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Exhibit 10.7
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 8th day of July 1998 by and between SOFTWORKS,
Inc., a Delaware corporation (hereinafter the "Company") and XXXX X. XXXXXX,
residing at 00000 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000 (hereinafter the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company and the Employee desire to enter into an
Employment Agreement relating to the Company's employment of the Employee; and
WHEREAS, this Agreement is intended to supersede and replace all prior
agreements, understandings and arrangements between the Company and the
Employee, including any and all royalty agreements, relating to such employment.
NOW, THEREFORE, it is agreed as follows:
1. Retention of Services. The Company hereby retains the services
of Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
2. Employment Term.
(a) Subject to earlier termination on the terms and conditions
hereinafter provided, and further subject to certain provisions hereof which
survive the term hereof, the term of this Agreement shall be comprised of a
period of employment commencing on the date on which the company completes an
initial public offering (the "IPO") of its capital stock (the "Effective Date")
and terminating December 31, 2002. The term of this Agreement shall
automatically be extended for additional one (1) year periods unless and until
the Company or the Employee shall deliver written notice to the other party
hereto no less than ninety (90) days prior to the end of any renewal term of its
desire to terminate this Agreement.
(b) In the event that the Company delivers written notice of its
intent not to renew the employment of the Employee for any year after December
31, 2002, the Employee shall be entitled to receive as severance pay all
Remuneration and Employee Benefits in accordance with Sections 4a and 5 of this
Agreement for a period of not less than twelve (12) months from the date that
this Agreement or any extension thereof is terminated.
3. Duties and Extent of Services During Period of Employment.
During the term of employment, Employee shall be employed on a full-time basis
as the President and Chief Executive Officer of the Company. In such capacity,
Employee agrees that she shall serve the Company under the direction of the
Board of Directors of the Company to the best of her ability;
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shall perform all duties incident to her offices on behalf of the Company and
shall perform such other duties as may from time to time be assigned to her by
the Chairman of the Board of the Company. Employee shall also serve in similar
capacities for such subsidiary corporations of the Company as shall be
agreeable to the Board of Directors and the Employee, and Employee shall be
entitled to such additional compensation therefor as shall be agreeable to the
Board of Directors and the Employee. Notwithstanding the foregoing, it is
understood and agreed that during the term of employment, the duties and
authority of Employee shall not be inconsistent with: (i) her position and
titles, or (ii) those duties ordinarily and customarily performed in such
titles. Further, it is understood and agreed that any change in Employee's
title as Chief Executive Officer on or before two years from the Effective Date
or any change in her title as President during the term of this Agreement or
any material diminution in her duties or authority in the title or titles she
holds shall constitute a Good Reason for termination of this Agreement by the
Employee pursuant to Section 9(b) hereunder.
4. Remuneration. For the period of employment, Employee shall be
entitled to receive the following compensation for her services:
(a) The Company shall pay to Employee a salary at the
rate of $200,000 per annum payable in equal bi-weekly installments, or in such
other manner as shall be agreeable to the Company and Employee. Employee's
annual salary shall be reviewed annually by the Board of Directors.
(b) In the event that the Company meets or exceeds the
quarterly targets established by the Board of Directors of the Company, the
Company shall pay to Employee, as incentive compensation, at the rate of
$150,000 per annum in 1998 and $200,000 per annum in each of 1999, 2000, 2001
and 2002. The Company shall pay one-eighth of such incentive compensation on a
quarterly basis not later than thirty (30) days after the end of each fiscal
quarter and shall pay one-half of such incentive compensation not later than
ninety (90) days after the end of each fiscal year of the Company. The Company
agrees to furnish to Employee a copy of such financial statements not later than
thirty (30) days after the end of each fiscal quarter and ninety (90) days after
the end of each fiscal year of the Company during the term hereof.
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5. Employee Benefits; Expenses.
