EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of December 6,
2002, is entered into between CLARUS CORPORATION, a Delaware corporation (the
"Company") and XXXXX X. XXXXX (the "Employee").
W I T N E S S E T H :
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WHEREAS, the Company desires to employ the Employee and to be assured
of his services on the terms and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such employment on such
terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Company and the Employee hereby agree as
follows:
1. EMPLOYMENT. The Company hereby employs the Employee on the terms
set forth below, and the Employee accepts such employment, upon the terms and
subject to the conditions set forth in this Agreement.
2. TERM. The term of this Agreement shall commence on November 25,
2002, subject to the approval of this Agreement by the Board of Directors of the
Company (the "Effective Date") and shall terminate on the third anniversary of
the Effective Date, subject to earlier termination pursuant to the provisions of
Section 10 hereof (the "Term").
3. DUTIES. (a) During the Term of this Agreement, the Employee
shall serve as the Chief Administrative Officer and Secretary of the Company, or
in such other executive capacity as may be assigned to him, and shall perform
all duties commensurate with his position and as may be assigned to him by the
Executive Chairman of the Company or such other person(s) as may be designated
by the Board of Directors of the Company. The Employee shall devote as much time
as is necessary to perform his duties hereunder and shall use his best efforts,
skills and abilities to promote the interests of the Company and to diligently
and competently perform the duties of his position. The Employee's performance
shall be subject to annual review.
(b) The Employee shall report to the Executive Chairman of the Company
or such other person(s) as may be designated by the Board of Directors of the
Company and shall at all times keep the such persons promptly and fully informed
(in writing if so requested) of his conduct of the business or affairs of the
Company, and provide such explanations of his conduct as may be required.
(c) The Employee's duties shall be performed at the Corporation's
offices in Greenwich, Connecticut. The Employee shall travel to other locations
as may be necessary for Employee to perform his duties.
4. COMPENSATION AND BENEFITS. (a) During the term of this
Agreement, the Company shall pay to the Employee, and the Employee shall accept
from the Company, as compensation for the performance of services under this
Agreement and the Employee's observance and performance of all of the provisions
hereof, a salary of $175,000 per year (the "Base Compensation"). The Employee's
salary shall be payable in accordance with the normal payroll practices of the
Company and shall be subject to withholding for applicable taxes and other
amounts. In addition to the Base Compensation, the Employee may, in the sole and
absolute discretion of the Board of Directors of the Company, be entitled to
performance bonuses which may be based upon a variety of factors, including the
Employee's performance and the achievement of Company goals, all as determined
in the sole and absolute discretion of the Board of Directors of the Company.
(b) During the term of this Agreement, the Employee shall be
entitled to participate in or benefit from, in accordance with the eligibility
and other provisions thereof, the Company's medical insurance and other fringe
benefit plans or policies as the Company may make available to, or have in
effect for, its personnel with commensurate duties from time to time. In
addition, during the Term the Company shall maintain term life insurance on the
Employee in the amount of $2,000,000 for the benefit of the Employee's designees
(the "Life Insurance"). The Company retains the right to terminate or alter any
such plans or policies from time to time. The Employee shall also be entitled to
four weeks paid vacation each year, sick leave and other similar benefits in
accordance with policies of the Company from time to time in effect for
personnel with commensurate duties.
(c) The Employee shall also be entitled to participate, at the
sole and absolute discretion of the Board of Directors of the Company, in the
Company's incentive stock option plan. Such participation shall be based upon,
among other things, the Employee's performance and the Company's performance. In
addition, the Employee may be entitled, during the term of this Agreement, to
receive such additional options, at such exercise prices and other terms, and/or
to participate in such other bonus plans, whether during the term of this
Agreement or upon termination pursuant to Section 10 hereof, as the Board of
Directors of the Company may, in its sole and absolute discretion, determine. In
addition to the foregoing, the Employee shall be entitled to receive options to
purchase up to 200,000 shares of the Company's common stock, par value $.0001
per share ("Common Stock"), having an exercise price of $5.35 per share and
vesting over five (5) years, with one-fifth of such options to vest on each
annual anniversary of the date of issuance.
