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EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into on August
7, 2000, by and between Xxxxxx X. Xxxxx, an individual ("Executive") and Gartner
Group, Inc., a Delaware corporation (the "Company").
RECITALS
A. The Company and the Executive desire to set forth their agreement
pursuant to which the Executive will become the Chief Marketing Officer of the
Company effective August 7, 2000 and to provide for Executive's employment by
the Company upon the terms and conditions set forth herein.
AGREEMENT
THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereby agree as follows:
1. Employment. Executive will serve as Chief Marketing Officer of the
Company for the Employment Term specified in Section 2 below. Executive will
report solely to the Chief Executive Officer of the Company and will render such
services consistent with the foregoing role as the Chief Executive Officer or
Board of Directors may from time to time direct. Executive's office shall be
located at the executive offices of the Company in Stamford, Connecticut.
Executive may (i) serve on corporate, civic or charitable boards or committees
and (ii) deliver lectures, fulfill speaking engagements or teach at educational
institutions, to the extent consistent with the Company's policies (as
applicable) or disclosed to the Chief Executive Officer and that the Chief
Executive Officer determines in good faith do not interfere with the performance
of Executive's responsibilities hereunder.
2. Term. The employment of Executive pursuant to this Agreement shall
continue through September 30, 2003 (the "Employment Term"), unless extended or
earlier terminated as provided in this Agreement. The Employment Term shall
automatically be extended for additional one-year periods commencing on October
1, 2003 and continuing each year thereafter, unless either Executive or the
Company gives the other written notice, in accordance with Section 12(a) and at
least 90 days prior to the then scheduled expiration of the Employment Term, of
such party's intention not to extend the Employment Term.
3. Salary. As compensation for the services rendered by Executive under
this Agreement, the Company shall pay to Executive a base salary initially equal
to $27,083 per month ("Base Salary") for fiscal year 2000, payable to Executive
in accordance with the Company's payroll practices as in effect from time to
time during the Employment Term. The Base Salary shall be subject to adjustment
by the Board of Directors of the Company or the Compensation Committee of the
Board of Directors, in the sole discretion of the Board or such Committee, on an
annual basis; provided, however, that Executive's salary may not be decreased
other than any such reduction consistent with a general reduction of pay across
the executive staff as a group as an economic or strategic measure due to poor
financial performance by the Company.
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4. Bonus. In addition to his Base Salary, Executive shall be entitled
to participate in the Company's executive bonus program. The Board or its
Compensation Committee shall establish the annual target bonus, in the
discretion of the Board or such Committee, and shall be payable based on
achievement of specified Company and individual objectives. Executive's target
bonus for the fiscal year ending September 30, 2000 shall be $250,000, prorated
based on the portion of the year employed. Executive's target bonus for the year
ending September 30, 2001 shall be between $250,000 and $500,000. Such bonus
amounts shall be subject to annual adjustment by the Board or the Compensation
Committee of the Board, in the sole discretion of the Board or such Committee,
on an annual basis; provided, however, that Executive's target bonus may not be
decreased without Executive's consent other than any such reduction consistent
with a general reduction of pay across the executive staff as a group, as an
economic or strategic measure due to poor financial performance by the Company.
Employee will receive a one-time sign on bonus in the amount of $59,000.
5. Executive Benefits.
(a) Stock Options. You will be granted by the Compensation
Committee options to purchase an aggregate of 250,000 shares of Class A Common
Stock of the Company ("Stock") (the "Fiscal 2000 Option Grant") under the
Company's 1991 Stock Option Plan (the "1991 Plan"). The Fiscal 2000 Option Grant
shall vest 25% one year after grant and 2.08% per month thereafter, subject to
continuous status as an employee or consultant (such that all the options
subject to each grant shall have vested 4 years from the date of grant assuming
continuous service); provided that vesting of all or a portion of such options
shall accelerate upon certain events as described below. Shares issuable under
the Company's 1991 Plan (including the shares issuable on exercise of
Executive's Fiscal 2000 Option grant) have been registered on Form S-8 under the
Securities Act of 1933, as amended.
