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Exhibit 10.17
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is executed and effective as of the 1st
day of May, 1999, by and between XXXXXXX XXXXX an individual ("Employee"), and
WAREFORCE INCORPORATED a California corporation ("Wareforce"), with reference to
the following facts:
Employee is an individual possessing unique management and executive talents of
value to Wareforce, and Wareforce's parent company, Xxxxxxxxx.xxx, Inc.
("Xxxxxxxxx.xxx") (collectively the "Companies").
The Companies desire to employ Employee as a Vice President of Wareforce, and as
a Vice President of Xxxxxxxxx.xxx, Inc. ("Xxxxxxxxx.xxx") and Employee desires
to accept such employment, all on the terms and conditions set forth in this
Agreement.
AGREEMENT
In consideration of the foregoing recitals and of the covenants and agreements
herein, the parties agree as follows:
1. The Companies hereby engage Employee to perform the duties and render the
services set forth in Sections 2 for a period commencing on May 1, 1999
(the "Start Date") and ending on the third anniversary of such date, (the
"Employment Period") and Employee hereby accepts said employment and agrees
to perform such services during the Employment Period. Unless this
Agreement is terminated pursuant to Section 4 or unless either party gives
the other written notice to the contrary at least one (1) month prior to an
expiration date, this Agreement, together with any changes which have
occurred during the employment period then expiring, shall automatically
renew at the end of an Employment Period for an additional one (1) year
employment period.
2.1. For purposes of determining seniority, benefit eligibility and the
like, Employee's original date of hire with Kennsco, Inc. shall be
used.
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2. DUTIES
2.1. VICE PRESIDENT OF XXXXXXXXX.XXX AND VICE PRESIDENT OF WAREFORCE'S
KENNSCO SERVICES DIVISION: Performing work of major importance to the
Companies, with the primary focus being the profitable management and
profitable growth of the Companies as a whole. During the Employment
Period, Employee shall devote his full business time and attention to
performing his duties as Vice President of Xxxxxxxxx.xxx and Vice
President of Wareforce's Kennsco Service Division (the Division). As
such, Employee shall manage the operations of the Division in a manner
consistent with Employee's management of Kennsco Inc. prior to the
closing of the Asset Purchase Agreement dated February 4, 1999 by and
between Wareforce and Kennsco, Inc. (the "Purchase Agreement). In such
capacity his responsibilities shall include 1) manage the overall
direction coordination, and evaluation of the non-internal (i.e., the
Companies' internal MIS Department and Electronic Commerce
Departments) technical services areas of the Division; 2) assist the
CEO in formulating and administering Companies policies relating to
the sale and provision of technical services to customers for the
Companies; 3) review and analyze the activities and operations of the
Division to define and to track its progress toward achieving its
goals and objectives in his related functional areas; 4) carry out
supervisory responsibilities in accordance with the Companies
policies, and applicable laws; 5) interview, hire and train managers
and staff in his functional areas; 6) plan, assign and direct the work
of managers and staff, appraise their performance, and reward and
discipline them, and address their complaints in his functional areas;
7) submit all required documentation in a timely and accurate manner.
The above description of duties is non-exhaustive. In all manner until
directed otherwise by the Companies' respective Boards of Directors,
Employee understands and agrees that his primary responsibility,
irregardless of anything
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contained herein to the contrary, shall be the successful operation of
the Division specifically. Employee shall work out of the Division's
Plymouth, Minnesota location and shall report to Wareforce's Chief
Executive Officer or such executive officer of any of the Companies as
may be directed by the Boards of Directors of the Companies. Employee
recognizes that the Boards of Directors of any of the Companies may be
required under their fiduciary duties and to their stockholders to
eliminate such position or to appoint a different person as such
officer of any of the Companies. The parties agree however, that any
such elimination or replacement of Employee by any of the Companies,
other than pursuant to Section 4.2.1 or 4.3.2. hereof, shall
constitute a termination of Employee's employment hereunder by any of
the Companies, as the case may be, without cause. However, Employee
understands and agrees that the Division may in the future, and in
consultation with Employee, merge or otherwise integrate all of the
relevant technical services of the Xxxxxxxxx.xxx group of companies
under one entity and such merger or integration may require the
elimination of Wareforce or the Division in favor a successor entity.
