Exhibit 10.6
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EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is made and entered into this
____day of March, 2001, by and between LEVEL 8 SYSTEMS, INC., a Delaware
corporation (the "Company"), and Xxxxxxx Xxxx, a resident of the State of New
Jersey (the "Employee").
In consideration of the mutual covenants, promises and conditions set forth
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Employee and Employee hereby accepts
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such employment upon the terms and conditions set forth in this Agreement.
2. Duties of Employee. Employee's title will be Chief Executive Officer and
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Chief Technology Officer. Employee will be based in New Jersey. Employee
agrees to perform and discharge such other duties as may be assigned to
Employee from time to time by the Company to the reasonable satisfaction of
the Company, and such duties will be consistent with those duties regularly
and customarily assigned by the Company to the position of Chief Executive
Officer and Chief Technology Officer. In addition, Employee shall serve as
Chairman of the Board of Directors so long as he is elected to such post by
the Board of Directors according to the By-Laws of the Company. Employee
also agrees to comply with all of the Company's policies, standards and
regulations and to follow the instructions and directives as promulgated by
the Board of Directors of the Company. Employee will devote Employee's full
professional and business-related time, skills and best efforts to such
duties and will not, during the term of this Agreement, be engaged (whether
or not during normal business hours) in any other business or professional
activity, whether or not such activity is pursued for gain, profit or other
pecuniary advantage, without the prior written consent of the Board of
Directors. This Section will not be construed to prevent Employee from (a)
investing personal assets in businesses which do not compete with the
Company in such form or manner that will not require any services on the
part of Employee in the operation or the affairs of the companies in which
such investments are made and in which Employee's participation is solely
that of an investor; (b) purchasing securities in any corporation whose
securities are listed on a national securities exchange or regularly traded
in the over-the-counter market, provided that Employee at no time owns,
directly or indirectly, in excess of one percent (1%) of the outstanding
stock of any class of any such corporation engaged in a business
competitive with that of the Company; or (c) participating in conferences,
preparing and publishing papers or books, teaching or joining or
participating in any professional associations or trade group.
3. Term. The term of this Agreement will be at-will, and can be terminated by
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either party at any time, with or without cause, subject to the provisions
of Section 4 of this Agreement.
4. Termination.
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(a) Termination by Company for Cause. The Company may terminate this
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Agreement and all of its obligations hereunder immediately, including
the obligation to pay Employee severance, vacation pay or any further
benefits or remuneration, if any of the following events occur:
(i) Employee materially breaches any of the terms or conditions set
forth in this Agreement and fails to cure such breach within ten
(10) days after Employee's receipt from the Company of written
notice of such breach (notwithstanding the foregoing, no cure
period shall be applicable to breaches by Employee of Sections
6, 7 or 8 of this Agreement);
(ii) Employee commits any other act materially detrimental to the
business or reputation of the Company;
(iii) Employee engages in dishonest or illegal activities or commits
or is convicted of any crime involving fraud, deceit or moral
turpitude; or
(iv) Employee dies or becomes mentally or physically incapacitated or
disabled so as to be unable to perform Employee's duties under
this Agreement even with a reasonable accommodation. Without
limiting the generality of the foregoing, Employee's inability
adequately to perform services under this Agreement for a period
of sixty (60) consecutive days will be conclusive evidence of
such mental or physical incapacity or disability, unless such
inability adequately to perform services under this Agreement is
pursuant to a mental or physical incapacity or disability
covered by the Family Medical Leave Act, in which case such
sixty (60)-day period shall be extended to a one hundred and
twenty (120)-day period.
b) Termination by Company Without Cause. The Company may terminate
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Employee's employment pursuant to this Agreement for reasons other
than those stated in Section 4(a) upon at least thirty (30) days'
prior written notice to Employee. In the event Employee's employment
with the Company is terminated by the Company without cause, the
Company shall be obligated to pay Employee a lump sum severance
payment equal to one (1) year of Employee's then base salary payable
within thirty (30) days of the date of termination. Other than the
severance payment set forth in this Section 4(b), Employee will be
entitled to receive no further cash remuneration and will not be
entitled to participate in any Company benefit programs following his
termination by the Company, whether such termination is with or
without cause. Furthermore, should Employee's
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employment with the Company be terminated without cause, Employee
shall be entitled to an award of 200,000 shares of the Company's
Common Stock. Employee shall not be entitled to any further
remuneration of any kind whatsoever for his termination without cause.