(a) During the period of employment, the Company will provide to
Employee at its expense certain employee benefits, including, but not limited
to, convertible life insurance in the face amount of $1,000,000, long-term
disability insurance coverage continuing until Employee is age 65 in an amount
equal to two-thirds of Employee's Base Salary as established under Section 4(a)
with a premium for a standard risk non-smoker, Directors and Officers liability
insurance in an amount not less than that maintained for other directors and
officers of the Company, and such additional benefits that shall, at a minimum,
include the benefits described on Exhibit A hereto. Any applicable employee
medical policy shall include the right to convert such policy from a corporate
policy to a personal policy at the expense of the Company if the Company ceases
to directly provide such policies to its officers, directors, or employees or at
employee's departure from employment.
(b) During the period of employment, Employee shall be eligible to
participate in the Company's stock option plans, stock purchase plans or other
employee incentive plans (including without limitation its 1998 Stock Option
Plan ) to the extent determined in the sole discretion of the Board of Directors
of the Company or a committee thereof.
(c) During the period of employment, Employee shall be furnished
with office space and facilities commensurate with her position and adequate for
the performance of her duties; she shall be provided with the perquisites
customarily and regularly associated with the position of the President and
Chief Executive Officer of the Company, including, but not limited to, an
automobile allowance equal to $1200 per month and reasonable professional
association memberships; and she shall be entitled to regular vacations during
each year of four (4) weeks in the aggregate.
(d) It is contemplated that during the period of employment,
Employee may incur out-of-pocket expenses in connection with the performance of
her services hereunder, including customary and regular expenses incurred for
travel and business entertainment. Accordingly, the Company shall reimburse
Employee for all reasonable out-of-pocket expenses incurred by Employee in the
performance of her duties hereunder upon submission of reasonable documentation
therefore in accordance with the Company's policies.
(e) All benefits to Employee specifically provided for herein
shall be in addition to, and shall not diminish any rights which Employee may
have or may acquire under any hospitalization, life insurance, pension, profit
sharing or other present or future employee benefit plan or plans of the
Company.
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6. Disability. If Employee, during the period of employment, due
to ill health or other physical or mental incapacity becomes unable to perform
substantially all of her duties and obligations as set forth in this Agreement,
which ill health or other physical or mental incapacity will have existed
continuously for a period of six (6) consecutive months or more, the Company may
thereafter, upon at least forty-five (45) days' written notice to Employee,
specifying in reasonable detail those factors set forth above, place her on
disability status; provided, however, that the Company may not place Employee on
disability status if she would not become eligible for benefits pursuant to the
long-term disability coverage provided to the Employee by the Company, and
further provided that the disability policy does not provide different levels of
benefits for physical and mental disabilities and provides, at a minimum, the
level of benefits described in Section 5(a) of this Agreement.
7. Confidential Information.
(a) In the course of Employee's employment by the
Company, Employee will have access to and possession of valuable and important
confidential or proprietary data or information of the Company and its
operations. Employee will not during Employee's employment by the Company or at
any time thereafter divulge or communicate to any person nor shall Employee
direct any Company employee, representative or agent to divulge or communicate
to any person or entity or use to the detriment of the Company or for the
benefit of any other person or entity, any of such confidential or proprietary
data or information or make or remove any copies thereof, whether or not marked
or otherwise identified as "confidential" or "secret," except to a person or
entity bound by confidentiality obligations similar to those contained herein
and other than as reasonably necessary in performing Employee's duties hereunder
or as may be required by law or as may reasonably be required in connection with
any judicial or administrative proceeding or inquiry. Employee shall take all
reasonable precautions in handling the confidential or proprietary data or
information within the Company to a strict need to know basis and shall comply
with any and all written policies adopted from time to time by the Company to
protect the confidentiality of confidential or proprietary data or information.
(b) The term "confidential or proprietary data or
information" as used in this Agreement shall mean information not generally
available to the public, including, without limitation, all database
information, personnel information, financial information, customer lists,
supplier lists, trade secrets, patented or proprietary information, forms,
information regarding operations, systems, services, know how, computer and any
other processed or collated data, computer programs, pricing, marketing and
advertising data.
