EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 27th day of October, 1997, between
Condor Technology Solutions, Inc., a Delaware corporation (the "Company"),
and Xxxxxx X. Xxxxx (the "Executive").
WHEREAS, the parties hereto wish to enter into an employment agreement to
employ the Executive as the Chief Operating Officer of the Company and to set
forth certain additional agreements between the Executive and the Company.
NOW, THEREFORE, in consideration of the mutual covenants and representations
contained herein, the parties hereto agree as follows:
1. TERM.
The Company will employ the Executive, and the Executive will serve the
company, under the terms of this Agreement for an initial term of three (3)
years, commencing on the date hereof. Effective as of the expiration of such
initial three-year term and as of each anniversary date thereof, the term of
this Agreement shall be extended for an additional 12-month period unless,
not later than two months prior to each such respective date, either party
shall have given notice to the other party that the term shall not be so
extended. Notwithstanding the foregoing, the Executive's employment hereunder
may be earlier terminated, as provided in Section 4 hereof. The term of this
Agreement, as in effect from time to time in accordance with the foregoing,
shall be referred to herein as the "Term." The period of time between the
commencement and the termination of the Executive's employment hereunder
shall be referred to herein as the "Employment Period."
2. EMPLOYMENT.
(a) Position and Reporting. The Company hereby employs the Executive for
the Employment Period as Chief Operating Officer of the Company on the terms
and conditions set forth in this Agreement. Effective on the closing date of
the Company's initial public offering of Common Stock, the Executive will be
employed hereunder as the President and Chief Operating Officer.
(b) Authority and Duties. The Executive shall exercise such authority,
perform such executive duties and functions and discharge such
responsibilities as are reasonably associated with the Executive's position,
commensurate with the authority vested in the Executive's position, pursuant
to this Agreement and consistent with the By-Laws of the Company. Without
limiting the generality of the foregoing, the Executive shall report directly
and be responsible to the Chief Executive Officer of the Company. During the
Employment Period, the Executive shall devote his full business time, skill
and efforts to the business of the Company. Notwithstanding the foregoing,
the Executive may (i) make and manage passive personal business investments
of his choice (in the case of publicly-held corporations, not to exceed five
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percent (5%) of the outstanding voting stock) and serve in any capacity with
any civic, educational or charitable organization, or any trade association,
without seeking or obtaining approval by the Board of Directors of the
Company (the "Board"), provided such activities and service do not materially
interfere or conflict with the performance of his duties hereunder and (ii)
with the approval of the Board, which shall not be unreasonably withheld,
serve on the boards of directors of other corporations.
3. COMPENSATION AND BENEFITS.
(a) Salary. During the Employment Period, the Company shall pay to the
Executive, as compensation for the performance of his duties and obligations
under this Agreement, a base salary at the rate of $220,000 per annum,
payable in arrears not less frequently than monthly in accordance with the
normal payroll practices of the Company. Such base salary shall be subject to
review each year for possible increase by the Board, but shall in no event be
decreased from its then-existing level during the Employment Period.
(b) Annual Bonus. During the Employment Period, the Executive shall have
the opportunity to earn an annual bonus in accordance with a Company annual
bonus program to be established by the Board for senior executives of the
company and its subsidiaries. The payment of any annual bonus under any such
program shall be contingent upon the achievement of certain corporate and/or
individual performance goals established by the Board in its discretion.
(c) Stock Options. The Company has established a 1997 Long-Term Incentive
Plan (the "Plan") in the form attached hereto as Exhibit A that will be in
effect upon the completion of the initial public offering of the Company's
Common Stock. The Plan provides, among other things, for the issuance from
time to time to certain officers, directors and other employees of the
Company of options to purchase shares of the Company's Common Stock. On the
date of the commencement of the initial public offering (the "IPO Date")
under the Securities Act of 1933, as amended (the "Securities Act"), the
Company shall grant to the Executive options to purchase 75,000 shares of the
Company's Common Stock (the "Initial Grant"), exercisable at the initial
public offering price, that shall vest and become exercisable in three equal
annual installments on each of the first, second and third anniversaries of
the closing date of the Company's initial public offering of Common Stock.
(d) Founder's Shares. The Company has sold to the Executive 800,000
shares of the Company's Common Stock before giving effect to a
reverse stock split to be made in connection with the Company's initial
public offering (the "Founder's Shares") in consideration of consulting,
financial advisory and related services provided to the Company by the
Executive.
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(e) Other Benefits. During the Employment Period, the Executive shall be
entitled to participate in all of the employee benefit plans, programs and
arrangements in effect during the Employment Period that are generally
available to senior executives of the Company, subject to and on a basis
consistent with the terms, conditions and overall administration of such
plans, programs and arrangements. In addition, during the Employment Period,
the Executive shall be entitled to fringe benefits and perquisites comparable
to those of other senior executives of the Company.
