EXHIBIT 10.7
================================================================================
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
ITERATED SYSTEMS, INC.
AND
XXXX X. XXXXX
DATED
MAY 1, 1994
================================================================================
TABLE OF CONTENTS
EXECUTIVE EMPLOYMENT AGREEMENT
PARAGRAPH PAGE NO.
--------- --------
1. Background.................................... 1
2. Definitions................................... 1
3. Employment.................................... 3
4. Responsibilities.............................. 3
5. Compensation.................................. 4
6. Termination................................... 6
7. Proprietary Information....................... 6
8. Ownership..................................... 8
9. Exclusive Service and Non-Competition Covenant 8
10 Covenant Not to Hire.......................... 8
11 Non-Solicitation.............................. 8
12 Severability.................................. 9
13 Attorneys' Fees............................... 9
14 Headings...................................... 9
15 Notices....................................... 9
16 General Provisions............................ 10
17 Entire Agreement.............................. 10
EXHIBIT A - Duties of Employee
EXHIBIT B - Performance Goals of Employee
EXHIBIT C - Stock Option Grant
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into
this 1st day of May, 1994 by and between ITERATED SYSTEMS, INC., a Georgia
corporation with its principal offices at 0000-X Xxxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxx 00000 (the "Company") and XXXX X. XXXXX ("Employee"), an
individual, and shall be effective on the Effective Date, as defined below.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements of the parties hereto, the parties do hereby covenant
and agree as follows:
1. BACKGROUND.
A. The Company is engaged in the business of (i) research and
development in the area of fractal geometry and dynamical systems, (ii)
application of the results from such research and development in the
compression, transmission, storage and decompression of images using computer
technology, and (iii) design, development, marketing and distribution of
products and services which embody or relate to the compression, transmission,
storage and decompression of images.
B. Employee has been serving as President and Treasurer of the
Company, the Company desires to secure and retain the services of Employee in
the office and in the capacities to be designated pursuant to Subsection 4A
hereof, and Employee desires to continue in the full and active employ of the
Company in accordance with the terms and conditions herein set forth, and the
Company desires to retain Employee's valuable skills and services for the
benefit of the Company.
2. DEFINITIONS.
As used in this Agreement and the Exhibits, the following terms shall
have the meaning as set forth below, and the parties hereto agree to be bound by
the provisions hereof:
A. AREA means the geographic area of the United States, Canada and
the countries currently comprising the European Community which is the area in
which operations are performed, supervised, or assisted in by Employee on behalf
of the Company, both as of the date hereof and as are anticipated to be
conducted throughout the Term.
B. BOARD OF DIRECTORS means the Board of Directors of the Company.
C. BUSINESS OF THE COMPANY means the (i) research and development in
the area of fractal geometry and dynamical systems, (ii) application of the
results from such research and development in the compression, transmission,
storage and decompression of images using computer technology, and (iii) design,
development, marketing and distribution of products and services which embody or
relate to the compression, transmission, storage and decompression of images.
D. COMPANY means Iterated Systems, Inc. and its successors.
E. EFFECTIVE DATE means the date this Agreement is executed by both
parties.
F. PERMANENT DISABILITY means a physical or mental condition which
renders Employee incapable of performing his regular duties hereunder for a
period of ninety (90) consecutive days. In the event of any disagreement between
Employee and the Company as to whether Employee is suffering from Permanent
Disability, the determination of Employee's Permanent Disability shall be made
by one or more board certified licensed physicians practicing the specialty of
medicine applicable to Employee's disorder in the Atlanta metropolitan area in
accordance with the provisions of this Subsection 2F. If either the Company or
Employee desires to initiate the procedure provided in this Subsection, such
party (the "Initiating Party") shall deliver written notice to the other party
(the "Responding Party") in accordance with the provisions of this Agreement
specifying that the Initiating Party desires to proceed with a medical
examination and the procedures specified in this Section. Such notice shall
include the name, address and telephone number of the physician selected by the
Initiating Party (the "Disability Examination Notice"). If the Responding Party
fails within thirty (30) days after the receipt of the Disability Examination
Notice to designate a physician meeting the standards specified herein, the
physician designated by the Initiating Party in the Disability Examination
Notice shall make the determination of Permanent Disability as provided in this
Section. If the Responding Party by written notice notifies the Initiating Party
within thirty (30) days of the receipt by the Responding Party of the Disability
Examination Notice by notice specifying the physician selected by the Responding
Party for purposes of this Section, then each of the two physicians as so
designated by the respective parties shall each examine Employee. Examinations
shall be made by each such physician within five (5) days of such physician's
respective designation. Each physician shall render a written report as to
whether Employee is in such physician's opinion suffering Permanent Disability.
