EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made the 10th day of
June, 1999 by and between NEOWARE SYSTEMS, INC., a Pennsylvania corporation
("Employer"), and XXXXXX X. XXXXX ("Employee").
WITNESSETH:
WHEREAS, Employer desires to continue to employ Employee and Employee
is willing to continue such employment, all upon and subject to the terms and
conditions contained in this Agreement;
NOW, THEREFORE, the parties to this Agreement, for good and valuable
consideration and intending to be legally bound, hereby agree as follows:
SECTION 1. EMPLOYMENT.
(a) Duties. Employer agrees to continue the employment of Employee as
the Vice President of Engineering of Employer. Employee agrees to perform such
duties and services consistent with Employee's position and to perform such
other duties and to serve in such capacities at such location as may be
determined and assigned to him from time to time by the Chief Executive Officer,
President or Board of Directors of Employer, it being expressly provided that
the duties of Employee may be enlarged or diminished, as the Chief Executive
Officer, the President or the Board of Directors determines. Employee will use
his best efforts to perform his duties and discharge his responsibilities
pursuant to this Agreement competently, carefully and faithfully.
(b) Devotion of Time. Employee will devote his entire time, attention
and energies to the affairs of Employer. Employee will not enter the employ of
or serve as a consultant to, or in any way perform any services with or without
compensation to, any other person, business or organization without the prior
written consent of the Board of Directors of Employer, provided that Employee
shall be permitted to devote a limited amount of time, without compensation, to
charitable or similar activities.
SECTION 2. DURATION AND TERMINATION OF EMPLOYMENT.
(a) The term (the "Term") of this Agreement shall begin as of the date
hereof and shall continue thereafter unless terminated by either party pursuant
to this Section 2 hereof, with or without cause.
(b) Employer may terminate employee's employment pursuant to this
Agreement as follows:
(i) If Employee shall die during the Term, Employee's
employment shall terminate, except that Employee's legal representatives shall
be entitled to receive the base salary
provided for under Section 3 hereof prorated to the last day of the month in
which Employee's death occurs.
(ii) If during the Term, Employee shall become physically or
mentally disabled whether totally or partially, so that Employee is unable
substantially to perform Employee's services hereunder for a period of six (6)
consecutive months, Employer may, by written notice to Employee, terminate
Employee's employment hereunder.
(iii) Employer may, by written notice to Employee, terminate
Employee's employment hereunder for "cause." For the purposes of this
Agreement, "cause" shall mean Employee's termination only upon: (A) Employee's
continued failure to perform such assigned duties and responsibilities as
shall be consistent with the terms of this Agreement after receipt of a
written warning of specific deficiencies and Employee's failure to cure said
deficiencies within thirty (30) days; or (B) Employee's engaging in willful
misconduct which is demonstrably injurious to Employer; or (C) Employee's
committing a felony or an act of fraud against or the misappropriation of
property belonging to Employer, or (D) Employee's breaching in any material
respect the terms of this Agreement and Employee's failure to cure the breach
within thirty (30) days after written notice of the breach from Employer.
(iv) Employer may terminate Employee's employment hereunder
"without cause" upon thirty (30) days prior written notice. A termination
"without cause" shall mean the termination of Employee's employment by
Employer under this Agreement other than pursuant to Sections 2(b)(i), (ii) or
(iii) above.
(c) If Employer terminates this Agreement during the first
twenty-four (24) months of the Term "without cause," Employer shall pay to
Employee the amount of Employee's then current annual base salary for a period
of one (1) year. In the event that Employee violates any of the provisions of
Sections 4 or 6 hereunder, Employer's obligation to make payments under this
Section 2(c) shall terminate immediately.
(d) Employee may terminate his employment hereunder upon ninety (90)
days prior written notice to Employer.
(e) Notwithstanding any termination of Employee's employment as
provided in this Section 2 or otherwise, the provisions of Sections 4, 5 and 6
shall remain in full force and effect.
SECTION 3. COMPENSATION.
(a) Employee's base salary is currently $140,000 per annum, payable in
equal, biweekly installments, subject to annual review and adjustments at the
discretion of the Chief Executive Officer and the Compensation and Stock Option
Committee of the Board of Directors.
(b) Employee shall be entitled to participate in any employee bonus
pool and stock option plans at the discretion of the Compensation and Stock
Option Committee or Board of Directors, as applicable.
(c) Employee shall participate in Employer's standard employee benefit
plans (for example, life insurance, disability insurance, health and dental
insurance) available to similarly situated employees.
SECTION 4. COVENANT NOT TO COMPETE OR SOLICIT.
(a) Non-Competition. Employee agrees that he will not directly or
indirectly engage in (whether as an employee, consultant, proprietor, partner,
director or otherwise), or have any ownership interest in, or participate in the
financing, operation, management or control of, any person, firm, corporation or
business that engages in or (to Employee's knowledge) intends to engage in a
"Restricted Business" (as defined below), during the term of his employment by
Employer and for a period of six (6) months following the termination of this
Agreement other than pursuant to Section 2(b)(iv).
Ownership of (i) no more than five percent (5%) of the outstanding
voting stock of a publicly traded corporation, or (ii) any stock presently owned
by Employee, shall not constitute a violation of this provision. In addition,
this provision shall not apply to Employee's employment by a company if: (i)
less than ten percent (10%) of the company's revenues during the prior twelve
(12) months were generated by the Restricted Business and (ii) Employee is not
employed by the division or subsidiary engaged in the Restricted Business.
"Restricted Business" shall mean any business that is engaged in or, to
Employee's knowledge after due inquiry, is preparing to engage in the design,
manufacture, marketing, sale or distribution of network computers and related
operating software for Network Computers.