(f) Business Expenses. During the Employment Period, the Company shall
reimburse the Executive for all documented reasonable business expenses
incurred by the Executive in the performance of his duties under this
Agreement, in accordance with the Company's policies.
(g) Indemnification. During the Employment Period and thereafter, the
Company shall indemnify the Executive to the fullest extent permitted by
applicable law, and the Executive shall be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the
benefit of the directors and officers of the Company, with respect to all
costs, charges and expenses, including attorneys' fees, whatsoever incurred
or sustained by the Executive in connection with any action, suit or
proceeding (other than any action, suit or proceeding brought by or in the
name of the Company against the Executive) to which he may be made party by
reason of being or having been a director, officer or employee of the Company
or his serving or having served any other enterprise as a director, officer
or employee at the request of the Company. In addition, the Company shall
indemnify the Executive in the event the Executive has to pay liquidated
damages of up to $100,000 to the Executive's former employer, Medaphis
Corporation ("Medaphis"), under the terms of the Severance Agreement and
General Release, dated September 30, 1997, by and between Medaphis and the
Executive.
4. TERMINATION OF EMPLOYMENT.
(a) Termination for Cause. The Company may terminate the Executive's
employment hereunder for cause. For purposes of this Agreement and subject to
the Executive's opportunity to cure as provided in Section 4 (c) hereof, the
Company shall have "cause" to terminate the Executive's employment hereunder
if such termination shall be the result of:
(i) willful fraud or dishonesty in connection with the Executive's
performance hereunder that results in material harm to the Company;
(ii) the failure by the Executive to substantially perform his
duties hereunder that results in material harm to the Company; or
(iii) the conviction for, or plea of nolo contendere to, a charge of
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commission of a felony.
(b) Termination for Good Reason. The Executive shall have the right at
any time to terminate his employment with the Company at any time and for any
good reason. For purposes of this Agreement and subject to the Company's
opportunity to cure as provided in Section 4 (c) hereof, the Executive shall
have "good reason" to terminate his employment hereunder if such termination
shall be the result of:
(i) a material diminution during the Employment Period in the
Executive's duties or responsibilities as set forth in Section 2 hereof;
(ii) a material breach by the Company of the compensation and
benefits provisions set forth in Section 3 hereof;
(iii) a notice of termination by the Executive under Section 4 (c)
hereof within 12 months following the occurrence of a Change in Control (as
defined in Section 4 (e) hereof); or
(iv) a material breach by the Company of any other term of this
Agreement.
(c) Notice and Opportunity to Cure. Notwithstanding the foregoing, it
shall be a condition precedent to the Company's right to terminate the
Executive's employment for "cause" and the Executive's right to terminate his
employment for "good reason" that (1) the party seeking the termination shall
first have given the other party written notice stating with specificity the
reason for the termination ("breach"); (2) if the Executive is terminated for
"cause," the Company provides the Executive an opportunity to appear before
the Board to answer such grounds for termination; and (3) if such breach is
susceptible of cure or remedy, a period of 30 days from and after the giving
of such notice shall have elapsed without the breaching party having
effectively cured or remedied such breach during such 30-day period, unless
such breach cannot be cured or remedied within 30 days, in which case the
period for remedy or cure shall be extended for a reasonable time (not to
exceed an additional 30 days), provided the breaching party has made and
continues to make a diligent effort to effect such remedy or cure.
(d) Termination Upon Death or Permanent and Total Disability. The
Employment Period shall be terminated by the death of the Executive. The
Employment Period may be terminated by the Company if the Executive shall be
rendered incapable of performing his duties to the Company by reason of a
"disability," defined as either (i) any medically determined physical or
mental impairment that can be expected to result in death or that can be
expected to last for a period of six or more consecutive months from the
first date of the Executive's absence, or (ii) due to a total and permanent
"disability" that can be expected to last for a period of six or more
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consecutive months from the first date of the Executive's absence, as such
term is defined in the Company's long term disability insurance policy or
contract as may be in effect from time to time for the benefit of employees
of the Company (either, a "Disability"). If the Employment Period is
terminated by reason of a Disability of the Executive, the Company shall give
30 days' advance written notice to that effect to the Executive. If the
existence of a Disability hereunder is in dispute, it shall be resolved by
two physicians, one appointed by the Executive and one appointed by the
Company. If the two physicians so selected cannot agree as to whether or not
the Executive has a Disability, the two physicians so selected shall
designate a third physician and a majority of the three physicians so
selected shall determine whether or not the Executive has a Disability.
