total
shares covered by the Options during each twelve-month period beginning on
the first anniversary of the date of grant and shall have an exercise
price per share equal to the fair market value of a share of Employer's
Common Stock on the date of grant, as determined in accordance with the
Stock Option Plan. The Options shall not be qualified incentive stock
options within the meaning of Section 422 of the Code. The Options shall
have a term of 10 years from the date of grant. The Options shall
otherwise be subject to the terms and conditions of the Stock Option Plan,
which are incorporated by reference herein. Employer shall use its best
efforts to cause a registration statement on Form S-8 registering the
shares to be issued upon Employee's exercise of the Options promptly to
become effective under the Securities Act of 1933, as amended, and
otherwise promptly to take such action necessary to permit Employee to
acquire shares upon exercise of the Options pursuant to a registration
statement that is effective under such act.
(ii) Employer shall award to Employee such additional stock options
and other stock-based compensation at times and in amounts as deemed
appropriate by the Compensation Committee of the Board of Directors of
Employer.
(iii) In the event of (A) a Change of Control (as defined below)
of Employer prior to such time as Employee shall have been granted
additional stock options for an aggregate of 80,000 shares of Employer's
Common Stock and such stock options shall have been approved by Employer's
stockholders and (B) Employee is not offered employment in the same or a
comparable position with Employer or Employer's successor corporation
following such Change of Control, Employer shall pay to Employee, in cash,
upon consummation of such Change of Control transaction, an amount equal
to the gain that would have been realized by Employee upon such Change of
Control had employee been granted options to purchase such additional
80,000 shares (less any additional options actually granted to Employee
and approved by Employer's
2
3
stockholders, other than the 20,00 Options awarded pursuant to
paragraph (c)(i) above, prior to the Change of Control), at the same per
share exercise price as the 20,000 Options awarded pursuant to paragraph
(c)(i) above, such gain to be determined by subtracting the option
exercise price(s) from the net per share price paid for Employer's Common
Stock in the Change of Control transaction; provided, however, that in no
event shall the aggregate amount payable by Employer to Employee pursuant
to this subsection exceed $750,000.
For purposes of this subsection, a Change of Control shall mean any one of
the following:
(A) A tender offer or exchange offer is made whereby the effect of
such offer is to take over and control the affairs of Employer
and such offer is consummated for the ownership of securities of
Employer representing 25% or more of the combined voting powers of
Employer's then outstanding voting securities.
(B) The adoption by Employer's stockholders of a plan of merger or
consolidation providing for the merger or consolidation of
Employer with another corporation and, as a result of such merger or
consolidation, less than 75% of the outstanding voting securities of
the surviving or resulting corporation would then be owned in the
aggregate by the former stockholders of Employer, other than
affiliates within the meaning of the 1934 Act or any party to such
merger or consolidation.
(C) Employer transfers substantially all of its assets to another
corporation or entity which is not a wholly owned subsidiary of
Employer.
(D) Any "person" (as such term is used in Sections 3(a)(9) and
13(d)(3) of the 0000 Xxx) is or becomes the beneficial owner,
directly or indirectly, of securities of Employer representing 25%
or more of the combined voting power of Employer's then outstanding
securities, and the effect of such ownership is to take over and
control the affairs of Employer.
(d) Employee Benefit Plans. In addition to the Base Salary and
additional compensation provided for above, Employer shall provide to the
Employee the opportunity to participate in all life insurance, medical, dental,
disability, and other employee benefit plans (collectively, "Employee Benefit
Plans") sponsored from time to time by Employer and covering its employees
generally or a particular group of its employees of which the Employee is a
member (including participation by the Employee's spouse and dependents to the
extent they are eligible under the terms of such plans), subject to the terms
and conditions of such benefit plans.
(e) Reimbursement of Expenses, Etc.
(i) Provided that Employee will relocate from Hartford, Connecticut
to the Charlotte, North Carolina area no later than January 31, 1998,
Employer shall (x)
3
4
reimburse Employee for all non-taxable expenses associated with Employee's
relocation, including reasonable moving and storage expenses and
reasonable travel expenses incurred by Employee in connection with his
travel to and from his home in Hartford, Connecticut and Employer's
principal offices in Charlotte, North Carolina, and (y) pay for taxable
expenses associated with Employee's relocation, including expenses for
temporary housing and other living expenses in Charlotte pending such
relocation and broker's fees incurred upon the sale of Employee's home in
Hartford, Connecticut and the purchase of Employee's new home in the
Charlotte, North Carolina area, in an aggregate amount not to exceed
$80,000, grossed up once for taxes at Employee's estimated 1997 tax rate,
payable as follows: July 15, 1997 - $20,000, August 15, 1997 - $20,000,
October 15, 1997 - $20,000, December 15, 1997 - $20,000 and January 15,
1998 - gross up amount; provided, however, that Employee shall promptly
return to Employer any portion of such amount not actually used for
expenses associated with Employee's relocation.
