Exhibit 10.50
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of July
19, 2002, by and between Edgewater Technology, Inc., Inc., a Delaware
corporation (hereinafter referred to as the "Company") and Xxxxx Xxxxxx
(hereinafter referred to as "Employee").
RECITALS
WHEREAS, in the course of building the business of the Company, and in his
capacity as an executive officer thereof, Employee will be engaged in a
confidential relationship and will gain knowledge of the business, affairs,
customers and methods of the Company and each of the Company's direct and
indirect subsidiaries during his employment with the Company and will have
access to lists of the Company's and its affiliates' customers and their needs,
and will become personally known to and acquainted with the Company's and its
affiliates' customers, thereby establishing a personal relationship with such
customers for the benefit of the Company; and
WHEREAS, the Compensation Committee of the Board of Directors of the Company has
been delegated authority, by the Board of Directors of the Company to authorize
the Company to enter into agreements involving executive compensatory matters,
including but not limited to the authority, to determine the terms of, and
approve, this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. TERM OF AGREEMENT. The term of this Agreement shall commence on the date
hereof and shall continue until March 1, 2003, unless terminated sooner in
accordance with Sections 5 or 6 hereof. During the term of this Agreement, the
calendar year shall be referred to herein as a "Compensation Year."
2. DUTIES AND PERFORMANCE.
(a) During the term of this Agreement, Employee shall be employed by the Company
on a full-time basis as its Chief Financial Officer and shall have such
authority and shall perform such duties consistent with his position as may be
reasonably assigned to him by, and shall report to, the Chief Executive Officer
of the Company, or any other member of senior management designated by the Board
of Directors of the Company; provided, however, that without the approval of the
Board of Directors of the Company, Employee may not, on behalf of the Company
(A) enter into term employment arrangements for the Company's employees, (B)
borrow funds or make material capital expenditures or material commitments, or
(C) alter or adopt any employee benefit plans. Employee shall use all reasonable
efforts to further the interests of the Company and shall devote substantially
all of his business time and attentions to his duties hereunder; provided,
however, that Employee shall not be required to locate outside the Wakefield,
Massachusetts area without Employee's consent.
(b) Employee shall be entitled to be reimbursed in accordance with the policies
of the Employee, as adopted and amended from time to time, for all reasonable
and necessary expenses incurred by him in connection with the performance of his
duties of employment hereunder; provided Employee shall, as a condition of such
reimbursement, submit verification of the nature and amount of such expenses in
accordance with the reimbursement policies from time to time adopted by the
Company.
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3. BASE SALARY. The Company shall pay to Employee a base salary at the rate of
$150,000 per annum through the expiration of the term of this Agreement, payable
biweekly as per normal pay practices of the Company. Such salary shall be
subject to increase based upon review by the Compensation Committee of the Board
of Directors of the Company from time to time.
4. BENEFITS.
(a) When eligible under non-discriminatory standards, Employee shall be entitled
to participate in any employee benefit plan maintained by the Company for its
full time employees and shall be entitled to three (3) weeks vacation per annum
and such holidays as the Company may establish as company policy.
(b) Employee shall be eligible to participate in the incentive compensation
plans of the Company, subject to the terms, provisions and conditions of any
such plans; provided, however, that any incentive compensation for a
Compensation Year under and subject to any such plan shall not exceed fifty
percent (50%) of Employee's annual base salary, unless a greater percentage is
approved by the Company's Compensation Committee. Employee acknowledges and
understands that the foregoing percentage is a maximum percentage and that
incentive compensation, if any, for a Compensation Year may be in an amount that
is less than the maximum percentage specified above.
