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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated this 11th day of
October, 1999 and is entered into by and between Xxxx Xxxxxxx ("Executive") and
Convergent Group Corporation, a Delaware corporation, having its principal
office at 0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000 (the "Corporation"). In consideration of the mutual promises and the terms
and conditions set forth below, Executive and the Corporation (together, the
"Parties," and each, a "Party") agree as follows:
1. Employment. The Corporation shall employ Executive as an Executive
Vice President of the Corporation, and Executive hereby accepts such employment
and agrees to perform such duties and undertake such responsibilities as are
customarily performed by others holding positions similar to that assigned to
Executive in similar businesses, subject to the general direction and
supervision of the Corporation's President and Chief Executive Officer.
2. Full-Time Best Efforts. Executive shall devote his full professional
time and attention to the performance of his obligations under this Agreement,
and will at all times faithfully, industriously and to the best of his ability,
experience and talent, perform all of his obligations hereunder. Executive shall
receive a performance review from the Corporation after six months of employment
and thereafter on or about each anniversary of the Effective Date (as defined
below).
3. Term. The term of this Agreement shall begin on October 11, 1999
(the "Effective Date") and shall end on December 31, 2002, unless terminated
prior to that date as provided herein..
4. Compensation and Benefits.
(a) The Corporation shall pay compensation to Executive consisting
of an annual base salary and bonuses. The annual base salary, effective as of
October 11, 1999, is $200,000. Executive's base salary shall be reviewed at
annually in conjunction with Executive's annual performance review and may be
increased, but not decreased, as appropriate in light of Executive's
performance. Executive's annual base salary shall be paid in twenty-four (24)
semi-monthly payments during each annual period.
(b) The annual base salary set forth in Section 4(a) shall be
adjusted annually in an amount equal to the increase in the cost of living
during the preceding annual period. At no time shall the annual base salary be
adjusted to an amount lower than the previous year's annual base salary. The
first cost of living adjustment shall be effective as of October 1, 2000 and
shall be based upon the cost of living increase for the period October 1, 1999
through September 30, 2000. The annual base salary shall be adjusted annually
each year thereafter, effective as of October 1, based upon the prior
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calendar year's cost of living change. The cost of living adjustment shall be
determined by reference to the change in the Consumer Price Index - Cities, all
items, figures for urban wage earners and clerical workers, Boston, as published
by the Bureau of Labor Statistics or a comparable index if this index is
discontinued at any time during the term of this Agreement. If the change in the
Consumer Price Index has not been released as of the time at which an adjusted
payment is to be made, the Corporation shall estimate the amount of the
adjustment, and the amount of any overpayment or underpayment shall be corrected
in the first payment in which it is reasonably practical to do so after the
Consumer Price Index is released.
(c) Executive shall receive a signing bonus of $180,000 (the
"Signing Bonus") in addition to his annual base salary. The signing bonus shall
be paid in twelve monthly payments of $15,000, payable on the last day of each
calendar month commencing October 31, 1999 and continuing through September 30,
2000, provided that Executive remains employed by the Corporation as of such
date.
(d) Commencing October 1, 2000, Executive shall be eligible to
earn an annual incentive performance bonus for each year (the "Incentive Bonus")
in addition to his annual base salary. The targeted annual bonus amount shall be
consistent with the bonus opportunity provided to other executive and senior
managers of the Corporation at Executive's level of employment (the "Target
Bonus"). The initial Target Bonus shall be pro-rated for the period October 1,
2000 through December 31, 2000. The amount of the Target Bonus which is earned
shall be dependent upon the attainment of Executive's annual performance plan
focussed upon E-Commerce and other mutually agreed upon objectives, which plan
shall be established annually by mutual agreement between Executive and the
Corporation, provided that the plan must be reasonably attainable by Executive
(the "Annual Performance Plan"). The initial Annual Performance Plan shall cover
the period from the Effective Date through December 31, 2000 and shall be
established within forty-five (45) days after the Effective Date. Subsequent
Annual Performance Plans shall cover a calendar year and shall be established
for each year on or before January 31 of such year. If the Corporation and
Executive are unable to mutually agree with respect to Executive's Annual
Performance Plan, the Annual Performance Plan shall be determined by the
Corporation in its reasonable discretion, provided that the plan must be
reasonably attainable by Executive. There shall be a 90% threshold for receipt
of the Incentive Bonus. If Executive achieves less than 90% of his Annual
Performance Plan during any year, Executive shall not be entitled to receive any
Incentive Bonus for such year. If the 90% threshold is met or exceeded,
Executive shall receive an Incentive Bonus equal to that percentage of the
Target Bonus which is the same as the percentage of the Annual Performance Plan
that has been met, up to 100%. Exceeding 100% of the Annual Performance Plan may
result in additional compensation to be determined by the Corporation in its
reasonable discretion. Any Incentive Bonus earned pursuant to this Agreement
shall be paid no later than April 15 of the year following the year for which
the Incentive Bonus was earned.