(ii) Employer shall otherwise pay or reimburse Employee for all
reasonable travel and other expenses incurred by him in performing his
obligations under this Employment Agreement.
(iii) All such expenses shall be appropriately submitted to
Employer and, with respect to expenses to be paid or reimbursed pursuant to
subsection (e)(ii), approved in accordance with Employer's expense
reimbursement policies as in effect from time to time.
(f) Vacation. Employee shall be entitled to paid annual vacation of up
to 4 weeks per year.
4. Duties. During the term hereof, Employee shall devote all of his
business time, attention, skills and efforts to the business of Employer and
the faithful performance of his duties hereunder; provided, however, that (i)
nothing contained herein shall prevent Employee from making outside investments
and relationships not inconsistent with the provisions contained herein, and
(ii) with the approval of the Chief Executive Officer and ratification of the
Board of Directors of Employer, from time to time Employee may serve, or
continue to serve, on the boards of directors of, and hold any other offices or
positions in, companies or organizations which, in the reasonable judgment of
the Chief Executive Officer and the Board of Directors of Employer, will not
present any conflict of interest with Employer, or materially affect the
performance of Employee's duties pursuant to this Agreement. Except for such
incidental matters as may be assigned by Employer from time to time, Employee
shall neither be demoted from his position nor shall the duties or
responsibilities normally associated with those positions be reduced during the
term of this Agreement.
5. Termination.
(a) Termination By Employer Without Cause. The parties recognize (i)
that the Board of Directors of Employer has the duty to use its judgment in the
best interests of Employer
4
5
in determining whether to remove Employee as an executive officer of Employer
even though there may be no legal cause therefor under this Agreement, and
(ii) that any action or inaction of the Board of Directors of Employer pursuant
to clause (i) shall not prejudice the rights of Employee under this Agreement.
Accordingly, the parties agree that, subject to all other provisions of this
paragraph 5, Employer shall have the right at any time during the current term
of this Agreement to terminate Employee's employment hereunder Agreement
without cause. Such right of termination may be exercised by removal of
Employee by the Board of Directors of Employer or the failure of the Board of
Directors of Employer to elect or reelect Employee as an executive officer of
Employer or otherwise. Termination of this Agreement shall be deemed to occur
on the date that Employee is notified thereof.
(b) Termination by Employee. Employee may terminate his employment
with Employer, for any reason or without reason, during the term of this
Agreement. Such termination must be accompanied by the delivery of at least 60
days' written notice delivered to Employer.
(c) Termination Payments.
(i) If Employer terminates Employee's employment hereunder
pursuant to paragraph 5(a) hereof for any reason other than for "Cause",
as defined herein, then immediately upon the effectiveness of the
termination set forth in paragraph 5(a) above, Employer shall make a lump
sum cash payment to Employee in an amount equal to the sum of (A) the
aggregate Base Salary that would have been paid to Employee under the
terms hereof after the date of such event through the date of the then
current term of this Employment Agreement (based upon the assumption that
the Base Salary as in effect immediately prior to the date of such
event(s) continued to be the Base Salary through the term of this
Employment Agreement; and (B) the aggregate amount of the annual cash
bonuses that would be paid to Employee under the terms hereof after the
date of such event through the date of the then current term of this
Employment Agreement (based upon the assumption that the annual cash bonus
most recently paid to Employee (or with respect to a termination prior to
July 1, 1998, $50,000) is the amount of the annual cash bonus to be paid
through the term of this Employment Agreement), prorated for the portion
of the year elapsed prior to the date of termination of employment.
(ii) From and after the termination of Employee's employment for
Cause, Employee's voluntary termination of employment, termination
pursuant to paragraph 5(e) or Employee's death, Employer shall not be
liable to Employee, his spouse or his personal representative for the
payment of salary, benefits, or payments of any kind, except for amounts
payable under this Agreement that are attributable to services performed
by Employee prior to the termination of his employment and except for
amounts payable pursuant to the terms of any Employer benefits,
disability, retirement or similar plan in which Employee may be a
participant.
