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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into to be effective as of
the 1st day of November, 1998, by and between SCB Computer Technology, Inc., a
Tennessee corporation (the "Company"), and Xxx X. Xxxxxx, Xx. (the "Executive").
WHEREAS, the Executive is currently employed by the Company
pursuant to the terms of an Employment Agreement dated February 14, 1996, and
the Company and the Executive desire to continue that employment relationship
and to set forth in an agreement the terms and conditions of such employment.
NOW, THEREFORE, in consideration of the premises hereof and of
the mutual promises and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Employment and Term of Employment. The Company hereby
agrees to employ the Executive, and the Executive hereby agrees to serve the
Company, on the terms and conditions set forth herein for the period commencing
as of the date set forth above and expiring on October 31, 2001, provided that
unless either party gives written notice to the contrary at least 30 days prior
to the second anniversary of this Agreement or any anniversary thereafter, the
term shall be extended for an additional year and on each anniversary thereafter
so that the remaining term shall always be, unless such written notice is given,
two years from such anniversary (the "Expiration Date"). Notwithstanding the
foregoing, in no event shall the term of Executive's employment hereunder extend
beyond the calendar year in which the Executive's 70th birthday occurs.
2. Positions and Duties. The Executive shall serve, in name
and in fact, as Vice Chairman, Chief Executive Officer, President and Treasurer
of the Company and shall have such powers and duties as are customarily
associated with such positions. The Executive shall devote substantially all his
working time and efforts to the business and affairs of the Company, shall use
his best efforts to advance the best interests of the Company, and shall not
engage in outside business activities which interfere with the performance of
his duties hereunder.
3. Compensation.
a. Base Salary. The Executive shall receive a base salary
at the rate of $425,000 per annum during the first year of this Agreement,
$600,000 per annum during the second year of this Agreement and $700,000 per
annum during the third year of this Agreement and any subsequent year (as
adjusted, the "Base Salary"), payable in substantially equal periodic payments,
which shall be made no less frequently than monthly during the period of the
Executive's employment hereunder.
b. Incentive Compensation. In addition to Base Salary, the
Executive shall be entitled to receive incentive compensation as determined in
accordance with the bonus plan authorized by the Compensation Committee of the
Board of Directors (the "Incentive Compensation").
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c. Stock Options. Concurrently herewith, the Company shall
execute and deliver to the Executive a Stock Option Agreement, in substantially
the form attached hereto as Exhibit A, pursuant to which Executive shall be
granted options to purchase 35,211 shares of common stock of the Company
pursuant to the Company's 1997 Stock Incentive Plan. In addition, the Executive
shall be entitled to receive stock options and other stock-based awards as the
Board of Directors or the Compensation Committee thereof may from time to time
determine.
d. Expenses. During the term of his employment hereunder,
the Executive shall be entitled to be reimbursed (in accordance with the
policies and procedures established by the Board of Directors for Company
officers) for all reasonable expenses incurred by him in performing services
hereunder, provided that the Executive properly accounts therefor in accordance
with Company policy.
e. Participation in Benefit Plans. The Executive shall be
entitled to participate in or receive benefits under all the Company's employee
benefit plans and arrangements in effect on the date hereof or made available in
the future to the officers and key management employees of the Company.
f. Car Allowance. During the term of the Executive's
employment hereunder, the Company shall lease an automobile selected by the
Executive, provided that the Executive's lease expenses shall not exceed $750.00
per month.
g. Vacation. During the term of his employment hereunder,
the Executive shall be entitled to four weeks of paid vacation per year.
4. Offices. In addition to serving as Vice Chairman, Chief
Executive Officer, President and Treasurer of the Company, the Executive agrees
to serve without additional compensation, if elected or appointed thereto, in
one or more offices or as a director of any of the Company's subsidiaries or
affiliates.
5. Termination.
a. Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from his duties hereunder on a full time basis for ninety (90)
consecutive days, the Company may terminate its obligations hereunder, except
for those obligations provided for in Section 6(a) hereof. The determination of
whether the Executive is disabled due to physical or mental illness shall be
made by a licensed physician satisfactory to the Executive and to the Company.
b. Termination Upon Death. If the Executive should die
during the term of this Agreement, the Company's obligations under this
Agreement shall cease, except for those obligations set forth in Section 6(a)
hereof, and the Executive's employment shall be terminated.
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c. Termination by the Company. The Company may terminate
the Executive's employment hereunder at any time for Cause or for any other
reason. For the purposes of this Agreement, "Cause" shall mean any act that is
materially inimical to the best interests of the Company and that constitutes on
the part of the Executive personal dishonesty, willful misconduct, breach of
fiduciary duty, intentional failure to perform stated duties of the Vice
Chairman, Chief Executive Officer, President and Treasurer of the Company,
willful violation of any law, governmental rule or regulation (other than
traffic violations or similar offenses) or final cease and desist order, or
material breach of this Agreement.
d. Termination by the Executive. The Executive may
terminate his employment hereunder upon 60 days written notice for any reason.
e. Notice of Termination. Any termination by the Company
or by the Executive pursuant to this Section 5 shall be communicated by written
notice of termination to the other party hereto.