c) Termination by Employee for Cause. In the event there occurs a
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substantial change in the Employee's job duties, there is a decrease
in or a failure to provide the compensation or vested benefits under
this Agreement or there is a change in control of the Company,
Employee shall have the right to resign his employment and will be
entitled to receive a severance payment equal to an award of 200,000
shares of the Company's common stock. For avoidance of doubt, this
award shall be in lieu of the 200,000 shares awarded Employee under
section 4(b) above. Employee shall have thirty (30) days from the date
written notice is given to Employee about either (a) the change in his
duties or (b) the announcement and closing of a transaction resulting
in a change in control of the Company to resign or this Section 4(c)
shall not apply. In the event Employee resigns from the Company for
any other reason, Employee will not be entitled to receive or accrue
any further Company benefits or other remuneration under this
Agreement, and Employee specifically agrees that he will not be
entitled to receive any severance pay or any further stock awards.
For purposes of this section, a change in control shall be deemed to
have occurred if any of the following occur:
i) the merger or consolidation of the Company with or into another
unaffiliated entity, or the merger of another unaffiliated entity
into the Company or another subsidiary thereof with the effect
that immediately after such transaction the stockholders of the
Company immediately prior to such transaction hold less than
fifty (50%) of the total voting power of all securities generally
entitled to vote in the election of directors, managers or
trustees of the entity surviving such merger or consolidation;
ii) the sale or transfer of more than 51% of the Company's then
outstanding voting stock (other than a restructuring event which
results in the continuation of the Company's business by an
affiliated entity) to unaffiliated person or group (as such term
is used in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended); or
iii) the adoption by the stockholders of the Company of a plan
relating to the liquidation or dissolution of the Company.
5. Compensation and Benefits.
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a) Annual Salary. During the term of this Agreement and for all services
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rendered by Employee under this Agreement, the Company will pay
Employee a base salary of Six Hundred Thousand Dollars ($600,000.00)
per annum in equal bi-
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weekly installments. Such annual salary will be subject to adjustments
by any increases given in the normal course of business.
b) Incentive Compensation. Employee shall be eligible to receive
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incentive compensation in the form of an annual bonus. Said bonus
shall take the form of a grant of additional stock options and a cash
payout. Employee shall be entitled to receive a grant of options to
purchase up to 100,000 shares of the Company's common stock as part of
his annual bonus. Employee shall also be entitled to receive a cash
bonus to be determined in the sole discretion of the Compensation
Committee of the Board of Directors. In determining the amount of this
cash bonus the Committee shall take into consideration the attainment
of certain goals by Employee as set by the Board of Directors.
6. Vacation. Employee shall be eligible for four (4) weeks of paid vacation
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annually, provided that such vacation is scheduled at such times that do
not interfere with the Company's legitimate business needs.
7. Other Benefits. Employee will be entitled to such fringe benefits as may be
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provided from time-to time by the Company to its employees, including, but
not limited to, group health insurance, life and disability insurance, and
any other fringe benefits now or hereafter provided by the Company to its
employees, if and when Employee meets the eligibility requirements for any
such benefit. The Company reserves the right to change or discontinue any
employee benefit plans or programs now being offered to its employees;
provided, however, that all benefits provided for employees of the same
position and status as Employee will be provided to Employee on an equal
basis.
8. Business Expenses. Employee will be reimbursed for all reasonable expenses
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incurred in the discharge of Employee's duties under this Agreement
pursuant to the Company's standard reimbursement policies.
9. Withholding. The Company will deduct and withhold from the payments made to
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Employee under this Agreement, state and federal income taxes, FICA and
other amounts normally withheld from compensation due employees.
10. Non-Disclosure of Proprietary Information. Employee recognizes and
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acknowledges that the Trade Secrets (as defined below) and Confidential
Information (as defined below) of the Company and its affiliates and all
physical embodiments thereof (as they may exist from time-to-time,
collectively, the "Proprietary Information") are valuable, special and
unique assets of the Company's and its affiliates' businesses. Employee
further acknowledges that access to such Proprietary Information is
essential to the performance of Employee's duties under this Agreement.
