Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), made and entered into as
of the 26 day of August, 2002 (the "Effective Date") by and between Predictive
Systems, Inc., a Delaware corporation with principal offices located at 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx (the "Company"), and Xxxxxx Xxxxx (the
"Executive"). The Company and the Executive may be referred to herein
individually as a "Party" or collectively as the "Parties".
WITNESSETH
WHEREAS, the Company has a need for the Executive's personal services
in an executive capacity; and
WHEREAS, the Executive possesses the necessary strategic, financial,
planning, operational and managerial skills necessary to fulfill those needs;
and
WHEREAS, the Executive and the Company desire to enter into a formal
Employment Agreement to fully recognize the contributions of Executive to the
Company and to assure continuous harmonious performance of the affairs of the
Company.
NOW, THEREFORE, in consideration of the mutual promises, terms,
provisions, and conditions contained herein, the parties agree as follows:
1. Position and Duties.
The Company hereby agrees to employ the Executive to serve in the role of Chief
Financial Officer and Executive Vice President of the Company, subject to the
limitations set forth herein. The Executive shall be responsible for the
financial management of the affairs of the Company. The Executive accepts such
employment upon the terms and conditions set forth herein, and further agrees to
perform to the best of his abilities the duties generally associated with his
position, as well as such other duties commensurate with his position as Chief
Financial Officer as may be reasonably assigned by the Company. The Executive
shall, at all times during the Term (as defined below), report directly to the
Chief Executive Officer. The Executive shall perform his duties diligently and
faithfully and shall devote his full business time and attention to such duties,
provided however, that nothing herein shall preclude the Executive from (i)
serving on the boards of directors of a reasonable number of other corporations
with the prior written approval of the Board (which approval shall not be
unreasonably withheld), (ii) serving on the boards of a reasonable number of
trade associations and/or charitable organizations, (iii) engaging in charitable
activities and community affairs and (iv) managing his personal investments and
affairs, provided that such activities do not conflict or interfere with the
effective discharge of his duties and responsibilities under this Agreement, or
otherwise violate any of the terms of this Agreement.
2. Term of Employment and Renewal.
The term of Executive's employment under this Agreement will commence
on the Effective Date. Subject to the provisions of Section 10 of this
Agreement, the term of Executive's employment hereunder shall be for an initial
term of three (3) years from the Effective Date (the "Initial Term"). The
Initial Term of this Agreement shall be automatically extended for successive
one (1) year periods (each a "Renewal Period") unless the Company or the
Executive gives written notice to the other at least ninety (90) days prior to
the expiration of the Initial Term or a Renewal Period, of such Party's election
not to extend this Agreement. References herein to the "Term" shall mean the
Initial Term as it may be so extended by one or more Renewal Periods. The last
day of the Term is the "Expiration Date."
3. Compensation and Benefits.
(a) Salary. Commencing on the Effective Date, the Company agrees to pay
the Executive a base salary at an annual rate of Two Hundred Twenty Thousand
Dollars ($220,000.00), payable in such installments as is the policy of the
Company (the "Salary"), but no less frequently than monthly. The Salary shall be
eligible for annual review by the Board beginning with calendar year 2003.
(b) Bonuses. The Executive shall be entitled to receive bonuses as
follows:
(i) The Executive shall receive a signing bonus of Thirty Thousand
Dollars ($30,000) payable on or about the Effective Date of this Agreement.
(ii) The Executive shall be eligible to receive an annual cash
bonus for each calendar year of employment with the Company (the "Annual Bonus")
at the discretion of the Company.
(c) Benefits. The Executive shall be entitled to participate in all
employee benefit plans which the Company provides or may establish from time to
time for the benefit of its employees or senior-level executives, including,
without limitation, group life, medical, surgical, dental and other health
insurance, short and long-term disability, deferred compensation, profit-sharing
and similar plans subject to the terms and conditions of the applicable plans
and/or policies. The Executive shall also be entitled to paid vacation of twenty
(20) days per year, in accordance with the Company's vacation policy.
(d) Stock Options. As of the last day of the month during which the
Effective Date occurs, the Company shall grant the Executive, pursuant to the
Company's 1999 Stock Incentive Plan (the "Plan"), an option to purchase Four
Hundred Fifty Seven Thousand Five Hundred (457,500) shares of the Company's
common stock (the "Option Shares") at a purchase price equal to the fair market
value of the shares at the time of the grant, under the terms and conditions set
forth in the Plan and the Company's standard Notice Of Grant of Stock Option,
and the exhibits thereto, which shall be provided to the Executive upon the date
of the stock option grant provided for herein, vesting and becoming exercisable
as to 25% of the Option Shares on the first anniversary of the grant, and in
thirty-six (36) equal monthly installments thereafter as long as the Executive
is employed by the Company.
