CrossZ SOFTWARE CORPORATION
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
effective as of October 6, 1997 (the "Effective Date"), by and between Xxxxxx
X. Xxxxxxx (the "Executive") and CrossZ Software Corporation (the "Company").
R E C I T A L S
The Company and the Executive desire to enter into this Agreement in
order to provide additional financial security and benefits to the Executive,
to encourage the Executive to continue employment with the Company and to
enhance the motivation and incentive of the Executive to increase the
profitability of the Company.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Executive with the Company,
the parties agree as follows:
1. Duties and Scope of Employment.
(a) Position. The Company shall employ the Executive in the
position of Senior Vice President of Worldwide Sales with such duties,
responsibilities and compensation as in effect as of the Effective Date;
provided, however, that the Board of Directors of the Company (the "Board")
shall have the right to revise such responsibilities and compensation from
time to time as the Board may deem necessary or appropriate. Such duties and
responsibilities shall be commensurate with Executive s past practices and
consistent with his position as Senior Vice President of Worldwide Sales of
the Company. If any such revision constitutes "Involuntary Termination" as
defined in Section 7 (d) of this Agreement, the Executive shall be entitled to
benefits upon such Involuntary Termination as provided under this Agreement.
(b) Obligations. The Executive shall devote his full
business efforts and time to the Company and its subsidiaries. The foregoing,
however, shall not preclude the Executive from engaging in such activities and
services as do not interfere or conflict with his responsibilities to the
Company.
2. Termination. This Agreement shall continue in force and effect
until the earliest of: (i) October 6, 1999 or (ii) until such time as notice
of non-renewal or termination of this Agreement is given in writing by either
the Company or the Executive to the other (the "Termination Event"). The
Company and the Executive agree to meet to negotiate in good faith the renewal
of this Agreement two (2) months prior to the Termination Event. This
Agreement may be extended for an additional period or periods by mutual
written agreement of the Company and the Executive. A termination of the terms
of this Agreement pursuant to the preceding sentence shall be effective for
all purposes, except that such termination shall not affect the payment or
provision of compensation or benefits on account of a termination of
employment occurring prior to the termination of the terms of this Agreement,
nor affect
Executive's right to six (6) months of Base Compensation as severance pay
after the termination.
3. Compensation and Benefits.
(a) Base Compensation. The Company shall pay the Executive
as compensation for services a base salary at the annualized rate of not less
than $150,000. Such salary shall be reviewed at least annually and may be
increased from time to time. Such salary shall be paid periodically in
accordance with normal Company payroll. The annual compensation specified in
this Section, as adjusted from time to time, before any salary reduction under
Section 401(k) of the Internal Revenue Code, deferred compensation plan or
agreement or any other benefit or plan requiring reduction of salary, is
referred to in this Agreement as "Base Compensation."
(b) Bonus and Commissions. Beginning with the Company's
current fiscal quarter and for each fiscal year thereafter during the term of
this Agreement, the Executive shall be eligible to receive commissions and
additional equity (the "Target Bonus") based upon a target or targets approved
by the Board annually (See Exhibit A). The Target Bonus payable hereunder
shall be payable in accordance with the Company's normal practices and
policies.
(c) Vacation. The Executive shall be entitled to three (3)
weeks of paid vacation per year or such additional vacation as may be
permitted from time to time by Company policy.
(d) Executive Benefits. The Executive shall be eligible to
participate in the employee benefit plans and executive compensation programs
maintained by the Company of general applicability to other key executives of
the Company, including (without limitation) retirement plans, savings or
profit-sharing plans, deferred compensation plans, supplemental retirement or
excess-benefit plans, stock option, incentive or other bonus plans, life,
disability, health, accident and other insurance programs, paid vacations, and
similar plans or programs, subject in each case to the generally applicable
terms and conditions of the plan or program in question and to the
determination of the Board or any committee administering such plan or
program. Participation shall be consistent with the Executive's position as
Senior Vice President of Worldwide Sales of the Company. The Company shall
reimburse the Executive for all reasonable business and travel expenses
actually incurred or paid by the Executive in the performance of services on
behalf of the Company, in accordance with the Company's expense reimbursement
policy as in effect from time to time.
