SUCCESS BONUS AGREEMENT
Exhibit 10.4
This Success Bonus Agreement (this “Agreement”), dated as of April 20, 2011 (the
“Effective Date”), is by and between J. XxXxxxxx Xxxxxx (the “Executive”) and
Vangent, Inc. (the “Company”) (each a “Party,” and collectively, the
“Parties”).
WHEREAS, the Executive is currently employed by the Company;
WHEREAS, the Company is currently exploring potential strategic alternatives, which may
involve one or more transactions that could result in a Change of Control (as defined below) (a
“Transaction”) pursuant to a definitive transaction agreement (a “Transaction
Agreement”);
WHEREAS, the continuing efforts of the Executive are necessary to the successful performance
of the ongoing operations of the Company and its subsidiaries and, should the Board of Directors of
the Company (the “Board”) authorize the Company to enter into any such Transaction, would
be necessary to the successful negotiation and execution of a Transaction Agreement and
consummation of the transactions contemplated by any such Transaction Agreement (the
“Closing”); and
WHEREAS, as an inducement to the Executive to remain employed by the Company through the
Closing of any Transaction, the Company has determined that, subject to and effective upon the
Closing occurring with respect to such Transaction, the Executive shall be entitled to receive a
success bonus on the terms and conditions described herein.
NOW, THEREFORE, in consideration of the mutual promises made herein, the Parties hereby agree
as follows:
1. Success Bonus.
(a) The Executive shall be eligible to receive a success bonus in cash equal to $2,500,000.00,
less applicable withholdings and deductions as required by law (the “Success Bonus”). The
Success Bonus shall be subject to (i) the Executive actively supporting and working towards the
execution of a Transaction Agreement and the completion of all of the requirements necessary to
consummate the Transaction, as reasonably determined by the Board, prior to the Closing, (ii) the
Executive continuing to be employed in good standing by the Company from the Effective Date through
the Closing (except as set forth in Section 1(c)) (iii) the Executive executing and delivering the
release described below in Section 2 eight (8) days prior to the Closing, which shall in no event
be less than twenty-one (21) days after Executive receives this Agreement, and Executive not
revoking the release; (iv) Executive complying with all of the terms of this Agreement; and (v) the
Closing of a Transaction occurring on or prior to the first anniversary of the Effective Date (the
“Outside Closing Date”). If all of the foregoing conditions are satisfied, the Success
Bonus shall be paid to the Executive within ten (10) days following the Closing (the “Payment
Date”).
(b) If the Executive’s employment terminates for any reason prior to the Closing (other than
the Executive’s death or disability as described in Section 1(c) below),
this Agreement shall be null and void and have no further force and effect and the Executive
shall have no rights hereunder.
(c) Notwithstanding the above, if Executive’s employment is terminated due to his death or
Complete Disability prior to the Closing, the Company shall pay to Executive (or his heirs or legal
representative) on the Payment Date, the Success Bonus described in Section 1(a), provided that the
Closing contemplated by any Transaction Agreement occurs on or prior to the Outside Closing Date.
“Complete Disability” shall mean the inability of Executive to perform Executive’s duties under
this Agreement because Executive has become permanently disabled within the meaning of any policy
of disability income insurance covering executives of the Company then in force. In the event the
Company has no policy of disability income insurance covering executives of the Company in force
when Executive becomes disabled, the term “Complete Disability” shall mean the inability of
Executive to perform Executive’s duties for the Company by reason of any incapacity, physical or
mental, which the Board, based upon medical advice or an opinion provided by a licensed physician
acceptable to the Board, determines to have incapacitated Executive from satisfactorily performing
all of Executive’s usual services for the Company for a period of at least one hundred twenty (120)
days during any twelve (12) month period (whether or not consecutive). Based upon such medical
advice or opinion, the determination of the Board shall be final and binding and the date such
determination is made shall be the date of such Complete Disability for purposes of this Agreement.
For the purposes of this Agreement, “Change of Control” shall have the meaning set
forth in the Amended and Restated Limited Liability Company Operating Agreement of Vangent Holding
LLC, dated as of February 14, 2007, as amended.
2. Release. As a condition of receipt by the Executive of the Success Bonus
hereunder, the executive shall execute a release substantially in the form attached hereto as
Exhibit A (“Release”). In the event that the Executive does not execute such a release prior to
the Closing, or, if the Executive revokes such Release within the revocation period provided in
such Release, which shall be a period of seven days after the Executive’s execution of the Release,
no Success Bonus shall be payable under this Agreement to the Executive.