5. TERMINATION OF AGREEMENT.
(a) The Company shall be entitled to terminate Employee's services, in any of
the following circumstances:
(i) For "cause," which shall mean by reason of any of the following: (A)
Employee's conviction of, or plea of nolo contendere to, any felony or to any
crime or offense causing substantial harm to the Company or any of its
affiliates (whether or not for personal gain) or involving acts of theft, fraud,
embezzlement, moral turpitude or similar conduct, (B) Employee's violation of
the Company's substance abuse policy, (C) malfeasance in the conduct of
Employee's duties, including but not limited to (i) willful and intentional
misuse or diversion of the Company's or any of its affiliates' funds, (ii)
embezzlement, and/or (iii) fraudulent, willful or material misrepresentations or
concealments on any written reports submitted to the Company or its affiliates,
(D) material failure to perform the duties of such person's employment, (E)
Employee's gross negligence or willful or intentional misconduct, (F) material
failure to follow or comply with the reasonable and lawful directives of the
Chief Executive Officer, any member of senior management designated by the Chief
Executive Officer, or the Board of Directors of the Company, (G) a material
breach by Employee of the provisions of this Agreement (including without
limitation any breach of Section 7 of this Agreement), or (H) the occurrence of
an event or series of events which lead the Chief Executive Officer and/or the
Board of Directors of the Company to the reasonable conclusion that Employee has
materially breached or damaged their trust in his character and integrity
sufficiently to impair his standing with the Company; provided, however, that in
the case of the foregoing clauses (D) and (F), Employee shall have been
informed, in writing, of such material failure referred to in the foregoing
clauses (D) and (F), respectively;
(ii) If, during the Term, in the opinion of the Company, Employee because of
physical or mental illness or incapacity shall be unable for any reason to
substantially perform all of his duties and responsibilities under this
Agreement for a period of one hundred eighty (180) days in the aggregate in any
twelve (12) month period ("Disability"); provided, that the Company shall give
Employee at least ten (10) days prior written notice of its intention to
terminate this Agreement, as of the date set forth in the notice, at any time
after the expiration of such one hundred eighty (180) day period. In case of
termination for Disability, Employee shall be entitled to receive salary,
benefits and reimbursable expenses owing Employee through the date of
termination; The death of Employee; or At any time, for any reason other than as
set forth above including without cause, immediately upon notice to Employee.
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(b) Except as provided in Section 6 hereof, in the event of the termination of
Employee's employment:
(i) For cause, or in the event of the resignation of Employee (excluding
circumstances involving Good Reason, as defined below), then as of the date of
such termination all of the Company's obligations hereunder, including, without
limitation, the Company's obligations to pay Employee's base salary accruing
after the date of such termination, and any benefits (except as otherwise
required by applicable law), other than those obligations which have accrued but
remain unpaid as of the date of such termination (such as accrued but unpaid
salary, expense reimbursements, health insurance premiums, retirement plan
contributions, if any, vacation pay, sick pay, etc.), shall cease and Employee
shall not be entitled to receive any incentive compensation for the Compensation
Year of such termination;
(ii) By the Company for any other reason other than for the reasons set forth in
clause (i) above, or by Employee for Good Reason (as defined below), then in
such event the Company shall pay Employee's base salary, in such amount as is
determined by reference to clauses (A) and (B) below and on such payment terms
as set forth in the last sentence of this paragraph (ii)(without offset for any
compensation received by Employee from any subsequent employment by any person
other than by an affiliate of the Company or in violation of Section 7 hereof)
and provide for the continuation of any Company health insurance benefits for
which he would be eligible but for such termination, but only if Employee signs
a valid general release for all claims against the Company in the form provided
by the Company, for a period which is the lesser of (A) six (6) months from the
date of such termination, or (B) the remaining term of this Agreement. The
continuation of health insurance benefits referenced above in this Section
5(b)(ii) shall extend to: (i) Employee and his eligible dependants under the
terms of the applicable the Company sponsored health care plan by which he was
covered at the time of such termination of employment, as such plan may be in
effect or may be modified from time to time, in consideration for Employee's
payment of such premiums as may be required to be paid by active employees of
the Company from time to time ("Required Premium Payments") or (ii) if such
Company sponsored health care plan does not by its terms allow Employee's
participation or continued participation, the Company shall obtain (in return
for Required Premium Payments) insurance coverage on behalf of Employee and/or
Employee's eligible dependents that provides all benefits otherwise provided
under such the Company sponsored health care plan or, at the Company's election
(in return for Required Premium Payments) shall provide such benefits from its
own assets (collectively, "Continued Health Care Coverage"). "Good Reason" shall
mean any of the following circumstances unless remedied by the Company within
thirty (30) days after receipt of written notification by Employee that such
circumstances exist or have occurred: (A) assignment to Employee of any duties
inconsistent with Employee's duties or responsibilities as contemplated by
Section 2 of this Agreement; or (B) any material failure by the Company to
comply with any of the material provisions of the Agreement. The payment of
Employee's base salary amount under the circumstances set forth in the first
sentence of this paragraph shall be made in two equal payments (equal to
one-half of such aggregate amount) on each of the effective date of termination
and ninety days after the effective date of termination.
