1
EXHIBIT 99.6
EMPLOYMENT AGREEMENT
This agreement (this "AGREEMENT") is made effective as of April 12,
1999, between Century Business Services, Inc., a Delaware corporation (the
"COMPANY"), and Xxxx X. Xxxxxxx ("EXECUTIVE").
PRELIMINARY STATEMENT
---------------------
The Company and Executive desire to enter into certain agreements
providing for Executive's employment with the Company and that Executive serve
in an executive capacity with the Company on the terms hereinafter set forth.
STATEMENT OF AGREEMENT
----------------------
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT. The Company agrees to employ Executive as described
below, and Executive accepts such employment for the period beginning as of the
date hereof and ending upon termination pursuant to PARAGRAPHS 1(d) OR 1(e)
hereof(the "EMPLOYMENT PERIOD").
(a) SERVICES. During the Employment Period, Executive will render such
services of an executive and administrative character to the Company and its
affiliates as the Board of Directors of the Company (the "BOARD") may from time
to time direct and will have the title and status of President and Chief
Operating Officer. Executive will also be elected to the Board of the Company
and be renominated for election as appropriate during the Employment Period.
Executive will devote his best efforts and substantially all of his business
time and attention (except for vacation periods and reasonable periods of
illness or other incapacity) to the business of the Company and its affiliates
and will faithfully and diligently carry out such duties and have such
responsibilities as are customary among persons employed in substantially
similar capacities for similar companies. Executive will report to the Chief
Executive Officer and shall faithfully and diligently comply with all of his
reasonable and lawful directives. For purposes of this Agreement, the term
"affiliates" means any corporation, limited partnership, limited liability
company or other entity engaged in the same business as the Company or a related
business, which is controlled by or under common control with the Company.
Executive's primary location for the performance of the services assigned to him
shall be the Company's corporate headquarters located in Cleveland, Ohio.
(b) SALARY. Executive's compensation shall be determined and payable as
follows:
(i) During the Employment Period and thereafter as provided in
paragraph 1(d) hereof, the Company will pay Executive a base salary at
the rate of not less than $340,000 per annum, as adjusted pursuant to
subparagraph (ii) below (or such higher amount as the Board may
establish from time to time). Executive's base salary for any partial
year will be prorated based upon the number of days elapsed in
Exhibit 99.6 Page 1 of 11
2
EXHIBIT 99.6
such year and will be payable in accordance with the Company's
customary payroll practices.
(ii) (A) commencing January 1, 2000, and on January 1 of each
subsequent year as long as Executive remains an employee of the Company
(each such January 1 being herein referred to as an "ADJUSTMENT DATE"),
the base salary of Executive shall be adjusted to reflect increases in
the Consumer Price Index for all urban consumers in the regional area
including the Cleveland-Akron-Lorain, Ohio region (1982-84 = 100),
published by the Bureau of Labor Statistics, United States Department
of Labor (the "INDEX"). On each Adjustment Date, his base salary shall
be increased by multiplying his base salary for the fiscal year
preceding the Adjustment Date (computed on an annualized basis), by a
fraction, the numerator of which shall be the Index most recently
published prior to the Adjustment Date then at hand and the denominator
of which shall be the Index of the immediately preceding Adjustment
Date (or in the case of the First Adjustment Date occurring hereunder,
the denominator shall be the most recently published Index as of the
last day of the month immediately preceding the effective date hereof
(the "BASE INDEX"). The result of such multiplications shall constitute
Executive's base salary, as adjusted, commencing on the Adjustment Date
then at hand and continuing until the next Adjustment Date.
(B) If (1) the Index ceases using the 1982-84 average of 100
as the basis of calculation, (2) a significant change is made in the
number or nature (or both) of items used in determining the Index, (3)
the parties agree that the Index does not accurately reflect, in
relationship to the Base Index, the purchasing power of the dollar, or
(4) the Index is discontinued for any reason, then the Company, in its
discretion, shall adopt a substitute Index or procedure which
reasonably reflects and monitors the salaries of urban consumers in the
region that includes Cleveland, Ohio.