In the event that during the Employment Term the Company
should create a material spin-off entity in which the Company intends to offer
an equity stake to third party investors or the public and in which executives
or employees of the Company or such entity are to receive capital stock or
options to purchase capital stock, then Executive shall be granted capital stock
in such entity, or an option to purchase such capital stock, in such amounts as
the Board of Directors of the Company or its compensation Committee shall deem
appropriate in connection with the formation or spin-off.
(b) Other Employee and Executive Benefits. Executive will be
entitled to receive all benefits provided to senior executives, executives and
employees of the Company generally from time to time, including medical, dental,
life insurance and long-term disability, and the executive split-dollar life
insurance and executive disability plan, in each case so long as and to the
extent the same exist; provided, that in respect to each such plan Executive is
otherwise eligible and insurable in accordance with the terms of such plans.
Executive will also be entitled to automobile benefits pursuant to a policy to
be implemented by the Company with the concurrence of the Chairman of the
Compensation Committee of the Board of Directors.
(c) Vacation, Sick Leave, Holidays and Sabbatical. Executive
shall be entitled to vacation, sick leave, holidays and sabbatical in accordance
with the policies of the Company as they
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exist from time to time. Executive understands that under the current policy he
is entitled to up to four (4) weeks vacation per calendar year. Vacation which
is not used during any calendar year will roll over to the following year only
to the extent provided under the Company's vacation policies as they exist from
time to time.
6. Severance Benefits.
(a) At Will Employment. Executive's employment shall be "at
will." Either the Company or Executive may terminate this agreement and
Executive's employment at any time, with or without Business Reasons (as defined
in Section 7(a) below), in its or his sole discretion, upon sixty days' prior
written notice of termination.
(b) Involuntary Termination. If at any time during the term of
this Agreement, other than following a Change in Control to which Section 6(c)
applies, the Company terminates the employment of Executive involuntarily and
without Business Reasons or a Constructive Termination occurs, then in addition
to salary and vacation accrued through the Termination Date, Executive shall be
entitled to receive the following: (i) continued salary for a period of one and
one-half years following the Termination Date at the rate then in effect,
payable in accordance with the Company's regular payroll schedule as in effect
from time to time, (ii) at the Termination Date Executive's minimum target bonus
for the fiscal year in which the Termination Date occurs plus any unpaid bonus
from the prior fiscal year, (iii) following the end of the fiscal year in which
the Termination Date occurs and management bonuses have been determined, a pro
rata share (based on the proportion of the fiscal year during which Executive
remained an employee of the Company) of the bonus that would have been payable
to Executive under the bonus plan in excess of Executive's minimum target bonus
for the fiscal year, (iv) following the end of the first fiscal year following
the fiscal year in which the Termination Date occurs, Executive's minimum target
bonus for such following fiscal year (or, if the target bonus for such year was
not previously set, then Executive's minimum target bonus for the fiscal year in
which the Termination Date occurred), (v) acceleration in full of vesting of all
outstanding stock options, TARPs and other equity arrangements subject to
vesting and held by Executive (and in this regard, all such options and other
exercisable rights held by Executive shall remain exercisable for one year
following the Termination Date, (vi) (A) for one and one-half years following
the Termination Date, continuation of group health benefits at the Company's
cost pursuant to the Company's standard programs as in effect from time to time
(or at the Company's election substantially similar health benefits as in effect
at the Termination Date, through a third party carrier) for Executive, his
spouse and any children, and (B) thereafter, to the extent COBRA shall be
applicable to the Company, continuation of health benefits for such persons at
Executive's cost, for a period of 18 months or such longer period as may be
applicable under the Company's policies then in effect, provided the Executive
makes the appropriate election and payments, (vii) continuation of Executive's
auto benefits for one year following the Termination Date, and (viii) no other
compensation, severance or other benefits, except only that this provision shall
not limit any benefits otherwise available to Executive under Section 6(c) in
the case of a termination following a Change in Control. Notwithstanding the
foregoing, however, the Company shall not be required to continue to pay the
salary or bonus specified in clauses (i)(iii) or (iv) hereof for any period
following the Termination Date if Executive violates the noncompetition
agreement set forth in Section 11.
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(c) Change in Control.