(e) Stock Options. Pending Board approval and subject to the
provisions of the Company's 1991 Incentive Stock Options Plan, the Executive
will be granted an initial option ("the Option") to purchase 100,000 stock
options at the exercise price equal to the Initial Offering Price of the
Company's common stock. The options granted will fully vest over a period of
four (4) years at the rate of 25% after one year of service with the balance
of the options vesting ratably each month over the remaining three year
period.
4. Severance Benefits.
(a) Termination of Employment During Term of Agreement. If
the Executive's employment with the Company terminates during the term of this
Agreement, then the Executive shall be entitled to receive severance benefits
as follows:
(i) Involuntary Termination. If, at any time during
the term of this Agreement, the Executive's employment terminates as a result
of Involuntary Termination other than for Cause, Disability or death, or the
Company breaches any of the material terms of this Agreement (either of the
foregoing, an "Event"), the Company shall pay the Executive severance in the
amount of one-twelfth (1/12) of the Base Compensation of the Executive at the
time of such termination (without giving effect to any reduction in Base
Compensation that resulted in such Involuntary Termination) per month, for a
period of six (6) months.
(ii) Voluntary Resignation; Termination for Cause.
If the Executive's employment terminates by reason of the Executive's
voluntary resignation (and is not an Involuntary Termination), or if the
Executive is terminated for Cause, then the Executive shall not be entitled to
receive severance or other benefits except for those (if any) as may then be
established (and applicable) under the Company's then-existing severance and
benefits plans and policies at the time of such termination.
(iii) Disability; Death. If the Company terminates
the Executive's employment as a result of the Executive's Disability, or such
Executive's employment is terminated due to the death of the Executive, then
the Executive shall not be entitled to receive severance or other benefits
except (i) those (if any) as may then be established (and applicable) under
the Company's then-existing severance and other benefits plans and policies at
the time of such Disability or death, (ii) benefits required by applicable
laws, and (iii) in the case of death, the Executive's salary for thirteen (13)
weeks payable to the Executive's surviving spouse, or if the Executive has no
spouse, to the Executive's estate. In the event of termination as a result of
Disability under this Agreement, the Executive shall be entitled to the
benefits provided under the Company's then-existing disability or extended
sick pay plan, for so long as such Executive continues to be disabled under
this Agreement or benefits otherwise terminate under such plan, whether or not
the Executive is deemed to be disabled under such plan.
(b) Continuing Benefits. In the event the Executive is
entitled to severance benefits pursuant to subsection 4(a)(i), then in
addition to such severance benefits, the Executive shall receive Company-paid
health, dental, vision, disability and life insurance coverage as provided to
such Executive immediately prior to the Executive's termination, upon the
terms and conditions, including deductibles and co-payments, provided in the
Company's then-existing plans, policies and programs.
(c) Accrued Salary, Benefits and Expenses. In addition, (i)
the Company shall
-3-
pay the Executive any unpaid base salary and unpaid bonus due for periods
prior to the Termination Date; (ii) the Company shall pay the Executive all of
the Executive's accrued and unused vacation through the Termination Date; and
(iii) following submission of proper expense reports by the Executive, the
Company shall reimburse the Executive for all expenses reasonably and
necessarily incurred by the Executive in connection with the business of the
Company prior to termination. These payments shall be made promptly upon
termination and within the period of time mandated by law.
(d) Retirement Plans. In addition to any other retirement
rights to which Executive may be legally entitled by contract or pursuant to
any plan or program, the Company shall pay the Executive regularly scheduled
payments which shall commence on the Executive's normal retirement age or
earlier if the Executive elects early retirement and shall be payable in
accordance with the Company's then-existing retirement plan, if any,
determined as though the Executive continued his employment with the Company
for an additional twelve (12) months following the Termination Date or until
Executive has attained normal retirement age under such Plan, whichever occurs
earlier. For purposes of determining the amount Executive is to receive the
Company shall utilize the greater of the Executive's compensation as defined
under any such retirement plan in effect on the date of this Agreement for the
year including the Termination Date.