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(e) Executive shall be entitled to participate in such life
insurance, disability, medical, dental, pension, profit sharing and retirement
plans and other programs as may be made generally available from time to time by
the Corporation for the benefit of executives of Executive's level or its
employees generally (the "Benefits"). In addition, provided that Executive is
able to qualify for such insurance, the Corporation shall pay the premiums for
$2,000,000 of life insurance on the life of Executive. The Corporation shall be
the beneficiary of $500,000 of such coverage. Executive shall be entitled to
name the beneficiary for the remaining $1,500,000 of such coverage. Executive
shall be entitled to receive one week of sick/personal time and four weeks of
vacation during each full year of employment. Any unused vacation leave time
accumulated during such year of employment shall not carry over to subsequent
years.
5. Stock Options. Executive shall be granted options to purchase Common
Stock of the Corporation pursuant to the Corporation's 1999 Stock Option Plan.
Option grants shall be made in three separate tranches, as follows:
(a) The first grant ("Tranche 1") shall consist of options to
acquire 226,626 shares of Common Stock (0.3% of the outstanding capital stock of
the Corporation on a fully diluted basis as of the date of this Agreement). The
exercise price of the options in Tranche 1 shall be $.046 per share. The date of
grant shall be October 11, 1999. The options in Tranche 1 shall be fully vested
and exercisable as of the date of grant; provided, however, that if Executive
voluntarily terminates employment with the Corporation, other than for "Good
Reason" (as defined herein), prior to the first anniversary of the Effective
Date, all vested and unexercised options shall immediately terminate and any
shares acquired upon exercise of options prior to such date shall be forfeited
to the Corporation, and Executive shall be entitled to receive back the amount
paid therefor. The exercise period of the options in Tranche 1 shall be ten
years from the date of grant, subject to earlier termination as set forth in the
1999 Stock Option Plan.
(b) The second grant ("Tranche 2") shall consist of options to
acquire 377,710 shares of Common Stock (0.5% of the outstanding capital stock of
the Corporation on a fully diluted basis as of the date of this Agreement). The
exercise price of the options in Tranche 2 shall be $.046 per share. The date of
grant shall be October 11, 1999. None of the options in Tranche 2 shall be
vested or exercisable as of the date of grant. The options in Tranche 2 shall
begin to vest as of October 31, 1999, depending upon Executive's achievement of
the Annual Performance Plan for the period October 11, 1999 through September
30, 2000 (the "Initial Performance Period"). There shall be a 90% threshold for
the commencement of vesting of the Tranche 2 options. If Executive achieves less
than 90% of his Annual Performance Plan during the Initial Performance Period,
none of the Tranche 2 options shall be eligible for vesting and all of the
Tranche 2 options shall be forfeited. If the 90% threshold is met or exceeded, a
percentage of the Tranche 2 options shall begin to vest equal to that percentage
of the Tranche 2 options which is the same as the percentage of the Annual
Performance Plan that has been met, up to 100%. One-third of the Tranche 2
options which have become eligible for vesting as a result of meeting the Annual
Performance Plan during the Initial
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Performance Period shall vest and become exercisable effective as of October 11,
2000, provided that Executive remains in the employ of the Corporation. The
remaining two-thirds of such Tranche 2 options shall vest and become exercisable
in 24 monthly installments commencing on October 31, 2000 and continuing through
September 30, 2002, provided that Executive remains in the employ of the
Corporation. Any Tranche 2 options which do not commence to vest as of October
11, 2000 as a result of a failure to meet 100% of the Annual Performance Plan
during the Initial Performance Period shall be forfeited as of October 11, 2000.