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(e) Additional Stock Options. The Company shall grant the Executive,
pursuant to the Plan, an option (The "Second Option") to purchase the greater of
(a) Two Hundred Thousand (200,000) shares of the Company's Common Stock ; or (b)
an amount of Common Stock equal to 1.2% of the Company's outstanding Common
Stock, calculated on a fully-diluted basis based on all outstanding Common Stock
including Common Stock subject to granted stock options (the "Second Option
Shares") provided that, in no event shall the amount of the Second Option Shares
exceed Five Hundred Thousand (500,000). The purchase price applying to the
Second Option shall be equal to the fair market value of the Second Option
Shares at the time of the grant. The Second Option shall be subject to the terms
and conditions set forth in the Plan and the Company's standard Notice Of Grant
of Stock Option, and the exhibits thereto, which shall be provided to the
Executive upon the date of the stock option grant provided for herein. The
Second Option shall vest and become exercisable as to 25% of the Second Option
Shares on the first anniversary of the grant, and in thirty-six (36) equal
monthly installments thereafter as long as the Executive is employed by the
Company. The grant of the Second Option shall be effective no later than January
2, 2003.
(f) Restricted Stock. On or about January 2, 2003, the Company shall
grant the Executive, pursuant to the Plan, One Hundred and Fifty Thousand
(150,000) shares of restricted stock (the "Restricted Stock") under the terms
and conditions set forth in the Plan and the Company's standard Stock Issuance
Agreement, subject to a repurchase right by the Company at the purchase price
paid by the Executive, which repurchase right shall lapse as to 25% of the
Restricted Stock on the first anniversary of the Effective Date, and in
thirty-six (36) equal monthly installments thereafter as long as the Executive
is employed by the Company.
(g) Notwithstanding the foregoing, any issuance of stock options or
restricted stock pursuant to subparagraphs (e) or (f) which would result in the
number of options and shares of restricted stock issued to Executive under the
Plan in any calendar year to exceed the aggregate limit per calendar year as set
forth in the Plan (taking into account any amendments to the Plan after the date
hereof) shall be issued to Executive on a "stand alone" basis outside the terms
of the Plan and pursuant to a written stock option agreement and/or stock
issuance agreement, as applicable, prepared by the Company with terms
substantially similar to those contained in the Company's standard Notice of
Grant of Stock Option and/or Stock Issuance Agreement.
(h) Other Long-Term Incentives. The Executive shall be eligible to
participate in any ongoing long-term incentive programs of the Company subject
to the terms and conditions of such programs.
(i) Perquisites. The Executive shall be entitled to perquisites on the
same basis as provided to other senior-level executives of the Company from time
to time.
(j) Expenses. The Company shall pay or reimburse the Executive for all
reasonable out-of-pocket expenses actually incurred by him during the Term in
performing services hereunder, provided that the Executive properly accounts for
such expenses in accordance with the Company's policies.
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4. Confidentiality, Disclosure of Information.
(a) The Executive recognizes and acknowledges that the Executive will
have access to Confidential Information (as defined below) relating to the
business or interests of the Company or of persons with whom the Company may
have business relationships. Except as permitted herein, the Executive will not
during the Term, or at any time thereafter, use, disclose or permit to be known
by any other person or entity, any Confidential Information of the Company
(except (i) as required by applicable law, by a court of law or an arbitrator,
by any governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with jurisdiction to do so, (ii) as necessary in the good faith
furtherance of the Company's business objectives, as long as the Executive
seeks, to the maximum extent possible, to protect such Confidential Information
through contractual or other legal mechanism; (iii) with the Board's prior
written authorization). The term "Confidential Information" means information
relating to the Company's business affairs, proprietary technology, trade
secrets, patented processes, research and development data, know-how, market
studies and forecasts, competitive analyses, pricing policies, employee lists,
employment agreements (other than this Agreement), personnel policies, the
substance of agreements with customers, suppliers and others, marketing
arrangements, customer lists, commercial arrangements or any other information
relating to the Company's business that is not generally known to the public or
to actual or potential competitors of the Company (other than through a breach
of this Agreement). This obligation shall continue until such Confidential
Information becomes available to the public or the relevant trade or industry,
other than pursuant to a breach of this Section 4 by the Executive, regardless
of whether the Executive continues to be employed by the Company.
(b) It is further agreed and understood by and between the parties to
this Agreement that all "Company Materials," which include, but are not limited
to, computers, computer software, computer disks, tapes, printouts, source, HTML
and other code, flowcharts, schematics, designs, graphics, drawings,
photographs, charts, graphs, notebooks, customer lists, sound recordings, other
tangible or intangible manifestation of content, and all other documents whether
printed, typewritten, handwritten, electronic, or stored on computer disks,
tapes, hard drives, or any other tangible medium, as well as samples,
prototypes, models, products and the like, shall be the exclusive property of
the Company and, upon termination of Executive's employment with the Company,
and/or upon the request of the Company, all Company Materials, including copies
thereof, as well as all other Company property then in the Executive's
possession or control, shall be returned to and left with the Company except for
any documents for which the Company has given written consent to removal and
except for his personal Rolodex, calendars, diaries, personal files and similar
items, provided that such items must be examined by an authorized agent of the
Company and all Confidential Information deleted prior to being retained by the
Executive.