(c) Employee will at all times, promptly disclose to the
Company in such form and manner as the Company may reasonably require, any
inventions, improvements or procedural or methodological innovations, programs,
methods, forms, systems, services, designs, marketing ideas, products or
processes (whether or not capable of being trademarked, copyrighted or patented)
conceived or developed or created by Employee during Employee's employment
hereunder and which relate to the business of the Company ("Intellectual
Property"). Employee
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agrees that all such Intellectual Property shall be "work-for-hire" and shall be
the sole property of the Company. To the extent any such Intellectual Property
does not constitute a "work-for-hire" under U.S. law, Employee hereby assigns to
Company all right, title and interest in such Intellectual Property. Employee
further agrees that Employee will execute such instruments and perform such acts
as may reasonably be requested by the Company to effectuate such assignment and
otherwise to transfer to and perfect in the Company all rights in such
Intellectual Property.
(d) All written materials, records and documents made by
Employee or coming into Employee's possession during Employee's employment by
the Company concerning any products, processes or equipment manufactured, used,
developed, investigated, purchased, sold or considered by the Company or
otherwise concerning the business or affairs of the Company shall be the sole
property of the Company, and upon termination of Employee's employment by the
Company, or upon request of the Company during Employee's employment by the
Company, Employee shall promptly deliver the same to the Company. In addition,
upon termination of Employee's employment by the Company, Employee will deliver
to the Company all other Company property in Employee's possession or under
Employee's control, including, but not limited to, financial statements,
marketing and sales data, customer and supplier lists, database information and
other documents, and any Company credit cards.
(e) The provisions of Sections 7(a), 7(b) and 7(d) shall
survive the termination of this Employment Agreement.
8. Non-Competition.
(a) Except as otherwise provided herein, during the term
of employment and for a period of one year thereafter (hereinafter the
"Restricted Period"), the Employee shall not, without the written consent of the
Company, directly or indirectly:
(i) become associated with, render services to, invest
in, represent, advise or otherwise participate in as an officer, employee,
director, stockholder, partner, promoter, agent of, or consultant for any
business engaged in those aspects of the systems management software business
that the Company was engaged in during the term of this Agreement, which are
conducted in any of the geographic areas in which the Company's business is
conducted; provided, however, that nothing contained herein will prevent
Employee from owning less than five percent (5%) of any class of equity or debt
securities listed on a national securities exchange or traded in any established
over-the-counter securities market, so long as such involvement with the issuer
of any such securities is solely that of a passive investor;
(ii) for her own account or for the account of any other
person or entity solicit any business from any person or entity which, during
the twelve-month period preceding the date her employment terminates, was a
customer or client of the Company (a "Restricted Person"); provided, however,
that nothing in this Section 8(a)(ii) shall prohibit the Employee from
soliciting business from a Restricted Person for the provision of services other
than related to those aspects
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of the systems management software business that the Company was engaged in
during the term of this Agreement; or
(iii) employ or otherwise engage, or solicit, entice or
induce on behalf of herself, or any other person or entity, the service,
retention or employment of any person who has been an employee, sales employee,
sales representative, consultant to or agent of the Company within one year of
such offer or solicitation. Provided, however, that a solicitation shall not be
deemed to have occurred based solely upon Employee's giving her new business
address to any person.
(b) In the event that the Employee terminates her
employment hereunder for Good Reason (as defined in Section 9(b) hereunder) or
the Company terminates the Employee's employment hereunder other than for Cause
(as defined in Section 9(a) hereunder), the covenants contained in Section 8(a)
shall not bind the Employee.
(c) The parties hereto intend that the covenants
contained in this Section 8, which pertain only to the geographic areas where
the Company is engaged in business, shall be deemed a series of separate
covenants for each applicable area of the relevant country, state, county and
city. If, in any judicial proceeding, a court shall refuse to enforce all the
separate covenants deemed included in this Section 8 because, taken together,
they cover too extensive a geographic area, the parties intend that those of
such covenants (taken in order of the cities, counties, states and countries
therein which are least populous) which if eliminated would permit the remaining
separate covenants to be enforced in such proceeding shall, for the purpose of
such proceeding, be deemed eliminated from the provisions of this Section 8.
(d) With respect to the covenants contained in Sections 7
and 8 of this Agreement, Employee agrees that any remedy at law for any breach
or threatened or attempted breach of such covenants may be inadequate and that
the Company shall be entitled to specific performance or any other mode of
injunctive and/or other equitable relief to enforce its rights hereunder or any
other relief a court might award without the necessity of showing any actual
damage or irreparable harm or the posting of any bond or furnishing of other
security.