(i) Benefits. If during the term of this
Agreement a "Change in Control" occurs (as defined below), then Executive shall
be entitled to receive the following: (i) salary and vacation accrued through
the date of the Change in Control plus an amount equal to one and one-half years
of Executive's salary as then in effect, payable immediately upon the Change in
Control, (ii) an amount equal to one and one-half times Executive's target bonus
for the fiscal year in which the Change in Control occurs (as well as any unpaid
bonus from the prior fiscal year), all payable immediately upon the Change in
Control, (iii) acceleration in full of vesting of all outstanding stock options,
TARPs and other equity arrangements subject to vesting and held by Executive
(and in this regard, all such options and other exercisable rights held by
Executive shall remain exercisable one year following the date of the Change in
Control, (iv) (A) continuation of group health benefits at the Company's cost
pursuant to the Company's standard programs as in effect from time to time (or
at the Company's election substantially similar health benefits as in effect at
the Termination Date (if applicable), through a third party carrier) for
Executive, his spouse and any children, for one and one-half years following the
date of the Change in Control (even if Executive ceases employment), and (B)
thereafter, to the extent COBRA shall be applicable, continuation of health
benefits for such persons at Executive's cost, for a period of 18 months or such
longer period as may be applicable under the Company's policies then in effect,
provided the Executive makes the appropriate election and payments, and (v) no
other compensation, severance or other benefits.
(ii) Additional Payments by the Company.
A. If it is determined (as hereafter
provided) that any payment or distribution by the Company to or for the benefit
of Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of
any of the foregoing (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision thereto) or to any
similar tax imposed by state or local law, or any interest or penalties with
respect to such excise tax (such tax or taxes, together with any such interest
and penalties, are hereafter collectively referred to as the "Excise Tax"), then
Executive will be entitled to receive an additional payment or payments (a
"Gross-Up Payment") in an amount such that, after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
B. Subject to the provisions of clause
F below, all determinations required to be made under this Section 6(c)(ii),
including whether an Excise Tax is payable by Executive and the amount of such
Excise Tax and whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, will be made by the Company's independent certified public
accountants prior to the Change in Control (the "Accounting Firm"). The Company
will direct the Accounting Firm to submit its determination and detailed
supporting calculations to both the Company and Executive within 15 calendar
days after the date of the Change in Control or the date of Executive's
termination of employment, if applicable, and any other such time or times as
may be
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requested by the Company or Executive. If the Accounting Firm determines that
any Excise Tax is payable by Executive, the Company will pay the required
Gross-Up Payment to Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it will, at the same time as it makes such
determination, furnish Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal, state, local income or
other tax return. Any determination by the Accounting Firm as to the amount of
the Gross-Up Payment will be binding upon the Company and Executive. As a result
of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to clause F
below and Executive thereafter is required to make a payment of any Excise Tax,
the Company or Executive may direct the Accounting Firm to determine the amount
of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and Executive as promptly
as possible. Any such Underpayment will be promptly paid by the Company to, or
for the benefit of, Executive within twenty days after receipt of such
determination and calculations.
C. The Company and Executive will each
provide the Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by clause B above.
D. The federal, state and local income
or other tax returns filed by Executive will be prepared and filed on a
consistent basis with the determination of the Accounting Firm with respect to
the Excise Tax payable by Executive. Executive will make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, Executive
will within twenty days thereafter pay to the Company the amount of such
reduction.
E. The fees and expenses of the
Accounting Firm for its services in connection with the determinations and
calculations contemplated by clauses B and D above will be borne by the Company.
If such fees and expenses are initially advanced by Executive, the Company will
reimburse Executive the full amount of such fees and expenses within twenty days
after receipt from Executive of a statement therefor and reasonable evidence of
his payment thereof.
