RESTATED
EMPLOYMENT AGREEMENT
This Restated Employment Agreement (the "Agreement") is effective as of
the 21st day of January, 1999, by and between Xxxxxxxxxxxx.xxx, Inc., a
corporation organized under the laws of the State of Delaware, having its
principal offices at 00 Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Employer") and Xxxxxxx X. Xxxx of Billerica, Massachusetts (the "Employee").
This Agreement supersedes any and all prior employment agreements between the
Employer and Employee, whether written or oral, including specifically the
Employment Agreement between Employer and Employee dated January 21, 1999, and
the terms of such prior agreements shall hereafter be deemed to be null and void
and of no continuing effect.
WHEREAS, the Employer and Employee are desirous of entering into a
Employment Agreement, to replace all prior employment agreements, whether
written or oral, which have been entered into between the Employee and the
Employer;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Employer and the
Employee agree as follows:
1. Employment. The Employer hereby agrees to employ the Employee, and
the Employee hereby accepts employment, all upon the terms, conditions and
covenants set forth in this Agreement.
2. Duties. The Employer hereby employs the Employee to serve as its
President, Chief Executive Officer and such other offices as Employee may be
elected to hold from time to time, with all powers and duties customarily
associated with such title or titles. During the term of this Agreement, the
Employee shall serve also, without additional compensation, as a Director of the
Employer, if and when so elected by the shareholders of the Employer. Employer
may not, without Employee's consent, materially diminish Employee's title and
responsibilities during the term of this Agreement. Employee's employment with
Employer shall be his sole business activity. The Employee, however, may devote
time to charitable and personal matters so long as such activities, in the
determination of the Employer, do not materially detract from the performance of
Employee's duties to the Employer. The Employee's duties hereunder will be
performed primarily within the State of Massachusetts, and, until otherwise
changed by mutual agreement, his work location shall be within Massachusetts.
3. Term. Subject to Section 14, the term of this Agreement shall begin
on the date hereof and, unless terminated sooner pursuant to Section 14, shall
continue until January 20, 2002 (the "Term"). Thereafter, the Term shall
automatically be renewed for up to three successive one (1) year periods unless,
not later than 90 days prior to the expiration of the initial Term or any one
year extension term, the party desiring to terminate this Agreement shall have
notified the other in writing of its intention to terminate, which in the case
of the Employer shall be authorized by the Employer's Board of Directors.
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4. Compensation and Benefits.
(a) In each year of this Agreement the Employer shall pay to
the Employee an annual base salary (the "Annual Salary"), the total of which
during the first year of the Term shall be One Hundred Forty Thousand Dollars
($140,000.00) prorated for any partial month (the "Initial Annual Salary"). The
Initial Annual Salary shall be payable as follows:
(i) During the first six months of 1999, payment of
the Initial Annual Salary shall be made (A) in equal amounts calculated
according to an annual salary of $57,000.00 (approximately $4,750.00
per month) in accordance with Employer's general payroll policies and
prorated for any partial months of employment; and (B) in a lump sum
payment made on June 30, 1999 or within 5 business days thereafter
equal to the difference between (1) the amount paid to Employee for
services rendered through June 30, 1999 as set forth above in part (A)
of this subsection, and (2) the remaining amount due to Employee for
services rendered through June 30, 1999 calculated according to an
annual salary of $140,000.00 and prorated for any partial months of
employment.
(ii) During the last six months of 1999, payment of
the Initial Annual Salary shall be made in equal amounts calculated
according to an annual salary of $140,000.00 (approximately $11,666.66
per month) in accordance with Employer's general payroll policies and
prorated for any partial months of employment.
The payment of the Annual Salary shall be made in accordance with the Employer's
general payroll policies and shall be prorated for any partial years of
employment hereunder. Any increases in the Annual Salary shall be subject to the
approval by the compensation committee, as described in section 4(e).