However, Employee understands and agrees that such a merger or
integration shall be for the purposes of simplifying Xxxxxxxxx.xxx's
technical services offerings and is not for the purpose of eliminating
or otherwise changing the Employee's functional duties or
responsibilities and shall not be considered a termination of
Employee's employment hereunder.
2.2. CHANGE OF CONTROL. If any of the Companies or a significant portion
thereof is sold or merged or undergoes a change of control transaction
(as defined in the Xxxxxxxxx.xxx Stock Option Agreement, this
Agreement shall survive consummation of such transaction and shall
continue in effect for the remainder of the Employment Period, but
Employee shall serve as an officer of the entity which succeeds to the
business or a substantial portion of the business of any of the
Companies, and is
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such case shall bear a suitable title and perform the duties and
functions of such office of such publicly traded or privately held
successor, consistent with those customarily performed by an officer
of such a unit, division or entity comparable to the then business of
the Companies, unit, division or entity. Employee may be required to
accept greater or lesser responsibility by any successor, and agrees
to fully cooperate and assist in any resulting transition for up to
the remainder of the Employment Period; and any adjustments required
of Employee to complete the transition to any successor, unit,
division or entity, shall not violate this Agreement so long as "good
reason" does not arise under Sections 4.6.2(ii), (iii) or (v). This
Agreement shall apply to the automatic modification in duties
resulting from such transaction as set forth above, however,
notwithstanding the foregoing, Employee may exercise any "good reason"
rights he may have under Section 4.6.2(iv).
2.3. CONFLICT OF INTEREST. Employee agrees that during the term of
employment Employee will not, directly or indirectly, compete with the
Companies in any way, or usurp an opportunity of the Companies in any
way, nor will employee act as an officer, director, employee,
consultant, shareholder, lender or agent of any entity which is
engaged in any business in which the Companies are now engaged or in
which the Companies become engaged during the term of employment. The
Companies are now engaged in the business of reselling computer
hardware, software and peripherals, primarily to corporate and
governmental accounts, and in the business of selling computer systems
consulting, help and maintenance services, also primarily to
corporate, education and governmental accounts. The Companies are not
now engaged in the business of manufacturing computers or their
primary components, nor is it now in the business of reselling
computers to non-end users. The Companies may become engaged in the
business of final assembly of computers and may become engaged in the
business of catalog, mail-order or Internet sales of computer
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hardware, software and peripherals. Employee also agrees that during
the term of employment, Employee will not, directly or indirectly,
whether on his own behalf or on behalf of another, offer employment or
a consulting assignment to any of the Companies employee, nor will
Employee, nor Employee's employer, directly or indirectly, whether on
his own behalf or on behalf of another, actually employ or grant a
consulting assignment to any of the Companies' employees. Employee
also agrees that during the term of employment Employee will not,
directly or indirectly, whether on his own behalf or on behalf of
another, contact or solicit any of Companies' clients to do business
with any entity other than the Companies.
2.4. During the term of employment with the Companies, Employee may have
access to and become acquainted with information of a confidential,
proprietary or secret nature which is or may be either applicable or
related to present or future business of the Companies, its research
and development, or the business of its customers. For example, trade
secret information includes, but is not limited to devices, secret
inventions, processes and compilations of information, records,
specifications and information concerning customers or vendors.
Employees shall not disclose any of the above-mentioned trade secrets,
directly or indirectly or use them in any way, either during the term
of this agreement of at any time thereafter, except as required in the
course of employment with the Companies.
2.5. Employee agrees that all customers of the Companies, for which the
Employee has or will provide services during the Employee's employment
by the Companies, and all prospective customers from whom the Employee
has solicited business while in the employ of the Companies, shall be
solely the customers of the Companies.
2.6. Employee agrees that, for a period of twelve (12) months immediately
following the termination of employment with
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the Companies, Employee shall neither directly nor indirectly solicit
business as to products or services competitive with those of the
Companies, from any of the Companies' customers with whom the Employee
had contact within twelve (12) months prior to the Employee's
termination.
2.7. Employee further agrees that for a period of twelve (12) months after
termination of employment, Employee will not directly or indirectly
induce or solicit any of Companies' employees to leave their
employment.