(c) BENEFITS. In addition to the compensation described above in this
PARAGRAPH 1, Executive will be entitled during the Employment Period to the
following benefits:
(i) such health insurance and other benefits as are available
from time to time to the Company's key executive employees generally;
(ii) vacation, sick leave and personal time in accordance with
the Company's vacation and absence policies as in effect from time to
time for the Company's Key executive employees, provided that
Executive shall have no less than three (3) weeks vacation each year,
with salary;
(iii) reimbursement, upon submission of documentation in
accordance with the Company's regular expense policies, for reasonable
business expenses incurred on the Company's behalf by Executive;
Exhibit 99.6 Page 2 of 11
3
EXHIBIT 99.6
(iv) participation in any savings plan or 401(k) plan as is
available from time to time to the Company's salaried employees
generally;
(v) participation in the Company's 1996 Employee Stock Option
Plan, as amended, with eligibility for annual grants of options
beginning January 1,2000, with terms and amounts determined by the
Compensation Committee of the Board consistent with those granted to
the Company's other key executive employees; and
(vi) such additional benefits as are set forth on EXHIBIT A
attached hereto.
(d) TERMINATION. Executive's employment with the Company will continue
until terminated by Executive's death, disability, which cannot be reasonably
accommodated, or termination of Executive's employment pursuant to any of the
following provisions:
(i) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
at any time terminate Executive's employment without Cause (as defined
below) by giving Executive notice of the effective date of termination
(which effective date may be the date of such notice). In the event of
such termination, each of the following shall occur: (A) the Company
shall make payments of base salary in accordance with PARAGRAPH 1(b)
above at the rate in effect at the effective date of such termination
for a period of twenty-four (24) months following the effective date of
such termination; (B) the Company shall make available to Executive its
medical plan, at a cost to the Executive equal to the Company's cost to
obtain such medical plan, until the earlier of Executive's death or
attainment of age 65; and (C) vesting with regard to the stock options
granted pursuant to PARAGRAPH 1(c)(v) and described in EXHIBIT A shall
be accelerated such that for purposes of determining the number of
options exercisable as of the termination date, two additional years
shall be considered to have passed ((A), (B) and (C) collectively
referred to herein as the "SEVERANCE PACKAGE"); PROVIDED, HOWEVER that
in the event that Executive breaches any of the representations,
warranties and covenants set forth in PARAGRAPHS 2, 3 and 5 below, the
Company will have no further obligation to make payments of the base
salary or provide medical coverage at cost as described above, and may
pursue all other available remedies.
For purposes of this PARAGRAPH 1 (d)(i), Executive shall be
deemed to have been terminated without Cause upon the occurrence of all
of the following conditions:
(x) Xxxxxxx X. XxXxxxxx is no longer the Chief
Executive Officer of the Company, whether through resignation
or removal;
(y) Xxxxxxx X. XxXxxxxx no longer beneficially owns
(as defined for purposes of Rules 13(d) and 13(g) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")) 10% or more of the voting stock of the Company; and
Exhibit 99.6 Page 3 of 11
4
EXHIBIT 99.6
(z) any person or entity beneficially owns (as
defined for purposes of Rules 13(d) and 13(g) of the Exchange
Act) 10% or more of the voting stock of the Company.
(ii) TERMINATION BY THE COMPANY FOR CAUSE. The Company shall
have the right to terminate Executive's employment at any time for any
of the following reasons (each of which is referred to herein as
"CAUSE") by giving Executive written notice of the effective date of
termination (which effective date may be the date of such notice):
(A) the willful breach of any provision of paragraphs 1(a), 2,
3, 4 or 5 (including but not limited to a refusal to follow reasonable
and lawful directives of the Board); provided, however, that to the
extent that such breach is curable, the Board will give Executive
written notice of such breach and Executive will have 15 days from the
receipt of such notice to cure such breach;
(B) any act of fraud or dishonesty with respect to any aspect
of the Company's or any affiliate's business;
(C) continued use of illegal drugs;
(D) as a result of Executive's gross negligence or willful
misconduct, Executive shall violate, or cause the Company to violate,
any applicable federal or state securities or banking law or regulation
and as a result of such violation, shall become, or shall cause the
Company or any affiliate to become the subject of any legal action or
administrative proceeding seeking an injunction from further violations
or a suspension of any right or privilege;
(E) as a result of Executive's gross negligence or willful
misconduct, Executive shall commit any act that causes, or shall
knowingly fail to take reasonable and appropriate action to prevent,
any material injury to the financial condition or business reputation
of the Company or any affiliate;
(F) substantial failure of performance, repeated or continued
after written notice of such failure and explanation of such failure of
performance, which is reasonably determined by the Board to be
materially injurious to the business or interests of the Company or any
affiliate; or
(G) conviction of a felony or of a crime involving moral
turpitude.
If the Company terminates Executive's employment for any of
the reasons set forth above in this paragraph 1 (d)(ii), the Company
shall have no further obligations hereunder from and after the
effective date of termination and shall have all other rights and
remedies available under this or any other agreement and at law or in
equity.
