EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is dated as of December
18, 1998 by and between COSI Acquisition Corp., a Delaware corporation (the
"Company") and wholly-owned subsidiary of Computer Outsourcing Services, Inc.
("Parent"), and Xxxxxx X. Xxxxxx ("Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to hire Employee as the President of the
Company, and Employee desires to commence such employment, upon the terms set
forth in the Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the adequacy
and receipt of which are hereby acknowledged, the parties agree as follows:
1. Employment. (a) During the Term (as defined herein), Employee shall
serve and the Company shall employ (the "Employment") Employee as President of
the Company. Employee shall have the full authority to control the day-to-day
operations of the Company and the operations management of Parent's data
center(s), subject to the general supervision, control and guidance of the
Board of Directors of the Company (the "Board"). Employee hereby accepts the
Employment and agrees to (i) render such services, (ii) perform such duties and
(iii) exercise such supervision and powers to, for and with respect to the
Company, as may be established by the Board, for the period and upon the terms
set forth in this Agreement.
(b) Employee shall devote substantially all of his business time and attention
to the business and affairs of the Company consistent with his position with
the Company. This Agreement shall not be construed as preventing Employee from
engaging in charitable and community affairs, or giving attention to his
passive investments, provided that such activities do not interfere with the
regular performance of his duties and responsibilities under this Agreement.
2. Term. Except as otherwise specifically provided in Section 5 below,
the term of this Agreement (the "Term") shall commence on the date hereof, and
shall continue until November 30, 2001, subject to the terms and conditions of
this Agreement.
3. Compensation.
3.1 Base Salary. Employee shall be paid a base salary (the "Base Salary")
at an annual rate of two hundred sixty eight thousand dollars ($268,000),
payable at such intervals as the other executive officers of the Company are
paid, but in any event at least on a monthly basis. The Base Salary may be
increased from time to time by the Board or a committee thereof, in its sole
discretion.
3.2 Bonus. In addition to the Base Salary, Employee shall be entitled to
such bonus compensation ("Bonus Compensation") as may be determined from time
to time by the Board or a committee thereof, in its sole discretion.
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3.3 Employee Benefits. In addition to the Base Salary, Employee shall
be entitled (i) to receive the fringe benefits provided by the Company to its
executive officers, including, but not limited to, life, hospitalization,
surgical, major medical and disability insurance and sick leave, which may be
in effect from time to time or may hereafter be adopted by the Company, (ii) to
be a full participant in all of the Company's other benefit plans, pension
plans, retirement plans and profit-sharing plans which may be in effect from
time to time or may hereafter be adopted by the Company, and (iii) to an
automobile provided by the Company or, in lieu thereof, to all costs and
expenses for the maintenance, including insurance, and lease of Employee's
automobile; provided however, that such costs and expenses shall not exceed
$1,000 in any month.
3.4 Vacation. During the Term, Employee shall be entitled to such
vacation with pay during each calendar year of his Employment hereunder
consistent with the vacation policy of the Company. Employee shall also be
entitled to all paid holidays given by the Company to its executive officers.
4. Expenses. During the Term, the Company shall reimburse Employee upon
presentation of appropriate vouchers or receipts in accordance with the
Company's expense reimbursement policies for executive officers, for all out-
of-pocket business travel and reasonable entertainment expenses incurred or
expended by Employee in connection with the performance of his duties under
this Agreement.
5. Consequences of Termination of Employment.
5.1 Death. In the event of the death of Employee during the Term,
Employee's Employment hereunder shall be terminated as of the date of his death
and Employee's designated beneficiary, or, in the absence of such designation,
the estate or other legal representative of Employee (collectively, the
"Estate") shall be paid Employee's unpaid Base Salary through the date on which
the death occurs plus the Base Salary for three (3) months. The Estate shall
be entitled to all other death benefits in accordance with the terms of the
Company's benefit programs and plans.
5.2 Disability. In the event Employee shall be unable to render the
services or perform his duties hereunder by reason of illness, injury or
incapacity (whether physical, mental, emotional or psychological) (any of the
foregoing shall be referred to herein as a "Disability") for a period of either
(i) one hundred twenty (120) consecutive days or (ii) one hundred eighty (180)
days in any consecutive three hundred sixty-five (365) day period, the Company
shall have the right to terminate this Agreement by giving Employee ten (10)
days' prior written notice. If Employee's Employment hereunder is so
terminated, Employee shall be paid, in addition to payments under any
disability insurance policy in effect, Employee's unpaid Base Salary through
the month in which the termination occurs.
