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KEY EMPLOYEE AGREEMENT
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AGREEMENT made as of January 1, 1997 by and between Augment Systems,
Inc., a Delaware corporation with a principal place of business at 0 Xxxxxxx
Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 (along with its affiliates, if any, "the
Company") and Xxxxxx X. Xxxx, an individual residing at 00 Xxxxxxx Xxxxx, Xxxx,
Xxxxxxxxxxxxx 00000 ("Employee").
WHEREAS, the Company wishes to retain the services of Employee upon the
terms set forth in this Agreement; and
WHEREAS, Employee desires to serve in the employ of the Company upon
the terms and conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Company and Employee agree as follows:
SECTION 1. EMPLOYMENT DUTIES.
Employee shall serve as the Company's President and Chief Executive
Officer and shall, subject to the direction of the Company's Board of Directors
(the "Board of Directors"), be responsible for such matters as would normally
attach to such positions and shall have such other duties and responsibilities
consistent with the spirit and intent of this Agreement as the Board of
Directors may from time to time direct. Employee will, if so elected, serve as a
director of the Company and an officer or director of any subsidiary or
affiliate of the Company.
SECTION 2. TERM.
Employee's term of employment under this Agreement shall be two (2)
years from the date hereof unless sooner terminated as provided hereunder or
extended by agreement of the Company and Employee.
SECTION 3. PERFORMANCE.
During the entire term of this Agreement, Employee shall devote his
best efforts and substantially all of his business time and attention (except
for vacation periods and reasonable periods of illness or other incapacity) to
the business of the Company and will faithfully and diligently carry out such
duties and have such responsibilities as are customary among persons employed in
substantially similar capacities for similar companies. At the end of the term,
the parties may, by mutual agreement, extend the period of full employment
beyond the term herein specified.
SECTION 4. COMPENSATION AND BENEFITS.
During the term of employment, and thereafter as provided in Section 5
below, the Company shall pay or cause to be paid to Employee and will provide or
cause to be provided to Employee the following:
(a) SALARY. A base salary at the rate of not less than $125,000.00 per
annum as increased from time to time by the Board of Directors. Salary payments
shall be made to Employee in equal installments in accordance with the Company's
customary payroll practices. The term "salary" shall not include any payment or
other benefit which is denominated as or is in the nature of a bonus, incentive
payment, profit-sharing payment, performance share award, stock option, stock
appreciation right, retirement or pension accrual, insurance benefit, other
fringe benefit or expense allowance, whether or not taxable to Employee as
income.
(b) FRINGE BENEFITS. Any benefits to which Employee becomes entitled
under any employee benefit plans, welfare benefit plans, retirement plans and
other fringe benefits plans from time to time in effect for employees of the
Company generally; provided, however, that Employee's right of participation in
any such plans and the degree or amount thereof shall be subject to the terms of
the applicable plan documents, generally applicable Company policies and action
by the Board of Directors or any administrative or other committee provided in
or contemplated by such plan, it being mutually agreed that this Agreement is
not intended to impair the right of any committee or other group or person
concerned with the administration of such plan to exercise in good faith the
full discretion reposed in them by such plan.
(c) BUSINESS EXPENSES. Reimbursement by the Company, subject to such
requirements with respect to substantiation and documentation as may be
reasonably specified by the Company, for all reasonable and necessary travel and
other business expenses incurred by Employee in the performance of his duties.
(d) VACATION. Paid vacation of four (4) weeks per year or such greater
amount as may be specifically approved by the Board of Directors. Employee shall
not be entitled to payments in lieu of vacation time, but may accrue up to ten
(10) days of vacation time to be carried over from year to year.
(e) BONUS; EQUITY INCENTIVES; STOCK OPTIONS. Employee shall be eligible
to participate in any cash bonus plans, equity compensation plans or option
plans of the Company, subject to the discretion of the Board of Directors.
Employee will be granted immediately incentive stock options under the
Company's 1995 Stock Option Plan to purchase a total of 100,000 shares of the
Company's Common Stock at an exercise price of $3.00 per share subject to the
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following vesting schedule and such other terms as the Compensation Committee
may decide:
options to purchase 20,000 shares shall be exercisable immediately;
options to purchase 40,000 shares shall become exercisable on the first
anniversary of this Agreement; and
options to purchase 40,000 shares shall become exercisable on the
second anniversary of this Agreement.