If the two physicians agree on the status of Employee for purposes of this
Subsection, such determination shall be conclusive and dispositive for all
purposes of this Subsection. If the two physicians cannot agree, the two
physicians shall jointly select a third physician meeting the standards
specified in this Subsection within ten (10) days after the later report of the
two physicians is submitted. The third physician shall render a written report
on the status of Employee within five (5) days of selection and such report
shall be dispositive for purposes of this Subsection. For purposes of this
Subsection 2F, Employee agrees that he shall promptly submit to such
examinations and tests as such physicians shall reasonably request for purposes
of making a determination of Permanent Disability as provided herein. Failure or
refusal of the Company to designate a licensed physician to make a determination
of Permanent Disability as required in accordance with this Section or of
Employee to submit to the examination as required by this Subsection shall
constitute a conclusive admission by the Company or Employee, as appropriate,
that Employee is suffering from a Permanent Disability as provided herein.
X. XXXXXXXXX AMOUNT shall have the meaning as set forth in
Section 5E.
H. TERM means the term of this Agreement, unless the Agreement is
earlier terminated for any reason as set forth herein.
I. TERMINATION DATE means the following: (i) with respect to
Termination With Cause other then under Subsections 2J(ii) and 2J(v), the date
the Company notifies Employee in writing of the actions described in Subsection
2J, and the termination of this Agreement based thereon, or with respect to
Termination With Cause pursuant to 2J(ii) or 2J(v) the date which is thirty (30)
days after written notice of violation to Employee pursuant to Subsections 2J
(ii) or (v) if such action or inaction is not cured by Employee; (ii) with
respect to the death of Employee, the date of his death; (iii) with respect to
Termination Without Cause, the date on which the Company gives Employee notice
of Termination Without Cause; and (iv) with respect to Voluntary Termination,
the date on which Employee unilaterally terminates his employment relationship
with the Company.
-2-
J. TERMINATION WITH CAUSE means the termination of this Agreement and the
employment relationship of Employee with the Company, only for the following:
(i) Theft or embezzlement by Employee with regard to property of the
Company;
(ii) Continued gross neglect by Employee in fulfilling his duties as set
forth on EXHIBIT A hereof or excessive unauthorized absenteeism, after
written notification from the Board of Directors of such neglect, setting
forth in detail the matters involved and Employee's failure to cure the
problem resulting in such neglect within thirty (30) days of receipt of
notice by Employee from the Company;
(iii) Death or Permanent Disability of Employee;
(iv) Actual fraud or other material acts of dishonesty in conducting the
Company's business or in the fulfillment by Employee of his assigned
responsibilities; the destruction of any material amount of the Company's
property willfully or through Employee's gross neglect; or the unauthorized
disclosure of any information constituting Confidential Information (and
having a material adverse impact on the financial condition of the Company)
or a Trade Secret (but not including general statements regarding the
Company and its business) which do not include Trade Secrets or
Confidential Information) to any person, business or entity in violation of
Section 7; or
(v) A violation or other failure of Employee to perform in accordance with
any material provision of any written agreement with the Company or to
perform in accordance with the duties set forth on EXHIBIT A, as may be
revised or modified in accordance with provisions of Subsection 4A, if such
violation or other failure is not cured within thirty (30) days of receipt
of notice by Employee from the Company.
K. TERMINATION WITHOUT CAUSE means a termination by the Company of this
Agreement and the employment relationship of Employee with the Company
which is not a Termination With Cause or a Voluntary Termination, but not
including the mutual agreement of the parties to terminate this Agreement.
