EXHIBIT 10.4
BEA SYSTEMS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, is entered into as of September 28, 1995,
between BEA Systems, Inc., a Delaware corporation (the "Company"), and Xxxxxx
X. Xxxxx, Xx. ("Employee").
R E C I T A L S
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A. Employee has developed a business plan for the acquisition and
operation of certain businesses in the transaction processing industry and
Warburg, Xxxxxx Ventures, L.P. ("Warburg") has agreed to invest up to a
maximum of $50,000,000 in the Company to provide financing for the
implementation of Employee's business plan pursuant to the terms of that
certain Stock Purchase Agreement dated September 28, 1995 and that certain
Adjustment Agreement dated September 28, 1995 among Warburg, the Company,
Employee and certain other stockholders of the Company.
B. Immediately prior to the date of this Agreement, Employee
owned 400,000 shares of the Common Stock of the Company and in connection
with the investment by Warburg as contemplated by Recital A above, Employee
has entered into that certain Restricted Stock Purchase Agreement dated
September 28, 1995 for the purchase of 435,793 additional shares of Common
Stock in the Company.
C. Company desires to obtain the services
of Employee, on its own behalf and on behalf of all existing and future
Affiliated Companies (defined to mean any corporation or other business
entity or entities that directly or indirectly controls, is controlled by, or
is under common control with the Company), and Employee desires to secure
employment from the Company upon the following terms and conditions.
A G R E E M E N T
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ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
1. POSITION, PERIOD OF EMPLOYMENT.
(a) PERIOD OF EMPLOYMENT. The Company hereby employs Employee to
render services to the Company in the position and with the duties and
responsibilities described in Section 1(b) for the period (the "Period of
Employment") commencing on the date of this Agreement and ending the earlier
of (i) September 28, 1999; or (ii) the date this Agreement is terminated in
accordance with Section 3 below.
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(b) Executive Vice President and Secretary (or in such other
position(s) as the Board of Directors of the Company (the "Board") shall
designate). Employee shall devote his full time and attention and his best
efforts to the performance of the services customarily incident to such
office and to such other services as may be reasonably requested by the
Board. The Company shall retain full direction and control of the means and
methods by which Employee performs the above services and of the place(s) at
which such services are to be rendered.
(c) OTHER ACTIVITIES. Except upon the prior written consent of
the Board, Employee, during the Period of Employment, will not (i) accept any
other employment; (ii) engage, directly or indirectly, in any other business
activity (whether or not pursued for pecuniary advantage) that is or may be
competitive with, or that might place him in a competing position to that of
the Company or any Affiliated Company, as determined in the discretion of the
Board; or (iii) engage in any work or business activity of any kind outside
those of the Company.
2. COMPENSATION, BENEFITS, EXPENSES.
(a) COMPENSATION. In consideration of the services to be rendered
hereunder, including, without limitation, services to any Affiliated Company,
Employee shall be paid an annual salary of One Hundred Fifty Thousand Dollars
($150,000.00), payable at the times and pursuant to the procedures regularly
established, and as they may be amended, by the Company during the Period of
Employment. This rate shall be reviewed annually on a calendar year basis,
in accordance with the Company's salary review practices, and adjusted in the
sole discretion of the Board of the Company to reflect increases in the cost
of living and such other increases as are awarded in accordance with the
Company's regular salary review practices for giving salary increases to
similarly situated employees.
(b) STOCK OPTIONS. Employee may become eligible to receive
options under the Company's 1995 Flexible Stock Incentive Plan and such other
option plans as the Company may from time to time adopt, as approved by the
Board or a Committee thereof.
(c) BONUS. Employee shall be eligible to participate in such
bonus plans as the Company may from time to time adopt for the benefit of
similarly situated employees of the Company. Employee's right to receive any
such bonus shall be subject to the terms of any Company bonus plan for which
he may become a participant and the terms determined by the Board or a
Committee thereof designating him as a participant or granting him an award
thereunder.
(d) VACATION. Employee shall be entitled to vacation in
accordance with the Company's vacation policies for similarly situated
employees, as such policies may be amended from time to time.
(e) BENEFITS. As he becomes eligible therefor, the Company shall
provide Employee with the right to participate in and to receive benefits
from all present and future life, accident, disability, medical, pension, and
savings plans and all similar benefits made
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available generally to similarly situated employees of the Company. The
amount and extent of benefits to which Employee is entitled shall be governed
by the specific benefit plan, as it may be amended from time to time.