(d) Definition of "Cause". "Cause" means (i) the substantial failure
of Employee to carry out and perform his duties after written notice from the
Chief Executive Officer or the
5
6
Board of Directors of Employer; (ii) the repeated refusal by Employee to follow
the lawful directions of the Chief Executive Officer or the Board of Directors;
(iii) the commission of an act by Employee constituting financial dishonesty
against Employer; (iv) the commission of an act by Employee involving a felony;
(v) the commission of an act by Employee involving moral turpitude that brings
Employer or any of its affiliates into public disrepute or disgrace or causes
material harm to the customer relations, operations or business prospects of
Employer or its subsidiaries, (vi) Employee's misrepresentation to Employer of
academic or professional qualifications or prior work experience; or (vii)
violation by Employee of any provision of paragraph 7 hereof.
(e) Disability. If the Employee is unable to perform his duties
hereunder for a period of six consecutive months due to disability (as defined
by the primary disability insurance carrier then providing such insurance
coverage for the Employer's executive officers), Employee's employment
hereunder may be terminated at Employer's discretion by giving to the Employee
written notice specifying a termination date subsequent thereto and also
subsequent to the end of said six-month period.
(f) No Mitigation. Employee shall have no obligation to seek other
employment in the event of termination of his employment and no compensation or
other benefits received by Employee from any other employment shall reduce or
limit Employer's obligation to make payment under paragraph 5(c).
6. Confidential Information. Employee shall not, at any time during
or following his employment by Employer regardless of the reason for such
termination of employment, furnish, divulge, communicate, use to the detriment
of Employer or for the benefit of any business, firm, person, partnership,
trust or corporation, or otherwise, any of Employer's confidential information,
data, trade secrets, sales methods, names of customers, advertising methods,
financial affairs or methods of procurement, or take with him any document or
paper relating to the foregoing, it being acknowledged that Employee received
or obtained all of the above in confidence and as a fiduciary of Employer.
7. Non-Competition. Employee agrees that during the term hereof:
(a) Employee will not directly or indirectly, individually or as a
partner, employee, stockholder, consultant, agent, officer, director, advisor
or in any other capacity, solicit any of the customers of Employer or its
subsidiaries (collectively, the "Company") for the purpose of selling any
service or product similar to those provided by the Company, or in any manner
attempt to induce any of the Company's customers or suppliers to withdraw,
reduce or divert any of their business from the Company or otherwise interfere
or attempt to interfere with any business relationship between the Company and
its customers or suppliers; provided, however, that Employer recognizes that
Employee possesses general and financial management skills and agrees that the
exercise of such skills are not proscribed by this section 7(a). For the
purposes of this section 7(a), customers shall mean (i) any client, account or
customer of the Company that has transacted any business with or been contacted
by the Company within the twelve months
6
7
preceding the date hereof, and (ii) any other client, account or customer of
the Company that has done business with the Company within two years of the date
of such separation or termination;
(b) Employee will not in any manner induce or attempt to induce any of
the Company's employees to leave the employment of the Company to become
associated with any business operation selling any service or product similar
to those provided by the Company (or, in the event of termination of employment
prior to the expiration of such two-year period, any service or product then
provided or proposed to be provided by the Company);
(c) Employee will not directly or indirectly, either as principal,
agent, manager, employee, owner (if the percentage of ownership exceeds one
percent (1%) of the net worth of the business), partner (general or limited),
director, officer, consultant or in any other capacity, participate in any
business operation engaged in a business selling any service or product similar
to those provided by the Company (or, in the event of termination of employment
prior to the expiration of such two-year period, any service or product then
provided or proposed to be provided by the Company).
8. Limitations on Scope. Because of the current and contemplated future
operations of Employer in the geographic areas hereinafter set forth, it is
further understood and agreed by the parties hereto that the restriction set
forth in paragraph 7(c) shall apply to a business operation engaged in the
following geographic areas:
(i) The State of North Carolina;
(ii) The State of New York;
(iii) The State of California;
(iv) The State of Texas;
(v) Any State contiguous with the State of North Carolina;
(vi) Any State contiguous with the State of New York;
(vii) Any State east of the Mississippi River;
(viii) Any State of the United States of America.
The parties intend the above geographical areas to be completely severable
and independent, and any invalidity or unenforceability of this Agreement with
respect to any one area shall not render this Agreement unenforceable as
applied to any one or more of the other areas.