L. TRIGGERING EVENT means a termination of Employee's employment by
the Company during the Term due to a Termination Without Cause.
M. VOLUNTARY TERMINATION means unilateral termination by Employee of
his employment with the Company prior to the end of the Term and in the absence
of a Triggering Event.
3. EMPLOYMENT. The Company, through its Board of Directors, agrees to employ
Employee in accordance with the provisions of this Agreement, and Employee
agrees to accept such employment and office upon the terms and conditions set
forth herein.
4. RESPONSIBILITIES.
A. Pursuant to this Agreement, Employee shall assume the duties and
exercise the powers described at EXHIBIT A, until such time as his
responsibilities, duties and powers may be revised or modified (i) to reduce the
scope of Employee's duties specified on EXHIBIT A in the sole discretion of the
Chief Executive Officer or the Board of Directors of the Company, with written
notice provided to
-3-
Employee thereof, or (ii) to increase the scope of Employee's duties specified
on EXHIBIT A as may be mutually agreed in writing by (a) the Board of Directors
or the Chief Executive Officer of the Company and (b) Employee. At no time
during the Term shall Employee's principal place of employment on behalf of the
Company be moved by the Company from any county other than Gwinnett, Dekalb,
Xxxxxx, Rockdale, Xxxxxxx and Xxxx ("Metropolitan Area") , nor shall Employee be
required to travel out of the Metropolitan Area in excess of travel required
while Employee served as President and Treasurer of the Company.
B. During the Term, Employee agrees to assume such responsibilities,
perform such duties, and exercise such powers as the Board of Directors may
request or delegate, in its sole discretion.
5. COMPENSATION. The Company shall pay, and Employee agrees to accept, as full
and complete compensation for services to be rendered hereunder during the Term,
the remuneration described below:
A. ANNUAL SALARY. The Company shall pay Employee a base annual salary
as of the Effective Date of Two Hundred Seventy-Five Thousand Dollars
($275,000.00) per year ("Base Salary"), subject to annual increases which, if
granted, shall be effective on the first day of the Company's fiscal year, as
the Board of Directors in its sole discretion may deem appropriate. Base Salary
shall be payable according to the customary payroll practices of the Company, at
least on a monthly basis.
B. CASH BONUS AWARD. The Company shall pay Employee an annual cash
bonus of Two Hundred Seventy-Five Thousand Dollars ($275,000) each year over a
three (3) year period, for an aggregate cash bonus award of Eight Hundred
Twenty-Five Thousand Dollars ($825,000), payable only upon satisfaction in full
of the specified performance goals described on EXHIBIT B hereof and in
consideration of the continued employment of the Employee. All payments, if
any, will be paid no later than ninety (90) days after the completion of each
respective bonus period in accordance with EXHIBIT B. In the event of
termination, Employee shall receive all bonus amounts earned by Employee as of
the date of termination.
C. NON-QUALIFIED STOCK OPTIONS. Employee is granted a stock option
in accordance with the Company's 1994 Amended and Restated Stock Option Plan
(the "Plan") as approved by the shareholders of the Company subject to the
restrictions and rights set forth in the Plan and the Stock Option Grant
attached hereto as EXHIBIT C.
D. INITIAL PUBLIC OFFERING BONUS. Employee shall be entitled to
receive a One Million Dollar ($1,000,000) bonus, payable in $.01 par value
common stock ("Common Stock") of the Company within thirty (30) days after the
closing of an underwritten offering of Common Stock (the "Offering") following
the declaration of effectiveness by the Securities and Exchange Commission
("SEC") of a registration statement, provided (i) the Offering is closed within
two (2) years from the Effective Date, and (ii) the market value of the Company,
determined by taking the product of the number of shares issued and outstanding
as of the closing of the Offering multiplied by the initial offering price
included in included in the Registration Statement declared effective by the SEC
is equal to or greater than Two Hundred Fifty Million Dollars ($250,000,000).
