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Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of October 1, 1997, by and between UBICS,
INC., a Delaware corporation (the "Company"), and XXXXXXX X. XXXX ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of providing
information technology services to various organizations;
WHEREAS, Employee has been serving as President of the Company, and
the Company and Employee desire to enter into a formalized Employment Agreement
containing, among other things, certain restrictive covenants and, in
connection therewith, the Company has agreed to provide certain additional
benefits to Employee;
WHEREAS, the Company and Employee have agreed to execute and deliver
this Agreement in consideration of Employee's employment by the Company and in
further consideration, among other things, of (i) the access Employee has had
and will continue to have to confidential or proprietary information of the
Company, (ii) the willingness of the Company to make valuable benefits
available hereafter to Employee, and (iii) Employee's receipt of compensation,
including valuable stock options, from time to time by the Company; and
WHEREAS, the Company desires to procure the services of Employee, and
Employee is willing to be employed by the Company, upon the terms and subject
to the conditions hereinafter set forth;
NOW, THEREFORE, intending to be legally bound, the Company agrees to
employ Employee, and Employee hereby agrees to be employed by the Company, upon
the following terms and conditions:
ARTICLE I
EMPLOYMENT
1.01 Office. Employee is hereby employed as President of the Company
and to perform such duties and responsibilities as the Company's By-laws and
its Board of Directors or Chairman may from time to time designate.
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1.02 Term. Subject to the terms and provisions of Article II hereof,
Employee's employment hereunder shall commence on the date hereof and shall
continue for an initial term of three years unless terminated earlier pursuant
to the provisions hereof. Beginning on the date which is two years after the
date hereof, and on each day thereafter this Agreement shall automatically
extend for an additional day, so that the remaining term of this Agreement
shall always be 12 months, unless either party gives the other written notice
of its intention to not so extend this Agreement, whereupon this Agreement
shall terminate on the date which is one year after the date of such notice.
1.03 Salary. A salary shall be paid to Employee by the Company during
the term of this Agreement at the rate of $120,000 per annum, payable monthly
in accordance with the Company's normal payroll practices (the "Salary"). The
Salary may be increased from time to time, such increase, if any, to be
determined by the Compensation Committee of the Board of Directors, in its
sole discretion.
1.04 Bonus. The Company shall pay to Employee annually during the term
of this Agreement such bonus, if any, as may be determined by the Compensation
Committee of the Board of Directors.
1.05 Out of Pocket Expenses. Employee shall be entitled to
reimbursement for his reasonable out-of-pocket expenses incurred in performing
his duties in accordance with the general policy of Company, as it may change
from time to time, provided that Employee shall provide an itemized account
together with supporting receipts for such expenditures in accordance with the
requirements set forth in the Internal Revenue Code of 1986, as amended, and
related regulations, subject to the right of the Company at any time to place
reasonable limitations on such expenses thereafter to be incurred or
reimbursed.
1.06 Employee Benefits. Subject to any limitations imposed by
applicable law, Employee shall be covered by such major medical and health
insurance, disability, pension, profit-sharing or 401(k) plans as may be
available generally to employees of the Company and shall be entitled to
receive such other benefits and perquisites as may be determined by the Board
of Directors or the Compensation Committee thereof. Employee shall be entitled
to such vacation time as is consistent with the performance of his duties.
1.07 Automobile. The Company shall furnish the Employee with an
automobile suitable to his status for business use in accordance with Company
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policy. The automobile shall belong to the Company, and the Company shall be
responsible for all expenses relating to the automobile except that the
Employee shall be responsible for gasoline and oil expenses incurred in
connection with his personal use of the automobile. The automobile is intended
for business use, and the Employee shall return it to the Company at the
request of the Company when his services are no longer used by the Company. The
Employee shall submit reports to the Company with respect to his use of the
automobile in sufficient detail to enable the Company to comply with all
relevant Federal and state income and employment tax laws.
1.08 Options. Employee shall be entitled to receive options to
purchase shares of the Company's Common Stock under the Company's 1997 Stock
Option Plan in accordance with the terms of a separate Stock Option Agreement.
ARTICLE II
TERMINATION
2.01 Illness, Incapacity. Subject to the Company's compliance with
applicable laws, if during the term of Employee's employment hereunder Employee
shall be prevented, in the good faith judgment of the Board of Directors of the
Company, from effectively performing his duties hereunder, for a period of the
lesser of (a) 90 days or (b) the number of days after which benefits would
begin to accrue under the applicable disability insurance policy, by reason of
illness or disability, then the Company may, by written notice to Employee,
terminate Employee's employment hereunder. Upon delivery to Employee of such
notice, together with payment of any compensation set forth in Article I of
this Agreement and benefits accrued under this Agreement, Employee's employment
and all obligations of the Company under Article I hereof shall forthwith
terminate; provided, however, that the Company shall continue to pay Employee's
Salary for the remaining term of this Agreement as of the date of such notice.