Exhibit 99.6 Page 4 of 11
5
EXHIBIT 99.6
(e) VOLUNTARY TERMINATION BY EXECUTIVE. In the event that Executive's
employment with the Company is terminated by Executive, the Company shall have
no further obligations hereunder from and after the date of such termination.
Notwithstanding the foregoing, if Executive terminates his employment for Good
Reason, such termination shall be deemed to be a termination without Cause. For
purposes of this Agreement, the term "Good Reason" shall mean: within sixty (60)
days of and in connection with or based upon (A) a material breach by the
Company of any material provision of this Agreement, (B) a material decrease in
Executive's base salary, (C) a material decrease in Executive's employee
benefits which is materially different from such decreases which are applicable
to senior management personnel taken as a whole, (D) an overall substantial and
material reduction in the nature or scope of Executive's duties and
responsibilities, (E) the permanent non-voluntary relocation of Executive's work
place for the Company to a location more than 50 miles from Executive's current
principal place of performance of services for the Company, or (F) the
assignment to Executive of duties and responsibilities that are materially
inconsistent with the position referred to in PARAGRAPH 1 (a); provided,
however, that, prior to Executive's termination of employment for Good Reason,
Executive must give written notice to the Company of any such breach, reduction
or assignment and such breach, reduction or assignment remains uncorrected for
thirty (30) days following such written notice.
2. NONDISCLOSURE. Executive acknowledges that during the course of his
performance of services for the Company he will acquire technical knowledge with
respect to the Company's business operations, including, by way of illustration,
the Company's investment plans or strategies, trade secrets, customer lists,
customer or consultant contracts and the details thereof, pricing policies,
operational methods, marketing and merchandising plans or strategies, business
acquisition plans, personnel acquisition plans, and all other information
pertaining to the business of the Company or any affiliate that is not publicly
available (all of such information herein referred to as the "CONFIDENTIAL
INFORMATION"); provided, however that the term "CONFIDENFIAL INFORMATION" shall
not include (a) any information which is or becomes publicly available otherwise
than through breach of this Agreement or (b) any information which is or becomes
known or available to Executive on a non-confidential basis and not in
contravention of applicable law from a source which is entided to disclose such
information to Executive. Executive agrees that he will not, while he is
employed by the Company, divulge to any person, directly or indirectly, except
to the Company or its officers and agents or as reasonably required in
connection with his duties on behalf of the Company, or use, except on behalf of
the Company, any Confidential Information acquired by Executive during the term
of his employment. Executive agrees that he will not, at any time after his
employment with the Company has ended, divulge to any person directly or
indirectly any Confidential Information nor use the Confidential Information in
any way detrimental to the Company. Executive further agrees that if his
relationship with the Company is terminated (for whatever reason) he shall not
take with him but will leave with the Company all records, papers and computer
software and data and any copies thereof relating to the Confidential
Information (or if such papers, records, computer software and data or copies
are not on the premises of the Company, Executive agrees to return such papers,
records and computer software and data immediately upon his termination).
Executive acknowledges that all such papers, records, computer software and data
or copies thereof are and remain the property of the Company.
Exhibit 99.6 Page 5 of 11
6
EXHIBIT 99.6
3. INVENTIONS AND PATENTS. Executive agrees that all inventions,
innovations or improvements relating to the Company's business or method of
conducting business (including new contributions, improvements, ideas and
discoveries, whether patentable or not) conceived or made by him during his
employment with the Company belong to the Company. Executive will promptly
disclose such inventions, innovations or improvements to the Board and perform
all actions reasonably requested by the Board to establish and confirm such
ownership.
4. OTHER BUSINESSES. During the Employment Period, Executive agrees
that he will not, directly or indirectly except with the express written consent
of the Board, become engaged in, render services for, or permit his name to be
used in connection with, or directly or indirectly counsel or consult with, any
business other than the business of the Company and its affiliates; provided
that Executive may (a) serve as trustee or on the board of directors, or in
other similar capacities, for charitable organizations or trusts in which
Executive has no pecuniary interest, and (b) engage in activities related to
Executive's personal passive investments, in all such cases so long as such
activities do not materially impact Executive's ability to perform his
obligations and duties under this Agreement or result in a breach of PARAGRAPHS
2 or 5.
5. NONCOMPETITION. Executive agrees that:
(a) During the term he performs services for the Company and for a
period of two (2) years after the termination thereof(for whatever reason), he
will not interfere with the relationship of the Company and any employee, agent
or representative.
(b) During the term he performs services for the Company and for a
period of two (2) years after the termination thereof (for whatever reason), he
will not directly or indirectly interfere with the relationships of the Company
with customers, dealers, distributors, vendors or sources of supply.
