EXHIBIT 10.8.1
EXECUTIVE MANAGEMENT
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into by and between Condor Technology
Solutions, Inc., a Delaware corporation (the "COMPANY"), and Xxxx X. XxXxxx (the
"EXECUTIVE") on August 11, 1999.
The Board of Directors of the Company (the "BOARD"), through the
Compensation Committee thereof (the "Compensation Committee"), has determined
that it is in the best interest of the Company to secure the continued
employment and objectivity of the Executive in the event of a possibility or
occurrence of a Change of Control (as defined in Section 1.3 of this Agreement).
The Compensation Committee has approved an arrangement for severance benefits as
set forth in this Agreement to provide incentive for the Execut ive's continued
employment and objectivity notwithstanding the possibility or occurrence of any
Change of Control. The Company, therefore, desires to provide the Executive, and
the Executive, in turn, desires to accept, the arrangement for severance
benefits as set forth herein.
Thus, in consideration of the mutual covenants contained in this
Agreement, the legal sufficiency of which is hereby acknowledged, and intending
to be legally bound, the Company and the Executive agree as follows:
1. BENEFITS & BENEFIT TRIGGERS.
1.1 EVENTS TRIGGERING SEVERANCE BENEFITS. The Executive shall be
entitled to the severance benefits provided in Section 1.2 if
his employment with the Company is terminated by the Company
without Good Cause (as defined in this Section 1.4) or by the
Executive for Good Reason (as defined in this Section 1.5) or,
solely for purposes of the severance benefit under Section
1.2(C), by the Executive for any other reason or for no reason
at all, at any time after a Change of Control and before the
third anniversary thereof; provided that a termination of the
Executive's employment by the Company without Good Cause
within 12 months before a Change of Control shall, for all
purposes of this Agreement, be deemed to occur immediately
after such Change of Control if the Executive demonstrates
that such termination was effected (i) at the request of, or
pursuant to an agreement with, a third party who had taken
steps reasonably calculated to effect the Change of Control,
or (ii) in connection with or in anticipation of the Change of
Control.
1.2 SEVERANCE BENEFITS. If the Executive's employment with the
Company is terminated as provided in Section 1.1, the
Executive shall be entitled to the following, provided that he
(i) honors the restrictive covenants as provided in Section 4,
and (ii) executes a release of all claims arising from his
employment by the Company, in such form as may then be used by
the Company respecting termination of employees:
(A) A severance benefit equal to the Executive's base
salary, at the highest rate in effect from the date
of this Agreement through the date of termination,
for the number of months after his termination of
employment as determined in accordance with the
schedule set forth in the Exhibit " A," attached
hereto (the "Severance Period"), subject to reduction
(if any) as provided in Section 2, payable in a cash
lump sum no later than 15 days after the date of
termination;
(B) Continuation through the Severance Period of benefits
under the Company's employee welfare benefit plans
(as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended)
in which the Executive participated immediately
before his termination of employment; provided that
(I) if the Executive cannot continue to participate
in such plans of the Company, the Company shall
otherwise provide such benefits outside of the plans
on the same after-tax basis as if participation had
continued, and (II) the continuation the benefits
under this Section 1.2(B) shall not constitute, in
whole or in part, a continuation of health coverage
under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA"), and such COBRA coverage under
the Company's group health plans shall commence after
the Severance Period to the extent elected by the
Executive and his qualified beneficiaries in
accordance with COBRA; and
(C) Full vesting and exercisability of all stock options
and full vesting of all restricted stock awards
granted to the Executive under each stock incentive
plan of the Company (including the Condor Technology
Solutions, Inc. 1997 Long-Term Incentive Plan) and
any other stock options or restricted stock awards
granted to the Executive to replace such options or
restricted stock; and the options so vested shall
remain exercisable for the greater of the duration of
the Severance Period or the remaining period for
exercising the options under the applicable stock
option agreements and stock incentive plan.