Any Common Stock granted in accordance with the terms of this Section 5D shall
be valued at the initial offering price included in the Registration Statement
declared effective by the SEC. As a condition to the receipt of Common Stock
hereunder, and if requested by the underwriter(s) of the Company's Common Stock,
Employee shall agree not to sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, any of the Common Stock or other securities
received hereunder for a period of time reasonably specified by the
underwriter(s).
-4-
X. XXXXXXXXX AMOUNT.
(i) Upon the occurrence of a Triggering Event, Employee shall be entitled
to receive the Severance Amount, as defined below. Employee shall receive
an amount equal to two (2) years of his Base Salary (as determined on the
date of the Triggering Event) as the Severance Amount, which shall be
payable in equal installments beginning on the date of termination of
employment, and shall continue to be paid for an additional twenty-three
(23) month period thereafter according to the Company's payroll practices
and procedures in effect at the time of the Triggering Event, but at least
on a monthly basis. The obligation of the Company under this Subsection
5E(i) shall be the sole and exclusive obligation of the Company to Employee
upon the occurrence of a Triggering Event.
(ii) If the aggregate present value (determined as of the date of a change
of control in accordance with the provisions of Section 280G of the
Internal Revenue Code of 1986, as amended, or any successor section
thereof, and the regulations and rulings thereunder ("Section 280G")) of
any payments to Employee in the nature of compensation which are contingent
on a change in ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company (the
"Aggregate Severance") would result in a parachute payment (as determined
under Section 280G), then the Aggregate Severance paid to Employee shall
not be greater than an amount equal to 2.99 multiplied by Employee's base
amount (as determined under Section 280G) for the base period (as
determined under Section 280G). In the event the Aggregate Severance is
required to be reduced pursuant to this Section 5E(ii), Employee shall be
entitled to determine which portions of the Aggregate Severance are to be
reduced so that the Aggregate Severance satisfies the limit in the
preceding sentence. Any controversy or claim between the Company and
Employee over any aspect of the determination of the amount of Aggregate
Severance, whether the Aggregate Severance results in a parachute payment
(as determined under Section 280G), or which portions of the Aggregate
Severance need to be reduced so that the above limit is satisfied shall be
determined by arbitration in accordance with Section 5F herein.
Notwithstanding the provisions of this Subsection 5E(ii), in no event shall
the Severance Amount received by Employee be less than Five Hundred Fifty
Thousand Dollars ($550,000).
F. ARBITRATION. Any controversy or claim arising out of or relating
to whether termination of Employee's employment is due to a Triggering Event, or
is a Termination With Cause, a Termination Without Cause, or a Voluntary
Termination as provided herein, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules ("Rules") of the American Arbitration
Association ("AAA"). Arbitration shall be initiated by a party by giving notice
in the manner set forth herein to the other party of its intention to arbitrate,
which notice shall contain a statement setting forth the nature of the dispute,
the amount claimed, if any, and the remedy sought. The initiating party shall
then file a copy or copies of the notice as set forth under the Rules. Atlanta,
Georgia shall be the location where the arbitration is held. The parties shall
agree upon and appoint three (3) arbitrators in accordance with the Rules within
twenty (20) days of the effective date of notice of arbitration; however, if the
parties fail to make such designation within twenty (20) days, the AAA shall
make the appointment. The determinations of such arbitrators will be final and
binding upon the parties to the arbitration, and judgment upon the award
rendered by the arbitrators may be entered in any such court having
jurisdiction, or application may be made to such court for a judicial acceptance
of the award and an order of enforcement, as the case may be. The arbitrators
shall apply the laws of the State of Georgia as to both substantive and
procedural questions.
-5-
G. INSURANCE AND BENEFITS.
(i) The Company shall allow Employee to participate in or receive benefits
under all employee and executive benefit plans or arrangements maintained
by the Company all at the highest level that is available through the
Company to other senior officers of the Company subject to the same terms
and conditions as apply to such other senior officers.
(ii) Employee shall be entitled to all holidays recognized by the Company
and vacation time as are available to other senior officers of the Company,
with continuing payment of all compensation as set forth herein. Employee
shall be reimbursed by the Company for all necessary and reasonable
expenses incurred on behalf of the Company in accordance with the then-
current reimbursement policies of the Company.