SECTION 5. TERMINATION.
Notwithstanding the provisions of Section 2 of this Agreement but
subject to the provisions of Section 6 hereof, Employee's employment hereunder
shall terminate under the following circumstances:
(a) DEATH. In the event of Employee's death, this Agreement shall
terminate as of the last day of the month during which his death occurs.
(b) DISABILITY. If Employee, due to physical or mental illness, becomes
so disabled as to be unable to perform substantially all of his duties for a
continuous period of six months, the Company may by notice terminate this
Agreement effective as of the last day of the calendar month during which such
notice is given. Nothing in this Agreement shall impair the power of the Board
of Directors to designate temporarily another person to perform Employee's
duties during any such period of disability, and thereafter on a permanent
basis, but such action shall not otherwise impair Employee's rights under this
Agreement. If any question arises as to whether Employee has become so disabled
as to be unable to perform his duties due to physical or mental illness,
Employee shall submit to an examination by a physician selected by the Company
to whom Employee has no reasonable objection, and following such examination,
the physician shall submit to the Company and Employee a report in reasonable
detail setting forth his or her opinion as to whether Employee was so disabled.
Such report shall for the purposes of this Agreement be conclusive of the issue.
If such question shall arise and Employee shall fail to submit to such physical
examination, a determination by the Board of Directors as to Employee's
disability for purposes of this Agreement shall be conclusive.
(c) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may at any
time by action of a majority of the entire membership of its Board of Directors
terminate Employee's employment without Cause (as defined below) by giving
Employee notice of the effective date of termination (which effective date may
be the date of such notice) (the "Date of Termination"). A voluntary termination
by Employee within sixty (60) days after the Company has reduced his status,
materially reduced his responsibilities or reduced his salary in a manner not
applied to all executive officers of the Company will be deemed to be
termination by the Company without Cause. In the
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event of such termination, the Company shall have the obligation to pay Employee
the following:
(1) Through the Date of Termination, the Company shall pay
Employee his full base salary at his then current annual rate of pay,
and continue the benefits in effect at the time notice of termination
is given.
(2) In lieu of any further salary payments to Employee for
periods subsequent to the Date of Termination, the Company shall pay as
severance to Employee a lump sum payment (the "Severance Payment")
equal to 1.0 times the annual compensation (as described in the next
succeeding sentence) which was payable to Employee by the Company (or
any corporation affiliated with the Company ("Affiliate") as that term
is defined in Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code")) for the twelve (12) calendar months preceding the
Date of Termination. Compensation payable to Employee by the Company
(or an Affiliate) shall mean his base salary and bonus includible in
his gross income in respect to his employment by the Company (or an
Affiliate).
(3) The Severance Payment shall be in lieu of any other
severance payment offered by the Company and applicable to Employee.
(4) In the event of a Change in Control, the payments provided
for in subsection (2), above, shall be made not later than the fifth
day following the Date of Termination; provided, however, that if the
amount of such payments, and the limitation on such payments set forth
in subsection (3), above, cannot be finally determined on or before
such day, the Company shall pay Employee on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the applicable federal rate as defined in Section 1274 of
the Code or such other minimum rate which will not cause imputation of
income for its purpose, hereafter referred to as the "Applicable Rate")
as soon as the amount thereof can be determined but in no event later
than the thirtieth day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the
Company to Employee, payable on the fifth day after demand by the
Company (together with interest at the Applicable Rate).
(5) If Employee's employment shall be terminated by the
Company other than for Cause, then for a twenty-four (24) month period
after the Date of Termination the Company shall, at Employee's request
made within sixty (60) days after the Date of Termination, arrange to
provide Employee with health and life benefits substantially similar to
those which Employee was receiving immediately prior to the Notice of
Termination unless and until Employee receives such benefits from a
subsequent employer. The cost of the benefits
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provided for in the preceding sentence shall be borne by the Company
for the first twelve (12) months after the Date of Termination. The
determination of whether any of such benefits would result in a
reduction of the Severance Payment and, if so, by how much shall be
made, at the Company's expense, by Tax Counsel and transmitted to
Employee within ten (10) days after the Date of Termination.
(6) If Employee's employment shall be terminated by the
Company other than for Cause, all options granted in Section 4(e)
hereof shall accelerate to be immediately exercisable.