5. REIMBURSEMENT OF BUSINESS EXPENSES. During the term of this
Agreement, upon submission of proper invoices, receipts or other supporting
documentation satisfactory to the Company and in specific accordance with such
guidelines as may be established from time to time by the Company's Board of
Directors, the Employee shall be reimbursed by the Company for all reasonable
business expenses actually and necessarily
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incurred by the Employee on behalf of the Company in connection with the
performance of services under this Agreement.
6. REPRESENTATION OF EMPLOYEE; RESTRICTIONS ON SALE. (a) The
Employee represents and warrants that he is not party to, or bound by, any
agreement or commitment, or subject to any restriction, including but not
limited to agreements related to previous employment containing confidentiality
or noncompete covenants, which in the future may have a possibility of adversely
affecting the business of the Company or the performance by the Employee of his
duties under this Agreement.
(b) The Employee further covenants and agrees that he will not
sell, transfer, assign, pledge or otherwise dispose of any shares of capital
stock or securities convertible into capital stock of the Company granted
pursuant to any stock incentive or similar plan of the Company until the third
anniversary of the Effective Date and such restrictions on dispositions shall
apply upon a termination of this Agreement for cause as described in Section
10(c) hereof; provided, however, that the restrictions with respect to such
dispositions as set forth in this sentence shall not apply to the Employee in
the event of a termination of this Agreement pursuant to Sections 10(a), 10(b)
or 10(d) hereof. With respect to any shares of capital stock or securities
convertible into capital stock of the Company that are owned by Employee other
than those granted to Employee pursuant to this Agreement, the Employee shall
give to the Company's Executive Chairman or such other designated member of the
Board of Directors of the Company five business days advance written notice of
any intent to sell such securities. Such restrictions on disposition may also be
waived from time to time in the sole and absolute discretion of the Company's
Board of Directors. Notwithstanding the foregoing, Employee shall, to the extent
permitted under applicable law, rule or regulation, be permitted to transfer
shares of capital stock or securities convertible into capital stock of the
Company to his immediate family members or trusts for the benefit of his
immediate family members for estate planning purposes; provided that any such
transferees shall be subject to the restrictions applicable to Employee set
forth herein.
7. CONFIDENTIALITY. For purposes of this Section 7, all references
to the Company shall be deemed to include all of the Company's affiliates and
subsidiaries.
(A) CONFIDENTIAL INFORMATION. The Employee acknowledges that
as a result of his employment with the Company, the Employee has and will
continue to have knowledge of, and access to, proprietary and confidential
information of the Company, including, without limitation, inventions, trade
secrets, technical information, know-how, plans, specifications, methods of
operations, financial and marketing information, information with respect to
business and product development, including, without limitation, acquisitions
and new lines of business, and the identity of customers and suppliers
(collectively, the "Confidential Information"), and that such information, even
though it may be contributed, developed or acquired by the Employee, constitutes
valuable, special and unique assets of the Company developed at great expense
which are the exclusive property of the Company. Accordingly, the Employee shall
not, at any time, either during or subsequent to the term of this Agreement, use
(whether for personal gain or otherwise), reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity, any of the
Confidential Information without the prior
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written consent of the Company, except (i) to responsible officers and employees
of the Company and other responsible persons who are in a contractual or
fiduciary relationship with the Company and who have a need for such information
for purposes in the best interests of the Company, (ii) for such information
which is or becomes of general public knowledge from authorized sources other
than the Employee, and (iii) for such disclosure as is required by law or legal
process and then only with as much prior written notice to the Company as is
practical under the circumstances and only to the extent required by such law or
legal process. The Employee acknowledges that the Company would not enter into
this Agreement without the assurance that all such Confidential Information will
be used for the exclusive benefit of the Company.