3. COBRA. In the event that the Executive’s employment is terminated by the Company
without Cause, or if the Executive resigns from such employment for Good Reason (the “Separation
Date”), within the twelve (12) month period following the Closing, group health insurance coverage
(including dental and vision insurance benefits) shall continue through the end of the month
following Executive’s last day of employment, and, effective with the end of coverage, Executive
will be eligible for continued medical coverage (including dental and vision insurance benefits)
under the Consolidated Omnibus Budget Reconciliation Act (“COBRA’) for a period of eighteen (18)
months. In the event of such termination or resignation, if the Executive elects medical coverage
under COBRA, the Company will pay, beginning forty-five days following the Separation Date,
provided the Executive executes and delivers within thirty (30) days following the date of such
resignation or termination, to the Company a valid release agreement substantially in the form
attached as Exhibit A, and provided the Executive does not revoked
such Release
within the 30 day period, the standard employer’s portion of the premium (76%), in
which case Executive will pay the remaining portion (24%). The Executive will make premium payments
for COBRA directly to the COBRA administrator. Information about COBRA benefits and costs will be
mailed from the Company’s COBRA Administrator to Executive’s address on record within two weeks of
Executive’s Separation Date.
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For purposes of this Letter Agreement, (A) “Cause” means the occurrence of any of the
following: (i) the willful engagement by Executive in conduct that causes material harm to the
Company, whether such harm is monetary or otherwise; (ii) the Executive’s conviction or indictment
for a felony; (iii) the Executive’s willful malfeasance or willful misconduct in connection with
the Executive’s duties which is not cured, if curable, within thirty (30) days of Executive’s
receipt of written notice; (iv) Executive’s failure to comply with a material provision of any of
the Company’s policies or procedures which is not cured, if curable, within thirty (30) days of
Executive’s receipt of written notice; or (v) Executive’s breach of any covenant set forth in
Sections 4-7 of this Agreement which is not cured, if curable, within thirty (30) days of
Executive’s receipt of written notice; and (B) “Good Reason” means the occurrence of any of the
following (i) relocation of Executive’s primary place of employment (defined as where Executive
work at least an average of 3 days per week in the course of a calendar year) more than 35 miles
from Executive’s primary place of employment at the time of execution of this Agreement without
Executive’s consent, (ii) any reduction in Executive’s current base salary or target incentive
compensation, unless such reduction is part of an across-the-board reduction of senior management
salaries, or (iii) a material diminution or change in Executive’s job duties or responsibilities as
they existed at the time of execution of this Agreement, provided, that, the Company shall have
thirty (30) days after receipt of notice from Executive in writing specifying the deficiency that
would result in Good Reason to cure such deficiency.
4. Confidentiality. Except as required by law or an order of a court or governmental
agency with jurisdiction (provided that Executive shall give prompt written notice
to the Company of such requirement, disclose no more information than is so required, and cooperate
with any attempt by the Company to obtain a protective order or similar treatment), the Executive
shall not, during the period he is employed by the Company and for anytime thereafter, disclose
Confidential Information (as defined below) to any person or entity for any reason or purpose
whatsoever. Executive shall take all reasonable steps to safeguard the Confidential Information and
to protect it against disclosure, misuse, espionage, loss and theft. All such Confidential
Information shall remain the exclusive property of the Company. For purposes of this Agreement,
“Confidential Information” shall mean non-public information concerning the Company’s business or
operations, plans, strategies, prospects or objectives; its sales, services, support and marketing
plans, practices and operations; the prices, costs and details of its services or prospective
services; the financial condition and results of its operations; information received from third
parties under confidential conditions; the Company’s personnel and compensation policies; and means
of gaining access to the Company’s computer data systems and related information. “Confidential
Information” shall not include general knowledge based on Executive’s experience in the industry,
information generally known in the industry, or information that is or becomes generally available
to the public other than as a result of prohibited disclosure by the Executive.
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5. Non-Solicitation. From the date of execution of this Agreement, and for a period
of twelve (12) months following the Closing (the “Restricted Period”), the Executive shall not
directly or indirectly (a) solicit or attempt to solicit or induce, (x) any party who is a customer
of the Company or its subsidiaries, who was a customer of the Company or its subsidiaries at any
time during the twelve (12) month period immediately prior to the date the Executive’s employment
terminates or who is a prospective customer that has been identified and targeted by the Company or
its subsidiaries as of the date the Executive’s employment terminates, for the purpose of
marketing, selling or providing to any such party any services or products offered by or available
from the Company or its subsidiaries (provided that if the Executive intends to solicit any such
party for any other purpose, he shall notify the Company of such intention), or (y) any supplier to
the Company or any subsidiary to terminate, reduce or alter negatively its relationship with the
Company or any subsidiary in any manner interfere with any agreement or contract between the
Company or any subsidiary and such supplier or (b) solicit or attempt to solicit any employee of
the Company or any of its subsidiaries (a “Current Employee”) or any person who was an employee of
the Company or any of its subsidiaries during the twelve (12) month period immediately prior to the
date the Executive’s employment terminates (a “Former Employee”) to terminate such employee’s
employment relationship with the Company or its subsidiaries in order, in either case, to enter
into a similar relationship with Executive, or any other person or any entity or hire any Current
Employee or Former Employee.