(d) TERMINATION BY THE COMPANY FOR CAUSE. A majority of the entire
membership of the Board of Directors shall have the right to terminate
Employee's employment at any time for any of the following reasons (each of
which is referred to herein as "Cause") by giving Employee written notice which
specifically identifies in reasonable detail the Cause and affords reasonable
opportunity for a hearing before the Board of Directors with the right to be
accompanied by counsel, and Employee shall have fifteen (15) days from the
receipt of such notice (or, if later, the date of such hearing) to cure such
Cause, to the extent such Cause is curable. If the Cause is not cured within
said fifteen (15) days or the Cause is not curable, the Company may give
Employee written notice of the effective date of termination (which effective
date may be the date of such notice):
(1) the willful breach of any provision of Sections 1 or 6
hereof;
(2) any act of intentional fraud or dishonesty which results
in a loss damage or injury to the Company or which adversely affects
the business of the Company;
(3) continued use of illegal drugs or abuse of alcohol;
(4) as a result of Employee's gross negligence or willful
misconduct, Employee shall violate, or cause the Company to violate,
any applicable federal or state securities or banking law or regulation
and as a result of such violation, shall become, or shall cause the
Company or any affiliate to become, the subject of any legal action or
administrative proceeding seeking an injunction from further violations
or a suspension of any right or privilege;
(5) as a result of Employee's gross negligence or willful
misconduct, Employee shall commit any act that causes, or shall
knowingly fail to take reasonable and appropriate action to prevent,
any material injury to the financial condition or business reputation
of the Company or any affiliate; or
(6) conviction of a felony or entry of a plea of guilty or
nolo contendere.
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If a majority of the Board of Directors terminates Employee's
employment for any of the reasons set forth above in this Section 5(d), the
Company shall have no further obligations hereunder accruing from and after the
effective date of termination and shall have all other rights and remedies
available under this or any other agreement and at law or in equity.
(e) VOLUNTARY TERMINATION BY EMPLOYEE. In the event that Employee's
employment with the Company is terminated by Employee (except as set forth in
Section 5(c)), the Company shall have no further obligations hereunder accruing
from and after the date of such termination.
SECTION 6. NONCOMPETITION, NONDISCLOSURE AND INVENTIONS.
(a) NON-COMPETITION. For a period of three years from the date of this
Agreement, Employee agrees that he will not, directly or indirectly, alone or as
a partner, officer, director or employee of any company or business
organization, or the holder of more than 5% of the outstanding voting securities
of, or ownership interests in, any company or business organization, engage in
any business activity, in any geographic areas in which the Company is then
conducting business which is directly competitive with the business of the
Company provided, however, that if Employee is terminated without Cause, the
non-competition period shall be effective for only the 12 months following the
date of termination.
(b) CONFIDENTIALITY; RETURN OF CONFIDENTIAL MATERIALS. Employee
understands that his relationship with the Company and its officers and
employees is one of trust and confidence and that during the period of
employment he may acquire or may have already acquired, knowledge of, or access
to, information which relates to the business, operations or plans of the
Company which is not known to the general public (hereinafter "Confidential
Information"). Confidential Information may include, but is not limited to,
information about products, technologies, methods, designs and other
intellectual property, source code, trade secrets, know-how, manufacturing
processes, marketing plans, customers budget costs, prices, vendor lists and the
Company's financial affairs. Employee will not at any time, whether during or
after the termination of employment, reveal to any person, association or
company any Confidential Information of the Company so far as it has come or may
come to his knowledge, except as may be required in the ordinary course of
performing his duties as a employee of the Company or except as may be in the
public domain through no fault of his, and Employee will keep secret all matters
entrusted to him and shall not use or attempt to use any such Confidential
Information in any manner which may injure or cause loss or may be reasonably
expected to injure or cause loss, whether directly or indirectly, to the
Company.
Further, Employee agrees that during his engagement, he shall not make,
use or permit to be used any notes, memoranda, records, files, computer
programs, data or any other materials of any nature relating to any matter
within the scope of the business of the
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Company or concerning any of its dealings or affairs otherwise than for the
benefit of the Company. In addition, Employee agrees that he shall not, after
the termination of employment, use or permit to be used, any such notes,
memoranda, records, files, computer programs, data or other materials, it being
agreed that any of the foregoing shall be, and remain, the sole and exclusive
property of the Company and that immediately upon the termination of employment,
Employee shall deliver all of the foregoing, and all copies thereof, to the
Company, at its main office.