9. Inventions. Employee agrees and understands that any invention,
discoveries, programs, programming techniques and underlying program design
and/or concepts developed
7
8
by him, either directly or indirectly, are the sole property of Employer.
Employee agrees to assign, and does hereby assign, to Employer or its nominees,
all right, title and interest in and to the aforesaid proprietary interests
made by him, alone or resulting from tasks specifically assigned to him by
Employer. Employee will with reasonable reimbursement for expenses, but at no
other expense to Employer, at any time during or after his employment, sign and
deliver all lawful papers and cooperate in such other lawful acts which may be
reasonably necessary or desirable to protect or vest title in such proprietary
interests in Employer or its nominees, including applying for, obtaining,
maintaining, and enforcing patents on such inventions in all countries of the
world. Employee understands, however, that this agreement does not apply to any
invention for which no equipment, supplies, facility, or trade secret
information of Employer was used and which was developed entirely on Employee's
own time unless (a) the invention relates (i) directly to the business of
Employer, or (ii) to Employer's actual or demonstrably anticipated research or
development; or (b) the invention results, either directly or indirectly, from
any work performed by Employee for Employer.
10. Severability. If any provision contained in this Agreement shall for
any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. The parties
agree that in the event a court should determine that this Agreement or any of
the covenants contained herein is unreasonable, void or invalid, for any reason
whatsoever, then in such event, the parties hereto agree that the duration,
geographical or other limitation imposed herein should be as the court, or
jury, if applicable, should determine to be fair and reasonable, it being the
intent of each of the parties hereto to be subject to an agreement that
protects the legitimate competitive interests of Employer and does not
unreasonably curtail the rights of the Employee.
11. Employee's Representation. Employee represents that his experience
and capabilities are such that the provisions of section 7 will not prevent him
from earning a livelihood.
12. Employer's Right to Obtain an Injunction. Employee acknowledges that
Employer will have no adequate means of protecting its rights under sections 7
and 8 of this Agreement other than securing an injunction. Accordingly,
Employee agrees that Employer is entitled to enforce this Agreement by
obtaining a preliminary and permanent injunction and any other appropriate
equitable relief in a court of competent jurisdiction. Employee acknowledges
that the recovery of damages by Employer will not be an adequate means to
redress a breach of this Agreement. Nothing contained in this paragraph,
however, shall prohibit Employer from pursuing any remedies in addition to
injunctive relief, including recovery of damages.
13. General Provisions.
(a) Entire Agreement. This Agreement contains the entire understanding
between the parties hereto relating to the employment of Employee by Employer
and supersedes any and all prior employment or compensation agreements between
Employer and Employee.
8
9
(b) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Employee, his beneficiaries or legal
representatives, without the prior written consent of Employer; provided,
however, that nothing shall preclude (i) Employee from designating a
beneficiary to receive any benefit payable hereunder upon his death, or (ii)
the executors, administrators or other legal representatives of Employee or his
estate from assigning any rights hereunder to the person or persons entitled
thereunto.
(c) Binding Agreement. This Employment Agreement shall be binding upon,
and inure to the benefit of, Employee and Employer and their respective
permitted successors and assigns.
(d) Amendment or Modification of Employment Agreement. This Employment
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(e) Insurance. Employer, at its discretion, may apply for and procure in
its own name and for its own benefit, life insurance on Employee in any amount
or amounts considered advisable; and Employee shall have no right, title or
interest therein, and further, Employee agrees to submit to any medical or
other examination and to execute and deliver any applications or other
instruments in writing as may be reasonably necessary to obtain such insurance.
(f) Notices. All notices under this Employment Agreement shall be in
writing and shall be deemed effective when delivered in person (in the case of
Employer, to its General Counsel) or when mailed, if mailed by certified mail,
return receipt requested. Notices mailed shall be addressed, in the case of
Employee, to him at his residential address currently on file with Employer,
and in the case of Employer, to its corporate headquarters, attention of the
General Counsel, or to such other address as Employer or Employee may designate
in writing at any time or from time to time to the other party. In lieu of
notice by deposit in the U.S. mail, a party may give notice by telegram or
telex.
(g) Waiver. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege. The provisions of this section 13(g) cannot be
waived except in writing signed by both parties.
(h) Governing Law. This agreement shall be governed and construed in
accordance with the laws of the State of North Carolina, exclusive of its
choice of law provisions.
9
10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BROADWAY & SEYMOUR, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
/s/ Xxxxx X. Xxxx 6/1/97
----------------------------------------
Xxxxx X. Xxxx
10
