EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of August 1, 1997, by and between
XXXXXXX SYSTEMS PLC (the "Company"), a public limited company incorporated
under the laws of the Republic of Ireland, and its subsidiaries, XXXXXXX
SYSTEMS, INC. ("SSUS") and XXXXXXX SYSTEMS CANADA, LTD. ("SSC")
(collectively, the "Companies"), and XXXX X. XXXXX, III, a resident of New
Hampshire (the "Executive");
WITNESSETH:
WHEREAS, each of the Companies wishes to employ the Executive as its
Chief Executive Officer, to serve in such capacity for all three 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, effective on the date
first above written to serve as follows: (a) the Executive shall serve as Chief
Executive Officer of the Companies as of the date first above written through
April 1, 1998, (b) the Executive shall serve as President and Chief Executive
Officer and Chairman of the Boards of Directors of the Companies from April 1,
1998 through July 31, 1999, and (c) the Executive shall serve as a Director of
the Companies through the period of time covered by clauses (a) and (b) above
and through August 1, 2002. The period from the date first above written through
July 31, 1999 is hereinafter referred to as the "Term." The Executive hereby
accepts such employment for such Term, on the terms and conditions hereinafter
set forth.
2 Duties. During that part of the Term during which the Executive is the Chief
Executive Officer, the Executive shall be responsible for the overall management
and operations of the Companies and shall have such duties and responsibilities
as may be assigned to him by 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 office of SSUS located there.
3 Availability. While employed by the Companies during the Term 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, 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 $350,000 for the one year
period commencing August 1, 1997. Such salary shall be subject to adjustment
thereafter as determined by the Board. The base salary will be allocated among
the Companies as determined by the Board from time to time. The Company shall
not be obligated to pay the Executive a salary after the last day of the Term.
b. The Executive shall have the right to participate in an incentive bonus plan
to be established by the Companies, pursuant to which the Executive will be
eligible to receive an aggregate bonus within 60 days after the end of each
calendar year during the Term equal to up to 100% of his base salary during such
year, and within 60 days after the end of the Term with respect to the partial
year ending on the last day of the Term, with the amount or the bonus to which
he is entitled determined by the Compensation Committee of the Board based upon
performance by the Executive and the Companies. At least one-half of such bonus
shall be payable based upon the Companies meeting financial performance
projections adopted by the Board with respect to the fiscal year for which such
bonus applied. c. The Companies shall provide the Executive either with an
automobile for use by the Executive or a reasonable allowance established by the
Board to enable the Executive to obtain the use of an automobile and liability
insurance therefor. d. 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 Restricted Ordinary Shares. The Company shall issue restricted Ordinary Shares
to the Executive in accordance with the terms specified in a Stock Restriction
Agreement to be entered into between the Executive and the Company. Such Stock
Restriction Agreement shall provide for vesting of such shares over the minimum
period that the Executive has agreed to continue to serve as a Director of the
Company, which minimum period ends on August 1, 2002.
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. a. Termination for Cause. The Companies may terminate their
employment of the Executive under this Agreement for cause in the event that the
Board determines that the Executive (i) has materially breached his obligations
to any Company under this Agreement or has refused or failed to perform
satisfactorily the duties properly assigned to him in accordance with the terms
of this Agreement, provided that the employment of the Executive shall not be
terminated under this clause (i) unless the Executive is given notice in writing
that the conduct in question constitutes grounds for termination under this
Section 9 and the Executive is allowed at least twenty (20) days to remedy the
refusal or failure, (ii) has been convicted of a crime of moral turpitude
(whether or not in conjunction with the performance by the Executive of his
duties under this Agreement), or (iii) has through willful misconduct or gross
negligence engaged in an act or course of conduct that causes material injury to
any Company (or any affiliate or subsidiary of any Company) (each of the reasons
specified in clauses (i) through (iii) 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, 12 17.
9 Termination Without Cause.
a. If the employment of the Executive is terminated by the Companies during the
Term of this Agreement other than (i) pursuant to Section 9(a) or Section 11 or
(ii) by virtue of the resignation of the Executive, or if the responsibilities
and duties of the Executive are, other than for Cause, materially diminished or
changed in a manner that materially impairs the Executive's ability to function
as Chief Executive Officer of the Companies, the Executive shall be entitled to
receive, upon such termination, a severance payment in an amount equal to the
aggregate of the cash consideration to which the Executive would be entitled
hereunder if he remained employed by the Companies for the lesser of (i) one
year or (ii) the period from the date of termination to end of the Term, in each
case computed on the assumption is that the Employee would be entitled to the
full amount of the incentive bonus provided for in Section 5(b). Such severance
payment shall be payable in equal monthly installments over the period during
which the Employee would be entitled to receive such cash consideration if still
employed by the Companies. b. Termination of employment under this Section 10
shall not terminate the Executive's obligations under Sections 7, 8 and 12.
10 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 11 shall not
terminate the Executive's obligations under Sections 7, 8 and 12.
11 Non-Competition.
a. The Executive hereby agrees that, except as provided in Section 12(b), during
the term of his employment by the Companies pursuant to this Agreement and for a
period of one year following the termination for any reason of his employment
under this Agreement, 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 the 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
Company) (x) any project, financing or customer that any Company (or any
affiliate or subsidiary of any Company) has under contract (including
unfulfilled purchase orders), or any letter of supply or other supplier contract
or arrangement entered into by any Company (or any affiliate or subsidiary of
any Company), and all extensions, renewals and resolicitations of such contracts
or arrangements, (y) any contract, agreement or arrangement that any Company (or
any affiliate or subsidiary of any Company) is actively negotiating with any
other party, or (z) any prospective business opportunity that any Company (or
any affiliate or subsidiary of any Company) has identified at the time of
termination as being actively pursued by such Company, or (iii) for himself or
another, hire, attempt to hire, or assist in or facilitate in any way the hiring
of any employee of the Companies (or any affiliate or subsidiary of any
Company), or any employee of any person, firm or other entity, the employees of
which any Company (or any affiliate or subsidiary of any Company) has agreed not
to hire or endeavor to hire. b. In the event that prior to the end of the Term
the Executive's employment is terminated by the Company pursuant to Section
10(a), the Executive shall have the option, exercisable at any time by notice to
the Company, to be relieved of his obligations under clause (i) of Section
12(a), but not clauses (ii) and (iii) of Section 12(a). Upon the giving of such
notice by the Executive, the Company 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 12, 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 12 are necessary and
reasonable to protect the Companies in the conduct of its business. If any
restriction contained in this Section 12 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.
12 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.
13 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.
14 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 Company.
15 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 Xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: 000-000-0000
If to the Executive:
Xx. Xxxx X. Xxxxx, III
0 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
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.
1 Arbitration; Jurisdiction. Except for disputes arising under or in connection
with Sections 7, 8, and 12, 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 12, 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.
2 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.
3 Miscellaneous. This Agreement sets forth all, and is 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.
4 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.
5 Survival of Terms. If this Agreement is terminated for any reason, the
provisions of Sections 7, 8, 12 and 17 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 CANADA, LTD.
XXXXXXX SYSTEMS, INC.
/s/ Xxxx X. Xxxxx, III By: /s/ Xxxxx X. Xxxxxxx
Xxxx X. Xxxxx, III Name: Xxxxx X. Xxxxxxx
Title: Chairman