The exercise period of the options in Tranche 2 shall be ten years from the date
of grant, subject to earlier termination as set forth in the 1999 Stock Option
Plan.
(c) The third grant ("Tranche 3") shall consist of options to
acquire up to 944,275 shares of Common Stock (1.25% of the outstanding capital
stock of the Corporation on a fully diluted basis as of the date of this
Agreement). Executive shall have the right, in his sole discretion, to allocate
the options in Tranche 3 among himself, Xxxxxxx X. Xxxxxxxxxx, Xxxxx X.
Xxxxxxxxxx and other employees of the Corporation who report, directly or
indirectly, to Executive; provided that the recipient of the options must be an
employee of the Corporation at the time of such allocation; and provided further
that the aggregate number of options so allocated shall not exceed 944,275. Such
allocation may be made at any time and from time to time on or after the
Effective Date and prior to the termination or expiration of this Agreement
(though once an allocation is made to an individual it may not be reallocated)
by written notice to the Corporation (an "Allocation Notice"). The date of grant
for each allocation shall be the date the Allocation Notice is received by the
Corporation. The exercise price of the options in Tranche 3 shall be Fair Market
Value, as determined in accordance with the 1999 Stock Option Plan, as of the
date of grant. The options in Tranche 3 shall vest and become exercisable only
upon the occurrence of a "Triggering Event" (as defined herein); provided that
Executive remains in the employ of the Corporation at the date of such
Triggering Event. A "Triggering Event" shall be deemed to have occurred (i) if
the Corporation's market capitalization, as determined by multiplying the
closing price per share of the Corporation's Common Stock in a nationally
recognized public trading market by the number of shares then issued and
outstanding, exceeds $1 Billion for thirty consecutive days at any time
commencing after October 1, 2000, or (ii) upon the closing of a sale of all or
substantially all of the Corporation's business, whether by sale of assets or
stock or by merger or consolidation, in a single transaction or a series of
related transactions (a "Sale"), in which the gross proceeds to the Corporation
or the Corporation's stockholders, as the case may be, equals or exceeds $750
Million. If the $750 Million threshold is met or exceeded, the percentage of the
Tranche 3 options which shall vest shall be determined by dividing the amount by
which the gross proceeds in the Sale exceeds $750 Million, up to a maximum of
gross proceed of $1 Billion or a $250 Million excess, by $250 Million. For
example if the gross proceeds in the Sale are $900 Million, 60% of the Tranche 3
options ($150 Million divided by $250 Million) shall vest. If there is a Sale in
which the $750 Million threshold is not met or exceeded, the Tranche 3 options
shall be forfeited. Due to the unique nature of the vesting conditions for the
options in Tranche 3, such options shall not automatically vest
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upon a "Change in Control" as provided in the 1999 Stock Option Plan, and the
1999 Stock Option Plan and the Stock Option Agreement issued pursuant to the
1999 Stock Option Plan to evidence the Tranche 3 options shall be modified as
necessary so that the provisions of this paragraph are permissible. The exercise
period of the options in Tranche 3 shall be ten years from the date of grant,
subject to earlier termination as set forth in the 1999 Stock Option Plan.
The option terms set forth herein shall be memorialized in Stock Option
Agreements to be executed by the Corporation and Executive pursuant to the
Corporation's 1999 Stock Option Plan. Such Option Agreements shall be in the
Corporation's standard form, subject to the modifications set forth herein,
shall be Incentive Stock Options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), to the maximum extent
permitted by the Code, and shall permit Executive to make an "early exercise" as
authorized pursuant to the 1999 Stock Option Plan. If there is any change,
increase or decrease, in the outstanding shares of the Corporation's Common
Stock which is effected without receipt of additional consideration by the
Company, by reason of a stock dividend, recapitalization, merger, consolidation,
stock split, combination or exchange of stock, or other similar circumstances,
which change occurs prior to the grant of all of the options to be granted
pursuant to this Agreement, then in each such event, the Corporation shall make
an appropriate adjustment in the aggregate number of shares of stock available
under the options not yet granted under this Agreement in order to prevent the
dilution or enlargement of Executive's rights. In making such adjustments,
fractional shares shall be rounded to the nearest whole share. If any options
are already outstanding at the time of any such change, such outstanding options
shall receive the anti-dilution protection set forth in the 1999 Stock Option
Plan. If at any time the Common Stock of the Corporation becomes
publicly-traded, the Corporation shall use reasonable efforts to register under
the Securities Act of 1933, as amended, the Common Stock to be received upon
exercise of Executive's options pursuant to a filing on Form S-8 or any
successor form, provided that the Corporation is eligible to use such Form. The
Corporation shall also use reasonable efforts to register under the Securities
Act of 1933, as amended, up to 50% of the shares of Common Stock to be received
upon exercise of Executive's options in the first secondary offering of the
Corporation's Common Stock following an initial public offering of the
Corporation's Common Stock. The Corporation and Executive recognize that the
Corporation's ability to effect a registration of shares held by Executive in
connection with a secondary offering of the Corporation's Common Stock may be
limited by the Corporation's existing obligations to register shares of Common
Stock held by existing shareholders of the Corporation pursuant to that certain
Registration Rights Agreement among the Corporation and the shareholders named
therein dated as of August 13, 1999. The Corporation and Executive further
recognize that the Corporation makes no representation and warranty regarding
the Corporation's ability to "go public" or consummate an initial public
offering or any secondary offering.
