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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
January 2, 1996, to be effective immediately prior to the Effective Time
(defined below), by and between XXXXXX GROUP, INC., a Delaware corporation
("TGI") and XXXXXX X. XXXXX, XX., an individual residing in Bloomfield Hills,
Michigan ("Employee").
RECITALS
1. Employee is the Vice President and the Chief Financial Officer of
TGI and an integral part of its management who participates in the
decision-making process relative to short and long-term planning and policy for
TGI. Employee has served since April, 1995, in this capacity.
2. TGI has determined that it would be in the best interests of TGI
and its stockholders to assure continuity in the management of TGI's operations
by entering into an employment agreement to retain the services of Employee.
3. TGI wishes to assure itself of the continued services of
Employee for the period hereinafter provided, and Employee is willing to be
employed by TGI for said period, upon the terms and conditions set forth in this
Agreement.
4. Employee is currently an at will employee of TGI, and both TGI
and Employee desire that Employee be under contract to TGI.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the obligations
undertaken by the parties pursuant hereto and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, TGI
and Employee agree as follows:
1. Definitions. The defined terms used in this Agreement shall have
the meanings ascribed to them in this Section 1.
1.1 Affiliate. "Affiliate" shall mean any corporation over which
Employee or TGI, as the case may be, can exercise effective management and
control.
1.2 Board of Directors. "Board" or the "Board of Directors" shall
mean the Board of Directors of TGI or any committee of the Board empowered to
act or make decisions or determinations with respect to this Agreement.
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1.3 Cause. "Cause" shall mean that, as determined in good faith by
the Board of Directors, Employee has engaged in any act of gross misconduct
which is materially injurious to TGI or its business.
1.4 Change in Control. "Change in Control" shall mean:
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person" which, for purposes of this
definition, excludes Employee or any of his Affiliates) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of shares
of common stock or other securities of TGI resulting in the beneficial
ownership by such individual, entity or group of 40% or more of either (1) the
then-outstanding shares of common stock of TGI (the "Outstanding TGI Common
Stock") or (2) the combined voting power of the then-outstanding voting
securities of TGI entitled to vote generally in the election of directors (the
"Outstanding TGI Voting Securities"); or
(b) if individual who, as of the date hereof, constitute the
Board (the "Incumbent Board) cease for any reason to constitute more than fifty
percent of the members of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by TGI's stockholders, was approved by a vote of at least
two-thirds of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
subject to Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) approval by the stockholders of TGI of a reorganization,
merger or consolidation unless following such reorganization, merger or
consolidation (1) more than 40% of, respectively, the then-outstanding shares
of common stock of the corporation resulting from such reorganization, merger
or consolidation (the "Outstanding Survivor Common Stock"), and the combined
voting power of the then-outstanding voting securities of such corporation
entitled to vote generally in the election of directors (the "Outstanding
Survivor Voting Securities"), is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding TGI Common Stock
and Outstanding TGI Voting Securities immediately prior to such reorganization,
merger or consolidation in substantially the same proportions as their
ownership immediately prior to such reorganization, merger or consolidation, of
the Outstanding TGI Common Stock and Outstanding TGI Voting Securities, as the
case may be (for purposes of determining whether such percentage test is
satisfied, there shall be excluded from the number of shares of Outstanding
Survivor Common Stock and Outstanding Survivor Voting Securities owned by TGI's
stockholders, but not from the total number of shares of Outstanding Survivor
Common Stock and Outstanding Survivor Voting Securities, any shares or voting
securities received by any such stockholder in respect of any consideration
other than shares or voting securities of TGI), (2) no Person (excluding TGI,
any
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employee benefit plan (or related trust) of TGI, any qualified employee benefit
plan of such Surviving Corporation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 40% or more of the Outstanding TGI Common Stock or Outstanding TGI
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 40% or more of, respectively, the shares of Outstanding Survivor
Common Stock or the Outstanding Survivor Voting Securities and (3) more than