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5. Inventions Discovered by Executive.
The Executive shall promptly disclose to the Company any invention,
improvement, discovery, process, formula, or method or other intellectual
property, whether or not patentable or copyrightable (collectively,
"Inventions"), conceived or first reduced to practice by the Executive, either
alone or jointly with others, while performing services hereunder (or, if based
on any Confidential Information, at any time during or after the Term), (a)
which pertain to any line of business activity of the Company, whether then
conducted or then being actively planned by the Company, with which the
Executive was or is involved, (b) which is developed using time, material or
facilities of the Company, whether or not during working hours or on the Company
premises, or (c) which directly relates to any of the Executive's work during
the Term, whether or not during normal working hours. The Executive hereby
assigns to the Company all of the Executive's right, title and interest in and
to any such Inventions. During and after the Term, the Executive shall execute
any documents necessary to perfect the assignment of such Inventions to the
Company and to enable the Company to apply for, obtain and enforce patents,
trademarks and copyrights in any and all countries on such Inventions,
including, without limitation, the execution of any instruments and the giving
of evidence and testimony, without further compensation beyond the Executive's
agreed compensation during the course of the Executive's employment. Without
limiting the foregoing, the Executive further acknowledges that all original
works of authorship by the Executive, whether created alone or jointly with
others, related to the Executive's employment with the Company and which are
protectable by copyright, are "works made for hire" within the meaning of the
United States Copyright Act, 17 U.S.C. ss. 101, as amended, and the copyright of
which shall be owned solely, completely and exclusively by the Company. If any
Invention is considered to be work not included in the categories of work
covered by the United States Copyright Act, 17 U.S.C. ss. 101, as amended, such
work is hereby assigned or transferred completely and exclusively to the
Company. The Executive hereby irrevocably designates counsel to the Company as
the Executive's agent and attorney-in-fact to do all lawful acts necessary to
apply for and obtain patents and copyrights and to enforce the Company's rights
under this Section. This Section 5 shall survive the termination of this
Agreement. Any assignment of copyright hereunder includes all rights of
paternity, integrity, disclosure and withdrawal and any other rights that may be
known as or referred to as "moral rights" (collectively "Moral Rights"). To the
extent such Moral Rights cannot be assigned under applicable law and to the
extent the following is allowed by the laws in the various countries where Moral
Rights exist, the Executive hereby waives such Moral Rights and consents to any
action of the Company that would violate such Moral Rights in the absence of
such consent. The Executive agrees to confirm any such waivers and consents from
time to time as requested by the Company.
6. Non-Competition and Non-Solicitation.
The Executive acknowledges that the Company has invested substantial
time, money and resources in the development and retention of its Inventions,
Confidential Information (including trade secrets), customers, accounts and
business partners, and further acknowledges that during the course of the
Executive's employment with the Company the Executive will have access to the
Company's Inventions and Confidential Information (including trade secrets), and
will be introduced to existing and prospective customers, accounts and business
partners of the Company. The Executive acknowledges and agrees that the
Company's business is international in scope. The Executive acknowledges and
agrees that any and all "goodwill" associated with any existing or prospective
customer, account or business partner belongs exclusively to the Company,
including, but not limited to, any goodwill created as a result of direct or
indirect contacts or relationships between the Executive and any existing or
prospective customers, accounts or business partners. Additionally, the parties
acknowledge and agree that the Executive possesses skills that are special,
unique or extraordinary and that the value of the Company depends, in great
part, upon his use of such skills on its behalf.
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In recognition of this, the Executive covenants and agrees that:
(a) During the Term, and for a period of six (6) months thereafter, the
Executive may not, without the prior written consent of the Board (whether as an
employee, agent, servant, owner, partner, consultant, independent contractor,
representative, stockholder or in any other capacity whatsoever), participate in
any business that offers products or services directly competitive with any of
those offered by the Company, or that were under active development by the
Company during the Term (any such business, a "Competitor," any such products or
services, "Competitive Services"), provided that nothing herein shall prohibit
the Executive from (i) owning securities of corporations which are listed on a
national securities exchange or traded in the national over-the-counter market
in an amount which does not exceed 3% of the outstanding shares of such
corporation or (ii) after termination of his employment (x) participating in the
business of a separately managed and operated division, subsidiary or affiliate
of a Competitor, provided that such division, subsidiary or affiliate does not
offer Competitive Services and the Executive has no business communications with
employees of any division, subsidiary or affiliate of the Competitor that offers
Competitive Services regarding the business of the competitive division,
subsidiary or affiliate or (y) becoming affiliated with an entity that is not a
Competitor but that is subsequently acquired by or merged with a Competitor,
provided that, following such acquisition or merger, he is participating in the
business of a separately managed and operated division, subsidiary or affiliate
of the Competitor that does not offer Competitive Services and he has no
business communications with employees of any division, subsidiary or affiliate
of the Competitor that offers Competitive Services regarding the business of the
competitive division, subsidiary or affiliate.