Such termination is without prejudice to any rights Employee may thereafter
have against insurance carriers under the employee benefit plans or programs
referred to in Section 1.05. The obligations of Employee under Article IV
hereof shall continue notwithstanding termination of Employee's employment
pursuant to this Section 2.01.
2.02 Death. If Employee dies during the term of his employment
hereunder, Employee's employment hereunder shall terminate and all obligations
of the Company hereunder shall forthwith terminate; provided, however, the
Company shall continue to pay to Employee's estate Employee's Salary for a
period of six months following the date of Employee's death.
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2.03 Company Termination.
(a) For Cause. Employee's employment hereunder may be terminated
at any time by the Company for cause. Termination shall be deemed for cause if
among the reasons therefor are Employee's dishonesty, disloyalty, willful
misconduct, gross negligence or refusal or unwillingness to perform his duties
hereunder in good faith and to the best of his ability. Payment of all
compensation and provision of all benefits to Employee hereunder shall cease
effective as of the date of any such termination, except that Employee will be
entitled to all compensation and benefits accrued as of the date of
termination. The obligations of Employee under Article IV hereof shall
continue notwithstanding termination of Employee's employment pursuant to this
Section 2.03(a).
(b) Without Cause. Employee's employment hereunder may be
terminated at any time by the Company without cause, provided that upon any
such termination without cause the Company shall pay Employee, subject to
Employee's compliance with all of his obligations hereunder, his full Salary
plus employee benefits for the remainder of the term of this Agreement. The
obligations of Employee under Article IV hereof shall continue notwithstanding
termination of Employee's employment pursuant to this Section 2.03(b).
2.04 Employee Termination.
(a) Employee agrees to give the Company two months prior written
notice of the termination of his employment with the Company. Simultaneously
with such notice, Employee shall inform the Company in writing as to his
employment plans following the termination of his employment with the Company.
The obligations of Employee under Article IV hereof shall continue
notwithstanding termination of Employee's employment pursuant to this Section
2.04.
(b) In the event that there is (i) a material diminution by the
Company of Employee's title or responsibilities or (ii) a material change in
the Employee's reporting relationship to the Chairman of the Company, Mr. Xxxxx
Xxxxxx, Employee may immediately terminate his employment with the Company.
Upon such termination, Employee will be entitled to all compensation and
benefits accrued as of the date of termination and the Company shall pay
Employee his full salary plus employee benefits for the remainder of the term
of this Agreement as in effect immediately prior to such termination. The
obligations of Employee under Article IV hereof shall continue notwithstanding
termination of Employee's employment pursuant to this Section 2.04(b).
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2.05 Effect of Termination on Options. Notwithstanding anything to the
contrary set forth in any stock option plan of the Company or any Stock Option
Agreement between the Company and Employee, in the event of termination of
Employee's employment hereunder for any reason other than for cause due to
Employee's willful misconduct or gross negligence, all stock options held by
Employee shall immediately vest and shall remain exercisable by Employee or
Employee's estate for a period of one year following such termination.
ARTICLE III
EMPLOYEE'S ACKNOWLEDGMENTS
Employee acknowledges that: (a) in the course of Employee's
employment by the Company, Employee will acquire information concerning the
Company's sales, sales volume, sales methods, sales proposals, customers and
prospective customers, identity of key personnel in the employ of customers and
prospective customers, amount or kind of customer's purchases from the Company,
the Company's recruiting method and practices, computer programs, system
documentation, special hardware, product hardware, related software
development, manuals, formulae, processes, methods and other confidential or
proprietary information belonging to the Company relating to the Company's
affairs (collectively referred to herein as the "Confidential Information");
(b) the Confidential Information is the property of the Company; (c) the use,
misappropriation or disclosure of the Confidential Information would constitute
a breach of trust and could cause irreparable injury to the Company; and (d) it
is essential for the protection of the Company's goodwill and to the
maintenance of the Company's competitive position that the Confidential
Information be kept secret and that Employee not disclose the Confidential
Information to others or use the Confidential Information to Employee's own
advantage or the advantage of others.
Employee further acknowledges that it is essential for the proper
protection of the business of the Company that Employee be restrained (a) from
soliciting or inducing any employee of the Company to leave the employ of the
Company, (b) from soliciting the trade of or trading with the customers of the
Company for a competitive purpose and (c) from competing against the Company
for a reasonable period of time following termination of Employee's employment
by the Company.