(B) RETURN OF CONFIDENTIAL INFORMATION. Upon the termination
of Employee's employment with the Company, the Employee shall promptly deliver
to the Company all drawings, manuals, letters, notes, notebooks, reports and
copies thereof and all other materials relating to the Company's business,
including without limitation any materials incorporating Confidential
Information, which are in the Employee's possession or control.
(C) INVENTIONS, ETC. The Employee will promptly disclose to
the Company all designs, processes, inventions, improvements, discoveries and
other information related to the business of the Company (collectively
"developments") conceived, developed or acquired by him alone or with others
during the term of this Agreement, whether or not conceived during regular
working hours, through the use of Company time, material or facilities or
otherwise. All such developments shall be the sole and exclusive property of the
Company, and upon request the Employee shall deliver to the Company all
drawings, models and other data and records relating to such developments. In
the event any such developments shall be deemed by the Company to be patentable
or copyrightable, the Employee shall, at the expense of the Company, assist the
Company in obtaining any patents or copyrights thereon and execute all documents
and do all other things necessary or proper to obtain letters patent and
copyrights and to vest the Company with full title thereto.
8. NON-COMPETITION. For purposes of this Section 8, all references
to the Company shall be deemed to include all of the Company's affiliates and
subsidiaries. The Employee will not utilize his special knowledge of the
business operations of the Company and his relationships with customers,
suppliers of the Company and others to compete with the Company. During the Term
of this Agreement and for a period of two (2) years after the expiration or
termination of this Agreement, the Employee shall not engage, directly or
indirectly, or have an interest, directly or indirectly, anywhere in the United
States of America or any other geographic area where the Company does business
or in which its products or services are marketed, alone or in association with
others, as principal, officer, agent, employee, director, partner or stockholder
(except with respect to his employment by the Company), or through the
investment of capital, lending of money or property, rendering of services or
otherwise, in any business competitive with or substantially similar to that
engaged in by the Company during the Term of this Agreement, or any line of
business or acquisition that the Company either (i) contemplates entering into,
whether or not actually entered into, or (ii) has obtained due diligence or
other information on during Employee's employment with the Company (it being
understood hereby, that the ownership by the Employee of five percent (5%) or
less of the stock
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of any company listed on a national securities exchange shall not be deemed a
violation of this Section 8 and it being further understood that nothing herein
shall prevent the Employee from engaging in the business of investing,
reinvesting, or trading in securities or other financial instruments). During
the same period, the Employee shall not, and shall not permit any of his
employees, agents or others under his control to, directly or indirectly, on
behalf of himself or any other person, (i) call upon, accept competitive
business from, or solicit the competitive business of any person who is, or who
had been at any time during the preceding two (2) years, a customer of the
Company or any successor to the business of the Company, or otherwise divert or
attempt to divert any business from the Company or any such successor, or (ii)
directly or indirectly recruit or otherwise solicit or induce any person who is
an employee of, or otherwise engaged by, the Company or any successor to the
business of the Company to terminate his or her employment or other relationship
with the Company or such successor, or hire any person who has left the employ
of the Company or any such successor during the preceding two (2) years. The
Employee shall not at any time, directly or indirectly, use or purport to
authorize any person to use any name, xxxx, logo, trade dress or other
identifying words or images which are the same as or similar to those used at
any time by the Company in connection with any product or service, whether or
not such use would be in a business competitive with that of the Company. Any
breach or violation by the Employee of the provisions of this Section 8 shall
toll the running of any time periods set forth in this Section 8 for the
duration of any such breach or violation.
9. REMEDIES. The restrictions set forth in Sections 7 and 8 are
considered by the parties to be fair and reasonable. The Employee acknowledges
that the restrictions contained in Section 7 and 8 will not prevent him from
earning a livelihood. The Employee further acknowledges that the Company would
be irreparably harmed and that monetary damages would not provide an adequate
remedy in the event of a breach of the provisions of Sections 7 or 8.