6. CHANGE IN CONTROL
(a) If Employee's employment with the Company is terminated during the term of
this Agreement following a Change in Control either by the Company which is not
for cause (as defined in this Agreement) or by the Employee for Good Reason
only, the Company shall pay Employee a lump sum in the amount of Employee's base
salary then in effect. Such lump sum payment shall be due on the effective date
of the termination of Employee's employment; provided, however, that upon the
written request of Employee, the Company shall pay such amount or portions
thereof at a later date or later dates as specified in Employee's written
request. In addition, in the case of any such termination, Employee shall be
permitted to receive Continued Health Care Coverage for the period described in
clause 5(b)(ii)(B).
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(b) A "Change in Control" shall be deemed to have occurred if: (i) any person,
other than the Company or an employee benefit plan of the Company, acquires
directly or indirectly the "beneficial ownership' (as defined in Section 13(d)
of the Securities Exchange Act of 1934, as amended, "beneficial Ownership") of
any voting security of the Company and immediately after such acquisition such
person is, directly or indirectly, the Beneficial Owner of voting securities
representing 50% or more of the total voting power of all of the
then-outstanding the Company voting securities of the Company; (ii) the
individuals (A) who, as of the effective date of the Company's registration
statement with respect to its initial public offering, constitute the Board of
Directors of the Company (the "Original Directors") or (B) who thereafter are
elected to the Board of Directors of the Company and whose election, or
nomination for election to the Board of Directors of the Company was approved by
vote of at least two-thirds (2/3) of the Original Directors then still in office
(such directors becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board of Directors of the Company
and whose election, or nomination for election, to the Board of Directors of the
Company was approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such directors
also becoming Additional Original Directors immediately following their
election), cease for any reason to constitute a majority of the members of the
Board of Directors of the Company; (iii) the stockholders of the Company shall
approve a merger or merger agreement involving the Company, a consolidation
transaction involving the Company, a recapitalization or reorganization of the
Company, a reverse stock split of outstanding the Company voting securities, or
the consummation of any such transaction if stockholder approval is not sought
nor obtained, provided, however, that the foregoing referenced transactions or
events in this clause (iii) shall not constitute a "Change of Control" if such
transaction or event would result in at least 60% of the total voting power
represented by outstanding securities of the surviving or resulting entity
(immediately after such transaction or event after giving effect to the
consideration issued or transferred in such transaction or event on an
as-converted or fully-diluted basis) being Beneficially Owned by at least 60% of
the holders of outstanding voting securities of the Company immediately prior to
the transaction, with the voting power of each such continuing holder relative
to other such continuing holders not altered in the transaction in any material
way; or (iv) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or a substantial portion of the Company's assets (i.e., 50% or
more of the total assets of the Company).
(c) (i) Anything in this Agreement to the contrary notwithstanding, in the event
that it shall be determined that any payment or distribution by the Company to
or for the benefit of Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a
"Payment"), would constitute an "excess parachute payment" within the meaning of
section 280G of the Internal Revenue Code of 1986, as amended (the "code"), the
aggregate present value of amounts payable or distributable to or for the
benefit of the Employee pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter referred to as
"Agreement Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount' shall be an amount expressed in present value which
maximizes the aggregate present value of Agreement Payments without causing any
Payment to be subject to the taxation under section 4999 of the Code. For
purposes of this Section 6, present value shall be determined in accordance with
section 280G(d)(4) of the Code.
(ii) All determinations to be made under this Section 6 (c) shall be made by the
Company's independent public accountant immediately prior to the Change of
Control (the "Accounting Firm"), which firm shall provide its determinations and
any supporting calculations both to the Company and Employee within 10 days of
the effective date of the termination of Employee's employment. Any such
determination by the Accounting Firm shall be binding upon the Company and
Employee.