50% of the members of the board of directors of the Surviving Corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or consolidation; or
(d) (1) approval by the stockholders of TGI of a complete
liquidation or dissolution of TGI or (2) the first to occur of (i) the sale or
other disposition (in one transaction or a series of related transactions) of
all or substantially all of the assets of TGI, or (ii) the approval by the
stockholders of TGI of any such sale or disposition, other than, in each case,
any such sale or disposition to a corporation, with respect to which
immediately thereafter (x) more than 40% of, respectively, the shares of
Outstanding Survivor Common Stock and the Outstanding Survivor Voting
Securities is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding TGI Common Stock and Outstanding TGI
Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding TGI Common Stock and Outstanding
TGI Voting Securities, as the case may be (for purposes of determining whether
such percentage test is satisfied, there shall be excluded from the number of
shares of Outstanding Survivor Common Stock and Outstanding Survivor Voting
Securities owned by TGI's stockholders, but not from the total number of shares
of Outstanding Survivor Common Stock and Outstanding Survivor Voting Securities
of the surviving corporation, any shares or voting securities received by any
such stockholder in respect of any consideration other than shares or voting
securities of TGI), (y) no Person (excluding TGI and any employee benefit plan
(or related trust) of TGI, any qualified employee benefit plan of such
transferee corporation and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly, 40% or more of the
Outstanding TGI Common Stock or Outstanding TGI Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 40% or more of,
respectively, the shares of Outstanding Survivor Common Stock and the
Outstanding Survivor Voting Securities and (z) more than 50% of the members of
the board of directors of the surviving corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or action
of the board providing for such sale or other disposition of assets of TGI.
1.5 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.6 Common Stock. "Common Stock" shall mean the common stock of TGI,
par value $.01 per share, that will be outstanding immediately following the
Effective Time.
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1.7 Disability. "Disability" shall mean the inability of Employee to
perform his material managerial duties and responsibilities as contemplated
under Section 3 during the Term of Employment, as determined in accordance with
Section 6.1(e).
1.8 Effective Time. "Effective Time" shall mean the date the Form
S-1 Registration Statement relating to the initial public offering of Common
Stock pursuant to the Securities Act of 1933, as amended, is declared effective
by the Securities and Exchange Commission.
1.9 Good Reason. "Good Reason" shall mean Employee's decision to
terminate his employment under this Agreement if: (i) a significant diminution
occurs in the nature or scope of the authorities, powers, functions,
responsibilities or duties of Employee as the Vice President and Chief
Financial Officer described in Section 3, or the assignment to Employee of
functions, responsibilities or duties materially inconsistent with his position
as Vice President and Chief Financial Officer; provided, however, if Employee
agrees in writing to any such change in the nature or scope of his authorities,
powers, functions, responsibilities or duties, Good Reason shall not be deemed
to exist; or (ii) without limiting the generality or effect of the foregoing,
TGI or any successor thereto commits any material breach of this Agreement.
1.10 Term of Employment. "Term of Employment" shall mean the period
of time commencing on the effective date of this Agreement and continuing until
the fifth anniversary date of this Agreement; provided, however, that Employee
and TGI can agree, in writing, to extend the Term of Employment for an
additional five years, unless terminated earlier pursuant to the terms hereof.
2. Termination of Prior Agreements. TGI and Employee hereby
acknowledge and agree that, upon the occurrence of the Effective Time, this
Agreement supersedes any prior agreements.
3. Employment. TGI employs Employee and Employee accepts
employment by TGI as Vice President and Chief Financial Officer of TGI for the
Term of Employment on the terms and conditions and for the compensation
hereinafter set forth. Subject to the authority of the Board of Directors,
Employee shall be responsible for financial management of the business and
affairs of TGI in the ordinary course of its business with all such powers with
respect to such financial management and control as may be reasonably incident
to such responsibilities as its Vice President and Chief Financial Officer,
with all of the rights, powers and decision-making discretion appertaining
thereto. Employee shall devote his full time and effort to the discharge of
his duties as TGI's Vice President and Chief Financial Officer.