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ARTICLE IV
EMPLOYEE'S COVENANTS AND AGREEMENTS
4.01 Nondisclosure or Utilization of Confidential Information.
Employee agrees to hold and safeguard the Confidential Information in trust for
the Company and its successors and assigns and agrees that he shall not,
without the prior written consent of the Company, misappropriate, disclose or
use for any reason or purpose, or make available to anyone for use outside the
Company's organization at any time for any reason or purpose, either during his
employment by the Company or subsequent to the termination of his employment by
the Company for any reason, any of the Confidential Information, whether or not
developed by Employee, except as required in the performance of Employee's
duties to the Company.
4.02 Duties. Employee agrees to be a loyal employee of the Company.
Employee agrees to devote his full working time and best efforts to the
performance of his duties for the Company, to give proper time and attention to
furthering the Company's business, and to comply with all rules, regulations and
instructions established or issued by the Company. Employee further agrees that
during the term of this Agreement, Employee shall not, directly or indirectly,
engage in any business which would detract from Employee's ability to apply his
full working time and best efforts to the performance of his duties hereunder.
Employee shall not perform services for other companies without the approval of
the independent members of the Company's Board of Directors. Employee also
agrees that he shall not usurp any corporate opportunities of the Company.
4.03 Return of Materials. Upon the termination of Employee's
employment by the Company for any reason, Employee shall promptly deliver to
the Company all correspondence, drawings, blueprints, manuals, letters, notes,
notebooks, reports, programs, proposals and any documents concerning the
Company's customers or concerning products or processes used by the Company
and, without limiting the foregoing, will promptly deliver to the Company any
and all other documents or materials containing or constituting Confidential
Information.
4.04 Nonsolicitation of Customers. Employee agrees that during his
employment by the Company and for three (3) years following termination of
Employee's employment with the Company for any reason, he shall not, directly
or indirectly, solicit the trade of, or trade with, any customer or prospective
customer of the Company in competition with the Company.
4.05 Nonsolicitation of Employees. Employee agrees that during his
employment by the Company and for three (3) years following termination of
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Employee's employment with the Company for any reason, Employee shall not,
directly or indirectly, solicit or induce, or attempt to solicit or induce, any
employee of the Company to leave the Company for any reason whatsoever, or hire
any employee of the Company.
4.06 Restriction on Competition. Employee covenants and agrees that
during the term of his employment with the Company and for a period of one (1)
year following the termination thereof for any reason, Employee shall not
engage, directly or indirectly, whether as principal or as agent, officer,
director, employee, consultant, shareholder, or otherwise, alone or in
association with any other person, corporation or other entity, in any
Competing Business, except as a shareholder of less than one percent of the
outstanding capital stock of a publicly held corporation. For purposes of this
Agreement, the term "Competing Business" shall mean any person, corporation or
other entity that maintains an office in the United States of America that
provides information technology services to organizations in competition with
the Company.
4.07 Limitation on Covenant. The covenant set forth in Section 4.06
above shall not be applicable in any of the following circumstances:
(1) If Employee terminates this Agreement because the Company is
in material violation of its obligations under this Agreement; or
(2) If any event should occur that gives rise to the incurrence
by the Company of a severance obligation to Employee under Article VI of this
Agreement.
ARTICLE V
EMPLOYEE'S REPRESENTATIONS AND WARRANTIES
5.01 No Prior Agreements. Employee represents and warrants that he is
not a party to or otherwise subject to or bound by the terms of any contract,
agreement or understanding which in any manner would limit or otherwise affect
his ability to perform his obligations hereunder, including without limitation
any contract, agreement or understanding containing terms and provisions
similar in any manner to those contained in Article IV hereof.
5.02 Remedies. In the event of a breach by Employee of the terms of
this Agreement, the Company shall be entitled, if it shall so elect, to
institute legal proceedings to obtain damages for any such breach, or to
enforce the specific performance of this Agreement by Employee and to enjoin
Employee from any further violation of this Agreement and to exercise such
remedies cumulatively or in conjunction with all other rights and remedies
provided by
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law. Employee acknowledges, however, that the remedies at law for any breach by
him of the provisions of this Agreement may be inadequate and that the Company
shall be entitled to injunctive relief against him in the event of any breach.
ARTICLE VI
SEVERANCE AGREEMENT
6.01 Severance Obligations. If on or after the date of a "Change in
Control" (as defined below), the Company, for any reason, terminates Employee's
employment or Employee resigns "for good reason" (as defined below), then the
Company shall pay to Employee within five days following the date of
termination or date of resignation: (i) Employee's salary and benefits through
the termination date or resignation date, both as in effect on the date prior
to the date of the Change in Control; and (ii) the amount of any bonus payable
to Employee for the year in which the Change in Control occurred, pro rated to
take into account the number of days that have elapsed in such year prior to
the termination date or the resignation date. In addition, during the period
equal to the remaining term of this Agreement as in effect on the day prior to
the termination or resignation date, the Company shall continue to pay to
Employee his annual salary, as in effect on the day prior to the date of the
Change in Control, on the dates when such salary would have been payable had
Employee remained employed by the Company and shall continue to provide to
Employee during such period, at no cost to Employee, the benefits Employee was
receiving on the day prior to the date of the Change in Control or benefits
substantially similar thereto.