(b) Non-Solicitation. For a period of one (1) year following the
termination of this Agreement, Employee shall not:
(i) solicit or initiate any other action which is intended to
induce any other employee of Employer to terminate his employment with
Employer, or
(ii) interfere in any manner with the contractual or employment
relationship between Employer and any such employee.
(c) Worldwide. The parties acknowledge that the market for products of
the type sold by Employer is worldwide, and that, in this market, products from
any nation compete with products from all other nations. Accordingly, in order
to secure to Employer the benefits of this Section 4, the parties agree that the
provisions of this Section 4 shall apply to each of the states and counties of
the United States and to each nation worldwide.
(d) Severability. The parties intend that the covenants contained in
the preceding paragraphs shall be construed as a series of separate covenants,
one for each state of the United States, and each nation. If, in any judicial
proceeding, a court shall refuse to enforce any of the separate covenants (or
any part thereof) deemed included in said paragraphs, then such unenforceable
covenant (or such part) shall be deemed eliminated from this Agreement for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenants (or portions thereof) to be enforced. In the event that the
provisions of this Section 4 should ever be deemed to exceed the time or
geographic limitations, permitted by applicable law, then such provisions shall
be reformed to the maximum time or geographic limitations, as the case may be,
permitted by applicable law.
SECTION 5. EMPLOYEE'S REPRESENTATIONS.
Employee represents and warrants to Employer that Employee is familiar
with and approves the covenants not to compete and not to solicit set forth in
Section 4, including, without limitation, the reasonableness of the length of
time, scope and geographic coverage of those covenants.
SECTION 6. PROTECTION OF CONFIDENTIAL INFORMATION.
In view of the fact that the Employee's work for Employer will bring
him into close contact with many confidential affairs of Employer not readily
available to the public, Employee agrees:
(a) To keep secret and retain in the strictest confidence all
confidential matters of Employer, including, without limitation, secrets,
know-how, customer lists, pricing policies, operational methods, technical data
and processes, inventions, research projects, marketing and sales data, customer
lists and other business affairs of Employer, learned by him about Employer
heretofore or hereafter, and not to disclose them to anyone outside of Employer
either during or after his employment with Employer, except in the course of
performing his duties hereunder or with Employer's express written consent; and
(b) To deliver promptly to Employer on termination of his employment,
or at any time Employer may so request, all memoranda, notes, records, reports,
manuals, drawings and other documents (and all copies thereof) relating to
Employer's business and all property associated therewith, which he may then
possess or have under his control.
(c) Confidential information of Employer shall not include information
which is in the possession of Employee at the time Employee commenced employment
with Employer or a predecessor of Employer or in the public domain other than as
a result of any breach of this Agreement or any confidentiality agreement
between Employer and Employee.
SECTION 7. REMEDIES.
(a) If Employee violates any of the provisions of Sections 4 or 6
hereof, Employer shall have the following rights and remedies:
(i) In the event of a breach, or a threatened breach, the right and
remedy to have the provisions of this Agreement specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to Employer and that
money damages will not provide an adequate remedy to Employer;
(ii) In the event of an actual breach, the right to recover damages
for all losses, actual and contingent, and the right to require the Employee to
account for and pay over to Employer all profits or other benefits (collectively
"Benefits") derived or received by the Employee as a result of any transactions
constituting such a breach, and the Employee hereby agrees to account for and
pay over such Benefits to Employer; and
(iii) The immediate termination of Employer's obligation to make
payments pursuant to Section 2(c).
(b) Each of the rights and remedies enumerated above shall be
independent of the other, and shall be severally enforceable, and all of such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to Employer at law or in equity.
SECTION 8. INTELLECTUAL PROPERTY.
(a) Employer shall be the sole owner of all the products and proceeds
of the Employee's services to Employer, including, but not limited to, all
materials, ideas, concepts, formats, designs, suggestions, developments,
arrangements, packages, computer programs, inventions, patent applications,
patents, copyrights, trademarks and other intellectual properties (collectively,
"Intellectual Property") that Employee may acquire, obtain, develop or create in
connection with the Employee's employment hereunder, free and clear of any
claims by Employee (or anyone claiming under Employee) of any kind or character
whatsoever (other than Employee's right to receive payments hereunder).
(b) Employee shall, at the request of Employer, execute such
assignments, certificates or other instruments as Employer may from time to time
deem necessary or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend its rights, title and interest in or to any such Intellectual
Property.
SECTION 9. MISCELLANEOUS.
(a) Notices. All notices, reports or other communications required or
permitted to be given hereunder shall be in writing to both parties and shall be
deemed given on the date of delivery, if delivered, or three days after mailing,
if mailed first-class mail, postage prepaid, to the following addresses:
(i) If to Employee:
Xxxxxx X. Xxxxx
000 Xxxxxxxxxxx Xxxx
Xxxxx, XX 00000
(ii) If to Employer:
NEOWARE SYSTEMS, INC.
000 Xxxxxxx Xxxxx
Xxxx xx Xxxxxxx, XX 00000
Attention: President
or to such other address as any party hereto may designate by notice given as
herein provided.
(b) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to its rule or principles relating to conflicts of laws.
(c) Amendments. This Agreement shall not be changed or modified in
whole or in part except by an instrument in writing signed by each party.
(d) Attorneys' Fees. In the event of any legal action or proceeding to
enforce or interpret the provisions hereof, the prevailing party shall be
entitled to reasonable attorneys' fees, whether or not the proceeding results in
a final judgment.
(e) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(f) Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
NEOWARE SYSTEMS, INC.
By: /S/ XXXXXX X. XXXXXXXX, XX.
Print Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: President and CEO
EMPLOYEE
/S/ XXXXXX X. XXXXX
Print Name: Xxxxxx X. Xxxxx
