Exhibit 10.32
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated October 24, 1997 is made and entered into by and
between CompuCom Systems, a Delaware corporation ("Employer"), and Xxxxxx X.
Xxxxxxxx, an executive employee of Employer ("Executive").
Recitals
A. Executive is employed by Employer in an executive capacity and
Executive has agreed to continue as an employee of Employer pursuant to the
terms of this Agreement.
B. Employer desires that the Executive continue as an employee of
Employer in order to provide the necessary leadership and senior management
skills that are important to the success of Employer. Employer believes that
retaining the Executive's services as an employee of Employer and the
benefits of his business experience are of material importance to Employer
and Employer's shareholders.
Agreement
NOW, THEREFORE, in consideration of Executive's continued employment by
Employer and the mutual promises and covenants contained herein the receipt
and sufficiency of which is hereby acknowledged, Employer and Executive
intend by this Agreement to specify the terms and conditions of Executive's
employment relationship with Employer.
Section I. General Duties of Employer and Executive.
1.1. Employer agrees to employ Executive and Executive agrees to
accept employment by Employer and to serve Employer in an executive capacity
upon the terms and conditions set forth herein. The duties and
responsibilities of Executive shall include those described for the
particular position held by Executive while employed hereunder in the Bylaws
of Employer or other documents of Employer, and shall also include such other
or additional duties, for Employer, as may from time-to-time be assigned to
Executive by the Board of Directors of Employer or any duly authorized
committee thereof. The executive capacity that Executive shall hold while
this Agreement is in effect shall be that position as determined by the Board
of Directors, or any duly authorized committee thereof, from time to time in
its sole
discretion. While employed hereunder, the initial position that Executive
shall hold (until such time as such position may be changed as aforesaid)
shall be the position of President, Chief Executive Officer.
1.2. While employed hereunder, Executive shall obey the lawful
directions of the Board of Directors of Employer, or any duly authorized
committee thereof, and shall use his best efforts to promote the interests of
Employer and to maintain and to promote the reputation thereof. While
employed hereunder, Executive shall devote his time, efforts, skills and
attention to the affairs of Employer in order that he shall faithfully perform
his duties and obligations hereunder and such as may be assigned to or
vested in him by the Board of Directors of Employer, or any duly authorized
committee thereof.
1.3. While this Agreement is in effect, Executive may from time to
time engage in any businesses or activities that do not compete directly and
materially with Employer, provided that such businesses or activities do not
materially interfere with his performance of the duties assigned to him in
compliance with this Agreement by the Board of Directors of Employer or any
duly authorized committee thereof. In any event, Executive is permitted to
(i) invest his personal assets as a passive investor in such form or manner
as Executive may choose in his discretion, (ii) participate in various
charitable efforts, and (iii) serve as a director or officer of any other
entity or organization that does not compete with Employer.
Section 2. Compensation and Benefits.
2.1. As compensation for services to Employer, Employer shall pay to
Executive, while this Agreement is in effect, a salary at a monthly rate of
$30,000. Any increases to such rate shall be at the discretion of the
Compensation Committee duly elected by the Board of Directors. The salary
shall be payable in equal bi-weekly installments, subject only to such
payroll and withholding deductions as may be required by law and other
deductions applied generally to employees of Employer for insurance and other
employee benefit plans. In addition, Executive shall be entitled to
participate in the Company's Management Incentive Compensation Plan ("MICP")
at a rate of 120% of base salary. This bonus will be subject to the
parameters set forth by the Compensation Committee each year and the amount
of payment will be determined by such Committee. In addition, for the
initial three years of this Agreement, provided extensions
are made, Executive will receive a lump sum bonus of $175,000 each year,
subject to required payroll and withholding deductions, on May 15, 1998, 1999
and 2000, respectively.