(c) A. (i) Executive further agrees that during the term he performs
services for the Company and, if Executive terminates this Agreement pursuant to
paragraph 1(e), for a period of two (2) years after the termination thereof, he
will not directly or indirectly own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership, management,
operation or control of, any business or enterprise which provides outsourced
business services to small and medium sized businesses, including but not
limited to services in the following areas: accounting Systems, advisory and
tax; employee benefits design and administration; human resources; information
technology systems; payroll; specialty insurance; valuation; and workers'
compensation (the "BUSINESS") within the United States/a thirty-mile radius of
the city limits of the cities in which the Company or any affiliate of the
Company conducts the Business, or for which the Company had, prior to the
termination of Executive's employment, developed a written business plan to
conduct the Business.
(ii) If the Company actively engages in any other business (in addition
to or in lieu of the Business), Executive further agrees that during the term he
performs services for the Company and, if Executive terminates this Agreement
pursuant to PARAGRAPH 1(e), for a period of two (2) years after the termination
thereof, he will not directly or indirectly own, manage, operate, control, be
employed by, participate in, or be connected in any manner with the ownership,
Exhibit 99.6 Page 6 of 11
7
EXHIBIT 99.6
management, operation or control of, any business or enterprise which competes
with such other business within the United States/a thirty-mile radius of the
city limits of the cities in which the Company or any affiliate of the Company
conducts the Business, or for which the Company had, prior to the termination of
Executive's employment, developed a written business plan to conduct the
Business.
B. (i) Executive further agrees that, in the event Executive's
employment is terminated other than pursuant to PARAGRAPH 1(e), for a period of
two (2) years after the termination of his employment he will not directly or
indirectly own, manage, operate, control, be employed by, participate in, or be
connected in any manner with the ownership, management, operation or control of,
any business or enterprise which is in the Business within the United States/a
thirty-mile radius of the city limits of the cities in which the company or any
affiliate of the Company conducts the Business, or for which the Company had,
prior to the termination of Executive's employment, developed a written business
plan to conduct the Business, unless Executive first provides (x) written notice
to the Company of his intent to do so and (y) an opportunity for the Company to
either continue paying Executive base salary in accordance with PARAGRAPH 1(b)
at the rate in effect at the effective time of his termination for the remainder
of such two (2) year period or to waive the Company's rights pursuant to this
PARAGRAPH 5(c). The Company shall have seven (7) business days following receipt
of such notice to make such election.
(ii) If the Company actively engages in any other business (in addition
to or in lieu of the Business), Executive further agrees that, in the event
Executive's employment is terminated other than pursuant to PARAGRAPH 1(e), for
a period of two (2) years after the termination thereof, he will not directly or
indirectly own, manage, operate, control, be employed by, participate in, or be
connected in any manner with the ownership, management, operation or control of,
any business or enterprise which competes with such other business within the
United States/a thirty-mile radius of the city limits of the cities in which the
Company or any affiliate of the Company conducts the Business, or for which the
Company had, prior to the termination of Executive's employment, developed a
written business plan to conduct the Business, unless Executive first provides
(x) written notice to the Company of his intent to do so and (y) an opportunity
for the Company to either continue paying Executive base salary in accordance
with PARAGRAPH 1(b) at the rate in effect at the effective time of his
termination for the remainder of such two (2) year period or to waive the
Company's rights pursuant to this PARAGRAPH 5(c). The Company shall have seven
(7) business days following receipt of such notice to make such election.
C. For purposes of this PARAGRAPH 5(c), the reference to business or
enterprise in lines 5 of PARAGRAPH (c)(A)(i), and line 6 of PARAGRAPH
(c)(A)(ii), line 5 of PARAGRAPH (c)(B)(i) and line 6 of PARAGRAPH (c)(B)(ii)
shall mean the specific business unit in which Executive is employed or
otherwise affiliated.
(d) After discussing the matter with Executive, the Company shall have the
right, subject to applicable law, to inform any other third party that the
Company reasonably believes to be, or to be contemplating, participating with
Executive or receiving from Executive assistance in violation of this Agreement,
of the terms of this Agreement and of the rights of the Company hereunder, and
that participation by any such third party with Executive in activities in
violation of this PARAGRAPH 5 may give rise to claims by the Company against
such third party.
Exhibit 99.6 Page 7 of 11
8
EXHIBIT 99.6
6. TERMINATION OF AGREEMENT. This Agreement shall terminate on the fifth
anniversary of the date hereof, unless extended by mutual consent.