F. Executive will notify the Company
in writing of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such
notification will be given as promptly as practicable but no later than 10
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business days after Executive actually receives notice of such claim and
Executive will further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by Executive). Executive will not pay such claim prior to the earlier of
(i) the expiration of the 30-calendar-day period following the date on which he
gives such notice to the Company and (ii) the date that any payment of amount
with respect to such claim is due. If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive will:
(i) provide the Company with
any written records or documents in his
possession relating to such claim reasonably
requested by the Company;
(ii) take such action in
connection with contesting such claim as the
Company will reasonably request in writing
from time to time, including without
limitation accepting legal representation
with respect to such claim by an attorney
competent in respect of the subject matter
and reasonably selected by the Company;
(iii) cooperate with the
Company in good faith in order effectively
to contest such claim; and
(iv) permit the Company to
participate in any proceedings relating to
such claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless Executive, on an after-tax basis,
for and against any Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing provisions of this clause F,
the Company will control all proceedings taken in connection with the contest of
any claim contemplated by this clause F and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim (provided that Executive may
participate therein at his own cost and expense) and may, at its option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company will determine;
provided, however, that if the Company directs Executive to pay the tax claimed
and xxx for a refund, the Company will advance the amount of such payment to
Executive on an interest-free basis and will indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to such
advance; and provided further, however, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive with
respect to which the contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of any such contested
claim will be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and Executive will be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
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G. If, after the receipt by Executive of an
amount advanced by the Company pursuant to clause F above, Executive receives
any refund with respect to such claim, Executive will (subject to the Company's
complying with the requirements of clause F above) within twenty days thereafter
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to clause F above, a
determination is made that Executive will not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial or refund prior to the expiration of 30 days
after such determination, then such advance will be forgiven and will not be
required to be repaid and the amount of such advance will offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid pursuant to this
Section 6(c)(ii).
(d) Termination for Disability. If at any time during the term
of this Agreement other than following a Change in Control to which Section 6(c)
applies Executive shall become unable to perform his duties as an employee as a
result of incapacity, which gives rise to termination of employment for
Disability, then in addition to salary and vacation accrued through the
Termination Date, Executive shall be entitled to receive the following: (i)
continued salary for a period of one and one-half years following the
Termination Date, payable in accordance with the Company's regular payroll
schedule as in effect from time to time, (ii) at the Termination Date,
Executive's minimum target bonus for the fiscal year in which the Termination
Date occurs (plus any unpaid bonus from the prior fiscal year), (iii) following
the end of the fiscal year in which the Termination Date occurs and management
bonuses have been determined, any bonus that would have been payable to
Executive under the bonus plan in excess of Executive's target bonus, (iv)
acceleration in full of vesting of all outstanding stock options held by
Executive (and in this regard, all such options and other exercisable rights
held by Executive shall remain exercisable one year following the Termination
Date (v) (A) for one and one-half years following the Termination Date,
continuation of group health benefits at the Company's cost pursuant to the
Company's standard programs as in effect from time to time (or at the Company's
election substantially similar health benefits as in effect at the Termination
Date, through a third party carrier) for Executive, his spouse and any children,
and (B) thereafter, to the extent COBRA shall be applicable to the Company,
continuation of health benefits for such persons at Executive's cost, for a
period of 18 months or such longer period as may be applicable under the
Company's policies then in effect, provided the Executive makes the appropriate
election and payments, and (vi) no other compensation, severance or other
benefits, except only that this provision shall not limit any benefits otherwise
available to Executive under Section 6(c) in the case of a termination following
a Change in Control. Notwithstanding the foregoing, however, the Company may
deduct from the salary specified in clause (i) hereof the amount of any payments
then received by Executive under any disability benefit program maintained by
the Company.
(e) Voluntary Termination, Involuntary Termination for
Business Reasons or Termination following a Change in Control. If (A) Executive
voluntarily terminates his employment (other than in the case of a Constructive
Termination), (B) Executive is terminated involuntarily for Business Reasons, or
(C) Executive is terminated involuntarily, is terminated in a Constructive
Termination or is terminated upon the Disability of Executive, in any such case
following a Change in Control to which Section 6(c) applies, then in any such
event Executive or his representatives shall be entitled to receive the
following: (i) salary and accrued vacation through the Termination
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Date only, (ii) the right to exercise all stock options held by Executive for
thirty days following the Termination Date (or such longer period as may be
provided in the applicable stock option plan or agreement), but only to the
extent vested as of the Termination Date, (iii) to the extent COBRA shall be
applicable to the Company, continuation of group health plan benefits pursuant
to the Company's standard programs as in effect from time to time (or at the
Company's election continuation by the Company of substantially similar group
health benefits as in effect at the Termination Date, through a third party
carrier), for Executive, his spouse and any children, for a period of 18 months
(or such longer period as may be applicable under the Company's policies then in
effect) following the Termination Date provided Executive makes the appropriate
election and payments, and (iv) no further severance, benefits or other
compensation, except only that this provision shall not limit any benefits
otherwise available to Executive under Section 6(c) in the case of a termination
following a Change in Control.