2.2. Upon Executive's furnishing to Employer customary and reasonable
documentary support (such as receipts or paid bills) evidencing costs and
expenses incurred by him in the performance of his services and duties
hereunder (including, without limitation, travel and entertainment expenses)
and containing sufficient information to establish the amount, date, place
and essential character of the expenditure, Executive shall be reimbursed for
such costs and expenses in accordance with Employer's normal expense
reimbursement policy.
2.3. As long as this Agreement is in effect, Employer will purchase and
maintain for Executive's benefit a guaranteed renewable term life insurance
policy having a death benefit of not less than $1 million. Unless prohibited
by any policy or plan under which such insurance is provided, Executive will
have the right to purchase at Executive's cost additional coverage under such
policy or plan. Employer will not permit, even in the event of termination
of this Agreement for any reason, any such policy to lapse without offering
Executive the opportunity to take up the premium payments and continue the
policy in force.
2.4. Executive shall have the right to participate in any additional
compensation, medical and dental insurance plan, 401(k) plan, other benefit,
life insurance or other plan or arrangement of Employer now or hereafter
existing for the benefit of executive officers of Employer.
2.5. Executive shall be entitled to such vacation (in no event less
than three (3) weeks per year), holidays and other paid or unpaid leaves of
absence as consistent with Employer's normal policies or as otherwise
approved by the Board of Directors.
2.6. Executive agrees to submit to and Company agrees to pay for one
complete physical examination on an annual basis at the Xxxxxx Clinic (or
similar medical clinic) in Dallas, Texas.
2.7. As long as this Agreement is in effect, Employer will purchase and
maintain for Executive's benefit a comprehensive long-term disability
insurance policy. Employer will not permit, even in the event of termination
of this agreement for any reason, any such policy to lapse without offering
Executive the
opportunity to take up the premium payments and continue the policy in force.
Section 3. Preservation of Business; Fiduciary Responsibility.
3.1. Executive shall use his best efforts to preserve the business and
organization of Employer, to keep available to Employer the services of
present employees and to preserve the business relations of Employer.
Executive shall not commit any act, or in any way assist others to commit any
act, that would injure Employer. So long as the Executive is employed by
Employer, Executive shall observe and fulfill proper standards of fiduciary
responsibility attendant upon his service and office.
Section 4. Initial Term; Extensions of the Term.
4.1. The term of this Agreement shall commence on the effective date
hereof and shall end on October 24, 1999.
4.2. The term of this Agreement shall automatically be extended for
additional one-year periods commencing on October 24, 1999 and continuing
each year thereafter, unless Executive gives written notice to Employer on or
before September 24, 1998 and each year thereafter on September 24th, of his
intention not to extend this Agreement.
Section 5. Termination other than by Expiration of the Term. Employer
or Executive may terminate Executive's employment under this Agreement at any
time, but only on the following terms:
5.1. Executive may terminate his employment under this Agreement at any
time upon at least thirty (30) days prior written notice to Employer.
5.2. Employer may terminate Executive's employment under this Agreement
at any time, without prior notice, for "due cause" upon the good faith
determination by the Board of Directors of Employer that "due cause" exists
for the termination of the employment relationship. As used herein, the term
"due cause" shall mean any of the following events:
(i) any intentional misapplication by Executive of Employer's
funds, or any other act of dishonesty injurious to Employer committed by
Executive; or
(ii) Executive's conviction of a crime involving moral turpitude;
or
(iii) Executive's use or possession of any controlled substance or
chronic abuse of alcoholic beverages; or
(iv) Executive's breach, non-performance or non-observance of any
of the terms of this Agreement if such breach, non-performance or
non-observance shall continue beyond a period of ten (10) business days
immediately after notice thereof by Employer to Executive; or
(v) any other action by the Executive involving willful and
deliberate malfeasance or gross negligence in the performance of Executive's
duties.
