1
EXHIBIT 10.56
[Lexecon Inc. Letterhead]
December 31, 1998
Xxxxxx X. Xxxxxxxxxx
Lexecon Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Dear Xx. Xxxxxxxxxx:
This letter will constitute our agreement regarding your employment
relationship with Lexecon Inc. ("Lexecon"), beginning as of the day on which
Lexecon becomes a wholly-owned subsidiary of Nextera Enterprises, Inc. or an
affiliate thereof ("Nextera") (the "Effective Date").
1. POSITION. Lexecon will employ you to provide services in connection
with its business of providing economic, litigation and business transaction
support services to government and industry (the "Business") in a position
comparable to your current position (or another position reasonably agreed by
the parties). Your services will cover those aspects of the Business in which
you presently participate. Subject to fulfilling your Priority Employment
Obligation, you agree to carry out your responsibilities under this Agreement in
an efficient, trustworthy, effective and businesslike manner.
2. SERVICE FEES.
(a) During the Service Term you shall be paid at your hourly
billing rate multiplied by the number of billable hours which you work on any
client matter on behalf of Lexecon; provided that the first $500,000 of total
payments otherwise payable to you pursuant to this Section shall instead be paid
to you at 25% of your hourly billing rate (i.e., you will receive $125,000 in
payments in respect of your first $500,000 of xxxxxxxx). You agree that Lexecon
shall set your hourly billing rate with respect to all client matters. To the
extent your hourly billing rate varies among client matters, you will be paid
based on the hourly billing rate for each client.
(b) You will be entitled to such benefits as are provided to other
executive employees of Lexecon (vacation, medical, etc.), in accordance with and
subject to Lexecon's policies and guidelines as in effect from time to time, but
in no event will such benefits be less than those provided to executive officers
of Nextera.
1
2
(c) You authorize Lexecon to deduct and withhold from all
compensation to be paid to you any and all sums required to be deducted or
withheld by Lexecon pursuant to the provisions of any federal, state, or local
law, regulation, ruling, or ordinance, including, but not limited to, income tax
withholding and payroll taxes.
3. SCOPE OF SERVICE. Lexecon acknowledges your employment obligations
to the distance learning business such as that conducted by Knowledge
University, L.L.C. (or any successor or related entity) and your part-time
teaching obligations at The University of Chicago, which will have priority over
your obligations to Lexecon (collectively, the "Priority Employment
Obligation"). You agree that after fulfilling your Priority Employment
Obligation, you will not devote a material amount of time to any commercial
endeavor other than Lexecon. It is understood that the term "material" shall be
determined in reference to your remaining time available to perform services for
Lexecon available after fulfillment of your Priority Employment Obligation. You
will not be required to devote any minimum number of hours to your
responsibilities under this Agreement. Notwithstanding anything in this
Agreement to the contrary, your Priority Employment Obligation may not be
changed by you in the future so as to:
o by virtue of location or otherwise, diminish your effective
availability to render services to Lexecon; or
o restrict your ability to render services to Lexecon to any
greater degree than those caused by your relationship as of
the date hereof with Knowledge University, L.L.C. and The
University of Chicago; and it being understood that your
Priority Employment Obligation may not relate to any endeavor
other than the distance learning business such as that
conducted by Knowledge University, L.L.C. and teaching
obligations at The University of Chicago.
4. TERM. Your term of employment will run from the Effective Date to
the third anniversary thereof, unless terminated earlier (i) upon your death or
Disability, or (ii) by Lexecon either with or without Cause (such term being
referred to as the "Service Term"). If Lexecon wishes to terminate your service
without Cause, Lexecon shall give you at least sixty (60) days prior written
notice. In the event of early termination without Cause, Lexecon will pay you,
in accordance with Section 2, for all services rendered by you prior to the date
of such termination.
5. RIGHTS OF FIRST NEGOTIATION AND FIRST REFUSAL.
a. You agree that during the three months prior to the expiration of
the term of this Agreement under Section 4, you will provide Lexecon the right
of first negotiation with respect to your services following such expiration. If
Lexecon exercises such right, you agree to negotiate in good faith with Lexecon
to extend or renew this Agreement or to negotiate to otherwise continue your
services to Lexecon on mutually agreeable terms.