(iii) In the event of a termination of Employee's employment with the
Company as a result of a Triggering Event, Employee shall be entitled to
continue to receive the health and disability insurance benefits (at the
highest level of such insurance benefits within the twelve (12) month
period prior to such event) for a twenty-four (24) month period following
the Triggering Event; provided, however, that in the event the Company is
legally prohibited from providing a specified insurance benefit after
termination of employment, it shall provide Employee the economic
equivalent thereof.
6. TERMINATION.
A. This Agreement will commence on the Effective Date and shall continue
unless terminated as set forth herein.
B. During the Term this Agreement may be terminated subject to the
terms, conditions and obligations hereof, by any of the following events:
(i) Mutual written agreement expressed in a single document signed by
both the Company and Employee;
(ii) Voluntary Termination by Employee;
(iii) Death of Employee;
(iv) Termination Without Cause; or
(v) Termination With Cause.
Upon termination for any of the foregoing reasons, Employee shall continue to
render services and shall be paid his Base Salary and benefits up to the
Termination Date.
D. The obligations of Employee under Sections 7, 8, 9, 10 and 11
shall survive termination or expiration of this Agreement. The obligations of
the Company under Sections 5 and 9 that by their terms are to be paid or to
continue after termination of this Agreement, shall also survive such
termination.
-6-
7. PROPRIETARY INFORMATION.
A. In performance of services under this Agreement, Employee may have
access to:
(i) information which derives economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure
or use, and is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy (hereinafter "Trade Secrets" or
"Trade Secret"); or
(ii) information which does not rise to the level of a Trade Secret, but is
valuable to the Company and provided in confidence to Employee (hereinafter
"Confidential Information").
B. Employee acknowledges and agrees that with respect to Trade
Secrets and Confidential Information provided to or obtained by Employee
(hereinafter collectively the "Proprietary Information"):
(i) that the Proprietary Information is and shall remain the exclusive
property of the Company;
(ii) to use the Proprietary Information exclusively for the purpose of
fulfilling the obligations under this Agreement;
(iii) to return the Proprietary Information, and any copies thereof, in
his possession or under his control, to the Company upon request of the
Company, or expiration or termination of this Agreement for any reason; and
(iv) to hold the Proprietary Information in confidence and not to copy,
publish, or disclose to others or allow any other party to copy, publish,
or disclose to others, in any form, any Proprietary Information without the
prior written approval of an authorized representative of the Company,
except in furtherance of Employee's performance of his duties on behalf of
the Company and subject to the recipient of such Proprietary Information
agreeing to hold such information in confidence.
C. The obligations and restrictions set forth in Subsection 7B(iv)
above shall survive expiration or termination of this Agreement, for any reason,
and shall remain in full force and effect as follows:
(i) as to Trade Secrets, for so long as such information remains subject to
protection under applicable law;
(ii) as to Confidential Information, for a period of three (3) years after
expiration or termination of this Agreement for any reason.
D. The obligations set forth in this Section 7 shall not apply or
shall terminate with respect to any particular portion of the Proprietary
Information which:
(i) was in Employee's possession, free of any obligation of confidence,
prior to his receipt from the Company;
-7-
(ii) is in the public domain at the time the Company communicates it to
Employee, or becomes available to the public through no breach of this
Agreement by Employee;
(iii) is received by Employee independently and in good faith from a third
party lawfully in possession thereof and having no obligation to keep such
information confidential; or
(iv) is ordered to be disclosed by a court of competent jurisdiction after
notice is provided to the Company.
E. The confidentiality, property, and proprietary rights protections
available in this Agreement are in addition to, and not exclusive of, any and
all other corporate rights, including those provided under copyright, corporate
officer or director fiduciary duties, and trade secret and confidential
information laws.