(e) Definition of Change in Control. A "Change in Control" shall be
deemed to have taken place if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's capital stock are
converted into cash, securities or other property other than a
consolidation or merger of the Company in which the holders of the
Company's voting stock immediately prior to the consolidation or merger
shall, upon consummation of the consolidation or merger, own at least 50%
of the voting stock of the surviving corporation, or any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of the Company; or
(ii) any person (as such term is used in Sections 13(d) and 14
(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) shall after the date hereof become the beneficial owner (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly,
of securities of the Company representing 35% or more of the voting power
of all then outstanding securities of the Company having the right under
ordinary circumstances to vote in an election of the Board (including,
without limitation, any securities of the Company that any such person has
the right to acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise, which shall be deemed
beneficially owned by such person); or
(iii) individuals who at the date hereof constitute the entire Board
and any new directors whose election by the Board, or whose nomination for
election by the Company's stockholders, shall have been approved by a vote
of at least a majority of the directors then in office who either were
directors at the date hereof or whose election or nomination for election
shall have been so approved (the "Continuing Directors") shall cease for
any reason to constitute a majority of the members of the Board;
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5. CONSEQUENCES OF TERMINATION
(a) Termination Without Cause or for Good Reason. In the event of
termination of the Executive's employment hereunder by the Company without
"cause" (other than upon death or Disability) or by the Executive for
"good reason" (each as defined in Section 4 hereof), the Executive shall
be entitled to the following severance pay and benefits:
(i) Severance Pay - severance payments in the form of continuation
of the Executive's base salary as in effect immediately prior to such
termination over the longer of: (A) the then-remaining Term hereof; or (B)
12 months (the "Severance Period").
(ii) Benefits Continuation - continuation for the Severance
Period of coverage under the group medical care, disability and life
insurance benefit plans or arrangements in which the Executive is
participating at the time of termination; provided, however, that the
Company's obligation to provide or cause to be provided such coverages
shall be terminated if the Executive obtains comparable substitute
coverage from another employer at any time during the Severance Period.
The Executive shall be entitled, at the expiration of the Severance
Period, to elect continued medical coverage in accordance with
section 4980B of the Internal Revenue Code of 1986, as amended (or
any successor provision thereto); and
(iii) Stock Options - all options to purchase shares of the Company's
Common Stock held by the Executive immediately prior to termination of
employment shall become immediately vested and exercisable and, subject
to the terms of the Company's 1997 Long-Term Incentive Plan, shall
remain exercisable for the duration of the Severance Period.
(b) Other Terminations. In the event of termination of the
Executive's employment hereunder for any reason other than those
specified in Section 5(a) hereof, the Executive shall not be entitled
to any severance pay, benefits continuation or stock option rights
contemplated by the foregoing, except as may otherwise be provided under
the applicable benefit plans or award agreements relating to the
Executive.
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(c) Accrued Rights. Notwithstanding the foregoing provisions of
this Section 5, in the event of termination of the Executive's
employment hereunder for any reason, the Executive shall be entitled to
payment of any unpaid portion of his base salary through the effective
date of termination, and payment of any accrued but unpaid rights solely
in accordance with the terms of any incentive bonus, stock option or
employee benefit plan or program of the Company.
6. CONFIDENTIALITY
The Executive agrees that he will not at any time during the Term hereof or
at any time thereafter for any reason, in any fashion, form or manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company and its subsidiaries, including, without limiting the generality of
the foregoing, the techniques, methods or systems of its operation or
management, any information regarding its financial matters, or any other
material information concerning the business of the Company and its
subsidiaries, their manner of operation, their plans or other material data.
The provisions of this Section 6 shall not apply to (i) information
that is public knowledge other than as a result of disclosure by the
Executive in breach of this Section 6; (ii) information disseminated
by the Company or any of its subsidiaries to third parties in the ordinary
course of business; (iii) information lawfully received by the Executive
from a third party who, based upon inquiry by the Executive, is not bound by
a confidential relationship to the Company or any of its subsidiaries; or
(iv) information disclosed under a requirement of law or as directed by
applicable legal authority having jurisdiction over the Executive.
7. INVENTIONS.
The Executive is hereby retained in a capacity such that the Executive's
responsibilities include the making of technical and managerial contributions
of value to the Company and its subsidiaries. The Executive hereby assigns
to the Company all right, title and interest in such contributions and
inventions made or conceived by the Executive alone or jointly with others
during the Employment Period that relate to the business of the Company or
any of its subsidiaries. This assignment shall include (a) the right to
file and prosecute patent applications on such inventions in any and all
countries, (b) the patent applications filed and patents issuing thereon,
and (c) the right to obtain copyright, trademark or trade name protection
for any such work product. The Executive shall promptly and fully disclose
all such contributions and inventions to the Company and assist the Company
in obtaining and protecting the rights therein (including patents thereon) in
any and all countries; provided, however, that said contributions and
inventions will be the property of the Company, whether or not patented or
registered for copyright, trademark or trade name protection, as the case may
be. The Executive hereby agrees to execute any documentation requested by
the Company to be so executed if such request is made in order to carry out
the purpose and terms of this paragraph. Inventions conceived by the
Executive that are not related
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to the business of the Company or any of its subsidiaries will remain the
property of the Executive.