6. Non-Competition. During the Restricted Period, the Executive shall not, whether
individually, as a director, manager, member, stockholder, partner, owner, employee, consultant or
agent of any business, or in any other capacity, other than on behalf of the Company or a
subsidiary, organize, establish, own, operate, manage, control, engage in, participate in, invest
in, permit his name to be used by, act as a consultant or advisor to, render services for (alone or
in association with any person, firm, corporation or business organization), or otherwise assist
any person or entity that is engaged in the government services business that is competing for
Major Contracts (as defined below) held by the Company or its affiliates or are being bid on, at
the time of the Executive’s termination of employment. Major Contracts shall mean any contract with
potential revenue of not less than $25 million per year. Notwithstanding the foregoing, nothing in
this Agreement shall prevent the Executive from owning for passive investment purposes not intended
to circumvent this Agreement, less than five percent (5%) of the publicly traded common equity
securities of any company engaged in the Business (so long as the Executive has no power to manage,
operate, advise, consult with or control the competing enterprise and no power, alone or in
conjunction with other affiliated parties, to select a director, manager, general partner, or
similar governing official of the competing enterprise other than in connection with the normal and
customary voting powers afforded the Executive in connection with any permissible equity
ownership).
7. Non-Disparagement. The Executive agrees that he will not at any time (whether
during or after the termination of his employment with the Company for any reason) publish or
communicate to any person or entity any Disparaging (as defined below) remarks, comments or
statements concerning the Company, its parent, subsidiaries and affiliates and their respective
present and former members, partners, directors, officers, shareholders, employees, agents,
attorneys, successors and assigns. The Company agrees to instruct its executive officers and
directors to refrain from publishing or communicating to any person or entity any Disparaging
remarks, comments or statements concerning the Executive at any time, provided
that, nothing in this Section 7 shall prevent the Company from (a) responding in a truthful
manner to inquiries regarding Executive’s employment or the termination thereof, from investors,
regulators, the Company’s auditors or insurers, or as otherwise may be required by applicable law,
rules or regulations, or (b) disclosing information concerning the Executive or the termination of
Executive’s employment to officers of the Company or its affiliates who, at the discretion of the
Company, should know such information. “Disparaging” remarks, comments or statements are those that
impugn the character, honesty, integrity or morality or business acumen or abilities in connection
with any aspect of the operation of business of the individual or entity being disparaged.
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8. Confidentiality of Agreement. The Executive agrees that the terms and conditions
of this Agreement are confidential and that the Executive will not disclose the terms and
conditions of this Agreement to any third parties, provided however, that the
Executive may disclose the terms and conditions of this Agreement (a) to Executive’s spouse,
attorney, or accountant, if Executive instructs such persons not to disclose the terms and
conditions of this Agreement to any third party, and (b) as required by law or as may be necessary
to enforce this Agreement or to comply with the terms.
9. Employment Relationship. Nothing in this Agreement is intended to modify the
at-will employment relationship between the Company and the Executive. Either the Company or the
Executive may terminate the employment relationship at any time, with or without notice, for any
reason or no reason.
10. Entire Agreement. This Agreement contains the entire agreement between the
Executive and the Company with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with respect thereto.
11. Waiver and Amendments. This Agreement may be amended, modified, superseded, or
canceled, and the terms and conditions hereof may be waived, only by a written instrument signed by
the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the part of
any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any Party of any right, power or privilege hereunder, nor any
single or partial exercise of any right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege hereunder.
12. Governing Law; Venue. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to conflicts of laws principles
thereof. All disputes arising out of or related to this Agreement shall be submitted to the state
and federal courts of New York and the Parties irrevocably consent to such personal jurisdiction
and waive all objections thereto, but do so only for the purposes of this Agreement.
13. Assignability by the Company and the Executive. This Agreement, and the rights
and obligations hereunder, may not be assigned by the Company or the Executive without written
consent signed by the other party; provided that the Company may assign the
Agreement to any successor that continues the business of the Company.
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14. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same instrument.
15. Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning of terms contained herein.
16. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof. If any provision of this Agreement, or the application thereof to any
Party or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision
shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the remainder of this
Agreement and the application of such provision to other Parties or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application thereof, in any other
jurisdiction.
17. Section 409A. This Agreement is intended to comply with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). To the
extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A,
the provision shall be read in such a manner so that all payments hereunder shall comply with
Section 409A.