2
3
b. In the event Lexecon and you do not reach agreement for the
extension or renewal of this Agreement or the continuation of your services to
Lexecon under Section 5.a., you agree that if, at any time prior to the date
that is four years after the Effective Date, you shall have finalized the
material terms of employment or engagement with any commercial enterprise that
engages in the Business (a "Competitor"), you shall give a written notice (the
"Competitor Notice") to Lexecon describing fully the proposed terms of such
arrangement, and the name and address of the Competitor. Lexecon shall have the
right to employ or engage you on substantially equivalent terms and conditions
as set forth in the Competitor Notice by delivery of a notice of exercise of its
right of first refusal (the "Lexecon Notice") within fifteen days after the date
the Competitor Notice is delivered to Lexecon. Upon receipt of the Lexecon
Notice, you agree to cease all discussions and negotiations with the Competitor
and any other Competitors. Nothing in this Section shall permit you to negotiate
with Competitors while this Service Agreement is in effect.
6. ADDITIONAL TERMS. You and Lexecon also agree to the provisions
contained in Appendix A attached hereto and incorporated herein. Initially
capitalized terms used herein without definition have the meanings as defined in
Appendix A.
7. SERVICE PROVIDER REPRESENTATION. You represent that you are free to
enter into and perform each of the terms and conditions of this letter agreement
including Appendix A (collectively, the "Agreement"); that you are not a party
to any confidentiality, non-compete or other agreement that restricts the
services that may be rendered by you to Lexecon other than the Priority
Employment Obligation; and that your execution and/or performance of services to
Lexecon under this Agreement does not and will not violate or breach any other
agreement between you and any other person or entity. You acknowledge that but
for this representation, Lexecon would not agree to enter into this Agreement.
8. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Illinois.
3
4
Please confirm your agreement with the foregoing and Appendix A by signing
the enclosed copy of this letter where indicated and returning it to me.
Very truly yours,
LEXECON INC.
By /S/ XXXXXX X. XXXXXXX
--------------------------------
AGREED:
/S/ XXXXXX X. XXXXXXXXXX
4
5
APPENDIX A
THIS APPENDIX A is attached to the letter agreement dated December 31 ,
1998 between Lexecon Inc. ("Company") and Xxxxxx X. Xxxxxxxxxx ("Service
Provider") (the "Service Agreement," and together with this Appendix A, the
"Agreement").
WHEREAS, pursuant to a Contribution Agreement, dated as of December 31,
1998, by and among Nextera Enterprises, Inc. ("Nextera"), Company and the
shareholders of Company (including the Service Provider), such shareholders are
contributing all of the outstanding shares of capital stock of Company to
Nextera (the "Transaction"); and
WHEREAS, Service Provider has been a key employee to Company and Service
Provider's covenants contained herein to be material and significant to
Company's success and the Service Provider's agreement to be employed by Company
and to provide the covenants contained herein constitute material provisions of
the Transaction;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. The following definitions shall apply to this Agreement
(including the Service Agreement):
The termination of Service Provider's services to the Company prior
to the expiration of the Service Term for other than death, Disability, Cause or
resignation by Service Provider, shall be deemed a termination "without Cause."
A termination shall be for "Cause" if (a) Service Provider: (i)
commits an act of fraud, dishonesty, embezzlement or misappropriation involving
Company, (ii) is convicted of, or enters a plea of guilty or no contest to, any
crime involving moral turpitude or dishonesty, (iii) commits an act, or fails to
commit an act, involving Company which amounts to, or with the passage of time
would amount to, a material breach of this Agreement, which breach is not cured
within 30 days after written demand for substantial performance is received by
Service Provider from Company which specifically identifies the breach which the
Board believes Service Provider has committed, or (iv) willfully fails or
habitually neglects to perform Service Provider's responsibilities under this
Agreement (other than such failure resulting from Disability), which failure or
neglect is not cured within 30 days after written demand for substantial
performance is received by Service Provider from Company which specifically
identifies the manner in which the Board believes Service Provider has not
performed Service Provider's responsibilities, and (b) Company terminates
Service Provider and, in conjunction with such termination, provides written
notice to Service Provider that Service Provider is being terminated for Cause.
The term "Disability" means a physical or mental disability that
renders Service Provider unable to perform Service Provider's normal duties for
Company for a period of 60 or
i
6
more days as determined in the good faith judgment of the President or the Board
of Directors of Company.
2. Access to Confidential Information. Service Provider's services
previously rendered to Company and to be rendered hereunder have placed Service
Provider and shall continue to place Service Provider in a position of
confidence and trust with Company and have allowed and may continue to allow
Service Provider access to Confidential Information. As used herein,
"Confidential Information" shall mean information and compilations of
information relating to the business of Company including, but not limited to,
information regarding any trade secrets, proprietary knowledge, operating
procedures, finances, financial condition, organization, employees, customer
lists, client lists, suppliers, distributors, agents, and other personnel,
business activities, budgets, strategic or financial plans, objectives,
marketing plans, documents, products, services, price and price lists, operating
and training materials, data bases and analyses and all other documents relating
thereto or strategies of Company. However, Confidential Information will not
include any information which is or becomes available in the public domain or
which is or becomes known to the public or the industry by any means other than
disclosure by Service Provider.