(f) Termination Upon Death. If Executive's employment is
terminated because of death, then Executive's representatives shall be entitled
to receive the following: (i) salary and vacation accrued through the
Termination Date, (ii) a pro rata share of Executive's target bonus for the year
in which death occurs, based on the proportion of the fiscal year during which
Executive remained an Employee of the Company (plus any unpaid bonus from the
prior fiscal year), (iii) except in the case of any such termination following a
Change in Control to which Section 6(c) applies, acceleration in full of vesting
of all outstanding stock options, TARPs and other equity arrangements subject to
vesting and held by Executive (and in this regard, all such options and other
exercisable rights held by Executive shall remain exercisable for one year
following the Termination (iv) to the extent COBRA shall be applicable to the
Company, continuation of group health benefits pursuant to the Company's
standard programs as in effect from time to time (or at the Company's election
continuation by the Company of substantially similar group health benefits as in
effect at the Termination Date, through a third party carrier), for Executive's
spouse and any children for a period of 18 months (or such longer period as may
be applicable under the Company's policies then in effect) provided Executive's
estate makes the appropriate election and payments, (v) any benefits payable to
Executive or his representatives upon death under insurance or other programs
maintained by the Company for the benefit of the Executive, and (vi) no further
benefits or other compensation, except only that this provision shall not limit
any benefits otherwise available to Executive under Section 6(c) in the case of
a termination following a Change in Control.
(g) Exclusivity. The provisions of this Section 6 are intended
to be and are exclusive and in lieu of any other rights or remedies to which
Executive or the Company may otherwise be entitled, either at law, tort or
contract, in equity, or under this Agreement, in the event of any termination of
Executive's employment. Executive shall be entitled to no benefits, compensation
or other payments or rights upon termination of employment other than those
benefits expressly set forth in paragraph (b), (c), (d), (e) or (f) of this
Section 6, whichever shall be applicable and those benefits required to be
provided by law.
7. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Business Reasons. "Business Reasons" means (i) gross
negligence, willful misconduct or other willful malfeasance by Executive in the
performance of his duties, (ii)
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Executive's conviction of a felony, or any other criminal offense involving
moral turpitude, (iii) Executive's material breach of this Agreement, including
without limitation any repeated breach of Sections 8 through 11 hereof, provided
that, in the case of any such breach, the Board provides written notice of
breach to the Executive, specifically identifying the manner in which the Board
believes that Executive has materially breached this Agreement, and Executive
shall have the opportunity to cure such breach to the reasonable satisfaction of
the Board within thirty days following the delivery of such notice. For purposes
of this paragraph, no act or failure to act by Executive shall be considered
"willful" unless done or omitted to be done by Executive in bad faith or without
reasonable belief that Executive's action or omission was in the best interests
of the Company or its affiliates. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based upon
the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by Executive in good faith and in the best interests of
the Company. The Board must notify Executive of any event constituting Business
Reasons within ninety days following the Board's actual knowledge of its
existence (which period shall be extended during the period of any reasonable
investigation conducted in good faith by or on behalf of the Board) or such
event shall not constitute Business Reasons under this Agreement.
(b) Disability. "Disability" shall mean that Executive has
been unable to perform his duties as an employee as the result of his incapacity
due to physical or mental illness, and such inability, at least 26 weeks after
its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to Executive or
Executive's legal representative (such Agreement as to acceptability not to be
unreasonably withheld). Termination resulting from Disability may only be
effected after at least sixty days written notice by the Company of its
intention to terminate Executive's employment. In the event that Executive
resumes the performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
(c) Termination Date. "Termination Date" shall mean (i) if
this Agreement is terminated on account of death, the date of death; (ii) if
this Agreement is terminated for Disability, the date specified in Section 7(b);
(iii) if this Agreement is terminated by the Company, the date on which
indicated in a notice of termination is given to Executive by the Company in
accordance with Sections 6(a) and 12(a); (iv) if the Agreement is terminated by
Executive, the date indicated in a notice of termination given to the Company by
Executive in accordance with Sections 6(a) and 12(a); or (v) if this Agreement
expires by its terms, then the last day of the term of this Agreement.