1.3 DEFINITION OF "CHANGE OF CONTROL." A "CHANGE OF CONTROL" shall
be deemed to have occurred if:
(i) There shall be consummated any consolidation or
merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to
which shares of the Company's capital stock are
converted into cash, securities or other property
other than a consolidation or merger of the Company
in which the holders of the Company's voting stock
immediately before to the consolidation or merger
shall, upon consummation of the consolidation or
merger, own at least 50% of the voting stock of the
surviving corporation, or any sale, lease, exchange
or other transfer (in one transaction or a series of
transactions contemplated
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or arranged by any party as a single plan) of all or
substantially all of the assets of the Company;
(ii) Any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), shall after the date
hereof become the beneficial owner (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company
representing 35% or more of the voting power of all
then outstanding securities of the Company having the
right under ordinary circumstances to vote in an
election of the Board (including, without limitation,
any securities of the Company that any such person
has the right to acquire pursuant to any agreement,
or upon exercise of conversion rights, warrants or
options, or otherwise, which shall be deemed
beneficially owned by such person); or
(iii) Individuals who at the date hereof constitute the
entire Board and any new directors whose election by
the Board, or whose nomination for election by the
Company's stockholders, shall have been approved by a
vote of at least a majority of the directors then in
office who either were directors at the date hereof
or whose election or nomination for election shall
have been so approved, shall cease for any reason to
constitute a majority of the members of the Board.
1.4 DEFINITION OF "GOOD CAUSE." "GOOD CAUSE" means:
(i) Any willful act or omission by the Executive
constituting dishonesty, fraud if (A) such act or
omission results in demonstrable material harm to the
Company, (B) the Company has provided the Executive
30 days' written notice thereof specifying such act
or omission, (C) such notice was made pursuant to a
majority vote of the Board, and (D) the Executive has
been provided an opportunity after such notice to be
heard at a meeting of the Board, provided that no act
or omission shall be considered to be Good Cause if
the Executive reasonably believed in good faith that
such act or omission was in, or not opposed to, the
best interests the Company;
(ii) The Executive's conviction, plea of guilty or nolo
contendere, or being charged of a felony or other
crime involving theft or moral turpitude, other than
a felony predicated on the Executive's vicarious
liability (for purposes of this Agreement, "vicarious
liability" means the Executive's liability based on
acts of the Company for which the Executive is
charged solely as a result of his offices with the
Company and in which he was not directly involved or
did not have prior knowledge of such acts); or
(iii) A written directive or order from a regulatory agency
requiring the Company to dismiss the Executive.
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1.5 DEFINITION OF "GOOD REASON." "GOOD REASON" means:
(i) A material breach by the Company of any provisions of
this Agreement or the employment agreement, if any,
between the Company and the Executive, if such breach
is not cured within 15 days of written notice thereof
by the Executive to the Company;
(ii) A change in the titles, position, functions,
responsibilities, or compensation, including
incentive based compensation and benefits, of the
Executive other than a promotion or an increase in
compensation;
(iii) An assignment of duties to the Executive which are
inconsistent with, or inferior to, responsibilities
or offices of the Executive, or elimination of a
significant portion of the material duties of the
Executive;
(iv) A reduction in compensation or benefits, including
incentive compensation, from that paid or awarded to
the Executive with respect to the last four completed
calendar quarters;
(v) The relocation of the Company's principal offices or
the Company's relocation of the Executive's principal
work location to a location which is in excess of 20
miles from that location without the prior written
consent of the Executive;
(vi) A request that the Executive routinely report to work
at a new location more than 20 miles from his primary
residence; or
(vii) A notice of termination of employment of the
Executive without Good Cause.
2. ADJUSTMENT RELATING TO TAX ON EXCESS PARACHUTE PAYMENTS.
2.1 Adjustment. Notwithstanding anything in this Agreement to the
contrary, in the event the Law or Accounting Firm (as defined
in Section 2.2) determines that any portion of the severance
benefits payable under this Agreement (such portion of
severance benefits, the "Agreement Payment"), and the
portions, if any, of other payments or distributions in the
nature of compensation by the Company to or for the benefit of
the Executive (including, but not limited to, the value of the
acceleration in vesting of restricted stock or any other
stock-based compensation) whether or not paid or payable or
distributed or distributable pursuant to the terms of this
Agreement (the Agreement Payment, together with such portions
of other payments and distributions, the "Payments"), would
cause any portion of the Payments to be subject to the excise
tax imposed by section 4999, or any successor provision, of
the Internal Revenue Code of 1986, as amended (the "Code")
(the portion subject to excise tax, the "Parachute Payment"),
the Agreement Payment shall be reduced (by first reducing the
benefits under Section 1.2(A) and, after such benefits have
been reduced to zero, reducing the benefits
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under the Section 1.2(C)) to an amount not less than zero
which shall not cause any portion of the Payments to
constitute a Parachute Payment, provided that no such
reduction shall be made if the present value (determined in
accordance-with section 280G, or any successor provision,
of the Code) of the Payments, after the reduction and after
the application of Federal income tax at the highest
marginal rate which applied to the Executive's taxable
income for the immediately preceding taxable year, would
not be greater than the present value (determined in
accordance with section 280G, or any successor provision,
of the Code) of the Payments before the reduction but after
the application of (i) excise tax under section 4999 of the
Code and (ii) Federal income tax at the highest marginal
rate which applied to the Executive's taxable income for
the immediately preceding taxable year.