3. Covenant as to Nondisclosure or Use of Confidential Information.
Service Provider agrees that at all times during and after the term of Service
Provider's engagement with Company hereunder, Service Provider will maintain the
Confidential Information in strictest confidence and will not, unless required
to do so in the conduct of Company's operations or unless required to do so by
legal process (such as subpoena), disclose to any individual or business
enterprise of any nature, or use for Service Provider's own personal use or
financial gain, whether individually or on behalf of another person, firm,
corporation or entity, any Confidential Information. Without limiting the
generality of the foregoing, Service Provider agrees that Company's agreements
with other persons may include agreements that impose obligations or
restrictions regarding the confidential nature of work pursuant to such an
agreement. Service Provider agrees to be bound by all such obligations and
restrictions made known to him, and to do whatever is reasonably necessary to
satisfy the obligations of Company. In the event Service Provider is required by
legal process to disclose any Confidential Information, Service Provider shall
give prompt notice thereof to Company to allow Company to object to such
process, obtain a protective order or take other reasonable action.
4. Assignment of Inventions. To the maximum extent permitted by law,
Service Provider shall assign and transfer to Company and does hereby assign and
transfer to Company Service Provider's entire right, title and interest in and
to all inventions including, but not limited to, designs, discoveries,
inventions, improvements, formulas, ideas, devices, techniques, processes,
writings, trade secrets, trademarks, trademark applications, patents, copyrights
and all other intellectual property rights including but not limited to notes,
records, reports, software, plans, memoranda and other tangible information
relating to such intellectual property, whether or not subject to protection
under applicable laws, which Service Provider solely or jointly with others
conceives, makes or acquires at any time during Service Provider's past, present
or future engagement with Company and which relate in any manner to the actual
or demonstrably
ii
7
anticipated business, products, processes, work, operations, research and
development or other activities of Company, or result from or are suggested by
any task assigned to Service Provider or any work performed by Service Provider
for or on behalf of Company ("Inventions"), but excluding those developed in
connection with his Priority Employment Obligation. All Inventions are and shall
be the sole property of Company.
Notwithstanding anything in this Agreement to the contrary, Service
Provider shall be entitled to write books and articles for publication under his
own name and shall be entitled to receive and retain any royalties therefrom, so
long as (1) Service Provider's writing activities do not interfere with the
performance of his responsibilities under this Agreement and (2) such books or
articles do not disclose or exploit any confidential or proprietary information
of Company or its clients.
5. Disclosure of Inventions, Patents, Copyrights and Other Rights.
Service Provider agrees:
5.1 To keep and maintain adequate and current written records of
all Inventions made by Service Provider (in the form of notes, sketches,
drawings and other forms specified by Company) while engaged with Company. These
records shall be available to Company and shall be and remain the sole property
of Company at all times. Service Provider will disclose such Inventions promptly
in writing to the President of Company.
5.2 Upon request, to promptly execute a written assignment of
title to Company for any Invention required to be assigned by Section 4
("assignable invention") and Service Provider will preserve any such assignable
invention as Confidential Information.
5.3 Upon request and at Company's expense, to assist Company or
its nominee during and at any time subsequent to Service Provider's employment
in every reasonable way to obtain for Company's or its nominee's benefit,
patents, copyrights, mask work rights and other statutory rights ("Statutory
Rights") for such assignable inventions in any and all countries, which
inventions shall be and remain the sole and exclusive property of Company or its
nominee whether or not patented, copyrighted or the subject of a mask work
right. Service Provider shall execute such papers and perform such lawful acts
as Company deems reasonably necessary to exercise all rights, title and interest
in such Statutory Rights.
5.4 To execute and deliver to Company or its nominee upon request
all documents, including applications for and assignments of Statutory Rights to
be issued therefor, as Company determines are necessary or desirable to apply
for and obtain Statutory Rights on such assignable inventions in any and all
countries and/or to protect the interest of Company or its nominee in Statutory
Rights and to vest title thereto in Company or its nominee.