6. Compensation Upon Termination or During Disability.
a. If the Executive's employment is terminated as a result
of disability under Section 5(a), the Executive shall receive an amount which,
when added to any disability benefits provided for by the Company, equals his
Base Salary until the Expiration Date. If the Executive's employment shall be
terminated because of the Executive's death, the Company shall pay to the
Executive's estate, in a single lump sum, an amount equal to the Base Salary
payable through the Expiration Date.
b. If the Executive's employment shall be terminated for
Cause or if the Executive voluntarily terminates his employment for any reason,
subject to the provisions of Section 7 hereof, the Company shall pay the
Executive his Base Salary earned through the date on which his employment is
terminated. The Company shall then have no further obligations to the Executive
under this Agreement.
c. Subject to Section 7 hereof, if the Company shall
terminate the Executive's employment under this Agreement for any reason other
than pursuant to Section 5(a) or for Cause pursuant to Section 5(c) hereof,
then, subject to the compliance by the Executive with the provisions of Sections
9 and 10 hereof, the Company shall pay the Executive, as liquidated damages or
severance or both, his Base Salary payable in substantially equal periodic
payments no less frequently than monthly for a period ending on the Expiration
Date.
7. Change in Control.
a. In the event a Change in Control (as defined below)
occurs during the term of this Agreement and the Executive is terminated by the
Company or if the Executive gives notice of termination prior to the first to
occur of the first anniversary of the Change in Control or the Expiration Date,
Executive shall be entitled to payment and benefits as set forth in subsections
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(b) and (c) below unless such termination is a result of (i) the Executive's
death; (ii) the Executive's disability; (iii) the Executive's retirement; (iv)
termination of the Executive by the Company for Cause; or (v) the Executive's
decision to terminate employment other than for Good Reason (as defined below).
b. If the Company terminates the Executive's employment
following a Change in Control other than pursuant to Section 7(a) or if the
Executive shall terminate his employment following a Change in Control for Good
Reason, then the Company shall pay to the Executive as severance pay, in cash,
on the fifth day following termination, $2,000,000.00; provided that if such
severance payment, either alone or together with other payments which the
Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the "Code")), and subject the Executive to excise taxes
imposed by Section 4999 of the Code, the Executive will be entitled to an
additional payment such that the aggregate amount of the severance payment and
gross-up payment shall be equal to $2,000,000.00, after deduction for the excise
tax on the severance payment and any federal, state, and local income taxes and
excise tax on the gross-up payment.
c. In addition to the severance payment provided in Section
7(b), if the Company terminates the Executive's employment following a Change in
Control other than pursuant to Section 7(a) or if the Executive shall terminate
his employment following a Change in Control for Good Reason, then the Company
shall provide the Executive with health insurance substantially equivalent to
that provided to the Executive immediately prior to termination until the
Executive is eligible to receive coverage under any federal or state health care
program, including Medicare, or is covered or permitted to be covered by benefit
plans of another employer providing substantially similar coverage.
Notwithstanding the foregoing, if Executive is eligible to receive coverage
under any federal or state health care program, including Medicare, the Company
shall provide Executive with Medigap insurance coverage or a similar
supplemental health insurance policy.
d. As used herein, a "Change in Control" means the
happening of any of the following:
(i) any person or entity, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, other than the Company or a wholly-owned subsidiary thereof,
any employee benefit plan of the Company or any of its subsidiaries,
Executive, or T. Xxxxx Xxxx, becomes the beneficial owner of the
Company's securities having 35% or more of the combined voting power
of the then outstanding securities of the Company that may be cast for
the election of directors of the Company (other than as a result of an
issuance of securities initiated by the Company in the ordinary course
of business); or
(ii) as the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination, sales
of assets or contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power of the
then outstanding securities of the Company or any successor
corporation or
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entity entitled to vote generally in the election of the directors of
the Company or such other corporation or entity after such transaction
are held in the aggregate by the holders of the Company's securities
entitled to vote generally in the election of directors of the Company
immediately prior to such transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Board of Directors of the Company cease for any reason to constitute
at least a majority thereof, unless the election, or the nomination
for election by the Company's shareholders, of each director of the
Company's first elected during such period was approved by a vote of
at least two-thirds of the directors of the Company then still in
office who were directors of the Company at the beginning of any such
period.
e. For purposes of this Agreement "Good Reason" shall mean
any of the following (without the Executive's express written consent):
(i) the assignment to the Executive by the Company of
duties inconsistent with the Executive's position, duties,
responsibilities and status with the Company immediately prior to a
Change in Control of the Company, or a change in the Executive's
titles or offices as in effect immediately prior to a Change in
Control of the Company, or any removal of the Executive from or any
failure to reelect the Executive to any of such positions, except in
connection with the termination of his employment for disability,
retirement or Cause or as a result of the Executive's death or by the
Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's Base
Salary as in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement;
(iii) a relocation of the Company's principal executive
offices to a location outside of Memphis, Tennessee, or the
Executive's relocation to any place other than the location at which
the Executive performed the Executive's duties prior to a Change in
Control of the Company, except for required travel by the Executive on
the Company's business to an extent substantially consistent with the
Executive's business travel obligations at the time of a Change in
Control of the Company;
(iv) any material breach by the Company of any provision
of this Agreement; or
(v) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company.