(b) The Employee shall be granted options to purchase from the
Employer up to Fourteen Thousand (14,000) shares of the Employer's authorized
but unissued common stock, $0.001 par value (the "Common Stock"), at an exercise
price of $0.55 per share, which options are subject to the terms and conditions
to be set forth more specifically in a Stock Option Agreement between the
Employer and Employee.
(c) The Employee shall be entitled to participate (to the
extent that he is eligible) in all other employee benefits, if any, provided by
the Employer for its employees, including participation in any qualified pension
or profit sharing plan, eligibility for participation in any group life, health
(including family dependant coverage), dental and eye care benefits. If a
"change in control" occurs (as defined in Section 16), the Employee may choose,
within one year following the event giving rise to the change in control, to
receive instead of any regularly-provided employee benefit or other benefit
provided for hereunder, the similar benefit provided by the Employer prior to
such event, for the balance of the Term hereunder. If there is no benefit then
provided which is similar to a previously-provided employee benefit, or if the
benefit elected by the Employee cannot be provided by the Employer, then the
Employer (or its successor) shall pay the Employee, no less than monthly, as
additional compensation, a cash amount equal to the value of the benefit to the
Employee. This provision shall survive any termination of this Agreement.
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(d) The Employer shall provide or reimburse the Employee for
reasonable disability insurance coverage and such other insurance as is
reasonably approved by the Board of Directors of the Employer.
(e). Employee shall be eligible to share in a portion of a
bonus pool created by the compensation committee (which shall be comprised of at
least two members of the board of directors and may consist only of outside
directors). The compensation committee shall have the authority to create for
each year a bonus pool in an amount equal to not more than 10% of the Employer's
net income, before income taxes, in excess of $750,000. Income before income
taxes shall be determined in accordance with generally accepted accounting
principles prior to the determination of the amount of the bonus pool. The
compensation committee shall have the sole discretion to determine the
allocation of the bonus pool among the senior executive officers. If the Board
of Directors does not appoint a compensation committee for any given year, there
will be no bonus pool and Employee shall not receive any raise. The compensation
committee may increase, but not decrease, the Annual Salary from year to year.
5. Sick Pay and Disability Income. Salary, employee benefits, vacation
accruals, automobile allowance and all other benefits set forth herein shall be
paid to the Employee for any temporary periods of illness during which the
Employee is unable to work and through the period of any disability (as defined
hereinafter).
6. Vacation and Conventions. The Employee shall be entitled each year
to three weeks of paid vacation, prorated for any partial year. Commencing two
years following the effective date of the Company's 1999 underwritten secondary
public offering, however, Employee shall be entitled to four weeks of paid
vacation, prorated for any partial year. Unused vacation time (including time
accumulated prior to the date hereof) shall accumulate from year to year and the
Employee will be compensated for any unused vacation accumulated upon demand at
any time following its accrual (including any vacation time accrued prior to the
date of this agreement for which payment has not yet been made). In no event,
however, may Employee carry over into a subsequent year more than 14 days of
unused vacation. Any vacation not used in excess of the maximum permitted
accrual shall be forfeited by Employee unless the compensation committee
determines otherwise. In addition, the Employee will be entitled to leaves of
absence, at full pay, for attendance at conventions, seminars or as otherwise
reasonably determined by the Employee. In the event any vacation time shall not
be taken by the Employee during any given year and compensation is not rendered
for such unused vacation time, Employee shall be entitled to carry over such
time into any subsequent year or years during the Term. In the event that
Employee has any unused vacation time accrued under this Agreement upon the
termination of Employee's employment or at the conclusion of the Term, Employee
shall be entitled to be compensated for such unused vacation time.
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7. Reimbursement for Expenses. The Employer shall reimburse the
Employee for items of travel, entertainment or meals incurred while working
outside of the Employer's principal office (including working at the Employee's
home), and miscellaneous expenses incurred or paid by the Employee in the
performance of his duties under this Agreement (including conventions and
seminars), upon presentation by the Employee of such expense statements,
vouchers or other supporting information as the Employer may reasonably require.