(b) During the Term, other than in the course of the proper performance
of his duties hereunder, and for a period of one (1) year thereafter, the
Executive may not knowingly, directly or indirectly through another individual
or individuals, entice, solicit or encourage any Company employee to leave the
employ of the Company or any independent contractor to sever its engagement with
the Company, absent prior written consent to do so from the Board.
(c) During the Term, and for a period of one (1) year thereafter, the
Executive may not knowingly, directly or indirectly through another individual
or individuals, entice, solicit or encourage any customer, prospective customer,
vendor, strategic partner or business associate of the Company (i) to cease
doing business with the Company, reduce its relationship with the Company or
refrain from establishing or expanding a relationship with the Company or (ii)
for the purpose of offering Competitive Services.
7. Non-Disparagement.
(a) The Executive hereby agrees that during the Term, and for a period
of one (1) year thereafter, the Executive will not intentionally make any public
statement that is disparaging about the Company or any of its officers or
directors, including, but not limited to, any public statement that disparages
the products, services, finances, financial condition, capabilities or other
aspect of the business of the Company.
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(b) The Company hereby agrees that during the Term and for a period of
one (1) year thereafter its officers and directors will not intentionally make
any public statement that is disparaging about the Executive, including, but not
limited to, any statement that disparages the services, capabilities,
performance or any other aspect of the Executive's relationship with the
Company.
(c) This Section 7 shall not prevent any person or entity subject to it
from responding publicly to incorrect or disparaging public statements made in
violation of this Section 7 to the extent reasonably necessary to correct or
refute such public statements or from making truthful statements when necessary
to enforce this Agreement or required by applicable law, by a court of law or an
arbitrator, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) with jurisdiction to do so.
8. Provisions Necessary and Reasonable.
(a) The Executive agrees that
(i) the provisions of Sections 4, 5, 6 and 7 of this Agreement are
necessary and reasonable to protect the Company's Confidential Information,
Inventions, and goodwill;
(ii) the specific temporal, geographic and substantive provisions
set forth in Section 6 of this Agreement are reasonable and necessary to protect
the Company's business interests in part because the Company's business is
international in scope; and
(iii) in the event of any breach of any of the covenants set forth
herein, the Company would suffer substantial irreparable harm and would not have
an adequate remedy at law for such breach. In recognition of the foregoing, the
Executive agrees that in the event of a breach or threatened breach of any of
these covenants, in addition to such other remedies as the Company may have at
law, without posting any bond or security, the Company shall be entitled to seek
equitable relief, in the form of specific performance, and/or temporary,
preliminary or permanent injunctive relief, or any other equitable remedy which
then may be available. The seeking of such injunction or order shall not affect
the Company's right to seek and obtain damages or other equitable relief on
account of any such actual or threatened breach.
(b) If any of the covenants contained in Sections 4, 5, 6 and 7 hereof,
or any part thereof, is hereafter construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect without regard to the invalid portions.
(c) If any of the covenants contained in Sections 4, 5, 6 and 7 hereof,
or any part thereof, is held to be unenforceable by a court of competent
jurisdiction because of the temporal or geographic scope of such provision or
the area covered thereby, the Parties agree that the court making such
determination shall have the power to reduce the duration and/or geographic area
of such provision and, in its reduced form, such provision shall be enforceable.
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9. Representations.
(a) Representations by the Executive.
(i) The Executive represents that the Executive has no agreement or
other legal obligation with any prior employer, or any other person or entity,
that restricts the Executive's ability to accept employment, or to perform any
function for, the Company.
(ii) The Executive has been advised by the Company that at no time
should the Executive divulge to or use for the benefit of the Company any trade
secret or confidential or proprietary information of any previous employer; the
Executive expressly acknowledges that the Executive has not to the best of his
knowledge divulged or used any such information for the benefit of the Company.
(iii) The Executive acknowledges that the Executive has not and
will not knowingly misappropriate any Invention that the Executive played any
part in creating while working for any former employer.
(iv) The Executive acknowledges that the Company is basing
important business decisions on these representations, and affirms that all of
the statements included herein are true to the best of his knowledge.
(b) Representations by the Company.