4. Compensation and Benefits During the Term of Employment.
4.1 Base Compensation. Employee shall receive base
compensation in the amount determined by the Compensation Committee of the
Board of Directors ("Base Compensation"). The amount of Employee's Base
Compensation shall initially be $300,000.00 annually and shall be reviewed and
adjusted as appropriate at least annually by the Compensation Committee. Base
Compensation shall be paid in equal monthly installments by TGI to Employee.
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4.2 Incentive Compensation Arrangement.
(a) In further consideration of Employee's
performance of services under Section 3 hereof, TGI agrees to compensate
Employee under the incentive compensation arrangement ("Incentive
Compensation") set forth in Section 4.2(b). Except as specifically provided
herein, the computation of annual bonus will be based upon the audited
financial results of TGI.
(b) (1) General. Employee's Incentive
Compensation is initially based upon 16.5% (the "Entitled Percent") of the
dollar value derived from a formula sharing ratio of TGI's revenues. The
sharing ratio is based upon TGI's percentage increase in cumulative income
before tax and incentive compensation ("IBTIC") for the current fiscal year
compared to TGI's cumulative IBTIC for the prior fiscal year, and upon certain
targeted levels of TGI's IBTIC. For purposes of determining IBTIC, Incentive
Compensation includes CEO Incentive Compensation as well as any Incentive
Compensation paid under a plan which includes TGI officers (as designated by
TGI's Board of Directors) only. The Compensation and Stock Option Committee of
the Company's Board of Directors may review the percent stated above from time
to time and make appropriate changes..
(2) Incentive Compensation Calculation.
The formula for determining incentive compensation is as follows: Incentive
Compensation equals the product of TGI revenues for the applicable fiscal year
multiplied by the income growth sharing ratio expressed as a percentage
("IGSR") for the fiscal year, the result multiplied by the Entitled Percent.
The ISGR is determined with reference to the following table:
INCOME GROWTH SHARING RATIO
Income Before Tax and
Incentive Compensation Less
as a % of Revenues than 5%* 5%-9.99%* 10%-14.99%* 15%-24.99%* Over 25%*
------------------ -------- --------- ----------- ----------- ---------
0 - 8.99% 0 0 0 .2% .3%
9.00% - 14.99% .3% .4% .5% .6% .7%
15.00% - 19.25% .5% .6% .8% 1.0% 1.2%
Over 19.25% .8% 1.0% 1.3% 1.6% 1.8%
*IBTIC Growth Rate
ISGR is determined by first determining the IBTIC as a percent of revenue for
the current fiscal year and then entering the table along that line until the
appropriate IBTIC Growth Rate is reached; the ISGR is shown at that
intersection in the table.
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For purposes of this table, IBTIC Growth Rate for each applicable fiscal year
is derived from the following formula:
IBTIC[Current Fiscal Year]
-------------------------- minus 1 x 100
IBTIC[Prior Fiscal Year]
In the event that either the IBTIC Growth Rate or the IBTIC, as
computed above, is zero or negative for a particular fiscal year, it shall be
treated as zero for purposes of the foregoing computation for such year.
(3) If Incentive Compensation, as
calculated in accordance with Section 4.2(b) hereof, exceeds 55 percent of Base
Compensation in a fiscal year, the excess of Incentive Compensation, as
calculated, over 55 percent of Base Compensation will not be paid to Employee
but will be used to calculate the award of a stock option to Employee. The
number of shares to be awarded under such option is determined using the
following formula:
Excess Incentive Compensation
N = -----------------------------
P
Where:
N = Number of shares subject to such option
P = Market price of the Company's stock on the date of award
Excess Incentive Compensation = Excess of Incentive Compensation as calculated
minus 55 percent of base compensation in a fiscal year.
Options granted hereunder shall be granted pursuant to the
Corporation's 1992 Stock Option Plan and shall be subject to all limitations of
such plan, including the aggregate number of options which may be granted.
Options granted pursuant to this Section 4.2(b)(3) shall contain an option
price equal to the market price (average of the day's high and low prices) on
the date of award, shall be fully vested, and shall expire 10 years following
date of grant. This stock option award shall not preclude the Board of
Directors from granting additional options to Employee as it deems appropriate.