5.3 Termination of Employment of Employee by the Company for Cause.
(a) Nothing herein shall prevent the Company from terminating Employee's
Employment for Cause (as defined below), upon written notice to Employee. From
and after the date of such termination, Employee shall no longer be entitled to
receive Base Salary and the Company shall no longer be required to pay premiums
on any life insurance or disability policy for Employee, if any. Any rights
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and benefits which Employee may have in respect of any other compensation or
any employee benefit plans or programs of the Company, whether pursuant to
Section 3.3 or otherwise, shall be determined in accordance with the terms of
such other compensation arrangements or plans or programs. The term "Cause,"
as used herein, shall mean that: (i) Employee shall embezzle funds or
misappropriate other property of the Company or any of its affiliates; (ii)
Employee shall willfully disobey a lawful directive of the Board, whether
through commission or omission; (iii) the engaging by the Employee in
misconduct which is or could reasonably be expected by the Board to become
materially injurious to the Company or any of its affiliates, monetarily or
otherwise; or (iv) Employee shall breach the Agreement in a material manner or
engage in fraudulent conduct as regards the Company or any of its affiliates.
(b) The Company shall provide Employee with written notice stating that it
intends to terminate Employee's employment for Cause under this Section 5..3 and
specifying the particular act or acts on the basis of which the Board intends
to so terminate Employee's employment. Employee shall then be given the
opportunity, within thirty (30) days of his receipt of such notice, to have a
meeting with the Board to discuss such act or acts (other than with respect to
an action described in Section 5.3(a)(i) above as to which the Board may
immediately terminate Employee's employment for Cause). Other than with
respect to an action described in Section 5.3(a)(i) above, Employee shall be
given fifteen (15) days after his meeting with the Board to take reasonable
steps to cease or correct the performance (or nonperformance) giving rise to
such written notice. In the event Board determines that Employee has failed
within such fifteen (15) day period to take reasonable steps to cease or
correct such performance (or nonperformance), which determination shall be made
in the Board's sole discretion, Employee shall be given the opportunity, within
ten (10) days of his receipt of written notice to such effect, to have a
meeting with the Board to discuss such determination. Following that meeting,
if the Board believes that Employee has failed to take reasonable steps to
cease or correct his performance (or nonperformance) as above described, which
determination shall be made in the Board's sole discretion, the Board may
thereupon terminate the employment of Employee for Cause.
5.4 Termination of Employment of Employee by the Company without Cause.
If the Employee's employment is terminated by the Company other than for Cause,
death or disability, Employee shall be paid Employee's unpaid Base Salary
through the date of termination and the Base Salary for the remainder of the
Term.
6. Confidential Information.
6.1 Employee covenants and agrees that he will not at any time, either
during the Term or thereafter, use, disclose or make accessible to any other
person, firm, partnership, corporation or any other entity any Confidential
Information (as defined below) pertaining to the business of the Company or any
of its affiliates except (i) while employed by the Company, in the business of
and for the benefit of the Company or any of its affiliates or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company or any of
its affiliates or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order the Company or any of its
affiliates to divulge, disclose or make accessible such information. For
purposes of this Agreement, "Confidential Information" shall mean non-public
information concerning the Company's or any of its affiliates' financial data,
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statistical data, strategic business plans, product development (or other
proprietary product data), customers (including, without limitation, the
identity of customers and prospective customers, and the identity of individual
contacts at business entities which are customers or prospective customers),
business relationships, member and manufacturer lists, member and manufacturer
information, information relating to practices, processes, methods, trade
secrets, marketing plans and other proprietary and confidential information of
the Company or any of its affiliates; provided, however, that Confidential
Information shall not include any information which (x) is known generally to
the public other than as a result of unauthorized disclosure by Employee, (y)
becomes available to the Employee on a non-confidential basis from a source
other than the Company or any of its affiliates or (z) was available to
Employee on a non-confidential basis prior to its disclosure to Employee by the
Company or any of its affiliates. It is specifically understood and agreed by
Employee that any Confidential Information received by Employee during his
Employment by the Company or any of its affiliates is deemed Confidential
Information for purposes of this Agreement. In the event Employee's Employment
is terminated hereunder for any reason, he immediately shall return to the
Company all Confidential Information in his possession.
