EMPLOYMENT AND NONCOMPETITION AGREEMENT
EMPLOYMENT
AND NONCOMPETITION AGREEMENT
THIS
AGREEMENT is entered into by and between TechTeam Global, Inc. (the
"Company"),
headquartered at 00000 Xxxx 00 Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and Xxxxxx
Xxxxxxxxxx (the "Executive"),
residing at 000 Xxxxx xx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, and is effective
as of June 1, 2008 (“Effective
Date”).
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1.
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Employment
Period.
The Company hereby agrees to employ the Executive, and the Executive
hereby agrees to be employed by the Company subject to the terms
and
conditions of this Agreement commencing on the Effective Date until
terminated as provided herein (the "Term").
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2. Terms
of Employment.
a) Position
and Duties.
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(i)
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During
the Term, the Executive shall serve as Company's Senior Vice President
and
General Manager for TechTeam Asia/Latin America, and in any other
capacity
assigned to him by the Company’s President and Chief Executive Officer
(“CEO”).
Executive shall report to the CEO.
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(ii)
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During
the Term, Executive agrees to devote his full attention and time
to the
business and affairs of the Company and to: (A) perform his
responsibilities in a professional manner, (B) promote the interests
of
the Company and its subsidiaries, and (C) discharge the executive,
operational and administrative duties, as may be reasonably assigned
to
him by the CEO. Notwithstanding the foregoing, the
Executive may (i) serve as a director, trustee or officer or
otherwise participate in not-for-profit educational, welfare, social,
religious and civic organizations; and (ii) manage personal
investments, to the extent that such other activities, either individually
or in the aggregate, do not inhibit or interfere with the performance
of
the Executive’s duties under this Agreement, or to the knowledge of the
Executive conflict in any material way with the business or policies
of
the Company
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(iii)
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Executive
agrees that he has read and at all times will abide by any employee
handbook, policy, or practice that the Company has or adopts with
respect
to its employees generally, as modified by this
Agreement.
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(iv)
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As
of the Effective Date, Executive shall have no agreements with, or
material obligations to, any other individual, partnership, corporation,
or legal entity, specifically including any confidentiality,
non-disclosure, non-solicitation, or non-competition agreements or
obligations, that may or would conflict with Executive’s obligations under
this Agreement. Executive agrees that he will not sit on the board
of
directors of any company without the prior written consent of the
CEO.
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b) Compensation.
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(ii)
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Stock
Options.
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(A) Initial
Grant.
Executive will be granted an option to acquire 80,000 shares of common stock
(“Options”)
of the
Company with an exercise price equal to the closing market price of the common
stock of the Company (“Company
Common Stock”)
on the
Effective Date (the “Initial
Grant Options”).
The
Initial Grant Options shall vest as follows: (i) 50,000 in equal parts annually
over four (4) years beginning on the first anniversary of the Effective Date
and
(ii) 15,000 on the second anniversary of the Effective Date and 15,000 on the
third anniversary of the Effective Date.
(B) Terms.
The
Initial Grant Options must be exercised within ten (10) years after the
Effective Date, and shall be subject to the terms and conditions of the
Company’s Incentive Stock and Awards Plan or successor plans. If Executive's
employment is terminated by the Company without Cause or by Executive for Good
Reason, all Options shall immediately vest. The Executive shall have a period
of
twelve (12) months after any Termination Date to exercise any vested Options.
(C) Restricted
Shares.
Executive will be issued 17,500 restricted shares of Company Common Stock
(“Restricted
Shares”)
on the
Effective Date, which shall vest as follows: 50% on the second anniversary
of
the Effective Date, 25% on each the third and the fourth anniversary of the
Effective Date. If Executive's employment is terminated by the Company without
Cause or by Executive for Good Reason, all Restricted Shares shall immediately
vest.
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(D) To
the
extent that any term of this Agreement conflicts with any term or provision
of
the Company’s 2006 Incentive Stock and Awards Plan, the Executive Long Term
Incentive Program, the Annual Incentive Plan, the Non-Qualified Stock Option
Award Agreement and the Restricted Stock Award Agreement and their successors,
the terms of this Agreement shall govern.