6.02 Definitions of Change of Control. A "Change in Control" is deemed
to occur upon any of the following events: (i) any individual, corporation,
partnership, association, trust or other entity (other than Xxxxx Xxxxxx or an
affiliate of Xxxxxx) becomes the beneficial owner (as defined in Rule 13(d)(3)
under the Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding voting securities; (ii) the individuals who as
of the date of this Agreement are members of the Board of Directors of the
Company (the "Incumbent Board"), cease for any reason to constitute at least a
majority of the Board of Directors of the Company (provided, however, that if
the election, or nomination for election by the Company's shareholders, of any
new director was approved by a vote of a least a majority of the Incumbent
Board, such new director will be considered to be a member of the Incumbent
Board); (iii) an agreement by the Company to consolidate or merge with any other
entity pursuant to which the Company will not be the continuing or surviving
corporation or pursuant to which shares of
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the Common Stock of the Company would be converted into cash, securities or
other property, other than a merger of the Company in which holders of the
Common Stock of the Company immediately prior to the merger would have the same
proportion of ownership of Common Stock of the surviving corporation
immediately after the merger; (iv) an agreement of the Company to sell, lease,
exchange or otherwise transfer in one transaction or a series of related
transactions substantially all the assets of the Company; (v) the adoption of
any plan or proposal for a complete or partial liquidation or dissolution of
the Company; or (vi) an agreement to sell more than 50% of the outstanding
voting securities of the Company in one or a series of related transactions
other than an initial public offering of voting securities registered with the
Securities and Exchange Commission.
6.03 Definition of "Good Reason". The term "good reason" means: (i) a
material diminution by the Company of Employee's title or responsibilities, as
that title and those responsibilities existed on the day prior to the date of a
Change in Control; or (ii) a material diminution by the Company in Employee's
salary, benefits or incentive or other forms of compensation, all as in effect
on the day prior to the date of a Change in Control.
ARTICLE VII
MISCELLANEOUS
7.01 Authorization to Modify Restrictions. It is the intention of the
parties that the provisions of Article IV hereof shall be enforceable to the
fullest extent permissible under applicable law, but that the unenforceability
(or modification to conform to such law) of any provision or provisions hereof
shall not render unenforceable, or impair, the remainder thereof. If any
provision or provisions hereof shall be deemed invalid or unenforceable, either
in whole or in part, this Agreement shall be deemed amended to delete or
modify, as necessary, the offending provision or provisions and to alter the
bounds thereof in order to render it valid and enforceable.
7.02 Entire Agreement. This Agreement represents the entire agreement
of the parties and may be amended only by a writing signed by each of them.
7.03 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
7.04 Agreement Binding. The obligations of Employee under this
Agreement shall continue after the termination of his employment with the
Company for any reason, with or without cause, and shall be binding on his
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heirs, executors, legal representatives and assigns and shall be binding on and
inure to the benefit of any successors and assigns of the Company.
7.05 Counterparts, Section Headings. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument. The
section headings of this Agreement are for convenience for reference only and
shall not affect the construction or interpretation of any of the provisions
hereof.
7.06 Binding Arbitration. The parties agree that all claims, disputes
and other matters in question between them, arising out of or related to this
Agreement, and the rights, duties and obligations arising thereunder or the
breach thereof, shall be decided by common-law arbitration in Pittsburgh,
Pennsylvania, in accordance with the Rules of the American Arbitration
Association then prevailing, unless the parties mutually agree otherwise;
provided however, the Company shall have the right to obtain preliminary or
permanent injunctive relief from a court of appropriate jurisdiction while the
arbitration process is continuing, and/or after the Board of Arbitrators
renders its decision on the merits; provided further, if either party would be
entitled to join a third party if the proceeding were brought before a court of
applicable jurisdiction, then in the interests of judicial economy, either
party may litigate all disputes against the other party and any third party in
one action before a court of appropriate jurisdiction. The parties agree that
with regard to all claims, disputes and remedies arising out of this Agreement,
the American Arbitration Association, and the Federal and State Courts in
Pittsburgh, Pennsylvania and applicable appellate courts, shall have
jurisdiction over their persons. This provision shall not be deemed to confer
exclusive subject matter jurisdiction over such courts. This Agreement shall
not be construed as a consent to arbitrate any dispute with any person who is
not party to this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed the day and year first above
written.
ATTEST:
________________________________ _________________________________
Xxxxxxx X. Xxxx
ATTEST: UBICS, INC.
________________________________ By: _____________________________
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