8. OWNERSHIP. Employee agrees and acknowledges that all works of authorship
and inventions, including but not limited to products, goods, know-how, Trade
Secrets and Confidential Information, and any improvements, modifications,
enhancements, derivative works, and/or revisions to existing products, goods,
know-how, Trade Secrets and/or Confidential Information, in any form and in
whatever stage of creation or development, arising out of or resulting from, or
in connection with, the services provided by Employee to the Company under this
Agreement or at any time prior to the Effective Date (collectively, the
"Property"), as they now exist and are currently used by the Company or
otherwise, or as they may exist in the future or have existed in the past, are
works made for hire and shall be the sole and exclusive property of the Company.
Employee hereby transfers and assigns to the Company any and all right, title
and interest in the Property, in whatever form, including all worldwide
copyrights, patents, trade secrets, moral rights and confidential and
proprietary rights therein and agrees to execute such documents as the Company
may reasonably request for the purpose of effectuating the rights of the Company
herein. Notwithstanding the foregoing, the Company agrees that Employee may
write and publish books or other similar publications, on whatever media,
provided (i) Employee does not disclose any Trade Secrets or Confidential
Information of the Company or take any actions which may have an adverse impact
on the Company's ability to protect such information, and (ii) Employee
continues to perform his responsibilities on behalf of the Company. In the
event such responsibilities are not so performed and Employee does not correct
such nonperformance after notice by the Company and thirty (30) days in which to
cure such nonperformance, Employee may be terminated by the Company in a
Termination With Cause.
9. EXCLUSIVE SERVICE AND NON-COMPETITION COVENANT. Employee covenants and
agrees for a period of two (2) years following the termination of his employment
with the Company for any reason, Employee shall not, anywhere within the Area,
engage in any one or more of the activities set forth at EXHIBIT A ("Duties of
Employee") in which Employee is engaged during the two (2) year period prior to
the termination or expiration of this Agreement, on behalf of any person, firm,
corporation or entity engaged in the Business of the Company. Following a
Termination Without Cause, if the Company fails to make a payment due under
Subsection 5E after notice of non-payment by the Employee to the Company and
failure of the Company to cure within thirty (30) days of the receipt of such
notice, this exclusive service and non-competition covenant shall terminate.
Nothing in this Section 9 shall preclude Employee from accepting a teaching
and/or research and development position with an academic or non-profit
organization immediately after termination of his employment, so long as such
position is not competitive in any manner with the Business of the Company.
-8-
10. COVENANT NOT TO HIRE. Employee agrees that Employee will not, for a period
of two (2) years after termination of employment with the Company for any
reason, solicit for employment, attempt to employ or affirmatively assist any
other person or entity in employing or soliciting for employment any person
employed by the Company.
11. NON-SOLICITATION. Employee agrees that during the period of two (2) years
immediately following cessation of Employee's employment with the Company for
any reason, Employee shall not, on Employee's own behalf or on behalf of any
person, firm, partnership, association, corporation or business organization,
entity or enterprise solicit, contact, call upon, communicate with or attempt to
communicate with, any customer or prospect of the Company, or any representative
of any customer or prospect of the Company, with a view to forming a joint
venture or similar relationship, selling or providing any product, equipment, or
service competitive or potentially competitive with any technology, product,
equipment or service sold or provided or under development by the Company during
the period of two (2) years immediately preceding cessation of Employee's
employment with the Company, provided that the restrictions set forth in this
Section 11 shall apply only to customers or prospects of the Company, or
representatives of customers or prospects of the Company with which Employee has
had contact during such two (2) year period.
12. SEVERABILITY. If any provision of this Agreement is held to be invalid or
unenforceable by any court of competent jurisdiction, such holdings shall not
affect the enforceability of any other provision of this Agreement, and all
other provisions shall continue in full force and effect.
13. ATTORNEYS' FEES. If a dispute between the parties arises in connection
with this Agreement, the prevailing party as determined through arbitration or
final judgment of a court of competent jurisdiction (which arbitration or
judgment is not subject to further appeal due to the passage of time or
otherwise) shall be entitled to reimbursement from the other party for
reasonable attorneys' fees and expenses incurred by the prevailing party in
connection with the resolution of the dispute.
14. HEADINGS. The headings of the several paragraphs in this Agreement are
inserted for convenience of reference only and are not intended to affect the
meaning or interpretation of this Agreement.