(d) Constructive Termination. A "Constructive Termination"
shall be deemed to occur if (A) (1) Executive's position changes as a result of
an action by the Company such that (w) Executive shall no longer be an Executive
Vice President of the Company, or (x) Executive shall have duties and
responsibilities demonstrably less than those typically associated with a Chief
Marketing Officer or (2) Executive is required to relocate his place of
employment, other than a relocation within fifty miles of Executive's current
residence or the Company's current Stamford headquarters, (3) there is a
reduction in Executive's base salary or target bonus (other than any such
reduction or termination consistent with a general reduction of pay across the
executive staff as a group, as an economic or strategic measure as a result of
poor performance by the Company) or (4) there occurs any other material breach
of this Agreement by the Company (other than a reduction of
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Executive's base salary or target bonus which is not described in the
immediately preceding clause (3)) after a written demand for substantial
performance is delivered to the Board by Executive which specifically identifies
the manner in which Executive believes that the Company has materially breached
this Agreement, and the Company has failed to cure such breach to the reasonable
satisfaction of Executive within thirty days following the delivery of such
notice and (B) within the ninety day period immediately following an action
described in clauses (A)(1) through (4), Executive elects to terminate his
employment voluntarily.
(e) Change in Control. A "Change in Control" shall be deemed
to have occurred if:
(i) any "Person," as such term is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than (i) the Company, (ii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
(iii) any company owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), becomes the "Beneficial Owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
(A) in the case of any Person filing as a "passive investor" on Schedule 13G
under the Exchange Act, 25% or more of the combined voting power of the
Company's then-outstanding securities (but only for so long as such Person
continues to report as a 13G passive investor), and (B) in the case of any
Person not filing or no longer filing as a 13G passive investor, 20% or more of
the combined voting power of the Company's then-outstanding securities;
(ii) during any period of twenty-four months (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than (i) a director nominated by a Person who has entered into an
agreement with the Company to effect a transaction described in Section
(7)(e)(i), (iii) or (iv) hereof, (ii) a director nominated by any Person
(including the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an actual or threatened
proxy contest) which if consummated would constitute a Change in Control or
(iii) a director nominated by any Person who is the Beneficial Owner, directly
or indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company's securities) whose election by the Board
or nomination for election by the Company's stockholders was approved in advance
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at lease a majority thereof;
(iii) the stockholders of the Company approve any
transaction or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or consolidation (A)
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 66 2/3% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation and (B) after which no Person holds 20% or more of
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the combined voting power of the then-outstanding securities of the Company or
such surviving entity;
(iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or
(v) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Change in Control has occurred.
(vi) Notwithstanding the foregoing, the issuance of
shares of the Company's common stock upon conversion of the Company's 6%
Convertible Subordinated Notes (as such notes may be amended, restated,
refinanced, supplemented or otherwise modified from time to time), which Notes
were issued pursuant to the Securities Purchase Agreement dated as of March 21,
2000 among the Company and the purchasers party thereto, shall not constitute a
Change of Control for purposes of this Agreement.
8. Confidential Information.
(a) Executive acknowledges that the Confidential Information
(as defined below) relating to the business of the Company and its subsidiaries
which Executive has obtained or will obtain during the course of his association
with the Company and subsidiaries and his performance under this Agreement are
the property of the Company and its subsidiaries. Executive agrees that he will
not disclose or use at any time, either during or after the Employment period,
any Confidential Information without the written consent of the Company, other
than proper disclosure or use in the performance of his duties hereunder.
Executive agrees to deliver to the Company at the end of the Employment Term, or
at any other time that the Company may request, all memoranda, notes, plans,
records, documentation and other materials (and copies thereof) containing
Confidential Information relating to the business of the Company and its
subsidiaries, no matter where such material is located and no matter what form
the material may be in, which Executive may then possess or have under his
control. If requested by the Company, Executive shall provide to the Company
written confirmation that all such materials have been delivered to the Company
or have been destroyed. Executive shall take all appropriate steps to safeguard
Confidential Information and to protect it against disclosure, misuse,
espionage, loss and theft.