(c) ASSIGNMENT OF INVENTIONS. Employee hereby acknowledges and agrees
that the Company is the owner of all Inventions, as defined below. In order to
protect the Company's rights to such Inventions, by executing this Agreement,
Employee hereby irrevocably assigns to the Company all my right, title and
interest in and to all Inventions to the Company.
For purposes of this Agreement, "Inventions" shall mean all
discoveries, processes, designs, methods, techniques, technologies, devices, or
improvements in any of the foregoing, whether or not patentable or copyrightable
and whether or not reduced to practice, made or conceived by Employee (whether
solely or jointly with others) during the period of employment by the Company
which relate in any manner to the actual or demonstrably anticipated business,
work, or research and development of the Company, or result from or are
suggested by any task assigned to Employee or any work performed by him for or
on behalf of the Company.
Any discovery, process, design, method, technique, technology, device,
or improvements in any of the foregoing or other ideas, whether or not
patentable or copyrightable and whether or not reduced to practice, made or
conceived by Employee (whether solely or jointly with others) which he develops
entirely on his own time not using any of the Company's equipment, supplies,
facilities, or trade secret information ("Personal Invention") is excluded from
this Agreement provided such Personal Invention (i) does not relate to the
actual or demonstrably anticipated business, research and development of the
Company, and (ii) does not result, directly or indirectly, from any work
performed by Employee for or on behalf of the Company.
(d) DISCLOSURE OF INVENTIONS. Employee agrees that in connection with
any Invention, he will promptly disclose such Invention to the Board of
Directors of the Company in order to permit the Company to enforce its property
rights to such Invention in accordance with this Agreement.
(e) PATENTS AND COPYRIGHTS; EXECUTION OF DOCUMENTS. Upon request,
Employee agrees to assist the Company or its nominee (at its expense) during and
at any time subsequent to employment in every reasonable way to obtain for its
own benefit patents and copyrights for Inventions in any and all countries. Such
patent and copyrights shall be and remain the sole and exclusive property of the
Company or its nominee. Employee agrees to perform such lawful acts as the
Company deems to be necessary to allow it to exercise all right, title and
interest in and to such patents and copyrights.
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In connection with this Agreement, Employee agrees to execute,
acknowledge and deliver to the Company or its nominee upon request and at its
expense all documents, including assignments of title, patent or copyright
applications, assignments of such applications, assignments of patents or
copyrights upon issuance, as the Company may determine necessary or desirable to
protect the Company's or its nominee's interest in Inventions, and/or to use in
obtaining patents or copyrights in any and all countries and to vest title
thereto in the Company or its nominee to any of the foregoing.
(f) MAINTENANCE OF RECORDS. It is understood that all Personal
Inventions, if any, whether patented or unpatented, which Employee made prior to
employment by the Company, are excluded from this Agreement. To preclude any
possible uncertainty, Employee has set forth in Schedule 1 attached hereto a
complete list of all of prior Personal Inventions, including numbers of all
patents and patent applications and a brief description of all unpatented
Personal Inventions which are not the property of a previous employer. Employee
represents and covenants that the list is complete and that, if no items are on
the list, Employee have no such prior Personal Inventions.
Employee agrees to notify the Company in writing before making any
disclosure or performing any work on behalf of the Company which appears to
threaten or conflict with proprietary rights he claims in any Personal
Invention. In the event of Employee's failure to give such notice, Employee
agrees that he will make no claim against the Company with respect to any such
Personal Invention.
(g) TRADE SECRETS OF OTHERS. Employee represents that his performance
of all the terms of this Agreement and as an employee of the Company does not
and will not breach any agreement to keep confidential proprietary information,
knowledge or data acquired by him in confidence or in trust prior to his
employment by the Company, and Employee will not disclose to the Company, or
induce the Company to use, any confidential or proprietary information or
material belonging to any previous employer or others. Employee agrees not to
enter into any agreement either written or oral in conflict herewith.