9. Termination.
(a) The Company recognizes that, for the period during
which Employee has been employed and/or associated with the Company, the Company
has been intimately familiar with the ability, competence and judgment of
Employee, which are acknowledged to be of the highest caliber. Accordingly, the
Company and Employee agree that Employee's services hereunder may be terminated
for Cause by the Company. For purposes of this Agreement, Cause shall mean: (i)
an act of fraud or embezzlement of a materially injurious nature that relates to
the performance of the Employee's duties under this Agreement and results in a
material injury to the Company; (ii) conviction of a felony that relates to the
performance of the Employee's duties under this Agreement; and (iii) conduct by
Employee involving willful and deliberate malfeasance or gross negligence in
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the performance of her material duties hereunder following the receipt by the
Employee of thirty (30) days written notice, specifying in reasonable detail
such malfeasance or gross negligence and the Employee's failure to cure within
such period.
Notwithstanding the foregoing, a termination for Cause shall
not be deemed to have been for Cause unless and until the Employee has first
received written notice specifying in reasonable detail the reasons for the
Company's intention to terminate her for Cause, and she has had an opportunity,
together with counsel, to be heard before the full Board of Directors of the
Company and to submit any materials or information to the Board of Directors
that she may view as appropriate, and a majority of the Board of Directors has
issued a finding that, in its good faith opinion, the Board of Directors
concludes that the Employee's conduct has established a sufficient basis for a
termination for Cause as defined. The foregoing is a procedural requirement only
and the determination of the Board may be challenged by the Employee in an
appropriate forum. Any alleged termination for Cause by the Board, which is not
correctly a termination for Cause, shall be deemed a termination without Cause.
If the Company terminates Employee's employment hereunder for
Cause, or if Employee terminates her employment hereunder for other than Good
Reason (as defined hereunder), Employee shall not be entitled to receive any
further compensation hereunder which has not already been earned pursuant to the
terms hereof. Employee and the Company acknowledge that the foregoing provisions
of this Section 9(a) are reasonable and are based upon the facts and
circumstances of the parties at the time of entering into this Agreement, and
with due regard to future expectations.
(b) The Employee may terminate this Agreement and her
employment hereunder for Good Reason. Said termination shall, at the Employee's
election, be effective immediately upon the giving of written notice of
termination to the Company. For the purposes of this Agreement, Good Reason
means: (i) the Company's failure to comply with Sections 3, 4, 5 and 12 herein,
except with respect to her title as Chief Executive Officer after two years
from the Effective Date, and the continued failure of the Company to cure such
default within thirty (30) days after written demand for performance has been
given to the Company by Employee (which demand shall describe specifically the
nature of such alleged failure); (ii) a material diminution of the Employee's
duties and authority (including, but not limited to, Employee's title as set
forth in Section 3 hereof) and the continued failure of the Company to cure
such default within thirty (30) days after written notice has been given to the
Company by Employee (which notice shall describe specifically the nature of
such diminution); or (iii) the Company's requirement that the Employee relocate
outside of the metropolitan Washington, D.C. area in order to fulfill her
obligations pursuant to this Agreement unless Employee is relocated due to the
relocation of the Company.
(c) If the Company terminates Employee's employment
hereunder other than for Cause, or if Employee terminates her employment
hereunder for Good Reason the Employee shall be entitled to: (i) all
Remuneration, Employee Benefits and Expenses as provided by Sections 4 and 5
herein for the greater of (A) the remainder of the term of her employment
provided for herein or (B) two years; and (ii) the immediate vesting of all
stock options granted to
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Employee pursuant to any stock option plan then in existence except for unvested
stock options which are based on the Company meeting certain performance levels.
(d) The employment term of this Agreement shall
terminate on the death of Employee. In the event of Employee's death during any
term of this Agreement, the Company shall pay to Employee's estate: (i)
Employee's due but unpaid Base Salary up to and including the date of Employee's
death; (ii) any and all unpaid amounts, if any, of additional compensation under
Section 4 hereof due to Employee; and (iii) the monetary value of Employee
Benefits and Expenses due to Employee under Section 5 hereof but unpaid as of
the date of her death. After payment of said amounts, the Company shall have no
further obligations to Employee or her estate.