(i) The Company represents that it is fully authorized by all
necessary action of its Board and any other body, entity or person whose action
is required to enter into this Agreement and to perform its obligations under it
and will, in a reasonably prompt manner, take all commercially reasonable
actions necessary to allow performance of all obligations hereunder.
(ii) The Company acknowledges that the Executive has relied upon
such representations in entering into this Agreement.
10. Termination and Severance; Change of Control.
Notwithstanding the provisions of Section 2 of this Agreement, the
Executive's employment hereunder may terminate under the following
circumstances:
(a) Termination by the Company for Cause.
(i) The Company may terminate the Executive's employment under this
Agreement for Cause at any time, subject to the requirements of Section
10(a)(ii) below. For purposes of this Agreement, "Cause" is defined as (A) the
Executive's willful and material breach of the terms of this Agreement; (B) the
Executive's commission of any felony or any crime involving moral turpitude; (C)
willful gross neglect or willful misconduct by the Executive in connection with
his position hereunder; or (D) the Executive's willful refusal to perform his
duties hereunder.
(ii) A termination for Cause shall not take effect unless the
provisions of this Section 10(a)(ii) are compiled with. The Executive shall be
given written notification by the Board of the termination for Cause, such
notification to state in reasonable detail the grounds on which the proposed
termination for Cause is based. The Executive shall be given ten (10) calendar
days' written notice and one opportunity to cure prior to a termination for
Cause pursuant to Section 10(a)(i)(D).
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(iii) Upon the termination for Cause of Executive's employment (A)
the Executive shall be entitled to Salary earned under this Agreement prior to
the date of termination, any earned but unpaid bonus, and any accrued but unused
vacation; and (B) any unvested stock options shall be forfeited and the
Executive shall have three (3) months in which to exercise any vested stock
options, provided however that if the basis for termination of Executive's
employment constitutes Misconduct under the relevant Stock Option Agreements
referred to above, then any unvested stock option shall terminate immediately
and cease to be outstanding.
(b) Termination by the Company Without Cause. The Executive's
employment under this Agreement may be terminated without Cause (other than
owing to death or Disability) by the Company, provided, however, that if the
Company terminates the Executive's employment without Cause, or the Executive
terminates his employment for Good Reason, as defined below, the Executive shall
be entitled to:
(i) Salary through the date of termination;
(ii) a lump sum payment equal to Salary for a period of six (6)
months, at the annualized rate in effect on the date of termination, payable as
provided for in Exhibit A hereto;
(iii) all outstanding stock options scheduled to vest within the
one-year period following termination shall immediately become fully vested and
exercisable and all vested stock options shall remain exercisable through the
end of their originally scheduled terms;
(iv) continuation health coverage for the Executive and any
eligible dependents covered as of the effective date of the termination,
pursuant to COBRA, at the Company's expense for a period of six (6) months; and
(v) in the event of termination occurring in the months of July
through December of any given calendar year, a pro rata portion of the Annual
Bonus for that year calculated based on the bonus awarded, if any, to the
Executive for the previous calendar year.
As a condition of receiving severance benefits pursuant to this Section
10(b) or Section 10(c), the Executive shall execute and deliver to the Company
prior to his receipt of such benefits a general release substantially in the
form attached hereto as Exhibit A.
(c) Termination by the Executive. The Executive may terminate his
employment hereunder upon thirty days (30) days' written notice to the Company.
(i) In the event of termination by the Executive of his employment
hereunder pursuant to this subsection 10(c) other than for Good Reason, (y) the
Company may elect to pay the Executive during the notice period (or for any
remaining portion of that period) the Salary and benefits at the rate of
compensation the Executive was receiving immediately before such notice of
termination was tendered in lieu of actual notice and (z) the Executive shall
have the same entitlements as under Section 10(a)(iii) above.
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(ii) The Executive may also terminate his employment hereunder for
"Good Reason." For purposes of this Agreement, "Good Reason" shall mean
termination by the Executive of his employment following the occurrence of any
of the following events without his consent:
(A) a material breach of this Agreement by the Company;
(B) a material reduction in the Executive's duties or
responsibilities;
(C) a change in the Executive's reporting relationship so that
he no longer reports directly to the CEO;
(D) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to
all or substantially all of the assets of the Company within a
reasonable period after a merger, consolidation, sale or similar
transaction; or
(E) a relocation of the Executive's principal worksite to a
location 50 miles or more from the location of the Company's principal
offices as of the Effective Date.
Provided, however, that the Executive must deliver to the Company written notice
of his intention to terminate his employment with Good Reason within thirty (30)
days following the Executive's discovery of the event or events constituting the
grounds for the termination, and the Company shall have thirty (30) days
following its receipt of such notice to cure such grounds prior to the
effectiveness of such termination.
(iii) In the event the Executive terminates his employment under
this Agreement for Good Reason, he shall have the same entitlements as under
Section 10(b) above.