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(iii)
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Bonuses:
Annual Incentive Plan (AIP) and Long Term Incentive Plan
(LTIP).
The Executive will participate in the Company's Annual Incentive
Plan (at
a target of 45% of Annual Base Salary) and Long Term Incentive Plan
(at a
target of 20% of Annual Base Salary) during the Term of this Agreement.
For fiscal 2008, Executive will be guaranteed a minimum bonus of
$35,000.00 under the Annual Incentive Plan for fiscal year 2008.
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(iv)
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Savings
and Retirement Plans.
During the Term, the Executive shall be eligible to participate in
all
savings and retirement plans, practices, policies and programs to
the
extent applicable generally to other executives of the Company in
accordance with the provisions of those
plans.
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(v)
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Welfare
and Other Benefits Plans.
During the Term, the Executive and the Executive's eligible family
members
shall be entitled to participate in all benefit and executive perquisites
under welfare, fringe and other similar benefit plans, practices,
policies
and programs which may be provided by the Company (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans
and
programs) to the extent applicable generally to other executives
of the
Company. Executive will receive credit under any benefit plan for
years of
service with Onvaio, LLC as if Executive had been an employee of
the
Company. Executive shall be eligible for twenty (20) business days
of
vacation to be taken at the discretion of Executive assuming vacation
utilized does not materially conflict with the duties and responsibilities
of Executive.
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(vi)
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Expenses.
During the Term, the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses incurred and submitted
by the Executive in accordance with the policies of the Company.
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3. Termination
of Employment.
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The
Executive's employment shall be terminated at any time (the “Termination
Date”)
upon the occurrence of any event set forth
below.
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3
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a)
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Death.
The Executive's employment shall terminate automatically upon the
Executive's death, which shall not be deemed a termination by the
Company
for Cause. Upon termination for death, the Company shall not be obligated
to make any further payment of Annual Base Salary, AIP or LTIP bonuses
or
provide any benefits under this Agreement (other than payments of
Annual
Base Salary, unused accrued vacation and reimbursements for expenses
incurred, through the Termination Date). If Executive’s employment is
terminated by Executive’s death, all unvested Options and Restricted
Shares shall immediately vest, and the Executive’s beneficiaries or his
estate shall have a period of twelve (12) months after the Termination
Date to exercise any vested
Options.
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b)
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Disability.
If during the Term, the Executive shall become physically or mentally
disabled such that the Executive, in the good faith judgment of a
medical
doctor retained by the Company and reasonably acceptable to Executive,
is
unable perform his duties hereunder for a period of 90 consecutive
days or
for 90 days during any six month period during employment (a “Disability”),
the Company may terminate the Executive’s employment hereunder by
providing Executive 30 days written notice of Company’s decision. In order
to assist the Company in making that determination, the Executive
shall,
as reasonably requested by the Company, make himself available for
medical
examinations by one or more physicians chosen by the Company. Upon
termination for Disability, the Company shall not be obligated to
make any
further payment of Annual Base Salary, AIP or LTIP bonuses or provide
any
benefits under this Agreement (other than payments of Annual Base
Salary,
unused accrued vacation and reimbursements for expenses incurred,
through
the Termination Date). In addition, if Executive’s employment is
terminated by reason of disability, all unvested Options and Restricted
Shares shall immediately vest, and the Executive or his legal
representative shall have a period of twelve (12) months after the
Termination Date to exercise any vested
Options.
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c)
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By
Company for Cause.
