EMPLOYMENT AGREEMENT RELATING TO CHANGE OF CONTROL
RELATING TO CHANGE OF
CONTROL
EMPLOYMENT
AGREEMENT RELATING TO CHANGE OF CONTROL (the “Agreement”) by and between
TechTeam Global, Inc., a Delaware corporation (the “Company”) and Xxxxx X. Xxxxx (the
“Executive”) dated as of the 13th day of July 2010.
The Board
of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to diminish the inevitable
distraction to the Executive from the personal uncertainties and risks created
by a pending or potential Change of Control, and to encourage the Executive’s
full attention and dedication to the Company currently and in the event of any
pending or potential Change of Control, and to provide the Executive with a
severance package if the Executive is terminated after a Change of
Control. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain
Definitions.
(a) The
“Effective
Date” shall mean the date on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding,
if a Change of Control occurs and if the Executive’s employment with the Company
is terminated prior to the date on which the Change of Control occurs, and if it
is reasonably demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps reasonably
calculated to effect the Change of Control or (ii) otherwise arose in connection
with or in anticipation of the Change of Control, then for all purposes of this
Agreement, the “Effective Date” shall mean the date immediately prior to the
date of such termination of employment.
(b) “Change of Control” of
the Company shall mean:
(i)
The sale of all then outstanding shares of common stock of the Company or 51% of
the then outstanding voting securities of the Company entitled to vote generally
in the election of the directors (the Outstanding Company Voting Securities”);
or
(ii) The
consummation of the sale or other disposition of all or substantially all of the
assets or operations of the Company.
(c) Change
Period. The “Change Period” shall be the period commencing on
the Effective Date and ending on the first anniversary of such
date.
(d) “Code” shall mean the
Internal Revenue Code of 1986, as amended. Any reference to a
specific provision of the Code shall be deemed to include any successor
provision thereto and the regulations promulgated thereunder.
(e) “Separation from
Service” shall having the meaning given in Code Section 409A, applying
the default rules thereof.
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(f)
“Specified
Employee” shall have the meaning given in Code Section 409A as
determined in accordance with the methodology established by the Company as in
effect on the date of Executive’s Separation from Service.
2. Terms of
Employment.
(a) Position and
Duties. During the Change Period, Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive’s
reasonable best efforts to perform faithfully and efficiently such
responsibilities.
(b) Compensation. During
the Change Period, the Executive shall receive an annual base salary (“Annual
Base Salary”) at least equal to twelve times the highest monthly base salary
paid or payable to the Executive by the Company in the twelve-month period
immediately preceding the month in which the Effective Date
occurs. During the Change Period, Executive shall be eligible to
participate in any bonus program in force on the Effective Date, or otherwise
adopted by the Company, and shall be entitled to participate in all savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company. Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and
programs provided by the Company (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs).
3. Termination of
Employment.
(a) Death or
Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death or Disability that continues for 30
days after the Company provides Executive of notice of its determination of
Disability. For purposes of this Agreement, “Disability” shall mean
the absence of the Executive from the Executive’s duties with the Company on a
full-time basis for 180 consecutive business days as a result of incapacity due
to mental or physical illness, which is determined to be total and/or permanent
by a physician selected by the Company or its insurers and acceptable to the
Executive or the Executive’s legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The
Company may terminate the Executive’s employment during the Change Period for
Cause. For purposes of this Agreement, “Cause” means any of
the following: (i) Eligible Employee’s conviction of or a plea of no
contest to a felony, fraud or a crime involving moral turpitude under any state
or federal statute; (ii) Eligible Employee’s continued failure to substantially
perform the Eligible Employee’s duties, or any other intentional action or
omission by Eligible Employee that is injurious to the Company; or (iii) any
material breach of any employee handbook of the Company by the Eligible
Employee, which breach is not remedied within fourteen (14) days after written
notice thereof.
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(c) Good
Reason. The Executive’s employment may be terminated during
the Change Period by the Executive for Good Reason. For purposes of
this Agreement, “Good Reason” shall mean the occurrence of any of the following
without the written consent of the Executive:
(i)
the assignment to the Executive of any duties inconsistent in any respect with
the Executive’s position, authority, duties or responsibilities prior to the
Change of Control, or any other action by the Company (or its successor) which
results in a material diminution in such position, authority, duties or
responsibilities, and the continuance of such assignment of duties or other such
action for a period of sixty (60) days; or
(ii) the
Company’s requiring the Executive to be based at any office or location other
than in Southfield, Michigan, except for any short-term assignment (under three
(3) months) where the Company pays all travel or temporary relocation costs
incurred by the Executive; or
(iii) any
failure by the Company to comply with and satisfy Section 8(c), or any failure
by any successor to assume and offer to perform this Agreement in accordance
with Section 8(c) provided that such successor has received at least ten days
prior written notice from the Company or the Executive of the requirements of
Section 9(c).