15. NOTICES. All notices, consents, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
delivered if (i) delivered personally; (ii) mailed by certified mail, return
receipt requested, with proper postage prepaid; or (iii) delivered by recognized
courier contracting for same day or next day delivery with signed receipt
acknowledgment to:
(a) To the Company:
Iterated Systems, Inc.
0000-X Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: President
-9-
With a copy to:
Xxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxx
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
(b) To Employee:
Xxxx X. Xxxxx
0000 Xxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx 00000
or at such other address as the parties hereto may have last designated by
notice to the other parties. Any item delivered personally or by recognized
courier contracting for same day or next day delivery shall be deemed delivered
on the date of delivery. Any item mailed shall be deemed to have been delivered
on the date evidenced on the return receipt.
16. GENERAL PROVISIONS. This Agreement shall be governed by and construed
under the laws of the State of Georgia, without giving effect to its conflict of
law principles. The terms of this Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns. Neither party may
assign his or its rights and obligations under this Agreement to any other
party.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the
parties hereto, and except as otherwise provided in this Agreement, supersedes
and cancels all previous and contemporaneous written and oral agreements,
including all prior employment agreements between the Company and Employee and
amendments thereto. No amendment or modification of this Agreement shall be
valid or binding unless in writing and signed by the party to be bound.
IN WITNESS WHEREOF, the parties hereto have affixed their seals and
executed this Agreement effective as of the date first above written.
ITERATED SYSTEMS, INC.
By: Asmund R. Slogedal
-----------------------------------------
Title: Chairman
-----------------------------------------
Date: May 1, 1994
-----------------------------------------
EMPLOYEE:
/s/ Xxxx X. Xxxxx
------------------------------------------------
XXXX X. XXXXX, Individually
Date: 5/1/94
-----------------------------------------
-10-
EXHIBIT A
TO EXECUTIVE EMPLOYMENT AGREEMENT
WITH XXXX X. XXXXX
DATED: MAY 1, 1994
Duties of Employee
------------------
The parties agree and acknowledge that the duties set forth below accurately
reflect the current duties and responsibilities of Employee as of the Effective
Date, subject to future revision as set forth in Section 4A of the Agreement.
Duties
1. Plan, conduct and direct the research and development activities of the
Government Division of the Company.
2. Manage the sales and marketing activities and personnel of the Government
Division of the Company.
3. Identify the business opportunities for the Company and perform associated
negotiations as directed by the Board of Directors or Chief Executive Officer of
the Company.
4. Formulate and implement business plans of the Company as approved by the
Board of Directors or directed by the Chief Executive Officer of the Company.
5. Manage specific internal and external projects as approved by the Board of
Directors or directed by the Chief Executive Officer of the Company.
Initials: __________
__________
EXHIBIT B
TO EXECUTIVE EMPLOYMENT AGREEMENT
WITH XXXX X. XXXXX
DATED: MAY 1, 1994
Performance Goals of Employee and Payment Schedule
--------------------------------------------------
The parties to this Agreement agree to negotiate in good faith to establish
mutually acceptable performance goals, to be consistent with the performance
goals included in the original unamended version of the Employment Agreement
contemplated to be entered into between the Company and Xxxx X. Xxxxx in his
capacity as Chief Executive Officer of the Company. Such mutually acceptable
performance goals shall be included as EXHIBIT B hereof.
Initials: __________
__________
EXHIBIT C
TO EXECUTIVE EMPLOYMENT AGREEMENT
WITH XXXX X. XXXXX
DATED: MAY 1, 1994
Stock Option Grant
------------------
SECOND ADDENDUM TO EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN ITERATED SYSTEMS, INC. AND XXXX X. XXXXX
DATED MAY 1, 1994
RECITALS
--------
Xx. Xxxx X. Xxxxx has entered into an Executive Employment Agreement, dated
May 1, 1994, as amended by an Addendum dated March 28, 1996 (the "Agreement"),
by and between Xx. Xxxxx and Iterated Systems, Inc. (the "Company").