Options granted pursuant to this Agreement shall be administered by the
Compensation and Stock Option Committee of TGI's Board of Directors.
(4) Partial Fiscal Years. The
computations set forth in Section 4.2(b)(2) above shall be adjusted to take
into account eligibility for partial fiscal years by computing them based upon
the entire fiscal year and multiplying these results by the ratio of the number
of days of such partial fiscal year to the number of days in the complete
fiscal year.
(5) (i) Payments. TGI shall pay the
Incentive Compensation to Employee on or before the fifteen (15) days after
the completion of the audit of TGI's financial statements by TGI's certified
public accountants.
(ii) Eligibility Under Other
Plans. Employee's eligibility for bonuses or incentive compensation payments
under plans in effect prior to effectiveness of this
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Agreement shall terminate upon the effectiveness of this Agreement except that,
if the Effective Time is after the 16th day of any calendar month, any bonuses
or incentive payments earned under prior plans for the full calendar month will
be paid to Employee.
4.3 Travel Costs. TGI shall reimburse Employee for all
travel costs incurred by Employee in connection with TGI's business, together
with all other business expenses of Employee in performing his duties
hereunder, consistent with TGI's past practices.
4.4 Automobile Expenses. TGI shall provide automobile
transportation to employee for Employee's use in connection with TGI's
business, consistent with TGI's past practices.
4.5 Pension and Insurance Benefit Plan Participation; No
Bonus Plan Participation. Employee shall be entitled to participate in TGI's
401(k) plan and profit sharing plan, subject to the terms and conditions of
such plans. TGI also shall provide medical, disability and life insurance
coverage to Employee on the terms and conditions of each of the plans TGI
maintains with respect thereto. In addition, TGI shall continue to pay
premiums on all insurance policies on Employee's life which name either TGI or
TGI's creditors as beneficiary. Employee shall not be entitled to participate
in any of TGI's bonus plans as in effect at the Effective Time or in any other
bonus arrangement instituted from time to time by TGI, unless approved in
advance in writing by the Board.
5. Term of the Agreement. The term of this Agreement, unless
terminated sooner pursuant to Section 5, shall be for the Term of Employment.
6. Termination; Disability; Death, Change in Control.
6.1 Basis. Employee's employment under this Agreement
may be terminated as described in this Section 6.1. In the event that
Employee's employment is terminated in accordance with this Section 6.1,
Employee shall be entitled to receive the benefits described in Section 6.2
that correspond with the manner of such termination.
(a) Termination Without Cause. TGI may terminate
Employee's employment hereunder without Cause, as determined in the good faith
judgment of the Board of Directors, by written notice to Employee to that
effect. Unless otherwise specified in the notice, such termination shall be
effective immediately.
(b) Termination With Cause. TGI may terminate
the employment of Employee hereunder for Cause by written notice to Employee to
that effect. Unless otherwise specified in the notice, such termination shall
be effective immediately.
(c) Good Reason. Upon the occurrence of an event
described in Section 1.10 hereof, Employee may terminate his employment
hereunder for Good Reason within 30 days thereafter upon written notice to TGI
to that effect. If the effect of the occurrence of the event described in
Section 1.10 may be cured, TGI shall have the opportunity to cure any such
effect for a
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period of 30 days following receipt of Employee's termination notice. If TGI
fails to cure any such effect, Employee's termination for Good Reason shall
become effective 360 days after the date of Employee's termination notice. If
Employee does not give such notice to TGI, this Agreement will remain in
effect; provided, however, that the failure of Employee to terminate this
Agreement for Good Reason shall not be deemed a waiver of Employee's right to
terminate his employment for Good Reason upon the occurrence of a subsequent
event described in Section 1.10 hereof in accordance with the terms of this
subsection. Notwithstanding the foregoing, the right of Employee to terminate
his employment for Good Reason under this Section 6.1(c) shall not limit TGI's
ability to terminate Employee for Cause under Section 6.1(b) hereof if Cause is
determined to exist prior to the time Employee delivers his written notice of
termination for Good Reason to TGI.
(d) Without Good Reason. Employee may
voluntarily terminate his employment hereunder without Good Reason upon 360
days written notice to TGI to that effect.