Therefore, in order to obtain access to such Proprietary Information,
Employee agrees that, except with respect to those duties assigned to him
by the Company, Employee shall hold in confidence all Proprietary
Information and will not reproduce, use, distribute, disclose, publish or
otherwise disseminate any Proprietary Information, in whole or in part, and
will take no action
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causing, or fail to take any action necessary to prevent causing, any
Proprietary Information to lose its character as Proprietary Information,
nor will Employee make use of any such information for Employee's own
purposes or for the benefit of any person, firm, corporation, association
or other entity (except the Company) under any circumstances.
For purposes of this Agreement, the term "Trade Secrets" means information,
including, but not limited to, any technical or nontechnical data, formula,
pattern, compilation, program, device, method, technique, drawing, process,
financial data, financial plan, product plan, list of actual or potential
customers or suppliers, or other information similar to any of the
foregoing, 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 derive economic value from its disclosure
or use. For purposes of this Agreement, the term "Trade Secrets" does not
include information that Employee can show by competent proof (i) was known
to Employee and reduced to writing prior to disclosure by the Company (but
only if Employee promptly notifies the Company of Employee's prior
knowledge); (ii) was generally known to the public at the time the Company
disclosed the information to Employee; (iii) became generally known to the
public after disclosure by the Company through no act or omission of
Employee; or (iv) was disclosed to Employee by a third party having a bona
fide right both to possess the information and to disclose the information
to Employee. The term "Confidential Information" means any data or
information of the Company, other than trade secrets, which is valuable to
the Company and not generally known to competitors of the Company. The
provisions of this Section 6 will apply to Trade Secrets for so long as
such information remains a trade secret and to Confidential Information
during Employee's employment with the Company and for a period of two (2)
years following any termination of Employee's employment with the Company
for whatever reason.
11. Non-Solicitation Covenants. Employee agrees that during Employee's
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employment by the Company and for a period of one (1) year following the
termination of Employee's employment for whatever reason, Employee will
not, directly or indirectly, on Employee's own behalf or in the service of
or on behalf of any other individual or entity, divert, solicit or attempt
to divert or solicit any individual or entity (i) who is a client of the
Company at any time during the six (6)-month period prior to Employee's
termination of employment with the Company ("Client"), or was actively
sought by the Company as a prospective client, and (ii) with whom Employee
had material contact while employed by the Company to provide similar
services or products as such provided by Employee for the Company to such
Clients or prospects. Employee further agrees and represents that during
Employee's employment by the Company and for
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a period of one (1) year following any termination of Employee's employment
for whatever reason, Employee will not, directly or indirectly, on
Employee's own behalf or in the service of, or on behalf of any other
individual or entity, divert, solicit or hire away, or attempt to divert,
solicit or hire away, to or for any individual or entity which is engaged
in providing similar services or products to that provided by the Company,
any person employed by the Company for whom Employee had supervisory
responsibility or with whom Employee had material contact while employed by
the Company, whether or not such employee is a full-time employee or
temporary employee of the Company, whether or not such employee is employed
pursuant to written agreement and whether or not such employee is employed
for a determined period or at-will. For purposes of this Agreement,
"material contact" exists between Employee and a Client or potential Client
when (1) Employee established and/or nurtured the Client or potential
Client; (2) the Client or potential Client and Employee interacted to
further a business relationship or contract with the Company; (3) Employee
had access to confidential information and/or marketing strategies or
programs regarding the Client or potential Client; and/or (4) Employee
learned of the Client or potential Client through the efforts of the
Company providing Employee with confidential Client information, including
but not limited to the Client's identify, for purposes of furthering a
business relationship.
12. Existing Restrictive Covenants. Except as provided in Exhibit B, Employee
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has not entered into any agreement with any employer or former employer (a)
to keep in confidence any confidential information or (b) to not compete
with any former employer. Employee represents and warrants that Employee's
employment with the Company does not and will not breach any agreement
which Employee has with any former employer to keep in confidence
confidential information or not to compete with any such former employer.
Employee will not disclose to the Company or use on its behalf any
confidential information of any other party required to be kept
confidential by Employee.
13. Return of Proprietary Information. Employee acknowledges that as a result
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of Employee's employment with the Company, Employee may come into the
possession and control of Proprietary Information, such as proprietary
documents, drawings, specifications, manuals, notes, computer programs, or
other proprietary material. Employee acknowledges, warrants and agrees that
Employee will return to the Company all such items and any copies or
excerpts thereof, and any other properties, files or documents obtained as
a result of Employee's employment with the Company, immediately upon the
termination of Employee's employment with the Company.