8. Binding Agreement. This Agreement and all obligations of
the Company hereunder shall be binding upon the successors and assigns of the
Company. This Agreement and
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all rights of the Executive hereunder shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.
9. Non-Competition; Nonsolicitation. Executive will not, for a
period equal to the longer of (i) one year from the date of termination of
employment or (ii) October 31, 2001:
(a) own or have a proprietary or equity interest in, be
employed by, or serve as a consultant or advisor to, or in any other
capacity for, any business or firm, that is engaged in the information
technology services business; provided, however, that beneficial
ownership by executive of less than 5% of the outstanding capital stock
of a publicly-held corporation will not violate this provision.
"Information technology services business" shall include, without
limitation: (i) advising persons on the acquisition or strategic
utilization of information technology systems, planning and designing
new information technology systems, and redesigning existing
information technology systems; (ii) providing network design and
management, systems support and maintenance, programming and
application software development, computer code review, data center
management, and information technology outsourcing services; and (iii)
recruiting or training persons with information technology skills;
Company will be entitled to extend noncompete for one additional year
upon payment to executive of lump sum cash payment equal to base salary
at time of termination.
(b) recruit or hire or solicit for business any person who,
during the twelve month period preceding the date of recruitment or
hiring or solicitation, was an employee, customer, or client of the
Company or any of its subsidiaries or affiliates.
10. Unauthorized Disclosure.
(a) During the period of his employment hereunder, the
Executive shall not, without the prior written consent of the Board of
Directors, disclose to any person, other than a person to whom disclosure is
necessary or appropriate in connection with the performance by the Executive of
his duties as an officer of the Company, or its subsidiaries or affiliates, any
confidential information obtained by him while in the employ of the Company with
respect to any of the Company's products, improvements, designs or styles,
methodologies, processes, customers, methods of marketing or distribution,
systems, procedures, plans, proposals, or policies the disclosure of which he
knows, or should have reason to know, could be damaging to the Company or its
subsidiaries or affiliates; provided, however, that confidential information
shall not include any information known generally to the public (other than as a
result of unauthorized disclosure by the Executive) or any information of a type
not otherwise considered confidential by persons engaged in the same business or
a business similar to that conducted by the Company. Following the termination
of employment hereunder, the Executive shall not disclose any confidential
information of the type described above except as may be required in the opinion
of the Executive's counsel in connection with any judicial or administrative
proceeding or inquiry.
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(b) The foregoing provision of this Section 10 shall be
binding upon the Executive's heirs, successors, and legal representatives.
11. Injunction. The Executive acknowledges and agrees that, in
the event of a breach of Section 9 or Section 10 hereof by the Executive, the
Company would be irreparably harmed and that monetary damages would be an
inadequate remedy in favor of the Company. Accordingly, the Executive and the
Company agree that in the event of such a breach, the Company shall be entitled
to injunctive relief against the Executive.
12. Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxx X. Xxxxxx, Xx.
0000 Xxxx Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
If to the Company:
SCB Computer Technology, Inc.
0000 Xxxx Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Corporate Secretary
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city, and other taxes
as shall be required pursuant to any law or government regulation or ruling.
14. Enforcement of Agreement. The Company shall pay or
reimburse the Executive for all costs and expenses (including court costs and
reasonable attorney's fees) incurred by the Executive in connection with any
litigation seeking to enforce the Executive's rights under this Agreement,
provided that the Executive is substantially successful in such litigation.
15. Governing Law. This Agreement shall be construed according
to the laws of Tennessee, without giving effect to the principles of conflicts
of laws of such State.
16. Amendment; Modification; Waiver. This Agreement may be
amended only by the written agreement of the parties hereto. No provisions of
this Agreement may be modified,
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waived, or discharged unless such waiver, modification, or discharge is agreed
to in writing signed by Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
17. Binding Effect.
a. This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer, or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided for herein. Without limiting the generality of the foregoing,
Executive's right to receive payments hereunder shall not be assignable,
transferable, or delegable, whether by pledge, creation of a security interest
or otherwise, other than by a transfer by his will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer contrary
to this paragraph, the Company shall have no liability to pay any amount so
attempted to be assigned, transferred, or delegated.
b. The Company and Executive recognize that each party
will have no adequate remedy at law for breach by the other of any of the
agreements contained herein and, in the event of any such breach, the Company
and Executive hereby agree and consent that the other shall be entitled to a
decree of specific performance, mandamus, or other appropriate remedy to enforce
performance of this Agreement.
18. Entire Contract. This Agreement constitutes the entire
agreement and supersedes all other prior and contemporaneous agreements,
employment contracts and understandings, both written and oral, express or
implied with respect to the subject matter of this Agreement, including the
Employment Agreement dated February 14, 1996 between the Executive and the
Company.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
SCB COMPUTER TECHNOLOGY, INC.
By:
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Xxx X. Xxxxxx, Xx.
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