6.2 Employee and the Company agree that this covenant regarding
Confidential Information is a reasonable covenant under the circumstances, and
further agree that if, in the opinion of any court of competent jurisdiction,
such covenant is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. Employee agrees that any breach of
the covenant contained in this Section 6 would irreparably injure the Company
and its affiliates. Accordingly, Employee agrees that the Company, in addition
to pursuing any other remedies it may have in law or in equity, may obtain an
injunction against Employee from any court having jurisdiction over the matter,
restraining any further violation of this Section 6.
7. Non-Competition; Non-Solicitation.
7.1 In consideration of the execution of this Agreement, Employee agrees
that during the Non-Competition Period (as defined in Section 7.4 below), (i)
he shall not be a principal, manager, agent, consultant, officer, director or
employee of, or, directly or indirectly, own more than five percent (5%) of any
class or series of equity securities in, any partnership, corporation or other
entity, which, now or at such time, has material operations which are engaged
in any business activity competitive (directly or indirectly) with the business
of the Company or any business activity of the Parent or any of its subsidiaries
for which Employee had direct or indirect management responsibility or had
detailed knowledge of while employed with the Company (the "Parent Business");
and (ii) he shall not, on behalf of any competing entity, directly or
indirectly, have any dealings or contact with any customers of the Company or
any of its affiliates (including, without limitation, prospective customers and
individual contacts at business entities that are customers or prospective
customers).
7.2 During the Non-Competition Period, Employee agrees that (other than
on behalf of the Company or any of its affiliates), Employee shall not, on his
own behalf or on behalf of any person or entity, directly or indirectly (a)
hire, solicit or encourage to leave the employment of, any employee (other than
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Xxxxxxxxx Xxxxx) who has been employed by the Company or any of its affiliates
and (b) directly or indirectly solicit, entice, or divert away from the Company
or any of its affiliates, any person who is a then customer or prospective
customer of the Company or any of its affiliates or who was a customer or
prospective customer of the Company or any of its affiliates at any time while
Employee was in the employ of the Company.
7.3 Employee and the Company agree that the covenants of non-competition
and non-solicitation are reasonable covenants under the circumstances, and
further agree that if, in the opinion of any court of competent jurisdiction
such covenants are not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
these covenants as to the court shall appear not reasonable and to enforce the
remainder of these covenants as so amended. Employee agrees that any breach of
the covenants contained in this Section 7 would irreparably injure the Company
and its affiliates. Accordingly, Employee agrees that the Company, in addition
to pursuing any other remedies it may have in law or in equity, may obtain an
injunction against Employee from any court having jurisdiction over the matter,
restraining any further violation of this Section 7.
7.4 The provisions of this Section 7 shall extend for the Term and survive
the termination of this Agreement for one (1) year from the date of such
termination (herein referred to as the "Non-Competition Period").
8. Invention, Assignment, Publication and Return Provisions.
(a) Employee agrees to and hereby does assign to the Company his entire
right, title, and interest in any invention, discovery, idea, improvement, or
work, whether patentable or not or copyrightable or not, including, but not
limited to, computer software and related products, which is conceived or made
solely or jointly by Employee while employed by the Company and which relates
in any manner to the actual or reasonably anticipated business, research,
developments, services, other activities, or products of the Company or any its
affiliates, or which is suggested by or results from any task or work assigned
to or performed by the Employee on behalf of the Company or any of its
affiliates.
(b) Employee agrees to promptly disclose to the Company any invention,
discovery, idea, improvement or work covered by this Section 8 and, if
requested, will take all reasonable actions necessary to enable the Company or
any of its affiliates to secure patent or copyright protection in the United
States or foreign countries for such invention, discovery, idea, improvement or
work.
(c) Employee agrees that, while in the employ of the Company and for one (1)
year following termination of Employment, for any reason, at least fifteen (15)
days prior to the submission for publication of any article or contribution from
or by Employee, which article or contribution deals with or makes reference to
Confidential Information or any subject pertaining to Employee's work with the
Company or any of its affiliates, the Employee will make available to the
Company a copy of such article or publication for review. The Company shall
have the ability to withdraw any such article or contribution from publication
as it deems necessary to protect its Confidential Information or proprietary
information.