18. Tax Withholding. The Company shall have the right to deduct from any payment due
under this Agreement, any applicable withholding taxes or other deductions required by law to be
withheld with respect to such payment and to take such action as may be necessary in the opinion of
the Company to satisfy all obligations for the payment of such taxes.
19. Termination of Agreement. Notwithstanding anything to the contrary herein, if
either (a) the Closing fails to be consummated by the Outside Closing Date or (b) the Executive’s
employment terminates for any reason prior to the Closing (except due to the Executive’s death or
Complete Disability), then this Agreement shall automatically terminate without any further action
by the Parties hereto and this Agreement shall be null and void and have no further force and
effect.
20. Shareholder Approval. The payment of the Success Bonus shall be subject to
shareholder approval pursuant to Section 280G of the Code (“Shareholder Approval”). If Shareholder
Approval is not obtained prior to the Closing, the Executive shall not be entitled to the Success
Bonus and this Agreement shall be null and void and have no further force and effect.
[Signature page follows]
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IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have executed
this Agreement as of the day and year first above mentioned.
| VANGENT, INC. | EXECUTIVE | |||||||
By:
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/s/ Xxxxxx X. XxXxxx
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/s/ Xxxx X. Xxxxxx
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| Title: Chairman | ||||||||
Signature Page to Success Bonus Agreement
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in the Success Bonus Agreement dated
(the “Success Bonus Agreement”), to which this form is attached, I, J. XxXxxxxx Xxxxxx,
hereby furnish Vangent Inc. (the “Company”), with the following release and waiver (“Release and
Waiver”).
I hereby release, and forever discharge the Company, its officers, directors, agents, employees,
stockholders, successors, assigns affiliates and benefit plans, all of their past and present
officers, directors, agents, and insurers, in all capacities, including individually (all of which
organizations and persons are hereinafter collectively identified as the “Company Parties”), from
any and all claims, demands, actions, indemnities, liabilities, or obligations of whatever kind and
nature, which I may have had, may now have, or may hereafter claim to have through the date this
Release and Waiver is executed, whether known or unknown, contingent or otherwise, at law or in
equity, including, without limitation, any claims relating to my employment and the termination of
my employment, all compensation and benefits relating to my employment (including but not limited
to, claims for salary, bonuses, commissions, stock, stock options, vacation pay, fringe benefits,
severance pay or any form of compensation); any claim of discrimination based on my race, color,
religion, sex, national origin, or disability, if any; any claim that the Company Parties have
violated any federal, state or local statute, regulation, or ordinance with respect to my
employment or the cessation thereof, including, without limitation, the Age discrimination in
Employment Act, 29 U.S.C. § 621 et seq., Title VII of the Civil Rights Act of 1964, 42 U.S.C. §
1981, the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act; the
Americans with Disabilities Act, 42 U.S.C. 12101 et seq., and any claim that the Company Parties
have breached any oral, written, express, or implied employment agreement; any claim that the
Company Parties have intentionally or negligently inflicted emotional distress, mental anguish or
humiliation on me; any claim of the breach of any implied covenant of good faith and fair dealing;
any claim of damages, monetary or other personal relief, and/or attorney’s fees in any
administrative and/or judicial proceeding initiated by me, by any third party on my behalf, or by
any governmental authority prior to or following my execution of this Release and Waiver; any claim
of libel, slander and/or defamation of character; any retaliation, “whistleblower,” or public
policy claim; and any other claim of whatever kind not specifically identified in this Release and
Waiver; provided, however, that this release does not extend to and will not release the Company
from any of its obligations under the Success Bonus Agreement.
I acknowledge that, among other rights, I am waiving and releasing any rights I may have under
ADEA, that this Release and Waiver is knowing and voluntary, and that the consideration given for
this Release and Waiver is in addition to anything of value to which I was already entitled as an
Executive of the Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the Release and Waiver granted herein does not
relate to claims which may arise after this Release and Waiver is executed; (b) I have the right to
consult with an attorney, at my expense, prior to executing this Release and Waiver (although I may
choose voluntarily not to do so); (c) I have twenty-one (21) days to consider this Release
and Waiver (although I may choose voluntarily to execute this Release and Waiver earlier); (d) I am
entitled to revoke my consent to this Release and Waiver within seven (7) days following the
execution of this Release by delivering written revocation notice to Vangent, Inc. 0000 X. Xxxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxxxx, XX. 22203 Attention: Chairman of the Board of Directors and (e) this
Release and Waiver shall not be effective until the seven (7) day revocation period has expired. If
I timely revoke this Release and Waiver after signing it, this Release and Wavier will become null
and void and the Company will have no obligation to pay the Success Bonus (as defined in the
Success Bonus Agreement).
By:
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