3. COMPENSATION. As compensation for his services to be performed hereunder,
Wareforce shall provide Employee with the following compensation and
benefits:
3.1 BASE SALARY. Employee's base salary shall be $225,000.00 per year,
payable in accordance with Wareforce's payroll practices as in effect
from time to time, and subject to such withholding as is required by
law.
3.2 BONUS. Employee shall receive an annual bonus should the Division
achieve at least 90% of the goals set by the Company's Board of
Directors for the Employee for the year. Goals and bonus amount shall
developed by the Board of Directors within ninety (90) days from the
Start Date. If any bonus is declared or paid, it shall be subject to
such withholding as is required by law.
3.3 Additionally, if the Division generates Earnings Before Interest,
Taxes, Depreciation and Amortization in the twelve (12) month period
commencing March 1, 1999 of at least Six Hundred Thirty Thousand
($630,000) dollars, Wareforce shall pay to the Employee a bonus of Two
Hundred Ten Thousand ($210,000) dollars, payable in twelve (12) equal
monthly installments beginning thirty (30) days following the end of
such annual period. Such bonus shall be calculated by the Wareforce's
accountant in accordance with generally accepted accounting principles
consistently applied, but without any charge being made to the
Division by Wareforce, its parent or
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any affiliate for administrative or overhead charges. Such bonus, if
any, shall be subject to such withholding as is required by law.
3.4 LEASE COMMISSION.
3.4.1 For three (3) years subsequent to the date of execution of the
Purchase Agreement, to be paid quarterly, an amount equal to
Fifty Percent (50%) of the gross margin after deducting
commissions and direct administrative costs, for lease
transactions recorded by the Division on new and/or renewal
schedules from customer leases of Kennsco as of the date of
execution of the Purchase Agreement. 3.4.2 Employee specially
agrees that there are no other lease commissions owing to him
at the time of the execution of this Agreement.
3.3. BENEFITS.
3.3.1. VACATION. Employee shall be entitled to vacation time as been
accrued each pay period since his date of first hire, less any
vacation taken in such amounts and under such conditions as
normally afforded to the Companies' executives. In the event
Employee does not use such vacation, he shall receive, upon
termination of the Employment Period, vacation pay for all
unused vacation calculated as having accrued at the applicable
base salary for each relevant period of his employment.
However, Employee shall endeavor to take vacation time in the
year in which it is allocated to him.
3.3.2. BUSINESS EXPENSES. Wareforce shall reimburse Employee for
reasonable business expenses incurred by Employee in the course
of performing services for the Companies and in compliance with
procedures established from time to time by the Companies. This
reimbursement shall occur on a monthly basis, and is subject to
Employee providing original
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documentation in support of all business expenses reimbursement
sought.
3.3.3. STOCK OPTIONS. The Companies shall grant Employee incentive
stock options on the same terms as granted to its senior
executives (excluding the Companies' Chief Executive Officer).
The issuance of options is subject to approval by the Companies
Boards of Directors Compensation Committees.
3.3.4. OTHER BENEFITS. Wareforce shall provide Employee with
employment benefits as 401(k) participation, medical insurance
and disability insurance, on the terms and to the extent
generally provided by the Companies to its executive employees.
3.4 OTHER PERSONS. The parties understand that other officers and
employees may be afforded payments and benefits and employment
agreements which differ from those of Employee in this agreement; but
Employee's compensation and benefits shall be governed solely by the
terms of this Agreement, which shall supersede all prior
understandings or agreements between the parties concerning terms and
benefits of employment of Employee with the Companies. Other officers
or employees shall not become entitled to any benefits under this
Agreement.
4. TERMINATION.
4.1. TERMINATION BY REASON OF PERMANENT DISABILITY. The Employment Period
shall terminate upon the permanent disability (as defined in Section
4.6.3 below) of Employee.
4.2. TERMINATION BY COMPANIES
4.2.1. The Companies may terminate the Employment Period for "cause"
by seven (7) days advance written notice to Employee. However,
no such advance written notice shall be given if the Companies
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determine that the Companies or a person would suffer
irreparable harm should the Employee be given notice.