10. Notices. Any notice to be given to the Company hereunder shall
be deemed sufficient if addressed to the Company in writing and delivered by
certified or registered mail to its offices at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000, or such other address as the Company may hereafter
designate, with a copy to Xxxxx X. Xxxxxxxxx, Esq., Blau, Kramer, Wactlar &
Xxxxxxxxx, P.C., 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000. Any notice to
be given to Employee hereunder shall be delivered by certified or registered
mail to her at: 00000 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000 or such other
address as she may hereafter designate, with a copy to Xxxxxx X. Xxxxx, Xxxxxx,
Xxxxx & Xxxxxxx LLP, 0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
11. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the Company, and
unless clearly inapplicable, all references herein to the Company shall be
deemed to include any successors. In addition, this Agreement shall be binding
upon and inure to the benefit of the Employee and her heirs, executors, legal
representatives and assigns; provided, however, that the obligations of Employee
hereunder may not be delegated without the prior written approval of the Board
of Directors of the Company.
12. Successor Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform as if no such
succession had taken place.
13. Amendments. This Agreement may not be altered, modified,
amended or terminated except by a written instrument signed by each of the
parties hereto.
14. Prior Agreements Superseded. This Agreement supersedes any
employment or consulting agreements, oral or written, entered into between
Employee and the Company prior to the date of this Agreement.
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15. Change of Control.
(a) In the event there shall be a change in the present
control of the Company, as hereinafter defined, and the Employee's working
conditions as contemplated hereby shall have been adversely affected as a result
thereof, Employee shall have the option, exercisable within six (6) months of
his becoming aware of such event, to terminate this Agreement forthwith. Upon
such termination, Employee shall have the right to immediately receive as a lump
sum payment an amount equal to three times the total compensation paid to
Employee during the immediately preceding fiscal year of the Company, less
$1.00.
(b) For purposes of this Agreement, a change in the
present control of the Company shall mean:
(i) if any "person" (as such term is used in
Section 13(d) and 14(d) of the Exchange Act) other than Computer Concepts Corp.,
the Company or any "person" who on the date of this Agreement is a director or
officer of the Company, becomes the "beneficial owner" (as defined in Rule
13(d)-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing thirty percent (30%) of the voting power of the Company's
then outstanding securities; or
(ii) if during any period of two (2) consecutive
years during the term of this Agreement, individuals who at the beginning of
such period constitute the Board of Directors cease for any reason to constitute
at least a majority thereof, unless the election of each director who is not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds (2/3) of the directors then in office
who were directors at the beginning of the period.
16. Applicable Law. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of Delaware, without
regard to conflicts of laws.
17. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to the subject matter of
this Agreement. Any other prior agreements, understandings or representations
with respect to the subject matter of this Agreement are hereby superseded,
terminated and canceled in their entirety and are of no force or effect.
18. Authority. The Company represents and warrants that: (i) it is
duly organized and validly existing under the laws of the jurisdiction in which
it was incorporated or formed; (ii) it has full power and authority to enter
into and perform its obligations hereunder; and (iii) this Agreement has been
duly authorized, executed, and delivered on behalf of the Company by
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persons empowered to do so.
19. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together will constitute one and the same
agreement, and any of the parties hereto may execute this Agreement by signing
such counterpart.
20. Acknowledgment. Employee acknowledges that she has carefully
read this Agreement and hereby represents and warrants to the Company that
Employee's entering into this Agreement, and the obligations and duties
undertaken by Employee hereunder, will not conflict with, constitute a breach of
or otherwise violate the terms of any other agreement to which Employee is a
party and that Employee is not required to obtain the consent of any person OR
entity in order to enter into and perform her obligations under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SOFTWORKS, Inc.
By: /s/ Xxxxxx XxXxxxxxxx
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Name: Xxxxxx XxXxxxxxxx
Title: Chief Financial Officer
EMPLOYEE
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/s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
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Exhibit A
EMPLOYEE BENEFITS TO BE PROVIDED BY THE COMPANY
Life insurance
Health insurance
Long-Term Disability insurance
Directors and Officers insurance
Errors and Omissions insurance
401(k)
Dental/Optical
Stock options
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