(f) EXPENSES. The Company shall reimburse Employee for reasonable
travel and other business expenses incurred by Employee in the performance of
his duties hereunder in accordance with the Company's general policies, as
they may be amended from time to time during the course of this Agreement.
3. TERMINATION OF EMPLOYMENT.
(a) BY DEATH. The Period of Employment shall terminate
automatically upon the death of the Employee; provided however that the
Company shall pay to the Employee's beneficiaries or estate, as appropriate,
the compensation to which he is entitled pursuant to Sections 2(a) and 2(c)
and the benefits to which he is entitled pursuant to Section 2(e) shall
continue through the end of the Period of Employment, on the same time
schedule as if Employee were living. For the purposes of determining the
level of bonus compensation payable pursuant to said Section 2(c), Employee's
beneficiaries or estate, as appropriate, shall be eligible to receive bonus
payments in accordance with Section 2(c) based upon the average of the
bonuses paid to Employee for the two (2) years prior to termination;
PROVIDED, THAT if Employee's Period of Employment terminates prior to
September 28, 1997, then such bonus payments shall be 80% of the target bonus
for Employee for the year of termination as reasonably determined by the
Board. Thereafter, the Company's obligations hereunder shall terminate.
Nothing in this Section shall affect any entitlement of the Employee's heirs
to the benefits of any life insurance plan.
(b) BY DISABILITY. If the Employee shall become "permanently
disabled" as determined for purposes of the disability insurance policy
provided by the Company for Employee, then, to the extent permitted by law,
the Period of Employment shall terminate as of the date that Employee shall
be deemed to have become "permanently disabled" for purposes of such
disability insurance policy, provided, however that, the compensation to
which Employee is entitled pursuant to Sections 2(a) and 2(c) (net of amounts
paid to Employee pursuant to said disability insurance policy) and the
benefits to which he is entitled pursuant to Section 2(e) shall continue
through the end of the Period of Employment, on the same time schedule as if
Employee were not disabled. The amount of bonus payable to Employee pursuant
to this Section 3(b) shall be calculated in the manner set forth in Section
3(a) above. Thereafter, the Company's obligations hereunder shall terminate.
Employee shall continue to be receive benefits under any disability plan in
which Employee is a participant to the extent permitted under the applicable
plan.
(c) BY COMPANY FOR CAUSE. The Company may terminate, without
liability, the Period of Employment for Cause (as defined below) at any time
and without notice upon ten (10) days' advance written notice to Employee.
The Company shall pay Employee the compensation to which he is entitled
pursuant to Section 2(a) through the end of the notice period and thereafter
the Company's obligations hereunder shall terminate. The Company may
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terminate the employment of the Employee and all of the Company's obligations
under this Agreement at any time for "cause" by giving the Employee notice of
such termination, with reasonable specificity of the details thereof. For
the purposes of this Section 3(c), "Cause" shall mean: (i) the Employee's
material misconduct which could reasonably be expected to have a material
adverse effect on the business and affairs of the Company, (ii) the
Employee's disregard of lawful instructions of the Company's Board of
Directors consistent with the Employee's position relating to the business of
the Company or neglect of duties or failure to act, which, in each case,
could reasonably be expected to have a material adverse effect on the
business and affairs of the Company; (iii) Employee is convicted of common
law fraud, or a felony or criminal act against the Company or any Affiliate
thereof or any of the assets of any of them; (iv) the Employee's abuse of
alcohol or other drugs or controlled substances, or conviction of a crime
involving moral turpitude, or (v) the Employee's material breach of any of
the agreements contained herein. A termination pursuant to Section 3(c) (i),
(ii), (iv) (other than as a result of a conviction of a crime involving moral
turpitude), or (v) shall take effect 30 days after the giving of the notice
contemplated hereby unless the Employee shall, during such 30-day period,
remedy to the satisfaction of the Board of Directors of the Company the
misconduct, disregard, abuse or breach specified of such notice; PROVIDED,
HOWEVER, that such termination shall take effect immediately upon giving of
such notice if the Board of Directors of the Company shall have determined
that such misconduct, disregard, abuse or breach is not remediable which
determination shall be stated in such notice. A determination pursuant to
Section 3(c) (iii) or (iv) (as a result of a conviction of a crime involving
moral turpitude) shall take effect immediately upon giving of the notice
contemplated hereby.