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14. Proprietary Rights. During the course of Employee's employment with the
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Company, Employee may make, develop or conceive of useful processes,
machines, compositions of matter, computer software, algorithms, works of
authorship expressing such algorithm, or any other discovery, idea,
concept, document or improvement which relates to or is useful to the
Company's Business (the "Inventions"), whether or not subject to copyright
or patent protection, and which may or may not be considered Proprietary
Information. Employee acknowledges that all such Inventions will be "works
made for hire" under United States copyright law and will remain the sole
and exclusive property of the Company. Employee also hereby assigns and
agrees to assign to the Company, in perpetuity, all right, title and
interest Employee may have in and to such Inventions, including without
limitation, all copyrights, and the right to apply for any form of patent,
utility model, industrial design or similar proprietary right recognized by
any state, country or jurisdiction. Employee further agrees, at the
Company's request and expense, to do all things and sign all documents or
instruments necessary, in the opinion of the Company, to eliminate any
ambiguity as to the ownership of, and rights of the Company to, such
Inventions, including filing copyright and patent registrations and
defending and enforcing in litigation or otherwise all such rights.
Employee will not be obligated to assign to the Company any Invention made
by Employee while in the Company's employ which does not relate to any
business or activity in which the Company is or may reasonably be expected
to become engaged, except that Employee is so obligated if the same relates
to or is based on Proprietary Information to which Employee will have had
access during and by virtue of Employee's employment or which arises out of
work assigned to Employee by the Company. Employee will not be obligated to
assign any Invention which may be wholly conceived by Employee after
Employee leaves the employ of the Company, except that Employee is so
obligated if such Invention involves the utilization of Proprietary
Information obtained while in the employ of the Company. Employee is not
obligated to assign any Invention that relates to or would be useful in any
business or activities in which the Company is engaged if such Invention
was conceived and reduced to practice by Employee prior to Employee's
employment with the Company. Employee agrees that any such Invention is set
forth on Exhibit "A" to this Agreement.
15. Remedies. Employee agrees and acknowledges that the violation of any of the
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covenants or agreements contained in Sections 6, 7, and 10 of this
Agreement would cause irreparable injury to the Company, that the remedy at
law for any such violation or threatened violation thereof would be
inadequate, and that the Company will be entitled, in addition to any other
remedy, to temporary and permanent injunctive or other
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equitable relief without the necessity of proving actual damages or posting
a bond.
16. Severability. In case one or more of the provisions contained in this
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Agreement is for any reason held to be invalid, illegal or unenforceable in
any respect, the parties agree that it is their intent that the same will
not affect any other provision in this Agreement, and this Agreement will
be construed as if such invalid or illegal or unenforceable provision had
never been contained herein. It is the intent of the parties that this
Agreement be enforced to the maximum extent permitted by law.
17. Entire Agreement. This Agreement embodies the entire agreement of the
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parties relating to the subject matter of this Agreement and supersedes all
prior agreements, oral or written, regarding the subject matter hereof. No
amendment or modification of this Agreement will be valid or binding upon
the parties unless made in writing and signed by the parties.
18. Governing Law. This Agreement is entered into and will be interpreted and
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enforced pursuant to the laws of the State of New Jersey. The parties
hereto hereby agree that the appropriate forum and venue for any disputes
between any of the parties hereto arising out of this Agreement shall be
any federal court in the state where the Employee has his principal place
of residence and each of the parties hereto hereby submits to the personal
jurisdiction of any such court. The foregoing shall not limit the rights of
any party to obtain execution of judgment in any other jurisdiction. The
parties further agree, to the extent permitted by law, that a final and
unappealable judgment against either of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified exemplified copy of which shall be conclusive evidence of the
fact and amount of such judgment.
19. Surviving Terms. Sections 4, 6, 7, 10, 11 and 14 of this Agreement shall
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survive termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
COMPANY: EMPLOYEE:
XXXXX 0 SYSTEMS, INC.
By: ____________________________ _______________________________
Xxxxxxx Xxxx
Title: _________________________
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EXHIBIT A
INVENTIONS
Employee represents that there are no Inventions.
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Employee Initials
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EXHIBIT B
EXISTING RESTRICTIVE COVENANTS
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