5.3. In the event Executive is incapacitated by accident, sickness or
otherwise so as to render Executive mentally or physically incapable of
performing the services required under Section 1 of this Agreement for a
period of one hundred eighty (180) consecutive business days, and such
incapacity is confirmed by the written opinion of two (2) practicing medical
doctors licensed by and in good standing in the state in which they maintain
offices for the practice of medicine, upon the expiration of such period or
at any time reasonably thereafter, or in the event of Executive's death,
Employer may terminate Executive's employment under this Agreement upon
giving Executive or his legal representative written notice at least thirty
(30) days prior to the termination date. Executive agrees, after written
notice by the Board of Directors of Employer or a duly authorized committee
or officer of Employer, to submit to examinations by such practicing medical
doctors selected by the Board of Directors of Employer or a duly authorized
committee or officer of Employer.
5.4. Employer may terminate Executive's employment under this Agreement
at any time for any reason whatsoever, even without "due cause", by giving a
written notice of termination to Executive, in which case the employment
relationship shall terminate immediately upon the giving of such notice.
Section 6. Effect of Termination.
6.1. In the event the employment relationship is terminated (a) by
Executive upon thirty (30) days' written notice pursuant
to Subsection 5.1 hereof, (b) by Employer for "due cause" pursuant to
Subsection 5.2 hereof, or (c) by Executive breaching this Agreement by
refusing to continue his employment and failing to give the requisite thirty
(30) days' written notice, all compensation and benefits shall cease as of
the date of termination, other than: (i) those benefits that are provided by
retirement and benefit plans and programs specifically adopted and approved
by Employer for Executive that are earned and vested by the date of
termination, (ii) Executive's pro rata annual salary through the date of
termination, and (iii) those benefits required by law to be made available to
terminating employees.
6.2. If Executive's employment relationship is terminated pursuant to
Subsection 5.3 hereof due to Executive's incapacity or death, Executive (or,
in the event of Executive's death, Executive's legal representative) will be
entitled to those benefits that are provided by retirement and benefits plans
and programs specifically adopted and approved by Employer for Executive that
are earned and vested at the date of termination and, even though no longer
employed by Employer, shall continue to receive the salary compensation
(payable in the manner as prescribed in the second sentence of Subsection
2.1) for the remaining term of this Agreement.
6.3. If Employer (i) terminates the employment of Executive other than
pursuant to Subsection 5.2 hereof for "due cause" or other than for a
disability or death pursuant to Subsection 5.3 hereof, (ii) demotes the
Executive to a position below the level of the position described in
Subsection 1.1, or (iii) decreases Executive's salary below the level or
reduces the employee benefits and perquisites below the level provided for by
the terms of Section 2 hereof, other than as a result of any amendment or
termination of any employee and/or executive benefit plan or arrangement,
which amendment or termination is applicable to all qualifying executives of
Employer, then such action by Employer, unless consented to in writing by
Executive, shall be deemed to be a constructive termination by Employer of
Executive's employment (a "Constructive Termination"). In the event of a
Constructive Termination, the Executive shall be entitled to receive, in a
lump sum within ten (10) days after the date of the Constructive Termination,
an amount equal to the salary that would have been paid for the remainder of
the Agreement. The Company will also provide outplacement assistance to
Executive in an amount not to exceed $25,000, if so desired by the Executive.
6.4. For purposes of this Section 6, the term "salary" shall mean the
sum of (i) the annual rate of compensation provided to Executive by Employer
under Subsection 2.1 immediately prior to the Constructive Termination plus
(ii) the average annual cash bonuses or other cash incentive compensation
paid to Executive (based upon most recent position) by Employer for the two
calendar year period immediately preceding the year in which there shall
occur a Constructive Termination, excluding the lump sum bonus of $175,000 to
be paid for two (2) years described under Subsection 2.1.
6.5. In the event of a Constructive Termination, all other rights and
benefits Executive may have under the employee and/or executive benefit plans
and arrangements of Employer generally shall be determined in accordance with
the terms and conditions of such plans and arrangements.
Section 7. Covenants of Noncompetition.