8. NON-COMPETITION
The Executive agrees that he shall not during the Employment Period and, if
applicable, the Severance Period, without the approval of the Board, directly
or indirectly, alone or as partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor or stockholder (other
than as provided below) of any company or business, engage in any
"Competitive Business" within the United States. For purposes of the
foregoing, the term "Competitive Business" shall mean any business involved
in providing information technology solutions, including, but not limited to,
desktop services, software development, systems design and integration, large
scale survey research, recruiting and comprehensive marketing and sales,
which is in direct competition with the Company or any of its subsidiaries in
any community in which the Company or any of its subsidiaries is doing
business. Notwithstanding the foregoing, the Executive shall not be
prohibited during the non-competition period applicable above from acting as
a passive investor where he owns not more than five percent (5%) of the issued
and outstanding capital stock of any publicly-held company. During the
period that the above non-competition restriction applies, the Executive
shall not, without the written consent of the Company, solicit or encourage
any employee of the Company or any current or future subsidiary or affiliate
thereof to terminate his or her employment.
9. BREACH OF RESTRICTIVE COVENANTS.
The parties agree that a breach or violation of Section 6, 7 or 8 hereof
will result in immediate and irreparable injury and harm to the innocent
party, which party shall have, in addition to any and all remedies of law and
other consequences under this Agreement, the right to an injunction, specific
performance or other equitable relief to prevent the violation of the
obligation hereunder.
10. NOTICES.
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
(a) If to the Company, to:
CONDOR TECHNOLOGY SOLUTIONS, INC.
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0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
XxXxxx, XX 00000
(b) If to the Executive, to:
Xxxxxx X. Xxxxx
c/o CONDOR TECHNOLOGY SOLUTIONS, INC.
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
XxXxxx, XX 00000
or to such other address as a party hereto shall designate to the other party
by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
11. ARBITRATION: LEGAL FEES.
Except as provided in Section 9 hereof, any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in McLean, Virginia in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall
reimburse the Executive for all reasonable legal fees and costs and other
fees and expenses that the Executive may incur in respect of any dispute or
controversy arising against the Company under or in connection with this
Agreement; provide, however, that the Company shall not reimburse any such
fees, costs and expenses if the fact finder determines that an action brought
by the Executive was substantially without merit or the Executive is
otherwise unsuccessful in such an action.
12. WAIVER OF BREACH.
Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part of either
the Executive or of the Company.
13. NON-ASSIGNMENT: SUCCESSORS.
Neither part hereto may assign his or its rights or delegate his or its
duties under this Agreement without prior written consent of the other party;
provided, however, that (i) subject to the rights of the Executive under
Section 4(b) hereof, this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company upon any sale of all
or substantially all of the Company's assets, or upon any merger,
consolidation or reorganization of the Company with or into any other
corporation, all as
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though such successors and assigns of the Company and their respective
successors and assigns were the Company; and (ii) this Agreement shall
inure to the benefit of and be binding upon the heirs, assigns or designees
of the Executive to the extent of any payments due to the Executive
hereunder. As used in this Agreement, the term "Company" shall be deemed
to refer to any such successor or assign or the Company referred to in the
preceding sentence.
14. WITHHOLDING OF TAXES.
All payments required to be made by the Company to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any,
relating to tax, and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation.
15. SEVERABILITY.
To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
16. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute
one and the same instrument.
17. GOVERNING LAW.
This Agreement shall be construed, interpreted and enforced in accordance
with the laws of the State of Virginia.
18. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement by the Company and the
Executive with respect to the subject matter hereof and supersedes any and
all prior agreements or understandings between the Executive and the Company
with respect to the subject matter hereof, whether written or oral. This
Agreement may be amended or modified only by a written instrument executed by
the Executive and the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
____________, 1997.
CONDOR TECHNOLOGY SOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxx
___________________
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
By: /s/ J. Xxxxxxxx Xxxxxxx
_______________________
Name: J. Xxxxxxxx Xxxxxxx
Title: Chairman of the Board
THE EXECUTIVE
/s/ Xxxxxx X. Xxxxx
___________________
Name: Xxxxxx X. Xxxxx
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