4.2.2. The Companies, after the first twelve (12) months of the
Employment Period, may terminate the Employment Period for any
other reason, with cause other than those described in Section
4.6.1 or without cause, by thirty (30) days advance written
notice.
4.3 TERMINATION BY EMPLOYEE
4.3.1. Employee may terminate the Employment Period for "good reason"
(as defined in section 4.6.2 below) at any time by written
notice to the company.
4.3.2. Employee may terminate the Employment Period for any other
reason by thirty (30) days advance written notice to the
Companies.
4.4 SEVERANCE PAY
4.4.1 In the event the Employment Period is terminated by the
Companies for any reason other than pursuant to Section 4.2.1
or Section 4.3.2 hereof or if the Employment Period is
terminated because of a permanent disability of Employee
pursuant to Section 4.1, upon the effectiveness of any such
termination, the Companies shall be obligated to pay to the
employee (or his executors, administrators or assigns, as the
case may be) all unpaid salary, benefits and bonuses (if any)
accrued through the date of effectiveness of such termination
and, in addition, a cash severance payment equal to twelve (12)
month's total base salary at the rates set forth herein, and
such other benefits as may be required by law.
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4.4.2 In the event the Employment period is terminated by the
Companies pursuant to Section 4.2.1 hereof, or the Employment
Period is terminated by Employee pursuant to Section 4.3.2
hereof, the Companies shall have no obligation to pay any
severance pay to Employee. The Companies shall, however, be
obligated to pay to Employee (or executors, administrators or
assigns, as the case may be) all unpaid salary, benefits and
bonuses (if any) accrued through the date of termination and
shall provide such other benefits as may be required by law.
4.5 TERMINATION BENEFITS. In the event of termination of the employment
Period pursuant to Section 4.2 or 4.3.1, the Companies shall provide
Employee, Employee's spouse or domestic partner and children, if any,
with such normal medical insurance, on the terms and to the extent
generally provided by the Companies to its executive employees on the
level comparable to Employee, for a period of three (3) months from
the date of the termination of the Employment Period.
4.6 CERTAIN DEFINITIONS. For purposes of this Agreement:
4.6.1. The term "cause" shall mean those acts identified in Section
2924 of the California Labor Code, as that section exists on
October 1, 1997, to wit, any willful breach of duty by the
Employee in the course of his employment, or in case of his
habitual neglect of his duty or continued incapacity to perform
it.
4.6.2. The term "good reason" shall mean the occurrence of one or more
of the following events without Employee's express written
consent (I) removal of Employee from the position and
responsibilities as set forth under Section 2 above; (ii) a
material
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reduction by the company in the kind or level of employee
benefits to which Employee is entitled immediately prior to
such reduction with the result that Employee's overall benefit
package is significantly reduced; (iii) the relocation of
Employee to a facility or a location outside of Minneapolis,
Minnesota; (iv) a change in the control of any of the
Companies, or (v) any material breach by the Companies of any
material provision of this Agreement which continues uncured
for thirty (30) days following written notice thereof.
4.6.3. The term "permanent disability" shall mean Employee's
incapacity due to physical or mental illness, which results in
Employee being absent from the performance of his duties with
the Companies on a full-time basis for a period of six (6)
consecutive months. The existence or cessation of a physical or
mental illness which renders Employees absent from the
performance of his duties on a full-time basis shall, if
disputed by the Companies or Employee, be conclusively
determined by written opinions rendered by two qualified
physicians, one selected by Employee and one selected by the
Company. During the period of absence, but not beyond the
expiration of the Employment Period, Employee shall be deemed
to be on disability leave of absence, with his compensation
paid in full. During the period of such disability leave of
absence, the Board of Directors may designate an interim
officer with the same title and responsibilities of Employee on
such terms, as it deems proper.
4.7. EMPLOYEE BENEFIT PLANS
Any employee benefit plans in which employee may participate pursuant
to the terms of this Agreement shall be governed solely by the terms
of the underlying plan
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documents and by applicable law, and nothing in this Agreement shall
impair the Companies' right to amend, modify, replace, and terminate
any and all such plans in its sole discretion as provided by law. This
Agreement is for the sole benefit of Employee and the Companies, and
is not intended to create an employee benefit plan or to modify the
terms of any of the Companies' existing plans.