7.1. Executive acknowledges that he has received and/or will receive
specialized knowledge and training from Employer during the term of this
Agreement, and that such knowledge and training would provide an unfair
advantage if used to compete with Employer. In order to avoid such unfair
advantage, Executive agrees that while he is employed with Employer and for a
period equal to two (2) years after the date of a voluntary termination of
employment (the "Restricted Period"), he shall not, directly or indirectly,
individually or as an owner, lender, consultant, adviser, independent
contractor, employee, partner, officer, director or in any other capacity,
alone or in association with other persons or entities, own, assist, finance,
participate in or be employed by any business or other endeavor that is in
any way in competition with Employer in any business at the time the
termination occurs, including, but not limited to, computer resellers,
service companies providing the same services as CompuCom, and computer
retail companies. Executive also agrees that, for the Restricted Period, he
will not, either directly or indirectly, solicit any employee or other
independent contractor of the Employer to terminate his employment or
contract with the Employer. In the event of a Constructive Termination or
termination due to change in control, Executive will not compete for the same
period of time for which payments are received in accordance with Subsection
6.3.
7.2. Executive represents and acknowledges to Employer that his
education, experience and/or abilities are such that he can
obtain employment in a non-competing business and that enforcement of the
terms of this Agreement through temporary and/or permanent injunctive relief
will not prevent him from earning a livelihood and will not cause an undue
hardship upon him. Executive hereby acknowledges that $10,000 of his monthly
salary described in Subsection 2.1 is paid by Employer in consideration for
Executive's agreement to be bound by the non-competition provisions of this
Agreement.
Section 8. Change in Control.
8.1. Notwithstanding anything to the contrary in this Agreement, if a
"Change in Control" (as defined below) of the Employer occurs and, within six
months from the date of the Change in Control, the Executive voluntarily
terminates his employment under Subsection 5.1, then the Executive, even
though no longer employed by the Employer, shall be entitled to all payments
provided in Subsection 6.3, payable in a lump sum within thirty (30) days
after the date of termination.
8.2. If a Change of Control occurs during the course of this Agreement,
the Board of Directors will cause to vest, within ten (10) days of the
effective date of the Change of Control, all remaining unvested stock
options, both CompuCom and ClientLink, granted to Executive.
8.3. For the purposes of this Agreement, the term "Change in Control"
of the Employer shall be deemed to have occurred if (i) any "person" (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended) other than any Employer employee stock ownership plan or
the Employer, becomes the beneficial owner (as such term is used in Section
13(d) of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Employer representing 25% or more of the
combined voting power of the Employer's then outstanding securities, (ii) the
Board ceases to consist of a majority of Continuing Directors (as defined
below) or (iii) a person (as defined in clause (i) above) acquires (or,
during the 12-month period ending on the date for the most recent acquisition
by such person or group of persons, has acquired) gross assets of Employer
that have an aggregate market value greater than or equal to over 50% of the
fair market value of all of the gross assets of Employer immediately prior to
such acquisition or acquisitions. It is clearly understood, however, that no
change of control will be considered as having occurred
as long as Safeguard Scientifics, Inc. continues to maintain effective
control of the Company, evidenced by their ownership of more than 35% of the
outstanding common shares of the Company and/or the effective control of the
Board of Directors. It is also understood that the change of control
provisions will not become effective if Executive is offered and willingly
accepts a position in a newly formed Company in the event a merger occurs.
8.4. For purposes of this Agreement, a "Continuing Director" shall mean
a member of the Board of Directors who either (i) is a member of the Board of
Directors at the date of this Agreement or (ii) is nominated or appointed to
serve as a director by a majority of the then Continuing Directors.