(h) SOLICITATION. Employee will not at any time during the period
commencing upon the termination of his employment with the Company and ending
three years from the date of this Agreement, solicit or encourage any employee
of the Company to terminate his or her employment in order to work for a
business which competes or intends to compete with the Company and Employee will
use his best efforts to ensure that his then employer does not do so provided,
however, that if Employee is terminated without Cause, this non-solicitation
provision shall be effective for the 12 months following the date of
termination.
(i) CONFLICTS. Employee further represents that his performance of all
of the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement to maintain in confidence proprietary information
acquired by him in confidence or in trust prior to my employment by the Company.
Employee has not
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entered into, and he agrees that he will not enter into, any agreement, either
written or oral, in conflict herewith.
(j) BREACH. Employee agrees that any breach of this Agreement by him
could cause irreparable damage and that in the event of such breach the Company
shall have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to prevent the
violation of his obligations hereunder.
SECTION 7. CONFLICTING AGREEMENTS.
Employee represents and warrants that he is free to enter into this
Agreement, and that he has not made and will not make any agreements in conflict
with this Agreement.
SECTION 8. ASSIGNMENT.
(a) NONASSIGNABILITY. Neither this Agreement nor any right or interest
hereunder may be assigned by Employee, his beneficiaries or legal
representatives, without the Company's prior written consent.
(b) BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the Company and any successor to or assignee of the Company,
and any such successor or assignee shall be deemed to be substituted for the
Company under the provisions of this Agreement.
SECTION 9. SEVERABILITY.
If any provision of this Agreement shall be declared invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision in circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each provision of this
Agreement shall be valid and be enforceable to the fullest extent permitted by
law. If any provision contained in this Agreement shall be held to be
excessively broad as to scope, activity or subject so as to be unenforceable at
law, such provision shall be construed by limiting and reducing it so as to be
enforceable to the extent compatible with the applicable law as it shall then
appear.
SECTION 10. NOTICE.
All notices, requests, demands and communications with are or may be
given under this Agreement shall be deemed given if and when delivered in hand
or mailed by registered or certified mail to the Company or Employee at their
respective addresses as first referenced above, with a copy to Xxxxxxx X.
Xxxxxx, Esquire, Warner & Xxxxxxxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, or to such other address as may be designated by each party as his or its
new address in writing to the other party hereto.
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SECTION 11. WAIVERS.
The failure of either party to require the performance of any term or
obligation of this Agreement, or the waiver by either party of any breach of
this Agreement, shall not prevent any subsequent enforcement of such term or
obligation or be deemed a waiver of any subsequent breach.
SECTION 12. ENTIRE AGREEMENT.
This Agreement constitutes the entire understanding of Employee and the
Company with respect to Employee's employment. As of the commencement of its
term, this Agreement supersedes any prior agreement or arrangement relative to
Employee's employment with the Company. No modifications or waiver of any
provisions of this Agreement shall be made unless made in writing and signed by
Employee and such other person on behalf of the Company as the Board of
Directors may designate for such purpose.
SECTION 13. GOVERNING LAW.
The interpretation, construction and application of this Agreement
shall be governed and construed in accordance with the internal laws of the
Commonwealth of Massachusetts.
SECTION 14. SURVIVAL.
Employee's obligations under Section 6 hereof shall survive the
termination of employment regardless of the manner of such termination and shall
be binding upon Employee's heirs, executors and administrators.
SECTION 15. REMEDIES.
Each of the parties to this Agreement will be entitled to enforce his
or its rights under this Agreement specifically, to recover damages (including,
without limitation, reasonable fees and expenses of counsel) by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in his or its favor. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach or threatened breach
of the provisions of this Agreement and that any party may in his or its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
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SECTION 16. CAPTIONS.
The captions set forth in this Agreement are for convenience only, and
shall not be considered as part of this Agreement or as in any way limiting or
amplifying the terms and provisions hereof.
SECTION 17. COUNTERPARTS.
This Agreement may be signed in two counterparts, each of which shall
be deemed an original and both of which shall together constitute one agreement.
IN WITNESS WHEREOF, the parties have signed, sealed and delivered this
Agreement as of the date first above written.
AUGMENT SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Treasurer
/s/ Xxxxxx X. Xxxx
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XXXXXX X. XXXX
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SCHEDULE 1
PERSONAL INVENTIONS OF XXXXXX X. XXXX
None.
A-1