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(iii) As a result of the uncertainty in the application of section 280G of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that Agreement Payments, as the case may be, will have been made
by the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the Company could have
been made ("underpayment"), in each case, consistent with the calculations
required to be made hereunder. Within two years after the effective date of the
termination of Employee's employment, the Accounting Firm shall review the
determination made by it pursuant to paragraph (i), above. In the event that the
Accounting Firm determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Employee which
Employee shall repay to the Company together with interest at the applicable
Federal rate provided for in section 7872(f)(2) of the Code (the "Federal
Rate"); provided, however, that no amount shall be payable by Employee to the
Company if and to the extent such payment would not reduce the amount which is
subject to taxation under section 4999 of the Code. In the event that the
Accounting Firm determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Employee together with interest at the Federal Rate.
(iv) All of the fees and expenses of the Accounting Firm in performing the
determinations referred to in paragraphs (ii) and (iii) above shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses resulting
from or relating to its determinations pursuant to paragraphs (ii) and (iii)
above, except for claims, damages or expenses resulting from the negligence or
misconduct of the Accounting Firm.
7. COVENANT NOT TO COMPETE, CONFIDENTIALITY.
(a) Employee acknowledges that in the course of his employment by the Company he
has and will become privy to various economic and trade secrets and
relationships of the Company and its affiliates. Therefore, in consideration of
this Agreement, Employee hereby agrees that he will not, directly or indirectly,
except for the benefit of the Company or its affiliates or subsidiaries, or with
the prior written consent of the Board of Directors of the Company, which
consent may be granted or withheld at the sole discretion of the Company's Board
of Directors:
(i) During the Noncompetition Period (as hereinafter defined), become an
officer, director, stockholder, partner, member, manager, associate, employee,
owner, creditor, independent contractor, co-venturer, consultant or otherwise,
or be interested in or associated with any other person, corporation, firm or
business engaged in providing software solution services, including but not
limited to systems integration, custom software development, training, systems
support, outsourcing and/or information technology consulting services,
excluding however, information technology staffing business and commercial
software product businesses, except as to where a majority of the revenues of
any such business is derived from custom software development services (a
"Edgewater Services Business") within a radius of fifty (50) miles from any
office operated during the Noncompetition Period by the Company, or any of its
affiliates (collectively, the "Territory") or in any Edgewater Services Business
directly competitive with that of the Company, or any of its affiliates, or
itself engage in such business; provided, however, that
(A) Nothing herein shall be construed to prohibit Employee from owning not more
than five percent (5%) of any class of securities issued by an entity which is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, or which is traded over the counter;
(B) The foregoing shall not restrict Employee with respect to businesses, other
than a Edgewater Services Business, engaged in by the Company or its affiliates
during the Noncompetition Period unless Employee either is or was substantially
involved in such other businesses of the Company or such affiliates or had
access to Confidential Information (as hereinafter defined) with respect to such
other businesses; or
(ii) During the Noncompetition Period, in the Territory, solicit, cause or
authorize, directly or indirectly, to be solicited for or on behalf of himself
or third parties, from parties who are or were customers of the Company or its
affiliates, any Edgewater Services Business transacted by or with such customer
by the Company or its affiliates; or
(iii) During the Noncompetition Period, in the Territory, accept or cause or
authorize, directly or indirectly, to be accepted for or on behalf of himself or
for third parties, any such Edgewater Services Business from any such customers
of the Company or its affiliates; or
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(iv) From and after the date hereof and during the Noncompetition Period, (A)
use, publish, disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or used by the Company
or its affiliates relating to their business or the operations, employees or
customers of the Company or its affiliates which constitutes proprietary or
confidential information of the Company or its affiliates ("Confidential
Information"), including without limitation any Confidential Information
contained in any customer lists, mailing lists and sources thereof, statistical
data and compilations, patents, copyrights, trademarks, trade names, inventions,
formulae, methods, processes, agreements, contracts, manuals or any other
documents; and (B) from and after the date hereof, use, publish, disseminate or
otherwise disclose, directly or indirectly, any information heretofore or
hereafter acquired, developed or used by the Company or its affiliates which
constitutes Confidential Information, but excluding any Confidential Information
which has become part of common knowledge or understanding in the Edgewater
Services Business industry or otherwise in the public domain (other than from
disclosure by Employee in violation of this Agreement); provided, however, this
subparagraph (iv) shall not be applicable to the extent Employee is required to
testify in a judicial or regulatory proceeding pursuant to the order of a judge
or administrative law judge after Employee requests that such Confidential
Information be preserved; or
(v) During the Noncompetition Period, in the Territory,
(A) Solicit, entice, persuade or induce, directly or indirectly, any employee
(or person who within the preceding ninety (90) days was an employee) of the
Company or its affiliates or any other person who is under contract with or
rendering services to the Company or its affiliates, to terminate his or her
employment by, or contractual relationship with, such person or to refrain from
extending or renewing the same (upon the same or new terms) or to refrain from
rendering, services to or for such person or to become employed by or to enter
into contractual relations with any persons other than such person or to enter
into a relationship with a competitor of the Company or its affiliates;
(B) Solicit, induce, attempt to hire, or hire any employee of the Company (or
any who was an employee of the Company during the preceding ninety (90) days) or
assist in such hiring by any other person or business entity; or
(C) Authorize or knowingly approve or assist in the taking of any such actions
by any person other than the Company or its affiliates.