In Section 5B. of the Agreement, the Company has agreed to pay Xx. Xxxxx a
cash bonus based upon the attainment of certain performance goals to be
established by the Board of Directors of the Company.
Xx. Xxxxx has largely achieved the performance goals established by the
Board of Directors for the 1995 fiscal year.
Xx. Xxxxx has voluntarily agreed for the benefit of the Company to the
bonus payments as set forth herein as full and complete satisfaction by the
Company of its obligation to pay any cash bonus due under Section 5B of the
Agreement for the 1995 fiscal year to Xx. Xxxxx pursuant to the Agreement.
Now, Therefore, Xx. Xxxxx and the Company agree as follows:
1. PAYMENT OF 1995 PERFORMANCE BONUS. The Company shall pay, and Dr.
---------------------------------
Xxxxx agrees to accept, the amount of Seventy-Five Thousand and No/100 Dollars
($75,000.00) ("Final Bonus") as full and final satisfaction of any and all
obligations of the Company to Xx. Xxxxx for any bonus amounts or the balance of
any other compensation of any kind due to him under the Agreement or otherwise
for the 1995 fiscal year of the Company. The Company agrees to indemnify Xx.
Xxxxx against any tax liability, penalties or interest incurred by him as a
direct result of his agreement hereby to accept the Final Bonus amount set forth
above as full and final satisfaction of all obligations for and his agreement
hereby to release the Company from any liability for any cash bonus amount under
Section 5B. for fiscal year 1995. The foregoing indemnity shall not apply to
federal and state income taxes due by Xx. Xxxxx with respect to the actual
amount of the Final Bonus amount set forth above or any other compensation or
payments of any kind made by or on behalf of Xx. Xxxxx.
2. AMENDMENT UPON INITIAL PUBLIC OFFERING. Effective only upon the
--------------------------------------
effective date of a registration statement for an initial public offering of
securities of the Company filed with a governmental authority ("Effective
Registration Date"), Section 5A. of the Agreement shall be amended to provide
for a new base annual salary (in substitution for the Base Salary set forth in
Section 5A.) of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) (to
be defined as the "Base Salary" for all purposes in the Agreement and this
Second Addendum from and after the Effective Registration Date). In the event
and only in the event that the Effective Registration Date occurs on or prior to
December 31, 1996, Section 5B. of the Agreement shall be amended to provide that
Xx. Xxxxx shall have an opportunity to earn an annual bonus for the 1996 fiscal
year of the Company of up to fifty percent (50%) of the Base Salary, based on
performance goals to be established by the Board of Directors, in substitution
for any and all other bonus awards, compensation or payments under Section 5B.
of the Agreement. This Section 2 is conditioned upon and shall only be
effective upon (i) the completion within thirty-six (36) months from the date of
this Second Addendum of a public offering of the Company's securities at a
Market Value of $100 million or more, in which the Company receives proceeds
therefrom of at least $5 million dollars, and (ii) the exercise by the Company
of its best efforts to obtain the approval of the underwriters to allow Xx.
Xxxxx to sell in the initial public offering up to twelve and one-half percent
(12 1/2%) of his shares of the Company's common stock which are owned directly
by him of record as of the date of the filing of the registration statement. As
used
-14-
herein, "Market Value" means the value determined by multiplying the number of
shares of the Company's common stock outstanding immediately prior to the public
offering by the final price to the public per share in such offering. The
parties acknowledge that the Company shall not be in violation or breach of this
section, the Agreement or this Second Addendum if for any reason Xx. Xxxxx is
unable to sell up to twelve and one-half percent (12 1/2%) of the shares of the
Company's common stock directly owned by him of record as of the date of the
filing of the registration statement.
This Addendum shall be attached to the Agreement and will amend its terms.
If any conflict exists between the Agreement and this Addendum, this Addendum
shall control the terms between the parties.
ITERATED SYSTEMS, INC.
/s/ Xxxx X. Xxxxx /s/ Xxxx X. Xxxxx
----------------- -----------------
By: Xxxx X. Xxxxx XXXX X. XXXXX
-------------
Title: President
---------
Date: 4/9/96 Date: 3/28/96
------ -------
-15-