(d) AT WILL BY EMPLOYEE. At any time and subject to Section 3(g)
below, Employee may terminate the Period of Employment with or without cause,
on written notice to the Company. In the event Employee elects to terminate
the Period of Employment pursuant to this Section 3(d), Employee shall give
the Company not less than two (2) weeks notice of such termination. If the
Employee terminates his employment pursuant to this Section 3(d), the Company
shall pay Employee the compensation to which he is entitled pursuant to
Section 2(a) through the end of the notice period and thereafter all
obligations of the Company shall terminate.
(e) AT WILL BY THE COMPANY. At any time, the Company may
terminate the Period of Employment for any reason, without cause, upon 24
hours written notice to the Employee. In the event the Company elects to
terminate the Period of Employment pursuant to this Section 3(e), the Company
shall retain Employee as a consultant to the Company for a period commencing
on the date of such termination and continuing until the expiration of the
Period of Employment (the "Consultancy Period"), during which time Employee
agrees to be available to the Company (which may include availability via
telephone) to consult with officers and directors regarding the business of
the Company, whenever so requested, such consultancy work not to exceed 40
hours per week. Employee shall continue to receive payment of his
compensation under Sections 2(a), 2(c) and 2(f) during the Consultancy Period
and his benefits described in Section 2(e); PROVIDED THAT if (i) any of the
events listed in paragraph (c) of this Section 3 occur then the Company's
obligations hereunder shall be governed in accordance with the applicable
paragraph or (ii) Employee breaches Sections 3(h),
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3(i) and/or 4 hereof, including a violation of his Proprietary Information
and Inventions Agreement (described at Section 4 below), then all of the
Company's obligations hereunder shall cease immediately. The amount of bonus
payable to Employee pursuant to this Section 3(e) shall be calculated in the
manner set forth in Section 3(a) above. Employee hereby agrees that the
Company may dismiss him under this Section 3(e) without regard (i) to any
general or specific policies (whether written or oral) of the Company
relating to the employment or termination of its employees, or (ii) to any
statements made to Employee, whether made orally or contained in any
document, pertaining to Employee's relationship with the Company. During the
Consultancy Period, Employee agrees not to compete with the business of the
Company during such Consultancy Period as set forth in Section 3(i) hereof.
(f) TERMINATION BY EMPLOYEE FOR GOOD REASON FOLLOWING CORPORATE
TRANSACTION. At any time following a Corporate Transaction (as defined in
Section 6 of the Stock Purchase Agreement) and without limitation of
Employee's rights under Section 3(d) above, Employee may terminate the Period
of Employment for Good Reason (as defined below) on not less than two (2)
weeks written notice to the Company. In the event of a termination by
Employee for Good Reason pursuant to this Section 3(f), the Company shall
retain Employee as a consultant to the Company for a period commencing on the
date of such termination and continuing for two (2) years thereafter
(irrespective of the Consulting Period) for the compensation and benefits and
subject to all of the terms set forth in Section 3(e) above (other than the
term for such consultancy services). The following shall constitute a
termination by Employee for "Good Reason" if: (i) there is an assignment to
the Employee of any duties materially inconsistent with or which constitute a
material change in the Employee's position, duties, responsibilities, or
status with the Company, or a material change in the Employee's position,
duties, responsibilities, or status with the Company, or a material change in
the Employee's reporting responsibilities, title, or offices; or removal of
the Employee from or failure to re-elect the Employee to any of such
positions, except in connection with the termination for the Period of
Employment for Cause, or due to disability or death; (ii) there is a
reduction by the Company in the Employee's annual salary then in effect other
than a reduction similar in percentage to a reduction generally applicable to
similarly situated employees of the Company; or (iii) the Company acts in any
way that would adversely affect the Employee's participation in or materially
reduce the Employee's benefit under any benefit plan of the Company in which
the Employee is participating or deprive the Employee of any material fringe
benefit enjoyed by the Employee except those changes generally affecting
similarly situated employees of the Company.