6. Return of Records, Equipment and Confidential Information. Upon the
earlier of termination of Service Provider's services hereunder or request by
Company, Service Provider shall promptly return to Company: (i) all Confidential
Information and all documents, records,
iii
8
procedures, books, notebooks, and any other documentation in any form whatsoever
(including, but not limited to, written, audio, video or electronic) containing
any information pertaining to Company which includes Confidential Information,
including any and all copies of such documentation then in Service Provider's
possession or control regardless of whether such documentation was prepared or
compiled by Service Provider, Company, employees of Company, representatives,
agents, or independent contractors, and (ii) all equipment or tangible personal
property entrusted to Service Provider by Company. Service Provider will not
retain any original, copy, description, document, data base or other form of
media that contains or relates to any Confidential Information whether produced
by Service Provider or otherwise. Without limiting the generality of the
foregoing, Service Provider shall permanently delete all Confidential
Information from all computers, disks, CD-ROMS, tapes, and other media owned or
used by or accessible to Service Provider, other than from any of the foregoing
owned, used or controlled by Company. Service Provider acknowledges that all
Confidential Information and all such documentation, copies of such
documentation, equipment, and tangible personal property are and shall at all
times remain the sole and exclusive property of Company.
7. Post-Engagement Cooperation. Service Provider agrees that following
Service Provider's termination of services under this Agreement, Service
Provider shall cooperate and assist Company at Company's reasonable request and
expense in any dispute, controversy, or litigation to which Company is a party
and with respect to which Service Provider obtained knowledge while engaged with
Company or any of its predecessors, affiliates, successors, or assigns,
including, but not limited to, Service Provider's participation in any court or
arbitration proceedings, giving of testimony, signing of affidavits, or such
other personal cooperation as counsel for Company shall request.
8. Remedies. Service Provider has carefully considered the nature and
extent of the restrictions imposed by the covenants in this Appendix A and
Service Provider agrees that they are fair and reasonable and such restrictions
will not prevent Service Provider from earning a livelihood. In view of the
position of confidence and trust which Service Provider has and will enjoy with
Company and the relationship with the customers, suppliers and employees of
Company pursuant to Service Provider's engagement with Company, and recognizing
both the access to confidential financial and other information which Service
Provider has had and will have pursuant to Service Provider's engagement with
the Company and the fact that the Service Provider's covenants herein constitute
material provisions of the Transaction, Service Provider expressly acknowledges
that the restrictive covenants set forth in this Appendix A are necessary in
order to protect and maintain the proprietary interests, goodwill and other
legitimate business interests of Company. Service Provider further acknowledges
that (i) it would be difficult to calculate damages to Company from any breach
of Service Provider's obligations under this Appendix A, (ii) that injury to
Company from any such breach would be irreparable and impossible to measure, and
(iii) that the remedy at law for any breach or threatened breach of this
Appendix A would therefore be an inadequate remedy and, accordingly, Company
shall, in addition to all other available remedies (including without limitation
seeking such damages as it can show it has sustained by reason of such breach
and/or the exercise of all other rights it has
iv
9
under this Agreement), be entitled to injunctive and other similar equitable
remedies without the necessity of showing actual damages or posting bond.
9. General Provisions.
(a) All notices hereunder shall be deemed to have been duly given when
delivered, addressed as follows (or at such other address as the addressed party
may have substituted by notice pursuant to this Section):
If to Service Provider: Xxxxxx X. Xxxxxxxxxx
00 Xxxx Xxxxxxxx
Xxxx Xxxxxx, XX 00000
If to Company: Lexecon Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Maron & Sandler
000 Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
(b) This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof. This Agreement (and the amounts payable
to Service Provider) may be changed only by the written agreement of the
parties. This Agreement (and the rights and duties hereunder) may be assigned by
Company but not by Service Provider (provided that Service Provider shall not be
required to perform services for any business other than that presently
conducted (or contemplated by) Company).
(c) Every provision of this Agreement is intended to be severable from
every other provision of this Agreement. If any provision of this Agreement is
held to be unreasonable or excessive in scope or duration, that provision will
be deemed to be reformed to the minimum extent necessary so that such provision
as reformed may and shall be enforced to the maximum extent permitted by law. If
any provision of this Agreement is held to be void or unenforceable, in whole or
in part, the remaining provisions will remain in full force and effect, unless
the remaining provisions are so eviscerated by such holding that they do not
reflect the intent of the parties in entering into this Agreement.
v
10
(d) Any waiver of any breach of any provision of this Agreement will not
be deemed to be a waiver of any subsequent breach of that provision, or of any
breach of any other provision of this Agreement. No failure or delay in
exercising any right under any provision of this Agreement will be deemed a
waiver of that or any other right.
(e) Each of the parties has had the opportunity to be represented by
counsel in the negotiation and preparation of this Agreement. The parties agree
that this Agreement is to be construed as jointly drafted. Accordingly, this
Agreement will be construed according to the fair meaning of its language, and
the rule of construction that ambiguities are to be resolved against the
drafting party will not be employed in the interpretation of this Agreement.
(f) Transmission by facsimile of an executed counterpart signature page
hereof by a party hereto shall constitute due execution and delivery of this
Agreement by such party.
vi