(d) Death. In the event of the Executive's death during the Term, the
Executive's employment hereunder shall immediately and automatically terminate,
and the Company shall have no further obligation or duty to the Executive or his
estate or beneficiaries other than for the Salary earned under this Agreement to
the date of termination, any payments or benefits due under Company policies or
benefit plans and, in the case of the Executive's death occurring during the
months of July through December of any given calendar year, a pro rata portion
of the Annual Bonus for that calendar year.
(e) Disability. The Company may terminate the Executive's employment
hereunder, upon written notice to the Executive, in the event that the Executive
becomes disabled during the Term through any condition of either a physical or
psychological nature and, as a result, is, with or without reasonable
accommodation, unable to perform the essential functions of the services
contemplated hereunder for (a) a period of ninety (90) consecutive days, or (b)
for shorter periods aggregating one hundred twenty (120) days during any twelve
(12) month period during the Term. Any such termination shall become effective
upon mailing or hand delivery of notice that the Company has elected its right
to terminate under this subsection 10(e), and the Company shall have no further
obligation or duty to the Executive other than for salary earned under this
Agreement prior to the date of termination, any payments or benefits due under
Company policies or benefit plans and, in the case of termination hereunder
occurring during the months of July through December of any given calendar year,
a pro rata portion of the Annual Bonus for that calendar year.
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(f) Effect of Non-Renewal. In the event that the Company gives notice
of its election not to extend the Term of the Agreement for a Renewal Period
pursuant to Section 2 above, the Company shall continue to pay the Executive
full compensation as defined in Section 3 of this Agreement from the date the
Executive receives such notice through the Expiration Date. The Executive shall
not be entitled to any additional compensation other than any payments or
benefits due under Company policies or benefit plans.
(g) Change of Control. In the event a Change in Control or Hostile
Takeover, as defined in the Plan (collectively a "Change of Control"), occurs on
or before August 22, 2003, Fifty Percent (50%) of any unvested stock options and
Restricted Stock granted to the Executive shall accelerate and vest in full
immediately prior to the Change of Control, provided the Executive remains
employed by the Company on the date of such Change of Control. Any remaining
unvested stock options granted to the Executive shall vest in equal monthly
installments over a period of twelve months from the date of the Change of
Control, provided the Executive remains employed by the Company on such vesting
dates. If (i) the Executive is terminated other than for Cause, Disability or
death, or (ii) he terminates his employment for Good Reason, within 60 days
prior to the announcement of a Change of Control or within twelve months from
the effective date of the Change of Control, then all unvested stock options
granted to the Executive shall accelerate and vest in full and Executive shall
receive a lump sum payment equal to Salary for a period of twelve (12) months,
at the annualized rate in effect on the date of termination, payable as provided
for in Exhibit A hereto (such payment shall be in addition to any payment owed
pursuant to paragraph (b) of this Section 10 and conditioned upon the
Executive's execution and conditioned upon the Executive's execution and
delivery to the Company of a general release substantially in the form attached
hereto as Exhibit A). If a Change of Control occurs after August 22, 2003, then
all unvested stock options and Restricted Stock granted to the Executive shall
accelerate and vest in full immediately prior to the Change of Control, provided
the Executive remains employed by the Company on the date of such Change of
Control.
11. Choice of Law.
The Executive acknowledges that a substantial portion of the Company's
business is based out of and directed from the State of New York. The Executive
also acknowledges that during the course of the Executive's employment with the
Company the Executive will have substantial contacts with New York.
The validity, interpretation and performance of this Agreement shall be
governed by, and construed in accordance with, the internal law of New York,
without giving effect to conflicts of law principles. Both Parties agree that
the exclusive venue for any action, demand, claim or counterclaim relating to
the terms and provisions of Sections 4, 5, 6 and 7 of this Agreement, or to
their breach, shall be in the state or federal courts located in the State and
County of New York and that such courts shall have personal jurisdiction over
the Parties to this Agreement.
11
12. Miscellaneous.
(a) Assignment.
(i) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns. Rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
pursuant to a merger or consolidation in which the Company is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in the
preceding sentence, it shall take whatever action it reasonably can in order to
cause such assignee or transferee expressly to assume the liabilities,
obligations and duties of the Company hereunder. The term the "Company" as used
herein shall include such successors and assigns. Neither this Agreement nor any
right or interest hereunder shall be assignable or transferable by the
Executive, his beneficiaries or legal representatives, except by will or by the
laws of descent and distribution.
(ii) The Executive shall be entitled, to the extent permitted under
any applicable law, to select and change a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the Executive's
death by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, references in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiaries, estate or other legal representative.
(b) Withholding. All salary and bonus payments required to be made by
the Company to the Executive under this Agreement shall be subject to
withholding taxes, social security and other payroll deductions in accordance
with the Company's policies applicable to employees of the Company at the
Executive's level.