(g) COMPANY RIGHT TO REQUIRE CONSULTING SERVICES. In the event of
a termination of the Period of Employment pursuant to Section 3(c) or 3(d)
above, the Company shall have the option, exercisable on written notice to
Employee within twenty (20) days following such termination of the Period of
Employment, to require Employee to provide consulting services upon the same
terms provided in Section 3(e) above, including without limitation,
Employee's duties not to compete with the Company as provided in Section
3(i), except that: (i) the Company may thereafter terminate the Consultancy
Period on thirty (30) days notice to Employee; and (ii) the compensation
payable to Employee during the Consultancy Period shall be equal to
Employee's salary payable pursuant to Section 2(a)
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hereof as prorated and reduced to be equal to an hourly rate (assuming forty
(40) hours work weeks and forty-eight (48) full weeks of service during a
year), and Employee shall be so paid by the Company at such hourly rate for
such consulting services based on the greater of: (i) the actual number of
hours of consulting services provided by Employee; and (ii) ten (10) hours
per calendar month; provided, that if the Company requires in excess of
twenty (20) hours per week of consulting, then the Company shall compensate
Employee and provide benefits and bonuses as if Employee is working full time
during the Consultancy Period. The Company may require up to a maximum of
forty (40) hours per week of consulting services. In the event that the
Company requires less than forty (40) hours of consulting services per week,
then the Company may not prevent Employee from accepting other employment or
engaging in any work or other activity of any kind during the Consultancy
Period provided that such employment, work or activity is not competitive
with the business of the Company (as defined in Section 3(i) hereof) and
Employee may accept such other noncompetitive employment or engage in other
noncompetitive work or business activities during the Consultancy Period.
The Company acknowledges that once it chooses to require less than forty (40)
hours per week of consulting services from Employee that the Company may not
later unilaterally increase the consulting services required of Employee to
forty (40) hours per week or restrict Employee's ability to accept other
noncompetitive employment or engage in other noncompetitive work or
activities without Employee's consent, which may be withheld in Employee's
discretion.
(h) OTHER TERMINATION OBLIGATIONS.
(1) Employee hereby acknowledges and agrees that all personal
property, including, without limitation, all books, manuals, records,
reports, notes, contracts, computer files, lists, blueprints, and other
documents, or materials, or copies thereof, proprietary information, and
equipment furnished to or prepared by Employee in the course of or incident
to his employment, including, without limitation, records and any other
materials pertaining to the Company's proprietary information, belong to the
Company and shall be promptly returned to the Company upon termination of the
Period of Employment. Following termination, the Employee will not retain any
written or other tangible material containing any Proprietary Information or
information pertaining to the Company's proprietary information.
(2) Upon termination of the Period of Employment, the
Employee shall be deemed to have resigned from all offices and directorships
then held with the Company or any affiliates.
(3) Employee agrees that he will not, either directly or
indirectly, for a period of two (2) years following the termination of the
later of the Period of Employment or the Consultancy Period: (i) contact,
for purposes of soliciting employment, any employee of the Company; or, (ii)
contact for the purpose of inducing any termination or breach of any
contractual relationship with the Company, any individual or entity that has
a contractual relationship with the Company.
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(4) Employee agrees to comply with the covenant not to
compete as set forth in such Section 3(i).
(i) COVENANT NOT TO COMPETE. During the Consultancy Period,
Employee agrees not to compete with the business of the Company during such
Consultancy Period, anywhere within, from or into the countries listed in
EXHIBIT A and from or into any additional countries where the Company does
business at the time of termination of Employee's employment. For purposes
of this Section 3(h), Employee shall be deemed to compete if he either as an
employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director or in any other individual or representative
capacity engages or participates, or makes preparations to establish, any
business that conducts the same or substantially the same business as or is
competitive with the business which is conducted by the Company on the date
of Employee's termination, including, without limitation, work relating to
Top End, Encina, Unikix, CICS/6000, CICS/9000 and any activity engaged in by
the Company during the twelve months immediately preceding the date of
termination of the Period of Employment or any activity contemplated by the
Company on the date of such termination. Nothing contained in this Section
3(i) shall be construed to prohibit Employee from purchasing and owning
(directly or indirectly) up to one percent (1%) of the capital stock or other
securities of any corporation or other entity whose stock or securities are
traded on any national or regional securities exchange or the national
over-the-counter market and such ownership shall not constitute a violation
of this Section 3(i). In the event of a termination of the Period of
Employment pursuant to Section 3(c) or 3(d) above, the Company shall have the
option, exercisable on written notice to Employee within twenty (20) days
following such termination of the Period of Employment, to require Employee
to provide consulting services upon the same terms provided in Section 3(e)
above, including without limitation, Employee's duties not to compete with
the Company as provided herein.