8. Automobile. The Employer will provide the Employee with an
automobile allowance of a maximum of $350.00 per month (increased at the
beginning of each year, only, by the Consumer Price Index as determined by the
United States Department of Commerce, or any replacement index), or, if Employee
so elects, with free use of any automobile approved by the unanimous vote of the
Employer's Board of Directors. In addition, the Employer will either pay
directly or reimburse the Employee for all expenses incurred in connection with
such automobile, including without limitation, insurance, fuel, maintenance and
repairs. Reimbursement shall be made upon the Employer's receipt of a signed
itemized list of such expenses. The value of any benefits given to or of any
amounts paid to the Employee under this Section 8 in excess of Employee's actual
costs and expenses incurred in the performance of services for Employer shall be
deemed additional compensation under this Agreement and not subject to
reimbursement to the Employer.
9. Office. The Employer shall provide the Employee with an office,
secretarial and administrative assistance, office equipment and supplies and
such other facilities and services as are suitable to the Employee's position
and adequate for the performance of his duties. In addition, the Employer shall
reimburse the Employee for any expenses incurred by the Employee for use of his
home for business purposes on behalf of the Employer and any associated
expenses, including but not limited to those referenced in paragraph 7 hereof.
10. Withholding. The Employer shall withhold or deduct from the
Employee's compensation any amounts required by law to be so withheld or
deducted.
11. Confidentiality. During the Term of this Employment Agreement and
thereafter, the Employee hereby covenants and agrees that he shall not other
than for the benefit of the Employer publish, disclose to any third party or in
any way use for his own benefit any confidential information ("Confidential
Information"), including without limitation, any balance sheet or income
statement information (including but not limited to the value, amount or
condition of capital assets and/or inventory, sales figures, profitability,
etc.), or any other financial data, banking information, credit information,
trade secrets, financial statements or related data, customer lists or
information pertaining to customers or any unique distribution, manufacturing,
marketing and research methods of the Employer or its parent or affiliates, and
any other Confidential Information concerning the Employer's or its parent or
affiliate's, business, structure or affairs. All Confidential Information and
copies thereof are the sole property of the Employer and Employee shall deliver
promptly to the Employer at the termination of his employment or at any time as
the Board of Directors may request, without retaining copies, any Confidential
Information made, compiled, delivered, made available or otherwise obtained by
Employee. Employee shall also use his best efforts and exercise utmost diligence
to protect and safeguard the Confidential Information of the Employer's
customers, contractors and others with whom the Employer has a business
relationship, whether learned or acquired by Employee during the course of his
employment by the Employer.
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The nondisclosure obligations of this Section 11 shall not apply to:
(a) information that may be disclosed generally or is in the public domain
through no fault of the Employee; (b) information received from a third party
outside the Employer that was disclosed without a breach of any confidentiality
obligation; (c) information approved for release by written authorization of the
Employer; or (d) information that may be required by law or an order of any
court, agency or proceeding to be disclosed. This Section 11 shall remain in
effect notwithstanding any termination of this Employment Agreement.
12. Non-Competition and Non-Solicitation.
(a) During the time Employee is employed by the Employer,
Employee shall devote his full time and efforts to the business of the Employer
and shall not participate, directly or indirectly, in any capacity, in any
business or activity that is in competition with the Employer. For a period of
one year after the termination of employment with the Employer, and in any
geographic area in which the Employer conducts business, for any reason: (i)
Employee shall not hire or attempt to hire any employee of the Employer, or
assist in such hiring by anyone else, or encourage any employee to terminate his
or her employment with the Employer; (ii) Employee shall not participate,
directly or indirectly, in any capacity, in any business or activity that is in
competition with the Employer in any business in which the Employer is engaged;
and (iii) Employee shall not cause or assist to cause any of the customers of
the Employer with whom Employee communicated, dealt with or became acquainted
during his term of employment with the Employer to enter into contractual
arrangements with himself or any other person, firm, partnership, corporation or
other company in any business or activity that is in competition with the
Employer.