(e) Disability. Employee or TGI may terminate
Employee's employment by reason of Disability upon written notice to the other
party to that effect. If the parties hereto are unable to agree as to the
existence of Disability or as to the date of commencement of Disability, each
of Employee and TGI shall select a physician licensed to practice medicine in
the United States and the determination as to any such question shall be made
by such physicians; provided, however, that if such two physicians are unable
to agree, they shall mutually select a third physician licensed to practice
medicine in the United States and the determination as to any such question
shall be made by a majority of such physicians. Any determination made by
physicians in accordance with the provisions of the immediately foregoing
sentence shall be final and binding on the parties hereto. Employee agrees to
submit to any and all reasonable medical examinations or procedures and to
execute and deliver any and all consents to release of medical information and
records or otherwise as shall be reasonably required by any of the physicians
selected in accordance with this Section 6.1(e). Unless otherwise specified in
the notice, such termination shall be effective immediately.
(f) Death. This Employment Agreement shall
automatically terminate as of the date of Employee's death during the Term of
Employment.
(g) Change in Control. If a Change in Control
occurs during the Term of Employment, TGI shall promptly give written notice to
Employee thereof. Following a Change in Control, Employee shall be required to
continue his employment hereunder for 90 days after the date of such Change in
Control, unless his employment is terminated sooner by TGI as set forth in
Section 6.1(h). In the event that Employee decides to resign or otherwise
voluntarily terminate his employment following the occurrence of a Change in
Control, Employee may do so by giving written notice to TGI to that effect on
or before 180 days after the occurrence of the Change in Control, which notice
shall be effective on the later to occur of (i) 180 days after the occurrence
of the Change in Control or (ii) 90 days after the date of such notice. If
Employee does not give such notice to TGI, this Agreement will remain in
effect; provided, however, that the failure of Employee to terminate this
Agreement following the occurrence of a Change in Control shall not be deemed a
waiver of Employee's right to terminate his employment upon a subsequent
occurrence of a Change in Control in accordance with the terms of this
subsection.
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(h) Notwithstanding that Employee has given
notice of termination pursuant to subsections (c), (d) or (g) of this Section
6.1, TGI may, in its sole discretion, thereafter require Employee to terminate
his employment prior to the expiration of the applicable notice period.
6.2 Benefits Upon Termination. Employee shall receive
the benefits described in the subsection below that corresponds with the manner
of termination of Employee's employment under Section 6.1.
(a) Without Cause. In the event TGI terminates
Employee's employment hereunder without Cause during the Term of Employment,
Employee shall be entitled to the payments and benefits set forth on Exhibit I.
(b) With Cause. In the event Employee's
employment is terminated with Cause, no further payments or benefits shall be
paid or provided by TGI to Employee hereunder except for reimbursement for
expenses incurred prior to the date of termination, the payment of any vested
pension benefits or vested portions of bonuses described in Section 4.7 hereof,
or the payment of Incentive Compensation that has become due and payable to
Employee on or before the date of such termination under Section 4.2 hereof.
In addition, Employee shall be entitled to exercise any vested but unexercised
stock options for a period of 90 days following the effective date of the
termination of Employee for Cause, and if any such options remain unexercised
upon the expiration of such 90-day period, they shall be determined forfeited
by Employee and have no further force and effect.
(c) Good Reason. In the event Employee
terminates his employment for Good Reason during the Term of Employment,
Employee shall be entitled to the payments and benefits set forth on Exhibit I.
(d) Without Good Reason. In the event Employee
terminates his employment without Good Reason pursuant to Section 6.1(d)
hereof, Employee shall be entitled to the benefits or payments provided for in
Section 6.2(b) hereof.
(e) Disability. In the event that Employee's
employment is terminated by reason of Disability, Employee shall be entitled to
the payments and benefits set forth on Exhibit I.