The Company may terminate the Executive's employment for Cause. For
purposes of this Agreement, "Cause"
shall mean:
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An
act of fraud, embezzlement, theft, or other similar material dishonest
conduct in connection with the Executive’s
employment;
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(ii)
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Executive’s
willful and continued failure to substantially perform Executive’s duties,
which continues after fourteen (14) days written notice to
Executive;
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(iii)
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An
intentional action or failure to act by Executive that is materially
injurious to the Company;
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(iv)
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An
intentional action or a failure to act that constitutes insubordination,
which continues after seven (7) days written notice to
Executive;
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(v)
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Any
material breach of this Agreement by the Executive, which breach
is not
remedied within thirty (30) days after written notice thereof, specifying
the nature of such breach in reasonable detail, is given by the Company
to
the Executive;
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(vi)
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Executive's
conviction of or a plea of no contest to a felony or a crime involving
moral turpitude under any state or federal
statute;
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(vii)
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Any
act or omission by the Executive involving malfeasance or gross negligence
in the performance of Executive’s duties hereunder;
and/or
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(viii)
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Executive's
failure to follow the reasonable and lawful instructions given in
good
faith by the CEO, which failure is not remedied within thirty (30)
days
after written notice thereof, specifying the factual nature of such
conduct is given by the CEO to the
Executive.
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In
the event of a termination for Cause, the Company shall not be obligated
to make any further payment of Annual Base Salary, AIP or LTIP bonuses
or
provide any benefits under this Agreement (other than payments of
Annual
Base Salary, unused accrued vacation and reimbursements for expenses
incurred, through the Termination
Date).
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d)
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By
the Company Without Cause.
Commencing on the second anniversary of the Effective Date, this
Agreement
may be terminated by the Company at any time in its discretion, for
any
reason or no reason, with or without advance notice or warning, and
without Cause. If the Executive is terminated by the Company without
Cause, the Company shall pay the Executive, as severance, in a lump
sum
within fourteen (14) days after termination, an amount equal to the
Executive’s Annual Base Salary and the Executive’s target AIP bonus for
the then current fiscal year.
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e)
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By
Executive.
The Executive may terminate this Agreement at any time in its discretion,
for any reason or no reason, with or without advance notice or warning.
If
Executive exercises his right to terminate this Agreement without
Good
Reason, the Company shall not be obligated to make any further payment
of
Annual Base Salary, AIP or LTIP bonuses or provide any benefits under
this
Agreement (other than payments of Annual Base Salary, unused accrued
vacation and reimbursements for expenses incurred, through the Termination
Date). All unvested Options and Restricted shares will immediately
expire
on the Termination Date. The Executive will have (90) days after
the
Termination Date to exercise any vested Options, after which time
they
will expire.
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5
The
Executive may terminate this Agreement for cause by giving written notice to
the
Company of his belief that a factual basis constituting Good Reason (as defined
below) exists for terminating the employment relationship, and requesting that
the Company, within the sixty (60) day correction period, take measures to
correct this situation. If the Company fails to take corrective measures by
the
end of the sixty (60) day correction period, Executive may then terminate this
Agreement, upon expiration of the sixty (60) day correction period.
“Good
Reason”
shall
mean:
(a)
the
Company violates this Agreement and fails to cure such breach within sixty
(60)
days after receiving notice thereof from the Executive;
(b)
the
Executive is required to relocate outside the 50 mile radius surrounding Los
Gatos, California, unless such relocation is agreed to by Executive in writing
as part of a comprehensive relocation plan; or
(c)
the
Company removes the Executive from or fails to re-elect or appoint Executive
to
any officer position in the Company, and the Company fails to cure such breach
within sixty (60) days after receiving notice thereof from the Executive.
In
the
event the Executive terminates this Agreement for Good Reason, the Company
shall
pay the Executive, as severance, in a lump sum within fourteen (14) days of
such
termination, an amount equal to the Executive’s Annual Base Salary plus (i)
Executive’s target cash bonus for the then current full fiscal year, and (ii)
the cash value of any unused accrued vacation time. In addition, the Company
will provide for a 12 month period to complete the exercise of all vested stock
options.
Termination
By Executive Upon Change of Control. The Executive may terminate this Agreement
by giving thirty (30) days written notice, if during the first one year after
a
Change of Control, the Executive is assigned any role or duties inconsistent
in
any respect with the Executive’s position, title, authority, duties,
responsibilities or offices prior to the Change of Control or any other action
by the Company which results in a diminution in such position, title, authority,
duties or responsibilities that a reasonable person holding a similar position,
title authority or duties would find diminutive in any way and the continuance
of such assignment of duties or other such action for a period of thirty (30)
days; or the Company requires the Executive to be based at any office or
location other than in Los Gatos, California, except for any short-term
assignment agreed to by Executive where the Company pays all travel or temporary
relocation costs incurred by the Executive.