(d) Notice of
Termination. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 9(b). For
purposes of this Agreement, a “Notice of Termination” means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, and (ii) to the extent practicable, sets forth in reasonable detail the
facts and circumstances relied upon to form Executive’s basis for termination of
employment under the operative provisions. The Company and the
Executive are not precluded from asserting any other fact or circumstance in
enforcing the Executive’s or the Company’s rights under this
Agreement.
In addition, if the Executive is
resigning for Good Reason, the Notice of Termination must be provided to the
Company within ninety (90) days of the existence of the condition that
constitutes Good Reason and must provide the Company (or the successor in case
of Section 3(c)(iii)) a period of thirty (30) days to remedy the condition that
constitutes Good Reason. If the Company (or successor) remedies the
condition that constitutes Good Reason within such thirty (30) day period, then
the Executive may withdraw the Notice of Termination; provided that if the
Executive does not withdraw the Notice of Termination, then the Executive will
be considered to have terminated for other than Good Reason.
(e) Termination
Date. “Termination Date” means (i) if the Executive’s
employment is terminated by the Company for Cause, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be;
(ii) if the Executive’s employment is terminated by the Executive for Good
Reason, the end of the thirty-day cure period described in subsection (d) above
or any later date specified therein (which later date must in all cases be
within two years of the initial existence of the condition constituting Good
Reason); (iii) if the Executive’s employment is terminated by the Company other
than for Cause or Disability, the Termination Date shall be the date on which
the Company notifies the Executive of such termination; and (iv) if the
Executive’s employment is terminated by reason of death or Disability, the
Termination Date shall be the date of death of the Executive or the date of
Disability, as the case may be.
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4. Obligations of the Company
upon Termination.
(a) Good Reason: Other
than for Cause, Death or Disability. If, during the Change Period,
the Company shall terminate the Executive’s employment other than for Cause,
Death or Disability, or the Executive shall terminate employment for Good
Reason, the Company shall:
(i)
pay to the Executive in a lump sum in cash the aggregate of the following
amounts:
A. the
sum of: (1) the Executive’s Annual Base Salary through the Termination Date to
the extent not theretofore paid plus (2) any accrued vacation pay to the extent
not theretofore paid; and
B.
the Executive’s Annual Bonus as if earned at the Executive’s target level;
and
C.
the amount equal to twelve months of the Executive’s Annual Base
Salary;
(ii) provide
the Executive with reasonable executive outplacement services for a period of up
to twelve (12) months following Executive’s Separation from Service through a
recognized outplacement provider that is agreed to by the Company and the
Executive;
(iii) continue
welfare benefits to the Executive and/or the Executive’s family at least equal
to those which would have been provided to them in accordance with the welfare
plans, programs, practices and policies of the Company as if the Executive’s
employment had not been terminated for a period of twelve (12) months; provided,
however, that if the Executive becomes re-employed with another employer and is
eligible to receive medical or other welfare benefits under another employer
provided plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable period
of eligibility (such continuation of such benefits for the applicable period
herein set forth shall be hereinafter referred to as “Welfare Benefit
Continuation”). Any benefits received by the Executive pursuant to
this Section 4(a)(iii) shall not reduce the period of time the Executive is
entitled to receive COBRA continuation health coverage as a result of the
Executive’s termination of employment;
(iv) immediately
upon termination vest any options, restricted stock, or performance stock
granted to Executive, and the Executive will have six (6) months to
exercise any such options;
(v) pay
to the Executive the proceeds of the Executive Savings Plan, including all
accumulated interest and dividends, as required therein.
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The
Company shall pay the amounts described in clauses i.(B) and (C) (in the
aggregate, the “Severance Pay”) promptly following Executive’s Separation from
Service, but no more than thirty (30) days thereafter; provided that if the
Executive is a Specified Employee at the time of such Separation from Service,
then to the extent the Severance Pay exceeds an amount equal to the lesser of
(x) two times the Executive’s annual rate of pay for the prior calendar year and
(y) two times the dollar limitation in effect under Code Section 401(a)(17) for
the year in which such Separation from Service occurs, such excess shall be paid
with interest on such delayed payment at the applicable federal rate provided
for in Section 7872(f)(2)(A) of the Code on the first business day after
the date that is six months following the Executive’s Separation from Service
(the “Delayed Payment Date”).