(f) Death. In the event Employee's employment is
terminated by reason of his death, TGI shall not be required to make any
payments or provide any benefits hereunder, except for (a) reimbursement for
expenses incurred prior to such termination date, (b) payment of Incentive
Compensation through such termination date as provided in Section 4.2, (c) the
use by TGI of its best efforts to remove any guaranties by Employee of
indebtedness of TGI, and
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(d) payment of premiums to continue the medical and dental insurance coverage
on Employee's spouse as in effect at and as of the date of Employee's death for
the remainder of spouse's life, if available; provided, however, that nothing
contained herein shall limit or diminish any rights of Employee's estate or any
other person to payments under any life insurance policy maintained by TGI for
the benefit of Employee or his beneficiaries or any health, disability, pension
or other benefit plan provided pursuant to Section 4.7, in each case in
accordance with the terms thereof. If Employee's employment is terminated by
reason of his death, the benefits provided under this Section 6.2(f) shall be
paid to the beneficiary or beneficiaries designated in writing by Employee and
delivered during Employee's lifetime to an officer of TGI; however, if no such
beneficiary designation is made by Employee during his lifetime, the benefits
hereunder shall be paid to his estate. In addition, Employee's estate shall be
entitled to exercise any vested but unexercised stock options for a period of
180 days following the date of Employee's death, and if any such options remain
unexercised upon the expiration of such 180-day period, they shall be
determined forfeited by Employee's estate and have no further force and effect.
(g) Change in Control. In the event Employee
terminates his employment as provided in Section 6.1(g) following the
occurrence of a Change in Control, Employee shall be entitled to the payments
and benefits provided in Exhibit I.
7. Non-Competition, Non-Solicitation, and Confidentiality
Covenants.
7.1 Non-competition Covenant.
(a) In consideration for the execution of this
Agreement by TGI and the payments for services to be rendered by Employee
hereunder, Employee agrees that during the Term of Employment and, in the case
of a termination Without Good Reason or for Cause, for a period of three years
after the date of such termination, Employee shall not engage in competition
with TGI in any manner or capacity (e.g., as an advisor, principal, agent,
partner, officer, director, shareholder, employee, member of any association or
otherwise) that materially adversely affects TGI, including without limitation,
rendering time based management counseling services, soliciting customers of
TGI for any competitor of TGI, or soliciting any employee of TGI to leave the
employ of TGI to work for or on behalf of any competitor of TGI (the
"Prohibited Activities"). Employee further agrees that, during the Term of
Employment, and, in the case of a termination Without Good Reason or for Cause,
for a period of three years after the date of such termination, Employee will
not assist or encourage any other person in carrying out any activity that
would be one of the Prohibited Activities if such activity were carried out by
Employee and, in particular, Employee agrees that he will not induce any
employee of TGI to carry out any such activity.
(b) The obligations of Employee under this
Section 7.1 shall apply to any geographic area in which TGI is competing. In
addition to the exclusion from Prohibited Activities set forth in Section
7.1(a) hereof, ownership by Employee, as a passive investment, of less than 5%
of the outstanding shares of capital stock of any corporation listed on a
national securities exchange or publicly traded in the over-the-counter market
shall not constitute a breach of this Section 7.1.
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7.2 Right to Work Product and Confidentiality.
(a) TGI and Employee each acknowledge that
performance of this Agreement may result in the discovery, creation or
development of inventions, combinations, methods, formulae, techniques,
processes, improvements, software designs, computer programs, strategies,
specific computer-related know-how, course materials, seminar materials,
computer models, customer lists, data and original works of authorship
(collectively, the "Work Product"). Employee agrees that Employee will
promptly and fully disclose to TGI any and all Work Product generated,
conceived, reduced to practice or learned by Employee, either solely or jointly
with others, during the Term of Employment, which in any way relates to the
business of TGI. Employee further agrees that neither Employee, nor any party
claiming through Employee will, other than in the performance of this
Agreement, make use of or disclose to others any proprietary information
relating to the Work Product.
(b) Employee agrees that, whether or not the
services performed by Employee hereunder are considered works made for hire or
an employment to invent, all Work Product discovered, created or developed
under this Agreement shall be and remain the sole property of TGI and its
assigns. Except as specifically set forth in writing and signed by both TGI
and Employee, Employee agrees that TGI shall have all copyright and patent
rights with respect to any Work Product discovered, created, or developed under
this Agreement without regard to the origin of the Work Product.