(b) For purposes of this Agreement, the term "Noncompetition Period" shall mean
the period commencing on the date hereof and ending twenty four (24) months
after the date Employee ceases to be an officer or employee of, or consultant to
the Company or any of its affiliates; provided, however, that the Noncompetition
Period shall end one (1) year from the date of termination of the employment of
Employee by the Company under this Agreement which is without cause or by
Employee for Good Reason.
(c) The invalidity or non-enforceability of this Section 7 in any respect shall
not affect the validity or enforceability of this Section 7 in any other respect
or of any other provisions of this Agreement. In the event that any provision of
this Section 7 shall be held invalid or unenforceable by a court of competent
jurisdiction by reason of the Geographic or business scope or the duration
thereof, such invalidity or unenforceability shall attach only to the scope or
duration of such provision and shall not affect or render invalid or
unenforceable any other provision of this Agreement, and, to the fullest extent
permitted by law, this Agreement shall be construed as if the geographic or
business scope or the duration of such provision had been more narrowly drafted
so as not to be invalid or unenforceable and further, to the extent permitted by
law, such geographic or business scope or the duration thereof may be re-written
by a court of competent jurisdiction to make such sufficiently limited to be
enforceable.
(d) Employee acknowledges that the Company's remedy at law for any breach of the
provisions of this Section 7 is and will be insufficient and inadequate and that
the Company shall be entitled to equitable relief, including by way of temporary
and permanent injunction, in addition to any remedies the Company may have at
law.
(e) The provisions of this Section 7 shall survive termination of this
Agreement.
8. DIVISIBILITY OF AGREEMENT. In the event that any term, condition or provision
of this Agreement is for any reason rendered void, all remaining terms,
conditions and provisions shall remain and continue as valid and enforceable
obligations of the parties hereto.
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9. NOTICES. Any notices or other communications required or permitted to be sent
hereunder shall be in writing and shall be duly given if personally delivered or
sent postage prepaid by certified or registered mail, return receipt requested,
or sent by prepaid overnight courier service, delivery confirmed, as follows:
(a) If to Employee: Xxxxx Xxxxxx
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
(b) If to the Company: Edgewater Technology, Inc.
00 Xxxxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: President and Chief Executive Officer
Either party may change his or its address for the sending of notice to such
party by written notice to the other party sent in accordance with the
provisions hereof.
10. COMPLETE AGREEMENT. This Agreement contains the entire understanding of the
parties with respect to the employment of Employee and supersedes all prior
arrangements or understandings with respect thereto. This Agreement may not be
altered or amended except by a writing, duly executed by the party against whom
such alteration or amendment is sought to be enforced.
11. ASSIGNMENT. This Agreement is personal and non-assignable by Employee. It
shall inure to the benefit of any corporation or other entity with which the
Company shall merge or consolidate or to which the Company shall lease or sell
all or substantially all of its assets and may be assigned by the Company to any
affiliate of the Company or to any corporation or entity with which such
affiliate shall merge or consolidate or which shall lease or acquire all or
substantially all of the assets of such affiliate.
12. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument.
13. GOVERNING LAW. This Agreement shall in all respects be construed according
to the laws of the State of Delaware.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement in
multiple counterparts as of the day and year first above written.
EMPLOYEE
/s/ XXXXX X. XXXXXX
--------------------------------------------
Xxxxx X. Xxxxxx
--------------------------
Witness
EDGEWATER TECHNOLOGY, INC.
By: /s/ XXXXXXX XXXXXXXXX
----------------------------------------
Title: President and Chief Executive Officer
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