In
addition, if the Executive is a Specified Employee on the date of Separation
from Service and if the taxable value of continued life insurance coverage
exceeds the applicable dollar limit under Code Section 402(g)(1)(B) as in effect
for the year of Separation from Service, then the Executive shall pay the
Company the premiums for the coverage in excess of such limit and, on the
Delayed Payment Date, the Company shall reimburse such amount to the
Executive.
(b) Death, Retirement or
Disability. If the Executive’s employment is terminated by
reason of the Executive’s death, retirement or Disability during the Change
Period, this Agreement shall terminate without further obligations to the
Executive’s legal representatives or the Executive, as the case may be, under
this Agreement.
(c) Cause, Other than for Good
Reason. If the Executive’s employment shall be terminated for
Cause during the Change Period or if the Executive terminates employment during
the Change Period other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive, except
the Company shall be obligated to pay the Executive’s Annual Base Salary through
the Termination Date plus the amount of any compensation previously deferred by
the Executive (as required by the terms of the deferred compensation arrangement
in effect at such time), in each case to the extent theretofore
unpaid.
5. Limitation on
Payment. In the event that the Executive is a “disqualified
individual” within the meaning of Code Section 280G, the parties expressly agree
that the payments described in Paragraph 6 of this Agreement and all other
payments to the Executive under any other agreements or arrangements with any
persons that constitute “parachute payments” within the meaning of Section 280G
of the Code are collectively subject to an overall maximum limit. The
maximum limit shall be One Dollar ($1.00) less than the aggregate amount that
would otherwise cause any such payments to be considered a “parachute payment”
within the meaning of Section 280G of the Code, as determined by the
Corporation. Accordingly, to the extent that the payments would be
considered a “parachute payment” with respect to the Executive, then the
portions of such payments shall be reduced or eliminated in the following order
until the remaining payments with respect to the Executive are within the
maximum described in this Section 5.
(a) First,
any cash payment to the Executive;
(b) Second,
any “parachute payments” not described in this Agreement; and
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(c) Third,
any forgiveness of indebtedness of the Executive to the
Corporation.
The
Executive expressly and irrevocably waives any and all rights to receive any
“parachute payments” that exceed the maximum limit described in this Section
5.
6. Confidential
Information. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge
or data relating to the Company and its respective businesses, which has been
obtained by the Executive during the Executive’s employment by the Company which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation
of the provisions of this Section 6 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
7. Non-Solicitation
Covenant. In consideration for entry into this Agreement,
Executive reaffirms his/her agreement with the Company not to compete with, or
solicit customers or employees of the Company as set forth in the Intellectual
Property Assignment, Non-Solicitation, and Confidentiality
Agreement.
8. Successors and
Assigns.
(a) This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive’s legal
representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
9. Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of Michigan, without reference to principles or conflict of
laws. All litigation related to this Agreement shall be brought in a
court located in the State of Michigan, and each party, for the purposes of such
litigation, hereby submits to the exclusive jurisdiction and venue of that
court. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
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(b) All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the
Executive:
Xxxxx X.
Xxxxx
0000
Xxxxx Xxxxxx Xxxx
Xxxx
Xxxxxxxxxx, XX 00000
or at the
most current address of record designated in the Executive’s personnel
file.
If to the
Company:
Chief
Executive Officer
TechTeam
Global, Inc.
00000
Xxxx 00 Xxxx Xxxx
Xxxxxxxxxx,
Xxxxxxxx 00000-0000
or to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d) The
Company may withhold from any amounts payable under this Agreement such federal,
state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 3(c)(i)-(iii), shall not be deemed to be a waiver of
such provision or right or any other provision or right of this
Agreement.
(f) The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is “at will” and, prior to the
Effective Date, may be terminated by either the Executive or the Company at any
time. Moreover, if prior to the Effective Date, the Executive’s
employment with the Company terminates, then the Executive shall have no further
rights under this Agreement. The Executive further acknowledges that
this Agreement does not give the Executive any additional right to participate
in any plan, program, etc. The Executive and the Company agree that
this Agreement supersedes any separation policy of the Company.
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(g) This
Agreement constitutes the entire agreement between the parties concerning the
subject matter hereof. Any prior understandings, representations,
promises, undertakings, agreements or inducements, whether written or oral,
concerning the subject matter hereof not contained herein shall have no force
and effect.
(h) This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives. An agreement to amend this Agreement can be entered
into on behalf of the Company only by the President of the Company after
approval of the Company Board.
IN
WITNESS WHEREOF, the Company has by its appropriate officer executed this
Agreement and Executive has executed this Agreement.
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TECHTEAM
GLOBAL, INC.
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By:
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/s/ Xxxx X. Xxxxxxxx
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Chief
Executive Officer
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EXECUTIVE
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By:
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/s/ Xxxxx X. Xxxxx
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Xxxxx
X. Xxxxx
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