(b) "Confidential Information" shall mean information which is
not generally known to the public and which is used, developed, or obtained by
the Company or its subsidiaries relating to the businesses of any of the Company
and its subsidiaries or the business of any customer thereof including, but not
limited to: products or services; fees, costs and pricing structure; designs;
analyses; formulae; drawings; photographs; reports; computer software, including
operating systems, applications, program listings, flow charts, manuals and
documentation; databases; accounting and business methods; inventions and new
developments and methods, whether patentable or unpatentable and whether or not
reduced to practice; all copyrightable works; the customers of any of the
Company and its subsidiaries and the Confidential Information of any customer
thereof; and all similar and related information in whatever form. Confidential
Information shall not include any information which (i) was rightfully known by
Executive prior to the Employment Term; (ii) is
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publicly disclosed by law or in response to an order of a court or governmental
agency; (iii) becomes publicly available through no fault of Executive or (iv)
has been published in a form generally available to the public prior to the date
upon which Executive proposes to disclose such information. Information shall
not be deemed to have been published merely because individual portions of the
information have been separately published, but only if all the material
features comprising such information have been published in combination.
9. Inventions and Patents. In the event that Executive, as a part of
Executive's activities on behalf of the Company, generates, authors or
contributes to any invention, new development or method, whether or not
patentable and whether or not reduced to practice, any copyrightable work, any
trade secret, any other Confidential Information, or any information that gives
any of the Company and its subsidiaries an advantage over any competitor, or
similar or related developments or information related to the present or future
business of any of the Company and its subsidiaries (collectively "Developments
and Information"), Executive acknowledges that all Developments and Information
are the exclusive property of the Company. Executive hereby assigns to the
Company, its nominees, successors or assigns, all rights, title and interest to
Developments and Information. Executive shall cooperate with the Company to
protect the interests of the Company and its subsidiaries in Developments and
Information. Executive shall execute and file any document related to any
Developments and Information requested by the Company including applications,
powers of attorney, assignments or other instruments which the Company deems
necessary to apply for any patent, copyright or other proprietary right in any
and all countries or to convey any right, title or interest therein to any of
the Company's nominees, successors or assigns.
10. No Conflicts.
(a) Executive agrees that in his individual capacity he will
not enter into any agreement, arrangement or understanding, whether written or
oral, with any supplier, contractor, distributor, wholesaler, sales
representative, representative group or customer, relating to the business of
the Company or any of its subsidiaries, without the express written consent of
the Company.
(b) As long as Executive is employed by the Company or any of
its subsidiaries, Executive agrees that he will not, except with the express
written consent of the Company, become engaged in, render services for, or
permit his name to be used in connection with, any for-profit business other
than the business of the Company, any of its subsidiaries or any corporation or
partnership in which the Company or any of its subsidiaries have an equity
interest.
11. Non-Competition Agreement.
(a) Executive acknowledges that his services are of a special,
unique and extraordinary value to the Company and that he has access to the
Company's trade secrets, Confidential Information and strategic plans of the
most valuable nature. Accordingly, Executive agrees that during the term of this
Agreement and for the period of three years following the Termination Date,
Executive shall not directly or indirectly own, manage, control, participate in,
consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or any of its subsidiaries as such
businesses exist or are in process of
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development on the Termination Date (as evidenced by written proposals, market
research or similar materials), including without limitation the publication of
periodic research and analysis of the information technology industries. Nothing
herein shall prohibit Executive from being a passive owner of not more than 1%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation.
(b) In addition, for a period of three years commencing on the
Termination Date, Executive shall not (i) directly or indirectly induce or
attempt to induce any employee of the Company or any subsidiary (other than his
own assistant) to leave the employ of the Company or such subsidiary, or in any
way interfere with the relationship between the Company or any subsidiary and
any employee thereof, (ii) hire directly or through another entity any person
who was an employee of the Company or any subsidiary at any time during the then
preceding 12 months, or (iii) directly or indirectly induce or attempt to induce
any customer, supplier, licensee or other business relation of the Company or
any subsidiary to cease doing business with the Company or such subsidiary, or
in any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any subsidiary.