8.5. Notwithstanding any other provision of this Agreement, if (a) there
is a change in the ownership or effective control of the Employer or (b) in
the ownership of a substantial portion of the assets of the Employer within
the meaning of Section 280G of the Internal Revenue Code ("Section 280G"),
the payments to be paid to the Executive in the nature of compensation to be
received by or for the benefit of the Executive and contingent upon such
event (the "Termination Payments") would create an "excess parachute payment"
within the meaning of Section 280G, then the Employer shall make the
Termination Payments in substantially equal installments, the first
installment being due within thirty (30) days after the date of termination
and each subsequent installment being due on January 31 of each year, such
that the aggregate present value of all Termination Payments, whether
pursuant to this Agreement or otherwise, will be as close as possible to two
times the Executive's base salary and average cash bonuses, within the
meaning of Section 280G. It is the intention of this Subsection 8.5 to avoid
excise taxes on the Executive under Section 4999 of the Code and the
disallowance of a deduction to the Employer pursuant to Section 280G.
However, if the Company makes an error which triggers the excise tax,
Executive will be entitled to receive a gross up to cover incremental taxes
owed due to such error.
Section 9. Inventions.
9.1. Any and all inventions, product, discoveries, improvements,
processes, formulae, manufacturing methods or techniques, designs or styles
(collectively, "Inventions") made, developed or created by Executive, alone
or in conjunction with others, during regular hours of work or otherwise,
during the term of Executive's employment with the Employer and for a period
of two (2) years thereafter that may be directly or indirectly related to the
business of, or tests being carried out by, the Employer, or any of its
subsidiaries, shall be promptly disclosed by Executive to Employer and shall
be the Employer's exclusive property.
9.2. Executive will, upon the Employer's request and without additional
compensation, execute any documents necessary or advisable in the opinion of
the Employer's counsel to direct the issuance of patents to the Employer with
respect to Inventions that are to be the Employer's exclusive property under
this Section 9 or to vest in the Employer title to such Inventions; the
expense of securing any patent, however, shall be borne by the Employer.
9.3. Executive will hold for the Employer's sole benefit any Invention
that is to be the Employer's exclusive property under this Section 9 for
which no patent is issued.
9.4. Executive grants to Employer a royalty-free, nonexclusive
irrevocable license for any Inventions developed prior to the employment with
the Company that he has not reserved that are used by Executive in the
performance of his duties for the Employer. Employee represents and warrants
that any work produced by Executive will not, to the best knowledge of
Executive, infringe on any other person's or entity's copyright or other
proprietary rights, and Employee will hold the Employer harmless from any
claims and losses based on such infringements.
Section 10. No Violation. Executive represents that he is not bound by
any agreement with any former employer or other party that would be violated
by Executive's work for Employer.
Section 11. Confidential and Proprietary Information.
11.1. Executive acknowledges and agrees that he will not, without the
prior written consent of the Employer, at any time during the term of this
Agreement or any time thereafter, except as may be required by competent
legal authority or as required by the Employer to be disclosed in the course
of performing Executive's duties under this Agreement for the Employer, use
or disclose to any person, firm or other legal entity, any confidential
records, secrets or information related to the Employer or any parent,
subsidiary or affiliated person or entity (collectively, "Confidential
Information"). Confidential Information shall include, without limitation,
information about
the Employer's Inventions, customer lists, customer contracts, vendor
contracts, and non-public financial information. Executive acknowledges and
agrees that all Confidential Information of Employer and/or its affiliates
that he has acquired, or may acquire, were received, or will be received in
confidence and as a fiduciary of the Employer. Executive will exercise
utmost diligence to protect and guard such Confidential Information.
11.2. Executive agrees that he will not take with him upon the
termination of this Agreement, any document or paper, or any photocopy or
reproduction or duplication thereof, relating to any Confidential Information.
Section 12. Return of Employer's Property. Upon the termination of this
Agreement or whenever requested by Employer, Executive shall immediately
deliver to Employer all property in his possession or under his control
belonging to Employer, in good condition, ordinary wear and tear excepted.
Section 13. Injunctive Relief. Executive acknowledges that the breach,
or threatened breach, by the Executive of the provisions of this Agreement
shall cause irreparable harm to the Employer, which harm cannot be fully
redressed by the payment of damages to the Employer. Accordingly, the
Employer shall be entitled, in addition to any other right or remedy it may
have at law or in equity, to an inunction enjoining or restraining Executive
from any violation or threatened violation of this Agreement.