4. PROPRIETARY INFORMATION AGREEMENT. As a condition to his
employment with the Company, Employee shall execute and deliver a copy of the
Company's standard form Employee Proprietary Information and Inventions
Agreement in substantially the form of EXHIBIT B attached hereto and
incorporated herein. Any breach by Employee of such agreement shall be deemed
a breach of this Agreement for purposes of Section 3(c) hereof. Employee's
obligations under such Employee Proprietary Information and Inventions
Agreement shall survive any termination of the Period of Employment.
5. ASSIGNMENT; SUCCESSORS AND ASSIGNS. Employee agrees that he will not
assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily
or involuntarily, or by operation of law, any rights or obligations under this
Agreement, nor shall Employee's rights be subject to encumbrance or the claims
of creditors. Any purported assignment, transfer, or delegation shall be null
and void. Nothing in this Agreement shall prevent the consolidation of the
Company with, or its merger into, any other corporation, or the sale by the
Company of all or substantially all of its properties or assets, or the
assignment by the Company of this Agreement and the performance of its
obligations hereunder to any successor in interest or any Affiliated Company.
Subject to the foregoing, this Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, legal
representatives, successors,
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and permitted assigns, and shall not benefit any person or entity other than
those enumerated above. Without limitation of the foregoing, any such
successor in interest (including an entity which acquires substantially all
the assets and the business of the Company) in such acquisition transaction
or any Affiliated Company shall be bound by all of the terms and conditions
of this Agreement.
6. NOTICES. All notices or other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly
given if delivered by hand or mailed, postage prepaid, by certified or
registered mail, return receipt requested, and addressed to the Company at:
BEA Systems, Inc.
0000 X. Xxxxxxxx Xxxx, Xxx. 000
Xxxx Xxxx, XX 00000
Attn: Vice President, Finance
or to the Employee at: Xxxxxx X. Xxxxx, Xx.
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Notice of change of address shall be effective only when done in accordance
with this Section.
7. ENTIRE AGREEMENT. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of Employee by the Company and may not be contradicted by evidence
of any prior or contemporaneous agreement. The parties further intend that
this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding involving this Agreement.
8. AMENDMENTS; WAIVERS. This Agreement may not be modified, amended,
or terminated except by an instrument in writing, signed by the Employee and
by a duly authorized representative of the Company other than Employee. By
an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that such
other party was or is obligated to comply with or perform, provided, however,
that such waiver shall not operate as a waiver of, or estoppel with respect
to, any other or subsequent failure. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, or
power hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, or power provided herein or by law or in
equity.
9. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement, or
the application thereof to any person, place, or circumstance, shall be held
by a court of competent jurisdiction to be invalid, unenforceable, or void,
the remainder of this Agreement and such provisions as applied to other
persons, places, and circumstances shall remain in full force and effect. It
is the intention of the parties that the covenants contained in Section 3(f)
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shall be enforced to the greatest extent in time, area, and degree of
participation as is permitted by the law of that jurisdiction whose law is
found to be applicable to any acts allegedly in breach of these covenants.
10. GOVERNING LAW. The validity, interpretation, enforceability, and
performance of this Agreement shall be governed by and construed in
accordance with the law of the State of California.
11. EMPLOYEE ACKNOWLEDGMENT. Employee acknowledges (i) that he has
consulted with or has had the opportunity to consult with independent counsel
of his own choice concerning this Agreement and has been advised to do so by
the Company, and (ii) that he has read and understands the Agreement, is
fully aware of its legal effect, and has entered into it freely based on his
own judgment.
12. EXCLUSIVE. Both parties agree that this Agreement shall provide
the exclusive remedies for any breach by the Company of its terms.
The parties have duly executed this Agreement as of the date first
written above.
COMPANY: EMPLOYEE:
BEA SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx III /s/ Xxxxxx X. Xxxxx, Xx.
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Title: President & CEO Xxxxxx X. Xxxxx, Xx.
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EXHIBIT A
TO
EMPLOYMENT AGREEMENT
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