(e) Options. In the event the Executive is entitled to
severance benefits pursuant to subsection 4(a)(i), the Executive's stock
options and other exercise rights shall remain exercisable in accordance with
the provisions of the Stock Option Plan.
(f) Vesting of Benefits. If the Executive's employment
terminates as a result of Involuntary Termination other than Cause,
Disability, or death within twelve (12) months of a Change-in-Control or,
prior thereto, if resulting from a Change-in-Control, then any unvested
benefits on the date of termination, including stock options, restricted
stock, stock appreciation rights, growth units, or other incentive
compensation (other than target bonus), shall immediately accelerate and
become fully vested and exercisable. The Executive shall thereupon have fully
vested rights to such benefits in accordance with the terms of applicable plan
or agreement.
(g) Deferred Compensation. Any compensation deferred by the
Executive shall be subject to the terms and conditions of any applicable plan
or agreement, and shall not be affected or altered by this Agreement.
5. Limitation on Payments. In the event that any payment or benefit
received or to be received by the Executive pursuant to this Agreement or
otherwise (collectively the "Payments") would be subject to the Excise Tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any similar or successor provision (the "Excise Tax"), the Company
shall pay to the Executive within ninety (90) days of the Termination Date
(or, if earlier, within ninety (90) days of the date the Executive becomes
subject to the Excise Tax), an additional amount (the "Gross-Up Payment") such
that the net
-4-
amount retained by the Executive, after deduction of any Excise Tax and any
federal (and state and local) income tax on the Payments, shall be equal to
the Payments minus all applicable taxes on the Payments. For purposes of
determining whether any of the Payments will be subject to the Excise Tax and
the amount of Excise Tax, (i) any other payments or benefits received or to be
received in connection with a Change of Control of the Company or the
Executive's termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company), shall
be treated as "parachute payments" within the meaning of Section 280G(b)(2) of
the Code or any similar or successor provision, and all "excess parachute
payments" within meaning of Section 280G(b)(1) or any similar or successor
provision shall be treated as subject to the Excise Tax, unless in the opinion
of tax counsel selected by the Company such other payments or benefits (in
whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation for
services within the meaning of Section 280G(b) or any similar or successor
provision of the Code in excess of the base amount within the meaning of
Section 280G(b)(3) or any similar or successor provision of the Code, or are
otherwise not subject to Excise Tax; (ii) the amount of the Payments which
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Payments or (B) the amount of the excess parachute
payments within the meaning of Section 280G(b)(1) (after applying clause (i)
above), and (iii) the value of any non-cash benefits or an deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with the principles of Section 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income taxes at the highest nominal marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest nominal
marginal rate of taxation in the state and locality of the Executive's
residence on the Termination Date, net of the maximum reduction in federal
income taxes which could be obtained from deducting of such state and local
taxes. In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the Company at the time
that the amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal
(and state and local) income tax imposed on the Gross-Up Payment being repaid
by the Executive if such repayment results in a reduction in Excise Tax and/or
a federal (and state and local) income tax deduction) plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Executive's
employment (including by reason of a payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that the amount of
such excess is finally determined.
6. Noncompete.
-5-
(a) If the Executive's employment terminates by reason of
voluntary resignation under Section 4, (a), (ii) only above, then the
Executive agrees not to work directly in the data warehousing, data mining and
business intelligence areas, or any technologies that the Executive is
directly engaged in with the Company for six (6) months following the
termination date.
(b) The Executive agrees that during his employment with the
Company, he shall not engage in, own, manage or control, or participate in the
ownership, management or control, directly or indirectly, of any person, firm,
corporation or other entity engaged in the design, development, provision,
sales or marketing of any product for the creation, compression, storage,
retrieval or analysis of relational databases ("Restricted Business") anywhere
in the world (the "Restricted Area"). Notwithstanding the foregoing, the
Executive may acquire shares representing not more than 5% of the outstanding
securities of any publicly traded company engaged in the Restricted Business.