Accordingly, the Employee agrees that, in addition to any other remedies
available to the Company, the Company (i) shall be entitled to specific
performance, injunction, and other equitable relief to secure the enforcement of
such provisions and (ii) shall not be required to post bond in connection with
seeking any such equitable remedies. If any provisions of Sections 7, 8, or 9
relating to the time period, scope of activities or geographic area of
restrictions is declared by a court of competent jurisdiction to exceed the
maximum permissible time period, scope of activities or geographic area, the
maximum time period, scope of activities or geographic area, as the case may be,
shall be reduced to the maximum which such court deems enforceable. If any
provisions of Sections 7, 8, or 9 other than those described in the preceding
sentence are adjudicated to be invalid or unenforceable, the invalid or
unenforceable provisions shall be deemed amended (with respect only to the
jurisdiction in which adjudication is made) in such manner as to render them
enforceable and to effectuate as nearly as possible the original intentions and
agreement of the parties.
10. TERMINATION. This Agreement may be terminated prior to the
expiration of the Term set forth in Section 2 upon the occurrence of any of the
events set forth in, and subject to the terms of, this Section 10.
(A) DEATH. This Agreement will terminate immediately and
automatically upon the death of the Employee. If this Agreement is terminated on
account of the death of the Employee, then the Employee's estate shall be
entitled to receive accrued Base
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Compensation through the date of such termination, and the Employee and the
Employee's estate shall have no further entitlement to Base Compensation, bonus,
or benefits, other than the proceeds of the Life Insurance, from the Company
following the effective date of such termination.
(B) DISABILITY. This Agreement may be terminated at the
Company's option, immediately upon notice to the Employee, if the Employee shall
suffer a permanent disability. For the purposes of this Agreement, the term
"permanent disability" shall mean the Employee's inability to perform his duties
under this Agreement for a period of sixty (60) consecutive days or for an
aggregate of ninety (90) days, whether or not consecutive, in any twelve (12)
month period, due to illness, accident or any other physical or mental
incapacity, as reasonably determined by the Board of Directors of the Company.
In the event that a dispute arises with respect to the disability of the
Employee, the parties shall each select a physician licensed to practice in the
State of Connecticut to make such a determination. If the two (2) physicians
selected cannot agree on a determination, they will mutually select a third
physician and the decision of the majority of the three (3) physicians will be
binding. If this Agreement is terminated on account of the permanent disability
of the Employee, then the Employee shall be entitled to receive accrued Base
Compensation through the date of such termination, and the Employee shall have
no further entitlement to Base Compensation, bonus, or benefits from the Company
following the effective date of such termination.
(C) CAUSE. This Agreement may be terminated at the Company's
option, immediately upon notice to the Employee, and solely with respect to
clauses (i) and (iii) below, after the expiration of a 10-day cure period after
written notice thereof to the Employee, upon: (i) breach by the Employee of any
material provision of this Agreement; (ii) gross negligence or willful
misconduct of the Employee in connection with the performance of his duties
under this Agreement; (iii) Employee's failure to perform any reasonable
directive of the Executive Chairman or the Board of Directors of the Company;
(iv) fraud, criminal conduct, dishonesty or embezzlement by the Employee; or (v)
Employee's misappropriation for personal use of any assets (having in excess of
nominal value) or business opportunities of the Company. If this Agreement is
terminated by the Company for cause, then the Employee shall be entitled to
receive accrued Base Compensation through the date of such termination, and the
Employee shall have no further entitlement to Base Compensation, bonus, or
benefits from the Company following the effective date of such termination.