(c) If and to the extent that Employee may, under
applicable law, be entitled to claim any ownership interest in the Work
Product, Employee hereby transfers, grants, conveys, assigns and relinquishes
exclusively to TGI any and all right, title and interest it now has or may
hereafter acquire in and to the Work Product under patent, copyright, trade
secret and trademark law in perpetuity or for the longest period otherwise
permitted by law. Employee further agrees, as to the Work Product, to assist
TGI in every reasonable way to obtain and, from time to time, enforce patents,
copyrights, trade secrets and other rights and protection relating to said Work
Product, and to that end, Employee will execute all documents for use in
applying for and obtaining such patents, copyrights, trade secrets and other
rights and protection with respect to such Work Product as TGI may desire,
together with any assignments thereof to TGI or persons designated by it.
Employee's obligations to assist TGI in obtaining and enforcing patents,
copyrights, trade secrets and other rights and protection relating to the Work
Product shall continue beyond the Term of Employment.
(d) If and to the extent that any preexisting
rights of Employee are embodied or reflected in the Work Product, Employee
hereby grants to TGI the irrevocable, perpetual, non-exclusive, worldwide,
royalty-free right and license to (i) use, execute, reproduce, display, perform
and distribute copies of and prepare derivative works based upon such
preexisting rights and any derivative works thereof and (ii) authorize others
to do any or all of the foregoing.
(e) Employee acknowledges that much, if not all,
of the material and information related to the products, consulting techniques,
or other business affairs of TGI and its Affiliates, including, without
limitation, any and all Work Product discovered or created pursuant to
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this Agreement, and the business affairs of TGI's clients and customers which
have or will come into Employee's possession or knowledge in connection with
the performance of this Agreement, consists of confidential and proprietary
data of TGI and its Affiliates (collectively, "Confidential Information"),
disclosure of which to, or use by, third parties would be damaging to TGI or
its clients. Employee agrees to hold such Confidential Information in
strictest confidence and agrees not to release such information to any other
TGI employee unless such employee has a need for such knowledge. Employee
further agrees not to make use of Confidential Information for Employee's own
benefit or for the benefit of any third parties, other than for the performance
of this Agreement, and not to release or disclose the Confidential Information
to any other party either during or after the Term of Employment. In the event
of any breach of this confidentiality obligation, Employee acknowledges that
TGI would have no adequate remedy at law, since the harm caused by such a
breach would not be easily measured and compensated for in the form of damages,
and hereby waives its right to contest any equitable relief sought by TGI,
though not Employee's right to contest the question of whether a breach has
occurred, and Employee waives the requirement of any bond being posted as
security for such equitable relief.
8. General Provisions.
8.1 Notices. All notices, requests, demands, or other
communications with respect to this Agreement shall be in writing and shall be
personally delivered, telecopied, or mailed, postage prepaid, certified or
registered mail, or delivered by a nationally recognized express courier
service, charges prepaid, to the following addresses (or such other addresses
as the parties may specify from time to time in accordance with this Section
8.1):
Employee: Xxxxxx X. Xxxxx, Xx.
0000 Xxxxx X'Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
TGI: Xxxxxx Group, Inc.
0000 Xxxxx X'Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Any such notice shall, when sent in accordance with the preceding
sentence, be deemed to have been given and received (i) on the day personally
delivered or telecopied, (ii) on the third day following the date mailed, or
(iii) 24 hours after shipment by such courier service.
8.2 Entire Agreement. This Agreement, together with the
exhibits hereto, supersedes any and all other agreements, either oral or
written between the parties hereto with respect to the employment of Employee
by TGI and contains all of the covenants and agreements between the parties
with respect to such employment. Any modification of this Agreement will be
effective only if it is in writing signed by each of the parties hereto.
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13
8.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
8.4 Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach.
8.5 Severability. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be judicially
unenforceable and/or invalid by a court of competent jurisdiction, in whole or
in part, the remaining provisions shall nevertheless be binding, enforceable
and in full force and effect.