The convenant contained in this Section 6 shall be construed as a series of
separate covenants, one for each country in the world and each province or
state within such country. If, in any judicial proceeding, a court shall
refuse to enforce any of such separate covenants, such unenforceable covenant
shall be deemed deleted from this Agreement to the extent necessary to permit
the remaining separate covenants included in this Section 6 to be enforced.
7. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Cause. "Cause" shall mean:
(i) Executive's failure to begin to substantially
perform his duties or responsibilities hereunder for a period of fifteen (15)
days after written notice thereof from the Board to Executive setting forth in
reasonable detail the respects in which the Company believes Executive has not
substantially performed his duties or responsibilities hereunder or continued
failure to begin to substantially perform such duties or responsibilities for
a period of thirty (30) days after such written notice;
(ii) Executive personally engaging in knowing and
intentional illegal conduct which is seriously injurious to the Company or its
affiliates;
(iii) Executive being convicted of a felony, or
committing an act of dishonesty or fraud against, or the misappropriation of
property belonging to, the Company or its affiliates;
(iv) Executive knowingly and intentionally
breaching in any material respect the terms of the Separation Agreement or any
other confidentiality agreement or invention or proprietary information
agreement with the Company;
(v) Executive's commencement of employment with
another employer
-6-
while he is an employee of the Company; or
(vi) any material breach by Executive of any
material provision of this Agreement for which a cure is not initiated within
fifteen (15) days of notice thereof from the Board to Executive or which
remains uncured for thirty (30) days following such notice.
(b) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) Any "person" or "group" (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company representing
30% or more of the total voting power represented by the Company's then
outstanding voting securities; or
(ii) A change in the composition of the Board of
the Company occurring within a two-year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (A) are directors of the Company as
reconstituted subsequent to the Company's Initial Public Offering, or (B) are
elected, or nominated for election, to the Board of the Company with the
affirmative votes of at least a majority of the Incumbent Directors at the
time of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company); or
(iii) The shareholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets (other than to a subsidiary or
subsidiaries).
(c) Disability. "Disability" shall mean that the Executive
has been unable to perform his duties under this Agreement for a period of
three or more consecutive months due to illness, accident or other physical or
mental incapacity.
(d) Involuntary Termination. "Involuntary Termination" shall
include, but not be limited to,
(i) the continued assignment to Executive of any
duties or the
-7-
continued material reduction of Executive's duties, either of which is
substantially inconsistent with the level of Executive's position with the
Company, for a period of thirty (30) days after notice thereof from Executive
to the Board of Directors setting forth in reasonable detail the respects in
which Executive believes such assignments or duties are substantially
inconsistent with the level of Executive's position;
(ii) a reduction in Executive's salary, other than
any such reduction which is part of, and generally consistent with, a general
reduction of officer salaries;
(iii) a reduction by the Company in the kind or
level of employee benefits (other than salary and bonus) to which Executive is
entitled immediately prior to such reduction with the result that Executive's
overall benefits package (other than salary and bonus) is materially reduced
(other than any such reduction applicable to officers of the Company
generally);
(iv) any purported termination of the Executive's
employment by the Company other than for Cause or as a result of the
Executive's Disability;
(v) the failure of the Company to obtain the
assumption of this Agreement by any successors contemplated in Section 8
below; or
(vi) any material breach by the Company of any
material provision of this Agreement which continues uncured for thirty (30)
days following notice thereof; provided that none of the foregoing shall
constitute Involuntary Termination to the extent Executive has agreed thereto.
(e) Termination Date. "Termination Date" shall mean (i) if
the Executive's employment is terminated by the Company for Disability, thirty
(30) days after notice of termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such thirty (30) day period), (ii) if the
Executive's employment is terminated by the Company for any other reason, the
date on which a notice of termination is given, or (iii) if the Agreement is
terminated by the Executive, the date on which the Executive delivers the
notice of termination to the Company.