2.2 DETERMINATION. All determinations required to be made under
this Section 2, including the assumptions to be utilized in
arriving at such determination, shall be made by a reputable
law or accounting firm (the "Law or Accounting Firm"), which
shall provide detailed supporting calculations both to the
Company and the Executive (i) within fifteen (15) business
days of the date the Executive's employment with the Company
is terminated as provided in Section 1.1, or (ii) at such
earlier time as may be requested by the Company or the
Executive. The Law or Accounting Firm may employ and rely upon
the opinions of actuarial or accounting professionals to the
extent it deems necessary or advisable. In the event that the
Law or Accounting Firm determines, for any reason, that it is
unable to perform such services, or declines to do so, the
Company shall select another reputable law or accounting firm
to make the determinations required under this Section (which
law or accounting firm shall then be referred to in this
Agreement as the "Law or Accounting Firm"). All fees and
expenses of the Law or Accounting Firm shall be borne solely
by the Company. Any determination by the Law or Accounting
Firm shall be binding upon the Company and the Executive.
3. TERM. This Agreement shall be effective for a term (the "Term") which
shall include: (i) an initial period of three years beginning on the
date hereof (as set forth in the first paragraph of this Agreement),
and (ii) immediately after such initial period, successive 12-month
renewal periods, unless the Company shall give written notice of
termination of this Agreement to the Executive at least 180 days prior
to the last day of the initial or then current renewal period; provided
that, if before the last day of such Term, (x) a Change of Control has
occurred or (y) a termination of the Executive's employment with the
Company has occurred within one year before a Change of Control, and
pursuant to Section 1.1 is deemed to have occurred immediately after
such Change of Control, then the Term shall be extended for three years
after such Change of Control.
4. RESTRICTIVE COVENANTS.
4.1 CONFIDENTIALITY. The Executive agrees that he will not at any
time during the Term hereof or at any time thereafter for any
reason, in any fashion, form or manner, either directly or
indirectly, divulge, disclose or communicate to any
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person, firm, corporation or other business entity, in any
manner whatsoever, any confidential information or trade
secrets concerning the business of the Company or any
subsidiary thereof, including, without limiting the
generality of the foregoing, the techniques, methods or
systems of operation or management, or any information
regarding financial matters, plans or other material data.
The provisions of this Section 4.1 shall not apply to (i)
information that is public knowledge other than as a result
of disclosure by the Executive in breach of this Section
4.1; (ii) information disseminated by the Company or any
subsidiaries thereof to third parties in the ordinary
course of business; (iii) information lawfully received by
the Executive from a third party who, based upon inquiry by
the Executive, is not bound by a confidential relationship
to the Company or any subsidiaries thereof; or (iv)
information disclosed under a requirement of law or as
directed by applicable legal authority having jurisdiction
over the Executive.
4.2 INVENTIONS. The Executive is employed by the Company in a
capacity such that the Executive's responsibilities include
the making of technical and managerial contributions of value
to the Company. The Executive hereby assigns to the Company
all right, title and interest in such contributions and
inventions made or conceived by the Executive alone or jointly
with others during his employment with the Company that relate
to the business of the Company or any of its subsidiaries.
This assignment shall include (i) the right to file and
prosecute patent applications on such inventions in any and
all countries, (ii) the patent applications filed and patents
issuing thereon, and (iii) the right to obtain copyright,
trademark or trade name protection for any such work product.