(b) "Blue Pencil" Rule. The Employee and the Employer desire
that the provisions of this Section 12 be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If a court of competent jurisdiction, however,
determines that any restrictions imposed on the Employee in this Section 12 are
unreasonable or unenforceable because of duration, area of restriction, or
otherwise, the Employee and the Employer agree and intend that the court shall
enforce this Section 12 to whatever extent the court deems reasonable to effect
the intent of this Section 12.
(c) Legitimate Purpose. The Employee has read carefully all of
the terms and conditions of this Section 12 and agrees that the restraints set
forth herein (i) are reasonable and necessary to support the legitimate business
interests and goodwill of the Employer, and (ii) will not preclude the Employee
from earning a livelihood during the life of this Section 12.
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13. Developments. All Confidential Information and all other
discoveries, inventions, processes, methods, and improvements conceived,
developed, or otherwise made by Employee relating to the Employer's business or
products, whether or not patentable or subject to copyright protection and
whether or not reduced to tangible form or reduced to practice, during the Term
of employment ("Developments"), shall be the sole property of the Employer.
Employee agrees to and hereby does assign to the Employer all right, title, and
interest throughout the world in and to all Developments and agrees to promptly
disclose such Developments to the Employer and take all such actions reasonably
requested by the Employer to establish and confirm the Employer's ownership of
such Developments. Employee agrees that all such Developments shall constitute
works made for hire under the copyright laws of the United States and hereby
assigns to the Employer all copyrights, patents, trademarks and other
proprietary rights the Employee may have in such Developments.
14. Termination. This Agreement shall be terminated (except for those
obligations of the Employer which by their terms survive termination) by the
occurrence of any of the following:
(a) The Employee's death.
(b) The action by the Board of Directors following the
Employee's "disability". For this purpose, the term "disability" shall mean any
physical or mental illness, disability or incapacity of the Employee which
prevents him from substantially performing his regular duties for a period of
three (3) consecutive months or four (4) months, even though not consecutive, in
any twelve (12) month period.
(c) Action of the Board of Directors of the Employer for
Cause. "Cause" is defined as the occurrence of any of the following events: (i)
Employee's willful breach of this Agreement, repeated after written notice of
such breach has been given to Employee, and having a material adverse effect
upon the Employer's business or financial circumstances; (ii) Employee's
habitual gross neglect of a substantial portion of his duties hereunder, which
has not been cured by the Employee within 30 days after prior written notice
thereof is given by the Employer to the Employee; (iii) the Employee's
conviction of a felony; (iv) a conviction of any other crime involving fraud,
theft, embezzlement and any violations of securities laws and laws relating to
the workplace; and (v) a breach of the provisions of the agreement dealing with
noncompetition, nonsolicitation, trade secrets and assignment of inventions. In
no event shall "cause" be deemed to mean the Board of Director's mere
disagreement, after the fact, with any lawful action undertaken by the Employee
in the good faith exercise of his business judgment.
(d) Upon the election of the Employee by written notice to the
Employer at any time following the period ending twenty four months from the
date of this Agreement, not less than: (i) 30 days prior to the effective date
of termination, or (ii) after a change in control (as defined in Section 16), 30
days prior to the effective date of termination.
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(e) Upon the election of the Employee with "good reason".
"Good reason" is defined as a material breach of this Agreement by the Employer
and includes, but is not limited to, any decrease in the salary or benefits
provided to the Employee, relegating the Employee to duties which are unrelated
to or at a lower level of responsibility than those currently performed by
Employee, having Employee report to any other officer rather than directly to
the Board of Directors, altering Employee's title as President, or relocating
the Employee to a location unreasonably distant from his work location.