(D) WITHOUT CAUSE. This Agreement may be terminated, other
than upon a Change in Control, at any time by the Company without cause
immediately upon giving written notice to the Employee of such termination. In
such event, Company shall continue to pay to the Employee his Base Compensation
in accordance with the normal payroll practices of the Company for (i) if such
termination occurs prior to June 30, 2003, six (6) months after the effective
date of such termination or (ii) if such termination occurs after June 30, 2003,
twelve (12) months after the effective date of such termination, and the
Employee shall have no further entitlement to bonus or benefits from the Company
following the effective date of such termination. Notwithstanding anything else
contained herein, in the event that this Agreement is terminated, other than
upon a Change in Control, by the Company without cause, then a pro rata portion
of all options for the purchase of Common Stock of the Company held by the
Employee
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and eligible for vesting during the calendar year in which such termination
occurs shall vest and become immediately exercisable and salable, based upon the
number of days elapsed since the end of the most recent calendar year and the
date of such termination.
(E) CHANGE IN CONTROL. (i) This Agreement may be terminated by
the Company upon the effectiveness of a Change in Control. If this Agreement is
terminated by the Company upon a Change in Control, then the Employee shall be
entitled to receive accrued Base Compensation through the date of such
termination, and the Employee shall have no further entitlement to Base
Compensation, bonus, or benefits from the Company following the effective date
of such termination. Notwithstanding anything else contained herein, in the
event that this Agreement is terminated by the Company upon a Change in Control
prior to the expiration of the Term, all options for the purchase of Common
Stock of the Company held by the Employee shall vest and become immediately
exercisable and saleable.
(ii) As used herein, "Change in Control" shall mean any
of the following:
(a) The date any entity or person other than
Xxxxxx Xxxxxxx or his affiliates shall have become the beneficial owner of, or
shall have obtained voting control over, fifty percent (50%) or more of the
outstanding Common Stock of the Company;
(b) The date there shall have been a change in a
majority of the Board of Directors of the Company within a 12-month period (not
including any period prior to the execution of this Agreement) unless the
nomination for election by the Company's stockholders of each new director was
approved by the vote of a majority of the directors then still in office who
were in office at the beginning of the 12-month period;
(c) The date the Company consummates (x) a merger
or consolidation of the Company with or into another corporation, in which the
Company is not the continuing or surviving corporation or pursuant to which any
shares of Common Stock of the Company would be converted into cash, securities
or other property of another corporation, other than (i) a merger or
consolidation of the Company in which holders of Common Stock immediately prior
to such merger or consolidation have the same proportionate ownership of Common
Stock of the surviving corporation immediately after such merger or
consolidation as immediately before such merger or consolidation and (ii) a
merger or consolidation of the Company in which holders of Common Stock
immediately prior to such merger or consolidation continue to own at least a
majority of the combined voting securities of the Company (or the surviving
entity) outstanding immediately after such merger or consolidation, or (y) the
sale or other disposition of all or substantially all of the assets of the
Company.
(F) BY THE EMPLOYEE. This Agreement may be terminated at the
Employee's option upon thirty (30) days' notice to the Company. If this
Agreement is terminated by the Employee, then the Employee shall be entitled to
receive accrued Base Compensation through the date of such termination, and the
Employee shall have no further entitlement to Base Compensation, bonus, or
benefits from the Company following the effective date of such termination.
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(G) OTHER ACTIONS UPON TERMINATION. (i) Upon the termination
or expiration of this Agreement, the Employee shall be deemed to have
immediately resigned as an officer and director of the Company (if he then holds
such offices). The Employee shall take such other actions and execute such other
documents or instruments as may be required or advisable to document and confirm
his resignation and ensure its effectiveness.
(ii) The Employee shall not at any time following the
termination or expiration of this Agreement make any public statements relating
to the Company or any of its subsidiaries or affiliates or such entities'
directors, officers or executives, except as required by law or legal process or
in connection with litigation commenced to enforce the terms of this Agreement.
(H) NO OTHER LIABILITIES. Upon the termination or expiration
of this Agreement, the Company shall have no liability except as specifically
set forth in this Section 10.