The Executive shall promptly and fully disclose all such
contributions and inventions to the Company and assist the
Company in obtaining and protecting the rights therein
(including patents thereon) in any and all countries;
provided, however, that said contributions and inventions will
be the property of the Company, whether or not patented or
registered for copyright, trademark or trade name protection,
as the case may be. The Executive hereby agrees to execute any
documentation requested by the Company to be so executed if
such request is made in order to carry out the purpose and
terms of this paragraph. Inventions conceived by the Executive
that are not related to the business of the Company or any of
its subsidiaries will remain the property of the Executive.
4.3 NON-COMPETITION. The Executive agrees that he shall not, from
the date hereof until the later of (i) the last day of the
Severance Period, or (ii) the date the restrictive covenant
regarding non-competition under the employment agreement
between the Executive and the Company expires (the "RESTRICTED
TERM"), directly or indirectly, alone or as principal,
partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor or stockholder
(other than as provided below) of any company or business,
engage in any Competitive Business within the United States.
For purposes of the foregoing, the term "COMPETITIVE BUSINESS"
shall mean any business involved in providing information
technology solutions, including, but not limited to, desktop
services, software development, systems design and
integration, large scale survey research, recruiting and
comprehensive marketing and sales, which is in direct
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competition with (x) the Company, or (y) a Restricted Entity
(defined below) in any community in which such Restricted
Entity is doing business. For the purposes hereof, "RESTRICTED
ENTITY" shall mean any of the Company's subsidiaries, to the
extent that the Executive has had significant contacts or
involvement with, or obtained knowledge of or had access to
proprietary or confidential information or trade secrets of,
such entity. Notwithstanding the foregoing, the Executive
shall not be prohibited during the Restricted Term from (A)
acting as a passive investor where he owns not more than five
percent (5%) of the issued and outstanding capital stock of
any publicly-held company, or (B) being employed and providing
services as general counsel of, or in a similar position with,
any company or business.
4.4 NON-SOLICITATION OF EMPLOYEES. The Executive agrees that he
shall not during Restricted Term, directly or indirectly,
alone or as principal, partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor
or stockholder, or in any other capacity whatsoever, employ,
retain, or enter into any employment, agency, consulting or
other similar arrangement with, any person who, within the
90-day period prior to the termination of the Executive's
employment by the Company, was an employee of the Company or
of any of its subsidiaries (other than a person whose
employment with the Company or a subsidiary thereof was
involuntarily terminated), or, induce or attempt to induce
such person to terminate his employment with the Company or
such subsidiary.
4.5 NON-SOLICITATION OF CLIENTS OR CUSTOMERS. The Executive agrees
that he shall not during the Restricted Term, directly or
indirectly, alone or as principal, partner, joint venturer,
officer, director, employee, consultant, agent, independent
contractor or stockholder, or in any other capacity
whatsoever, directly or indirectly, for his own account, or
for the account of others, solicit orders for services of a
kind or nature like or similar to services performed by the
Company or any of its subsidiaries as of the date of the
termination of the Executive's employment by the Company, from
any party that was a customer or client of the Company or such
subsidiary, or which the Company or any of its subsidiaries
was soliciting to be a customer or client, during the 12-month
period preceding the termination of the Executive's
employment.
4.6 BREACH OF RESTRICTIVE COVENANTS. The parties agree that a
breach or violation of Section 4 hereof may result in
immediate and irreparable injury and harm to the innocent
party, which party shall have, in addition to any and all
remedies of law and other consequences under this Agreement,
the right to an injunction, specific performance or other
equitable relief to prevent the violation of the obligation
hereunder.
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5. WITHHOLDING TAXES. The Company shall have the right, to the extent
permitted or required by law, to withhold from any payment of any kind
due to the Executive under this Agreement to satisfy the tax
withholding obligations of the Company under applicable law.
6. NO ALTERATION OF AT-WILL EMPLOYMENT. The parties acknowledge and agree
that, except as may otherwise be expressly provided under any other
executed agreement between the Executive and the Company, nothing
contained in this Agreement (including, but not limited to, using the
term "Good Cause" to determine benefits under this Agreement) is
intended to change the "at will" employment of the Executive by the
Company.