8.6 Titles and Headings. The titles and headings of the
various sections hereof are intended solely for convenience of reference and
not intended for any purpose whatsoever to explain, modify or place any
construction upon any of the provisions of this Agreement.
8.7 Attorney's Fees. In the event any one or more of the
parties hereto bring suit against any other part hereto, based upon or arising
out of a breach or violation of this Agreement, each party hereto agrees that
each party who is successful on the merits, upon final adjudication from which
no further appeal can be taken or is taken within the time allowed by law,
shall be entitled to recover his or its reasonable attorneys' fees and expenses
from the party or parties which is or are (as the case may be) not successful.
8.8 Benefit and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns; provided, however, that nothing contained in this
Section 8.8 shall impair Employee's rights under Section 6.2(g), if the
successor or assign of TGI became such upon the occurrence of a Change in
Control. Notwithstanding anything herein to the contrary, Employee shall not
assign any of his rights or obligations under this Agreement.
8.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, and all of which
shall together constitute one agreement.
8.10 Reliance on Authority of Person Signing Agreement.
Each individual signing this Agreement on behalf of a corporation warrants that
such execution has been duly authorized by the corporation for which he or she
is signing. The execution and performance of this Agreement by each party has
been duly authorized by all applicable laws and regulations and (in the case of
a corporation) all necessary corporate action, and this Agreement constitutes
the valid and enforceable obligation of each party in accordance with its
terms.
8.11 Amendments. Amendments to any section of this
Agreement shall not be effective unless agreed to in writing by the parties
hereto. This Agreement, including this provision against oral modification,
shall not be amended, modified or terminated except in a writing signed by each
of the parties to this Agreement, and no waiver of any provision of this
Agreement shall be effective unless in a writing duly signed by the party
sought to be bound.
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14
8.12 Waiver. No waiver of any provision of this Agreement
shall be deemed to operate as waiver of any past or future right.
9. Renewal Discussions. Unless Employee's employment hereunder
has been earlier terminated, the parties hereto agree that they will use their
reasonable best efforts to enter into discussions six months prior to the fifth
anniversary of the Effective Time (the "Fifth Anniversary") with respect to
whether and on what terms Employee's employment after such date, and the terms
thereof, this Agreement shall automatically terminate on such Fifth
Anniversary.
10. Certain Tax Provisions. Employee acknowledges and agrees
that all payments and benefits made or provided to Employee pursuant to the
terms hereof which are required by applicable federal, state or local laws to
be subject to withholding for income taxes, shall be so subject.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on January 2, 1996, to be effective as of the Effective Time.
EMPLOYEE:
------------------------------------------
XXXXXX X. XXXXX, XX.
XXXXXX GROUP, INC.
By:
----------------------------------------
Name: XXXXXX X. XXXXXX
Title: Chairman and Chief Executive Officer
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15
Exhibit I, Page Solo
EXHIBIT I
Severance Benefit Payments
1. A lump sum payment in cash, not later than 20 days after the
termination of Employee's employment, in an amount equal to 1.5 times
Employee's average "Annualized Includible Compensation" (Annualized Includible
Compensation has been defined by the Board of Directors of TGI as the total
cash paid in Base Compensation, salary, Incentive compensation, profit sharing,
and incentive payments to Xxxxxx X. Xxxxx during the period consisting of the
preceding four full taxable years, plus the year in which termination occurred
[on an annualized basis], all after date of this Agreement); provided, however,
that the amount of this cash payment plus the value of any compensation paid to
Employee pursuant to 2 and 3 below that is subject to the provisions of Section
280G of the Code shall in no event exceed $100 less than 3.00 times Employee's
Annualized Includible Compensation, and the amount of TGI's cash payment to
Employee under this paragraph 1 of Exhibit I shall be adjusted accordingly to
achieve this result.
2. The unvested portion of stock options granted to Employee
shall become fully vested and immediately exercisable on the effective date of
such termination and shall be exercisable for the maximum period specified in
such options.
3. Employee shall continue to be covered by TGI's medical
insurance plan after termination of employment.