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(d) After the termination of Employee's Employment, for any reason(s),
Employee agrees to immediately disclose and surrender to the Company any and
all tangible items, including, but not limited to, all inventions; programs;
systems; schematics; specifications; ideas; suggestions; products; processes;
equipment; data; manuals; writings; documents; drawings; photographs;
observations; and the like (including all copies thereof); and any other items,
documents, or information concerning the business or affairs of the Company or
any of its affiliates that Employee has in his possession.
9. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if delivered personally or
sent by facsimile transmission, overnight courier, or certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally or sent by facsimile transmission (provided that a
confirmation copy is sent by overnight courier), one day after deposit with an
overnight courier, or if mailed, five (5) days after the date of deposit in the
United States mails, as follows:
If to the Company, to:
COSI Acquisition Corp.
0 Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
If to Employee, to:
Xx. Xxxxxx X. Xxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Fax No.: (000) 000-0000
10. Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the matters contemplated herein and
supersedes all prior agreements or understandings among the parties related to
such matters; provided, however that to the extent restrictive covenants similar
to those set forth in this Agreement are contained in another agreement, each
such provision shall be given independent effect and the provisions of this
Agreement related to such subject matter shall not invalidate or supersede any
provision set forth in any other agreement but all provisions shall be read
together and shall be enforceable to the fullest extent of the law.
11. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Company and its successors
and assigns and upon Employee. "Successors and assigns" shall mean, in the case
of the Company, any successor pursuant to a merger, consolidation, or sale, or
other transfer of all or substantially all of the assets or common stock of the
Company.
12. No Assignment. Except as contemplated by Section 11 above, this
Agreement shall not be assignable or otherwise transferable by either party,
except that the Company may assign this Agreement to the Parent without the
prior written consent of the Employee.
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13. Third Party Beneficiary. The parties agree that Parent and its
subsidiaries are third party beneficiaries to this Agreement.
14. Survival of Provisions. The provisions of this Agreement set forth in
Sections 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 20 hereof shall
survive the termination of Employee's employment hereunder.
15. Amendment or Modification; Waiver. No provision of this Agreement may
be amended or waived unless such amendment or waiver is authorized by the Board
and is agreed to in writing, signed by Employee and by a duly authorized officer
of the Company (other than Employee). Except as otherwise specifically provided
in this Agreement, no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of a similar or dissimilar provision
or condition at the same or at any prior or subsequent time.
16. Fees and Expenses. If either party institutes any action or proceedings
to enforce any rights the party has under this Agreement, or for damages by
reason of any alleged breach of any provision of this Agreement, or for a
declaration of each party's rights or obligations hereunder or to set aside any
provision hereof, or for any other judicial remedy, the prevailing party shall
be entitled to reimbursement from the other party for its costs and expenses
incurred thereby, including but not limited to, reasonable attorneys' fees and
disbursements.
17. Governing Law. The validity, interpretation, construction, performance
and enforcement of this Agreement shall be governed by the internal laws of the
State of New York, without regard to its conflicts of law rules. Each of the
parties hereto hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of any court of the State of New Jersey or any federal court
sitting in the State of New Jersey for purposes of any suit, action or other
proceeding arising out of this Agreement (and agrees not to commence any action,
suit or proceedings relating hereto except in such courts). Each of the parties
hereto agrees that service of any process, summons, notice or document by
U.S.
registered mail at its address set forth herein shall be effective service of
process for any action, suit or proceeding brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement, which is brought by or against it, in the courts of the State
of New Jersey or any federal court sitting in the State of New Jersey and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
18. Titles. Titles to the Sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any Section.
19. Counterparts. This Agreement may be executed in one or more
counterparts, which together shall constitute one agreement. It shall not be
necessary for each party to sign each counterpart so long as each party has
signed at least one counterpart.
20. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
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ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms and
provisions of this Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
COSI ACQUISITION CORP..
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, President
/s/ Xxxxxx X. Xxxxxx
-------------------------
Xxxxxx X. Xxxxxx
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