5. MISCELLANEOUS
5.1 ARBITRATION/GOVERNING LAW. To the fullest extent permitted
bylaw, any dispute, or claim or controversy of any kind
(including but not limited to tort, contract, and statue)
arising under, in connection with, or relating to this
Agreement or Employee's employment, shall be resolved
exclusively by binding arbitration in Minneapolis, Minnesota in
accordance with the commercial rules of the American
Arbitration Association then in effect. The Companies and
Employees agree to waive any objection to personal jurisdiction
or venue in any forum located in Minneapolis, Minnesota. No
claim, lawsuit or action of any kind may be filed by either
party to this Agreement except to compel arbitration or to
enforce an arbitration award; arbitration is the exclusive
dispute resolution mechanism between the parties hereto.
Judgment may be entered on the arbitrator's award in any court
having Jurisdiction. The validity, interpretation, effect and
enforcement of this Agreement shall be governed by the laws of
the State of California.
5.2 ASSIGNMENT. This agreement shall inure to the benefit of and
shall be binding upon the successors and assigns shall
specifically assume this Agreement. Since this agreement is
based upon the unique abilities of, and the Companies' personal
confidence in Employee, Employee shall have no right to assign
this Agreement or any of his rights hereunder without the prior
written consent of the Companies.
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5.3 SEVERABILITY. If any provision of this Agreement shall be found
invalid, such findings shall not effect the validity of the
other provisions hereof and the invalid provisions shall be
deemed to have been severed herefrom.
5.4 WAIVER OF BREACH. The waiver by any party of the breach of any
provision of this Agreement by the other party or the failure
of any party to exercise any right granted to it hereunder
shall not operate or be construed as the waiver of any
subsequent breach by such other party nor the waiver of the
right to exercise any such right.
5.5 ENTIRE AGREEMENT. This instrument, together with the plans
referred to in Section 5, contains the entire agreement of the
parties. It may not be changed orally but only by an agreement
in writing signed by the parties.
5.6 NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and may be personally served or sent by
United States mail, and shall be deemed to have been given when
personally served or two days after having been deposited in
the United States mail, registered or certified mail, return
receipt requested, with first-class postage prepaid and
properly addressed as follows. For the purpose hereof, the
addresses of the parties hereto (until notice of a change
thereof is given as provided in this Section 5.6) shall be as
follows:
If to Employee:
Xxxxxxx Xxxxx
(omitted)
Xxxxxxx, XX 00000
If to the Companies:
Xxxxxxxxx.xxx, Inc.
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0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
5.7. HEADINGS. The paragraph and subparagraph headings herein are for the
convenience only and shall not affect the construction hereof.
5.8. FURTHER ASSURANCES. Each of the parties hereto shall, from time to
time, and without charge to the other parties, take such additional
actions and execute, deliver and file such additional instruments as
may be reasonably required to give effect to the transactions
contemplated hereby.
5.9. ATTORNEYS' FEES. In the event any party hereto commences arbitration
or legal action in connection with this Agreement, the prevailing
party shall be entitled to its attorneys' fees, costs and expenses
reasonably incurred in such action, and the amount thereof shall be
included in any judgment or award granted under Section 5.1.
5.10. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but
all, which together shall constitute one and the same instrument.
5.11. SEPARATE COUNSEL. The Companies have been represented by counsel in
the negotiation and execution of this Agreement and has relied on
such counsel with respect to any matter relating hereto. The Employee
has been invited to have his own counsel review and negotiate this
Agreement and Employee has either obtained has either obtained his
own counsel or has elected not to obtain counsel.
5.12. INDEMNIFICATION. The Companies shall provide to the Employee
insurance coverage under their Director and Officer's Insurance and
General Liability, and Employment Practices policies to the same
extent as it provides to
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all other similar employees of the Employee's title and position.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
day and year first above written.
"EMPLOYEE" WAREFORCE INCORPORATED
a California corporation
/s/Xxxxxxx Xxxxx By: /s/Xxx Xxxxxxxx
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Xxxxxxx Xxxxx Title: General Counsel
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XXXXXXXXX.XXX, INC.
a Nevada corporation
By: Xxx Xxxxxxxx
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Title: General Counsel
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