(c) Executive agrees that these restrictions on competition
and solicitation shall be deemed to be a series of separate covenants
not-to-compete and a series of separate non-solicitation covenants for each
month within the specified periods, separate covenants not-to-compete and
non-solicitation covenants for each state within the United States and each
country in the world, and separate covenants not-to-compete for each area of
competition. If any court of competent jurisdiction shall determine any of the
foregoing covenants to be unenforceable with respect to the term thereof or the
scope of the subject matter or geography covered thereby, such remaining
covenants shall nonetheless be enforceable by such court against such other
party or parties or upon such shorter term or within such lesser scope as may be
determined by the court to be enforceable.
(d) Because Executive's services are unique and because
Executive has access to Confidential Information and strategic plans of the
Company of the most valuable nature, the parties agree that the covenants
contained in this Section 11 are necessary to protect the value of the business
of the Company and that a breach of any such covenant would result in
irreparable and continuing damage for which there would be no adequate remedy at
law. The parties agree therefore that in the event of a breach or threatened
breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
hereof.
12. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated
by this Agreement shall be in writing, shall be effective when given, and in any
event shall be deemed to have been duly given (i) when delivered, if personally
delivered, (ii) three business days after deposit in the U.S. mail, if mailed by
U.S. registered or certified mail, return receipt requested, or (iii) one
business day after the business day of deposit with Federal Express or similar
overnight courier, if so delivered, freight prepaid. In the case of Executive,
notices shall be addressed to him at
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the home address which he most recently communicated to the Company in writing.
In the case of the Company, notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Corporate Secretary.
(b) Notice of Termination. Any termination by the Company or
Executive shall be communicated by a notice of termination to the other party
hereto given in accordance with paragraph (a) hereof. Such notice shall indicate
the specific termination provision in this Agreement relied upon.
(c) Successors.
(i) Company's Successors. Any successor to the
Company (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets shall be entitled to assume the rights and
shall be obligated to assume the obligations of the Company under this Agreement
and shall agree to perform the Company's obligations under this Agreement in the
same manner and to the same extent as the Company would be required to perform
such obligations in the absence of a succession. For all purposes under this
Agreement, the term "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this subsection (i) or which becomes bound by the terms of this
Agreement by operation of law.
(ii) Executive's Successors. The terms of this
Agreement and all rights of Executive hereunder shall inure to the benefit of,
and be enforceable by, Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
(iii) No Other Assignment of Benefits. Except as
provided in this Section 12(c), the rights of any person to payments or benefits
under this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this subsection (iii) shall be void.
(d) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Executive and by an authorized officer of the Company
(other than Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(e) Entire Agreement. This Agreement shall supersede any and
all prior agreements, representations or understandings (whether oral or written
and whether express or implied) between the parties with respect to the subject
matter hereof.
(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
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(g) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
Stamford, Connecticut, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. No party shall be entitled to seek or be awarded
punitive damages. All attorneys fees and costs shall be allocated or apportioned
as agreed by the parties or, in the absence of an agreement, in such manner as
the arbitrator or court shall determine to be appropriate to reflect the final
decision of the deciding body as compared to the initial positions in
arbitration of each party. This Agreement shall be construed in accordance with
and governed by the laws of the State of Connecticut as they apply to contracts
entered into and wholly to be performed within such State by residents thereof.
(h) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable taxes.
(i) Indemnification. In the event Executive is made, or
threatened to be made, a party to any legal action or proceeding, whether civil
or criminal, by reason of the fact that Executive is or was a director or
officer of the Company or serves or served any other entity of which the Company
owns 50% or more of the equity in any capacity, Executive shall be indemnified
by the Company, and the Company shall pay Executive's related expenses when and
as incurred, all to the full extent permitted by law, pursuant to Executive's
existing indemnification agreement with the Company in the form made available
to all Executive and all other officers and directors or, if it provides greater
protection to Executive, to the maximum extent allowed under the law of the
State of the Company's incorporation.
(j) Legal Fees. The Company will pay directly the fees and
expenses of counsel retained by Executive in connection with the preparation,
negotiation and execution of this Agreement.
(k) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
GARTNER GROUP, INC.
By:
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Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
XXXXXX X. XXXXX
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