Section 14. Arbitration.
14.1. As concluded by the parties and as evidenced by the signatures of
the parties, any dispute between the parties arising out of any section of
this Agreement except Sections 7, 9 and 11, will, on the written notice of
one party served on the other, be submitted to arbitration complying with and
governed by the provisions of the Texas General Arbitration Act, Articles 224
through 238-20 of the Texas Revised Civil Statutes.
14.2. Each of the parties will appoint one person as an arbitrator to
hear and determine the dispute and if they are unable to agree, then the two
arbitrators so chosen will select a third impartial arbitrator whose decision
will be final and conclusive upon the parties.
14.3. The expenses of such arbitration will be borne by the losing party
or in such proportion as the arbitrators decide.
14.4. A material or anticipatory breach of any section of this Agreement
shall not release either party from the obligations of this Section 14.
Section 15. Miscellaneous.
15.1. If any provision contained in this Agreement is for any reason
held to be totally invalid or unenforceable, such provision will be fully
severable, and in lieu of such invalid or unenforceable provision there will
be added automatically as part of this Agreement a provision as similar in
terms as may be valid and enforceable.
15.2. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in
writing and shall be deemed to have been given when mailed by registered mail
or certified mail, return receipt requested, as follows (provided that notice
of change of address shall be deemed given only when received):
if to Employer:
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
if to Executive:
or to such other names or addresses as Employer or Executive, as the case may
be, shall designate by notice to the other party hereto in the manner
specified in this Subsection 15.2.
15.3. This Agreement shall be binding upon and inure to the benefit of
Employer, its successors, legal representatives and assigns, and upon
Executive, his heirs, executors, administrators, representatives, legatees
and assigns. Executive agrees that his rights and obligations hereunder are
personal to him and may not be assigned without the express written consent
of Employer.
15.4. This Agreement replaces and merges all previous agreements and
discussions relating to the same or similar subject matters between Executive
and Employer with respect to the subject matter of this Agreement. This
Agreement may not be modified in any respect by any verbal statement,
representation or agreement made by any employee, officer, or representative
of Employer or by any written agreement unless signed by an officer of
Employer who is expressly authorized by Employer to execute such document.
15.5. The laws of the State of Texas will govern the interpretation,
validity and effect of this Agreement without regard to the place of
execution or the place for performance thereof, and Employer and Executive
agree that the state and federal courts situated in Dallas County, Texas
shall have personal jurisdiction over Employer and Executive to hear all
disputes arising under this Agreement. This agreement is to be at least
partially performed in Dallas County, Texas, and, as such, Employer and
Executive agree that venue shall be proper with the state or federal courts
in Dallas County, Texas to hear such disputes. In the event either Employer
or Executive is not able to effect service of process upon the other with
respect to such disputes, Employer and Executive expressly agree that the
Secretary of State for the State of Texas shall be an agent of Employer
and/or the Executive to receive service of process on behalf of Employer
and/or the Executive with respect to such disputes.
15.6. Executive and Employer shall execute and deliver any and all
additional instruments and agreements that may be necessary or proper to
carry out the purposes of this Agreement.
15.7. The descriptive headings of the several sections of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
15.8. If either party should file a lawsuit against the other to
enforce any right such party has hereunder, the prevailing party shall also
be entitled to recover reasonable attorneys' fees and costs of suit in
addition to any other relief awarded such prevailing party.
15.9. This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement.
15.10. Executive acknowledges that Executive has had the opportunity to
read this Agreement and discuss it with advisors and legal counsel, if
Executive has so chosen. Executive also acknowledges the importance of this
Agreement and that Employer is relying on this Agreement in continuing an
employment relationship with Executive.
The undersigned, intending to be legally bound, have executed this
Agreement on the date first written above.
EMPLOYER:
CompuCom Systems, Inc.
By: /s/ Lazane Xxxxx
----------------
Its: Senior Vice President, Finance
and Chief Financial Officer
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxx