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A
“Change
of Control” of the Company shall mean: (i) any merger, consolidation,
recapitalization of the Company or the sale or other transfer of greater than
50% of all then outstanding voting shares of the Company entitled to vote
generally in the election of the directors; or (ii) the consummation of the
sale, lease, dissolution or other transfer (in one transaction or a series
of
transactions contemplated or arranged by any part as a single plan) or other
disposition of all or a majority of the assets or operations of the Company
In
the
event of a termination by the Executive following a Change of Control under
this
provision, the Company shall pay the Executive, as severance, in a lump sum
within fourteen (14) days of such termination, (1) an amount equal to the
Executive’s Annual Base Salary, (2) the product of (x) the Annual Incentive Plan
bonus as if earned at the target level and (y) a fraction, the numerator of
which is the number of days from beginning of the calendar year in which the
Termination Date occurs through the Termination Date, and the denominator of
which is 365, and (3) any accrued vacation pay, in which case to the extent
not
theretofore paid; and (4) continued benefits to the Executive in accordance
with
the plans, programs, practices and policies of the Company as if the Executive’s
employment had not been terminated for a period of twelve (12) months; provided,
however, the benefits shall cease if the Executive becomes eligible to receive
medical or other welfare benefits from another employer. Further, the Company
shall provide the Executive with executive outplacement services for a period
of
up to six (6) months through a recognized outplacement provider that is agreed
to by the Company and the Executive.
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f)
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Date
of Termination.
"Termination
Date"
means the effective date of termination determined in accordance
with the
provisions of this Paragraph 3.
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g)
Additional
Payments. Notwithstanding
the foregoing provisions of this Section 3, in the event that the Executive
is a “specified employee” within the meaning of Section 409A of the Code
(as determined in accordance with the methodology established by the Company
as
in effect on the Date of Termination) (a “Specified
Employee”),
the
severance payment and, to the extent (i) the Executive is not a Covered
Employee for the fiscal year of the Company in which the Date of Termination
occurs and (ii) such termination occurs during the 162(m) Reliance Period,
the pro-rata incentive payment shall instead be paid to the Executive, with
interest on any delayed payment at the applicable federal rate provided for
in
Section 7872(f)(2)(A) of the Code (“Interest”)
on the
first business day after the date that is six months following the Executive’s
“separation from service” within the meaning of Section 409A of the Code
(the “Delayed
Payment Date”).
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Notwithstanding
the foregoing provisions of this Section 3 or anything in this Agreement to
the contrary, the Medical Benefits that are not non-taxable medical benefits,
“disability pay” or “death benefit” plans within the meaning of Treasury
Regulation Section 1.409A-1(a)(5) shall be provided and administered in a
manner that complies with Treasury Regulation Section 1.409A-3(i)(1)(iv),
which requires that (i) the amount of such benefits provided during one
taxable year shall not affect the amount of such benefits provided in any other
taxable year, except that to the extent such benefits consist of the
reimbursement of expenses referred to in Section 105(b) of the Code, a
maximum, if provided under the terms of the plan providing such Medical Benefit,
may be imposed on the amount of such reimbursements over some or all of the
period in which such benefit is to be provided to the Executive, as described
in
Treasury Regulation Section 1.409A-3(i)(iv)(B), (ii) to the extent
that any such benefits consist of reimbursement of eligible expenses, such
reimbursement must be made on or before the last day of the Executive’s taxable
year following the taxable year in which the expense was incurred and
(iii) no such benefit may be liquidated or exchanged for another benefit
(such treatment, the (“409A
Medical Benefits Treatment”).
4. Confidential
Information; Noncompetition.