7. GENERAL PROVISIONS.
(a) NOTICES. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, or mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service, to the recipient at the address below indicated:
To the Company:
Century Business Services, Inc.
0000 Xxxxxxxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Telephone: 000-000-0000
Attn: Xxxxxxx X. XxXxxxxx
Xxxxxxx X. Xxxxxxxxxx, Esq.
Telecopy: (000)000-0000
To Executive:
At Executive's last known
address as listed with
the Company
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or if mailed, five days after so mailed.
(b) SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision in any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein except that
any court having jurisdiction shall have the power to reduce the duration, area
or scope of such invalid, illegal or unenforceable provision and, in its reduced
form, it shall be enforceable.
(c) COMPLETE AGREEMENT. This Agreement embodies the complete agreement and
understanding between the parties and supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way. Any
employment, benefit or bonus arrangements or agreements between the Company and
Executive that existed at any time prior to the execution and
Exhibit 99.6 Page 8 of 11
9
EXHIBIT 99.6
delivery of this Agreement are hereby terminated by Executive; provided,
however, that Executive shall remain liable for any breach of such arrangements
or agreements occurring during the term of such arrangement or agreement. From
and after the date of this Agreement, Executive shall not be entitled to any
compensation from the Company on account of any such arrangement or agreement.
(d) SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, his heirs and the Company,
except that Executive may not assign (other than by operation of law, will, or
the laws of descent) any of his rights or obligations under this Agreement. The
Company may assign its rights under this Agreement, as security, to any lender
to the Company, and in the event of a sale of the stock, or substantially all of
the stock, of the Company, or consolidation or merger of the Company into
another corporation or entity, or the sale of substantially all of the operating
assets of the Company to another corporation, entity or individual, the Company
may assign its rights and obligations under this Agreement to its
successor-in-interest, in which event such successor-in-interest shall be deemed
to have acquired all rights and assumed all obligations of the Company
hereunder.
(e) CHOICE OF LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND THE
NOT THE LAW OF CONFLICTS, OF THE STATE OF OHIO.
(f) REMEDIES. Each of the parties to this Agreement will be entitled to
enforce his or its rights under this Agreement specifically, to recover damages
(including, without limitation, reasonable fees and expenses of counsel) by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in his or its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach or
threatened breach of the provisions of this Agreement and that any party may in
his or its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement. Such
injunction or decree shall be available without the posting of any bond or other
security.
(g) AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended
or waived only with the prior written consent of (i) Executive and (ii) the
Chief Executive Officer of the Company or a majority of the Board.
(h) ABSENCE OF CONFLICTING AGREEMENTS. Executive hereby warrants and
covenants that his employment by the Company does not result in a breach of the
terms, conditions or provisions of any agreement to which Executive is subject.
(i) SURVIVAL. No termination of Executive's employment by either or both
parties shall reduce or terminate Executive's covenants and agreements in
paragraphs 2, 3 and 5.
[SIGNATURE PAGE FOLLOWS]
Exhibit 99.6 Page 9 of 11
10
EXHIBIT 99.6
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered effective as of the day and year first above written.
CENTURY BUSINESS SERVICES, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
-----------------------
Xxxxxxx X. XxXxxxxx
Chief Executive Officer and
Chairman of the Board
EXECUTIVE
/s/ Xxxx Xxxxxxx
----------------
Name: Xxxx Xxxxxxx
Title: President & Chief Operating Officer
Address: 000 Xxxxxx Xxx Xx.
Xx. Xxxxxxxxx, XX 00000
Exhibit 99.6 Page 10 of 11
11
EXHIBIT 99.6
EXHIBIT A
ADDITIONAL BENEFITS
-------------------
1. The Company will provide a vehicle for use by Executive.
2. The Company will pay membership expenses for Executive and Executive's
spouse at a country club or fitness club to be agreed upon by the parties.
3. Upon the effective date of this Agreement, Executive shall be granted
options to purchase 200,000 shares of the Company's common stock at a price
of $11.875 per share (the closing sale price on April 14, 1999). Such
options shall be issued pursuant to the Company's 1996 Employee Stock
Option Plan, as amended, and an Option Agreement to be entered into between
the Company and Executive pursuant thereto. Such options shall vest
according to the following schedule:
- Options to purchase 50,000 shares of the Company's common stock
shall not be subject to vesting and shall be immediately
exercisable upon grant; and
- Options to purchase 30,000 shares of the Company's common stock
shall vest on January 1 of each of 2000, 2001, 2002, 2003 and
2004.
Exhibit 99.6 Page 11 of 11