7. NON-DUPLICATION OF SEVERANCE BENEFITS. Notwithstanding any other prior
agreement to the contrary, the payments under this Agreement shall be
in lieu of any severance or similar payments that otherwise might be
payable under any plan, program, policy or agreement maintained by the
Company or any of its affiliates; provided, however, that the Executive
may elect, by written notice to the Company no later than three days
after the date of his termination of employment, to waive and forfeit
all severance benefits under Section 1.2 and, subject to the next
sentence of this Section 7, to receive in lieu thereof the benefits (if
any) to which he is entitled under his employment agreement with the
Company (the "EMPLOYMENT AGREEMENT") pursuant to a termination of his
employment thereunder by the Company without "cause" or by the
Executive for "good reason" (as such terms are defined in the
Employment Agreement). If the Executive elects to receive the benefits
under his Employment Agreement as provided in the preceding sentence,
such benefits shall be subject to the reduction (if any) as provided in
Section 2 of this Agreement as if the benefits were provided under
Section 1.2 of this Agreement.
8. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon,
and inure to the benefit of, the parties' respective successors and
assigns.
9. NOTICES. Any notice provided for in this Agreement must be in writing
and must be personally delivered, received by certified mail (return
receipt requested), or sent by guaranteed overnight delivery service,
if to the Executive, to his address as shown in the business records of
the Company and, if to the Company, to:
Condor Technology Solutions, Inc.
Xxxxxxxxx Xxxxxx Xxxxx
000 Xxxxxxxx Xxxx -Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
10. COMPLETE AGREEMENT. Except as otherwise provided herein, this Agreement
embodies the complete agreement and understanding among the parties and
supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may
have related to the subject matter hereof in any way.
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11. SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or the
effectiveness or validity of any provision in any other jurisdiction,
and this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
12. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
13. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Maryland (without giving effect to choice of law principles or
rules thereof that would cause the application of the laws of any
jurisdiction other than the State of Maryland) and the invalidity or
unenforceability of any provisions hereof shall in no way affect the
validity or enforceability of any other provision.
14. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended
or waived only with the prior written consent of the Company and the
Executive.
15. ARBITRATION. EXCEPT AS PROVIDED IN SECTION 4.6 HEREOF, ANY DISPUTE OR
CONTROVERSY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE
SETTLED EXCLUSIVELY BY ARBITRATION IN BALTIMORE, MARYLAND, 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. ALL COSTS AND EXPENSES OF ARBITRATION UNDER
THIS SECTION 15 AS INCURRED BY THE PARTIES, INCLUDING, WITHOUT
LIMITATION, ATTORNEY'S FEES, SHALL BE PAID ONE-HALF BY THE EXECUTIVE
AND ONE-HALF BY THE COMPANY.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first above written.
ATTEST: CONDOR TECHNOLOGY SOLUTIONS, INC.
/s/ Xxxxxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxx
----------------------------------- ----------------------------------
WITNESS: EXECUTIVE:
/s/ BarbaraC. Xxxxxxxxx /s/ Xxxx X. XxXxxx
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Xxxx X. XxXxxx
EXHIBIT A
LENGTH OF EMPLOYMENT NUMBER OF MONTHS
FOLLOWING CHANGE OF CONTROL OF BASE SALARY PAYABLE
--------------------------- ----------------------
Less than 7 months 36
At least 7 months but less than 8 months 29
At least 8 months but less than 9 months 28
At least 9 months but less than 10 months 27
At least 10 months but less than 11 months 26
At least 11 months but less than 12 months 25
At least 12 months but less than 13 months 24
At least 13 months but less than 14 months 23
At least 14 months but less than 15 months 22
At least 15 months but less than 16 months 21
At least 16 months but less than 17 months 20
At least 17 months but less than 18 months 19
At least 18 months but less than 19 months 18
At least 19 months but less than 20 months 17
At least 20 months but less than 21 months 16
At least 21 months but less than 22 months 15
At least 22 months but less than 23 months 14
At least 23 months but less than 24 months 13
At least 24 months but less than 25 months 12
At least 25 months but less than 26 months 11
At least 26 months but less than 27 months 10
At least 27 months but less than 28 months 9
At least 28 months but less than 29 months 8
At least 29 months but less than 30 months 7
At least 30 months but less than 31 months 6
At least 31 months but less than 32 months 5
At least 32 months but less than 33 months 4
At least 33 months but less than 34 months 3
3At least 34 months but less than 35 months 2
At least 35 months but less than 36 months 1