(c) Entire Agreement. Except as otherwise specifically provided for
herein, this Agreement sets forth the entire agreement between the Parties and
supersedes any prior communications, agreements and understandings, written or
oral, with respect to the terms and conditions of the Executive's employment. In
the event of any inconsistency between any provision of this Agreement and any
provision of any written plan, employee handbook or personnel manual of the
Company or any of its affiliates, the provisions of this Agreement shall control
unless the Executive otherwise agrees in a writing which expressly refers to the
provision of this Agreement whose control he is waiving.
(d) Amendments. Any attempted modification of this Agreement will not
be effective unless signed by an authorized officer of the Company and the
Executive.
(e) Waiver of Breach. No waiver by either Party of any breach by the
other Party of any condition or provision contained in this Agreement to be
performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time.
Any waiver must be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be. The Executive understands that a
breach by him of any provision of this Agreement may only be waived by an
authorized officer of the Company.
12
(f) Severability. If any provision of this Agreement should, for any
reason, be held invalid or unenforceable in any respect by a court of competent
jurisdiction, then the remainder of this Agreement, and the application of such
provision in circumstances other than those as to which it is so declared
invalid or unenforceable, shall not be affected, and each such provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
(g) Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be effective when
delivered by private messenger, private overnight mail service, or, if to the
Company, by facsimile (with confirmation in writing) as follows (or to such
other address as either Party shall designate by notice in writing to the other
in accordance herewith):
If to the Company:
Predictive Systems, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax number: 000.000.0000
Attn: General Counsel
If to Executive:
Xxxxxx Xxxxx
c/o Predictive Systems, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(h) Survival. The Executive and the Company agree that certain
provisions of this Agreement shall survive the expiration or termination of this
Agreement and the termination of the Executive's employment with the Company.
Such provisions shall be limited to those within this Agreement which, by their
express or implied terms, obligate either Party to perform any obligation, or
create an entitlement that runs beyond the termination of the Executive's
employment or termination of this Agreement.
(i) Indemnification. The Executive shall be entitled to all rights of
indemnification as provided for in the Company's certificate of incorporation
and by-laws as presently in effect and/or applicable insurance policies.
(j) Waiver of Jury Trial. The Company and the Executive hereby
irrevocably waive any right to a trial by jury in any action, suit or other
legal proceeding arising under or relating to any provision of this Agreement.
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(k) Rights of Other Individuals. Except as otherwise provided in this
Agreement, this Agreement confers rights solely on the Executive and the
Company. This Agreement is not a benefit plan and confers no rights on any
individual or entity other than the undersigned.
(l) Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company and for which
the Executive may qualify by the express terms of such benefit, bonus, incentive
or other plan or program, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any other written agreements with
the Company or any of its affiliated companies which are signed by an authorized
officer of the Company.
(m) No Mitigation; No Offset. In the event of any termination of his
employment hereunder, the Executive shall be under no obligation to seek other
employment nor shall any amounts due him pursuant to Section 10(b) be offset by
any other compensation received by the Executive.
(n) Headings. The Parties acknowledge that the headings in this
Agreement are for convenience of reference only and shall not control or affect
the meaning or construction of this Agreement.
(o) Advice of Counsel. The Executive and the Company hereby acknowledge
that each Party has had adequate opportunity to review this Agreement, to obtain
the advice of counsel with respect to this Agreement, and to reflect upon and
consider the terms and conditions of this Agreement. The Parties further
acknowledge that each Party fully understands the terms of this Agreement and
has voluntarily executed this Agreement.
(p) Counterparts. This Agreement may be executed in two or more
counterparts.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the day and year set forth below.
EXECUTIVE PREDICTIVE SYSTEMS, INC.
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxx Xxxxxxxxx
-------------------------- ---------------------------
Xxxxxx Xxxxx Title: CEO
---------------------------
14
EXHIBIT A
SEPARATION AGREEMENT
AND GENERAL RELEASE
This Separation Agreement and General Release ("Agreement") is
made and entered into this ____ day of _____, _____, by and between Predictive
Systems, Inc. (hereinafter the "Company" or "Employer") and Xxxxxx Xxxxx
("Employee") (hereinafter collectively referred to as the "Parties"), and is
made and entered into with reference to the following facts.
RECITALS
WHEREAS, Employee was hired by the Company on or about
________, as a ____________; and
WHEREAS, the Company and Employee have agreed to terminate
their employment relationship effective ______, ____; and
WHEREAS, the Parties each desire to resolve any potential
disputes which exist or may exist arising out of Employee's employment with the
Company and/or the termination thereof.