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a)
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The
Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data
relating
to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the
Term and which shall not be or have become public knowledge (other
than by
acts by the Executive or representatives of the Executive in violation
of
this Agreement). After the Term the Executive shall not, without
the prior
written consent of the Company or as may otherwise be required by
law or
legal process (provided the Company has been given notice of an
opportunity to challenge or limit the scope of disclosure purportedly
so
required), communicate or divulge any such information, knowledge
or data
to anyone other than the Company and those designated by
it.
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b)
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Executive
agrees not to utilize his knowledge of the business of the Company
or his
relationships with investors, suppliers, customers, clients, or financial
institutions to compete with the Company in any business the same
as, or
similar to, the business conducted by the Company during the term
of this
Agreement. Executive agrees not
to:
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1.
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Work
for, consult with, provide any services to or provide any information
to
any firm or entity or person that competes with, or engages in, or
carries
on any aspect of the Company's business services in competition with
the
Company for at least until the later of (i) two years after the date
of
this Agreement and (ii) one (1) year after the Termination Date;
and
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c)
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Executive
acknowledges that his services hereunder are of a special, unique,
and
intellectual character and his position with the Company places him
in a
position of confidence and trust with customers, suppliers, and employees
of the Company. The Executive further acknowledges that to perform
his
position, he will necessarily be given access to confidential information
of the Company. Executive will continue to develop personal relationships
with the Company's customers, financiers, suppliers, and employees.
The
parties expressly agree that these provisions are reasonable, enforceable,
and necessary to protect the Company's interests. In the unlikely
event,
however, that a court of competent jurisdiction determines that any
portion of such provisions is unenforceable, then the parties agree
that
the remainder of the provisions shall remain valid and enforceable
to the
maximum extent possible.
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d)
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The
Executive agrees that it would be difficult to measure damages to
the
Company from any breach of the covenants contained in this Paragraph
4,
but that such damages from any such breach would be great, incalculable
and irremediable, and that money damages would be an inadequate remedy.
Accordingly, the Executive agrees that the Company may have specific
performance of these provisions in any court of competent jurisdiction.
The parties agree, however, that the specific performance remedies
described above shall not be the exclusive remedies, and the Company
may
enforce any other remedy or remedies available to it either in law
or in
equity specifically including temporary, preliminary, and/or permanent
injunctive relief.
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5. Successors.
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a)
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This
Agreement is personal to the Executive and shall not be assignable
by the
Executive.
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b)
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This
Agreement shall inure to the benefit of and be binding upon the Company
and its affiliated companies, successors and
assigns.
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6. Arbitration.
7. General
Provisions.
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a)
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This
Agreement shall be governed by and construed in accordance with the
laws
of Michigan, without reference to principles of conflict of laws.
The
captions of this Agreement are not part of the provisions hereof
and shall
have no force or effect. This Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their
respective successors and legal
representatives.
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b)
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All
notices and other communications hereunder shall be in writing and
shall
be deemed to be received when (i) hand delivered (with written
confirmation of receipt), (ii) when received by the addressee, if
sent by
nationally recognized overnight delivery service (receipt requested)
in
each case to such address as a party may designate by written notice
to
the other party.
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c)
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The
invalidity or unenforceability of any provision of this Agreement
shall
not affect the validity or enforceability of any other provision
of this
Agreement.
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d)
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This
Employment Agreement may be executed through the use of separate
signature
pages or in any number of counterpart copies and each of such counterparts
shall, for all purposes, constitute one agreement binding on all
the
parties.
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[Remainder
of Page Left Intentionally Blank]
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IN
WITNESS WHEREOF, the Executive has executed this Agreement and, based upon
the
authorization of its Board of Directors, the Company has caused this Agreement
to be executed in its name on behalf, as of the Effective Date.
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Date:
May 30, 2008
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/s/
Xxxxxx Xxxxxxxxxx
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Xxxxxx
Xxxxxxxxxx, “Executive”
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Date:
May 30, 2008
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TechTeam
Global, Inc.
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By:
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/s/
Xxxx X. Xxxxxxxx
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Xxxx
X. Xxxxxxxx, "CEO"
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