-8-
8. Successors.
(a) Company's Successors. Any successor to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement
in the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession. For all purposes
under this Agreement, the term "Company" shall include any successor to the
Company's business and/or assets which executes and delivers the assumption
agreement described in this subsection (a) or which becomes bound by the terms
of this Agreement by operation of law.
(b) Executive's Successors. The terms of this Agreement and
all rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
9. Notice.
(a) General. Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of
the Executive, mailed notices shall be addressed to him at the home address
which he most recently communicated to the Company in writing. In the case of
the Company, mailed notices shall be addressed to its corporate headquarters,
and all notices shall be directed to the attention of its Corporate Secretary.
(b) Notice of Termination. Any termination by the Company
for Cause or by the Executive as an Involuntary Termination shall be
communicated by a notice of termination to the other party hereto given in
accordance with this Agreement. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the
termination date (which shall be not more than 30 days after the giving of
such notice). The failure by the Executive to include in the notice any fact
or circumstance which contributes to a showing of Involuntary Termination
shall not waive any right of the Executive hereunder or preclude the Executive
from asserting such fact or circumstance in enforcing his rights hereunder.
10. Confidentiality. Except as required by applicable laws, neither
party shall disclose the contents of this Agreement without first obtaining
the prior written consent of the other party, provided, however, that the
Executive may disclose this Agreement to his attorney, financial planner and
tax advisor if such persons agree to keep the terms hereof confidential.
-9-
11. Miscellaneous Provisions.
(a) Voluntary Execution; Conflict Waiver. The Executive has
been advised to obtain independent legal counsel regarding this Agreement. The
Executive is signing this Agreement knowingly and voluntarily. The Company and
the Executive acknowledge that each has received full disclosure of any
potential conflict of interest which may result from such representation, and
knowingly and voluntarily waive any such conflict of interest.
(b) Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Executive and by an authorized officer
of the Company (other than the Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
(c) Whole Agreement; Integration. This Agreement, the
Employment, Confidential Information and Invention Assignment Agreement, and
any written agreements or other documents evidencing matters referred to
herein and any written Company existing plans that are referenced herein
represent the entire agreement and understanding between the parties as to the
subject matter hereof and thereof and supersede all prior or contemporaneous
agreements as to the subject matter hereof and thereof, whether written or
oral. No waiver, alteration, or modification, if any, of the provisions of
this Agreement shall be binding unless in writing and signed by duly
authorized representatives of the parties hereto.
(d) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws
of the State of New York. The parties hereto consent to the personal
jurisdiction of the state and federal courts of the County of Nassau, State of
New York.
(e) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(f) No Assignment of Benefits. The rights of any person to
payments or benefits under this Agreement shall not be made subject to option
or assignment, either by voluntary or involuntary assignment or by operation
of law, including (without limitation) bankruptcy, garnishment, attachment or
other creditor's process, and any action in violation of this subsection (f)
shall be void.
(g) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.
(h) Assignment by Company. The Company may assign its rights
under this
-10-
Agreement to an affiliate, and an affiliate may assign its rights under this
Agreement to another affiliate of the Company or to the Company; provided,
however, that the Company shall remain jointly and severally liable under this
Agreement, and provided further, that no assignment shall be made if the net
worth of the assignee is less than the net worth of the Company at the time of
assignment. In the case of any such assignment, the term "Company" when used
in a section of this Agreement shall mean the corporation that actually
employs the Executive.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
(j) Legal Fees. In the event that the Executive is required
to enforce this Agreement or to procure the benefits hereunder through
arbitration or litigation, the Executive shall be entitled to reasonable legal
fees and all out-of-pocket expenses.
(k) Interest. In the event that the Company fails to make
any payment hereunder or afford any benefit when due, the Company shall pay
interest at the rate of the publicly-announced prime rate of interest of Bank
of America N.T. & S.A. or its successor in effect from time to time plus 3%,
or the maximum amount permitted by law, whichever is less.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of
the day and year first above written.
"COMPANY" CrossZ Software Corporation
/s/ Xxxx Xxxxxxxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxxxxxxx, President
"EXECUTIVE" Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