11. TAX EFFECT. If the compensation payable under this Agreement,
either alone or together with other payments to the Employee from the Company or
one of its subsidiaries would constitute a "parachute payment" (as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")),
such severance compensation may be reduced to the largest amount as will result
in no portion of the severance compensation payments hereunder being subject to
the excise tax imposed by Section 4999 of the Code or being disallowed as
deductions to the Company under Section 280G of the Code. The determination of
whether any reduction shall be made in the severance compensation payments
hereunder pursuant to the foregoing provision shall be made jointly by the
Employee and the Company. The Employee shall be liable for the payment of income
and excise taxes, if any, applicable to him on such severance compensation.
12. MISCELLANEOUS.
(A) SURVIVAL. The provisions of Sections 7, 8, and 9 shall
survive the termination of this Agreement.
(B) ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties and merges and supersedes any prior or
contemporaneous agreements between the parties pertaining to the subject matter
hereof.
(C) MODIFICATION. This Agreement may not be modified or
terminated orally, and no modification or waiver of any of the provisions hereof
shall be binding unless in writing and signed by the party against whom the same
is sought to be enforced.
(D) WAIVER. Failure of a party to enforce one or more of the
provisions of this Agreement or to require at any time performance of any of the
obligations hereof shall not be construed to be a waiver of such provisions by
such party nor to in any way affect the validity of this Agreement or such
party's right thereafter to enforce any provision of
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this Agreement, nor to preclude such party from taking any other action at any
time which it would legally be entitled to take.
(E) SUCCESSORS AND ASSIGNS. Neither party shall have the right
to assign this Agreement, or any rights or obligations hereunder, without the
consent of the other party; provided, however, that upon the sale of all or
substantially all of the assets, business and goodwill of the Company to another
company, or upon the merger or consolidation of the Company with another
company, this Agreement shall inure to the benefit of, and be binding upon, both
Employee and the company purchasing such assets, business and goodwill, or
surviving such merger or consolidation, as the case may be, in the same manner
and to the same extent as though such other company were the Company; and
provided, further, that the Company shall have the right to assign this
Agreement to any affiliate or subsidiary of the Company. Subject to the
foregoing, this Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their legal representatives, heirs, successors and
permitted assigns.
(F) COMMUNICATIONS. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been given at the time personally delivered or when mailed in any United
States post office enclosed in a registered or certified postage prepaid
envelope and addressed to the addresses set forth below, or to such other
address as any party may specify by notice to the other party; provided,
however, that any notice of change of address shall be effective only upon
receipt.
TO THE COMPANY: Clarus Corporation
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
WITH A COPY TO: Xxxx Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
TO THE EMPLOYEE: Xxxxx X. Xxxxx
000 Xxxxxx Xxxx Xxxxx Xxxx
Xxxxxx, XX 00000
(G) SEVERABILITY. If any provision of this Agreement is held
to be invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect the validity and enforceability
of the other provisions of this Agreement and the provision held to be invalid
or unenforceable shall be enforced as nearly as possible according to its
original terms and intent to eliminate such invalidity or unenforceability.
(H) JURISDICTION; VENUE. This Agreement shall be subject to
the exclusive jurisdiction of the courts located in New York County, New York.
Any breach of any provisions of this Agreement shall be deemed to be a breach
occurring in the State of New York by virtue of a failure to perform an act
required to be performed in the State of New York, and
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the parties irrevocably and expressly agree to submit to the jurisdiction of the
courts located in New York County, New York for the purpose of resolving any
disputes among them relating to this Agreement or the transactions contemplated
by this Agreement and waive any objections on the grounds of forum non
conveniens or otherwise. The parties hereto agree to service of process by
certified or registered United States mail, postage prepaid, addressed to the
party in question.
(I) GOVERNING LAW. This Agreement is made and executed and
shall be governed by the laws of the State of New York, without regard to the
conflicts of law principles thereof.
(J) NO THIRD-PARTY BENEFICIARIES. Each of the provisions of
this Agreement is for the sole and exclusive benefit of the parties hereto and
shall not be deemed for the benefit of any other person or entity.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement as of the date set forth above.
CLARUS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Chairman
/s/ Xxxxx X. Xxxxx
---------------------------------------------
Xxxxx X. Xxxxx
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