Provided, however, that for the purposes of this Section 14 (e) the term
Employer shall include (A) the surviving entity in the event of any merger
between the Employer and another entity; or (B) any company holding at least a
majority of the outstanding common stock of the Employer, in the event that a
controlling interest in the shares of the Employer were acquired by any other
entity.
15. Damages for Breach by Employer.
(a) The employment provisions in this Agreement are a material
inducement to the Employee in continuing to render services to the Employer
during the Term and thereafter. The parties acknowledge that if the Employer
should breach such provisions, the Employee may be required to bring legal
action for damages and that questions of mitigation of damages would be
presented which could be very difficult to resolve prior to expiration of the
Term. For the sake of certainty and to avoid the cost, difficulty and delay of
proving damages in such circumstances, both parties agree that the Employee
shall be entitled to the amount of liquidated damages as set forth in Section 15
(c) in the event of the Employer's breach.
(b) If (i) the Employee terminates this Agreement for "good
reason", or (ii) If during the Term hereof, the Employer (or any successor)
terminates the Employee's employment for any reason other than "cause", as
defined herein, then, in either such case, the Employer shall pay to the
Employee, not later than thirty (30) days after the date of such termination,
the amount of damages as set forth in Section 15 (c).
(c) In the event of the termination of this Agreement pursuant
to Sections 15 (a) or (b), Employee shall be entitled to payment equal to the
lesser of (a) one year's salary and bonus for the period of employment prior to
the calendar year in which termination occurred; or (b) the salary due for the
balance of the term plus a pro rata portion of the bonus paid to the Employee
for the previous year. The Employee shall not be required to mitigate the amount
of any payment provided for in this Section 15 (c) by seeking other employment
or otherwise, nor shall the Employee's income from any source after such
termination be deducted for any reason from the sum computed under this Section
15 (c).
(d) The provisions of this Section 15 shall survive any
termination of this Agreement.
16. Change in Control Defined. A "change in control" of the Employer
shall occur upon the occurrence of one of the following events, but only if the
Employee elects, within one year thereafter, to have such event treated as a
change in control:
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(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act")
excepting Xxxxxxx X. Xxxx and X.X. XxXxxxxxx is or becomes the "beneficial
owner" (as defined in rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than thirty (30%)
percent of the combined voting power of the Company's then outstanding
securities, or if
(b) over any twelve (12) month period ("Period") during the
term of this Agreement, individuals who at the beginning of such Period
constitute the board of the Company do not constitute at least fifty (50%)
percent of the number of Directors elected during such twelve (12) month Period,
or if
(c) the Board adopts a resolution, in its sole discretion, to
the effect that a material change in control of the Company has occurred for the
purposes of this Agreement. For purposes of clause (b) above, a person who was
not a Director at the beginning of such Period but who has (i) filled the place
of a Director who has died or has retired in the ordinary course in accordance
with any Company policies then in effect, and (ii) been approved in advance by
Directors who constitute at least two-thirds (2/3) of the Directors who were, or
are deemed to be, Directors at the beginning of the Period shall for purposes of
this provision be deemed to be a Director since the beginning of the Period.
17. Indemnification.
(a) The Employer agrees to indemnify the Employee in any suit
or proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Employer) to the maximum extent
provided under the laws of the State of Delaware.
18. Notice. Any notices required to be given pursuant to the provisions
of this Agreement shall be in writing and delivered by hand delivery, express
delivery service or by certified mail return receipt requested to the parties at
the following addresses:
Employer: Xxxxxxxxxxxx.xxx, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Employee: Xxxxxxx X. Xxxx
00 Xxxxx Xxxx
X. Xxxxxxxxx, XX 00000
19. Successors; Binding Effect.
(a) The Employer shall require any successor (whether direct
or indirect by purchase of assets, purchase or exchange of stock, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Employer, by agreement in form and substance satisfactory to the
Employee, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Employer would be required to perform it
if no such succession had taken place. Failure of the Employer to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement. As used in this Agreement, "Employer" shall mean
Xxxxxxxxxxxx.xxx, Inc. and any successor to the business and/or assets of
Xxxxxxxxxxxx.xxx, Inc. which executes and delivers the agreement provided for in
this Section 19 (a) or which otherwise becomes bound by all of the terms and
provisions of this Agreement by operation of law.