NOW THEREFORE, in consideration of the covenants and promises
contained herein, the Parties hereto agree as follows:
AGREEMENT
1. Agreement By the Company. In exchange for Employee's
agreement to be bound by the terms of this entire Agreement, including but not
limited to the Release of Claims in paragraph 2, the Company agrees to provide
Employee with the benefits required pursuant to Section 10(b), 10(c) or 10(g),
as applicable, of his Employment Agreement with the Company dated as of
_____________ (the "Employment Agreement"), the terms of which are hereby
incorporated by reference, to be paid within ten (10) days of the Company's
receipt of this Agreement, fully executed by Employee, or as otherwise agreed in
such Employment Agreement.
Employee acknowledges that, absent this Agreement, he has no
legal, contractual or other entitlement to the consideration set forth in this
paragraph and that the amount set forth in this paragraph constitute valid and
sufficient consideration for Employee's release of claims and other obligations
set forth herein.
2. Executive's Release of Claims. Employee hereby expressly
waives, releases, acquits and forever discharges the Company and its divisions,
subsidiaries, affiliates, parents, related entities, partners, officers,
directors, shareholders, investors, executives, managers, employees, agents,
attorneys, representatives, successors and assigns (hereinafter collectively
referred to as "Releasees"), from any and all claims, demands, and causes of
action which Employee has or claims to have, whether known or unknown, of
whatever nature, which exist or may exist on Employee's behalf from the
beginning of time up to and including the date of this Agreement arising out of
or related to the employment of Employee by the Company. As used in this
paragraph, "claims," "demands," and "causes of action" include, but are not
limited to, claims based on contract, whether express or implied, fraud, stock
fraud, defamation, wrongful termination, estoppel, equity, tort, retaliation,
intellectual property, spoliation of evidence, emotional distress, public
policy, wage and hour law, statute or common law, claims for severance pay,
vacation pay, debts, accounts, compensatory damages, punitive or exemplary
damages, liquidated damages, and any and all claims arising under any federal,
state, or local statute, law, or ordinance prohibiting discrimination on account
of race, color, sex, age, religion, sexual orientation, disability or national
origin, including but not limited to, the Age Discrimination in Employment Act,
Title VII of the Civil Rights Act of 1964 as amended, the Americans with
Disabilities Act, the Family and Medical Leave Act or the Employee Retirement
Income Security Act. Anything to the contrary notwithstanding in this Agreement
or the Employment Agreement, nothing herein shall release the Company from any
claims or damages based on (i) any right the Executive may have to enforce this
Agreement, (ii) any right or claim that arises after the date of this Agreement,
(iii) any right the Employee may have to benefits or entitlement under any
applicable plan, agreement, program, award, policy or arrangement of the Company
that becomes payable or due after the date of this Agreement; (iv) the
Executive's eligibility for indemnification in accordance with applicable laws
or the certificate of incorporation and by-laws of the Company, or any
applicable insurance policy, with respect to any liability he incurs or incurred
as an employee, officer or director of the Company.
3. Acceptance of Agreement/Revocation. This Agreement was
received by Employee on ______, ____. Employee may accept this Agreement by
returning a signed original to the Company. This Agreement shall be withdrawn if
not accepted in the above manner on or before _______, which in no event shall
be less than 21 days from date upon which he received this Agreement.
4. Confidentiality. Employee understands and agrees that this
Agreement, and the matters discussed in negotiating its terms, are entirely
confidential. It is therefore expressly understood and agreed that Employee will
not reveal, discuss, publish or in any way communicate any of the terms of this
Agreement to any person, organization or other entity, with the exception of his
immediate family members and professional representatives, including lawyers,
financial and tax advisors, unless required by subpoena or court order or as
necessary in connection with the enforcement of this Agreement. Employee and the
Company further agree to abide by the provisions of Section 7 of the Employment
Agreement with respect to disparagement.
5. New York Law Applies; Disputes. This Agreement, in all
respects, shall be interpreted, enforced and governed by and under the laws of
the State of New York without giving effect to conflict of law principles. Any
and all actions relating to this Agreement shall be filed and maintained in the
federal and/or state courts located in the State and County of New York, and the
parties consent to the jurisdiction of such courts. In any action arising out of
this Agreement, or involving claims barred by this Agreement, each shall pay its
own costs of suit, including reasonable attorneys' fees.
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6. Voluntary Agreement. EMPLOYEE UNDERSTANDS AND AGREES THAT
HE MAY BE WAIVING SIGNIFICANT LEGAL RIGHTS BY SIGNING THIS AGREEMENT, AND
REPRESENTS THAT HE HAS ENTERED INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY,
WITH A FULL UNDERSTANDING OF AND IN AGREEMENT WITH ALL OF ITS TERMS.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the dates provided below.
DATED: Predictive Systems, Inc.
By:
----------------------
Its:
----------------------
DATED: Xxxxxx Xxxxx
--------------------------
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