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(b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the administrators,
successors, heirs, distributees, devisees and legatees of the Employee. If the
Employee should die prior to the payment to him of any amounts due him
hereunder, all such payments shall be made in accordance with this Section 15
(b).
20. Arbitration. At the election of the Employee, any dispute
respecting this Agreement, whether commenced by the Employer or Employee may be
resolved by arbitration before a three person panel of independent arbitrators
pursuant to the Commercial Rules of the American Arbitration Association
("AAA"). Any arbitration compelled pursuant to this section shall be held at the
AAA office nearest to Employee's residence at the time such action is commenced.
Employee shall be entitled to a stay of any legal proceeding instituted against
by the Employer in the event that an election to arbitrate pursuant to this
Section is made.
21. Injunctive Relief. Employee acknowledges that in certain situations
Employer would not have any adequate remedy at law in the event Employee
breaches this Agreement and that Employer will suffer irreparable damage and
injury in such event. Employee agrees that Employer, in addition to any other
available rights and remedies available hereunder (including without limitation,
incidental and consequential damages), and notwithstanding the provisions of
Section 20 hereof, shall be entitled to equitable relief, including an
injunction restricting Employee from committing or continuing any violation of
this Agreement. Any action to seek an injunction pursuant to this Section 21 may
be brought in a court of competent jurisdiction in Boston, Massachusetts and the
parties hereto consent to the venue and jurisdiction of such court.
22. Attorney's Fees. In any litigation or arbitration relating to this
Agreement, including litigation or arbitration with respect to any instrument,
document or other agreement made under or in connection with this Agreement, the
Employer shall bear all costs and attorney's fees of both parties.
23. Authority. Each party represents that its undersigned
representative or corporate officer has all requisite power and authority to
enter into this agreement and to execute any and all instruments and documents
on its behalf necessary to and in performance of their respective obligations
hereunder.
24. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed original, but all of which together
shall constitute one and the same instrument.
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25. Severability. If any provisions of this Agreement shall be held to
be invalid or unenforceable to any extent or in any application, then the
remainder of this Agreement and such term and condition, except to such extent
or in such application, shall not be affected thereby, and each and every term
and condition of this Agreement shall be valid and enforced to the fullest
extent and in the broadest application permitted by law.
26. Headings. The paragraph headings contained herein are for
convenience and reference only, and shall be given no effect in the
interpretation of any term or condition of this Agreement.
27. Miscellaneous. This Agreement is entered into and shall be
construed under the laws of the State of Massachusetts applicable to contracts
made and to be entirely performed within that State. In the event that,
notwithstanding Section 20 hereof, any litigation relating to this Agreement is
held to be permissible, the venue thereof shall be in the appropriate court with
jurisdiction over the matter in dispute for the county in which the Employee
resides at the time of the filing of the lawsuit in question. This Agreement
shall be amended, modified or terminated only by an instrument in writing,
signed by the party or parties to be charged. This Agreement shall inure to the
benefits of the parties and their successors in interest. This Agreement is the
entire agreement of the parties relating to the employment of the Employee by
the Employer and supersedes all previous written or oral agreements.
IN WITNESS WHEREOF the parties have executed this Agreement under seal
effective as of the day and year first above written.
EMPLOYEE: XXXXXXXXXXXX.XXX, INC.
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Xxxxxxx X. Xxxx X.X. XxXxxxxxx, Chief Financial Officer
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