6. Facilities and Expenses. Executive's principal office shall be
located in facilities to be opened by the Corporation in the Boston,
Massachusetts metropolitan area (the "Boston Office"); provided, however, that
Executive shall make himself
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available at the Corporation's main office in Denver, Colorado, and/or at
customer premises at such times as are reasonably necessary for the satisfactory
performance of Executive's duties pursuant to this Agreement. The Corporation
shall pay per diem travel expenses, based upon the Corporation's standard
practices, for costs of commuting to the Corporation's main office and/or
customer premises. The Corporation shall further reimburse Executive, in
accordance with the Corporation's normal policies and procedures, for other
reasonable expenses incurred in the performance of Executive's duties hereunder,
including without limitation, expenses for entertainment and business fax and
telephone bills. Unusual and extraordinary expenses incurred by Executive and
not approved in advance by the Corporation may not be reimbursed.
7. No Copies of Documents and Materials. Executive shall not (except in
the performance of his duties in the ordinary course of business for which he is
employed by the Corporation) at any time or in any manner make or cause to be
made any copies, pictures, duplicates, facsimiles or other reproductions or
recordings or any abstracts or summaries of any reports, studies, memoranda,
correspondence, manuals, records, plans or other written, printed, computerized
or otherwise recorded materials of any kind or nature whatsoever belonging to or
in the possession of the Corporation or any of its subsidiaries.
8. Materials Remain on Premises. Executive shall have no right, title
or interest in any material referenced in Section 7. Executive agrees that,
except in the performance of his duties in the ordinary course of business for
which he is employed by the Corporation, Executive will not, without the prior
written consent of the Corporation, remove any such material from any premises
of the Corporation. Executive further agrees that, immediately upon the
termination of his employment with the Corporation or upon the termination of
this Agreement, whichever occurs earlier, or at any time prior thereto upon the
request of the Corporation, he shall surrender all such material to the
Corporation and execute a document acknowledging that he has complied with the
provisions of this Agreement.
9. Trade Secrets. Executive shall not at any time, whether during or
after the term of this Agreement, use for Executive's own benefit or purposes or
for the benefit or purposes of any other person, firm, partnership, association,
corporation or business organization, entity or enterprise, or disclose (except
in the performance of his duties in the ordinary course of business for which he
is employed by the Corporation) in any manner to any person, firm, partnership,
association, corporation or business organization, entity or enterprise any
trade secret, information, data, know how or knowledge (including, but not
limited to, that relating to service techniques, purchasing organization and
methods, sales organization and methods, inventories, client lists, market
development and expansion plans, personnel training and development programs and
client and supplier relationships) or any other Discoveries (as defined in
Section 11) belonging to or relating to the affairs of the Corporation or any of
its subsidiaries or to the clients of the Corporation or any of its
subsidiaries; provided, however, that this Section shall not apply to any trade
secret, information, data, know how, knowledge, or
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Discovery that is or becomes generally available to the public through no fault
or action of Executive.
10. Customers. In furtherance of and not in limitation of Section 9,
Executive acknowledges that the list of the Corporation's and its subsidiaries'
customers as it may exist from time to time constitutes a valuable and unique
asset of the Corporation, and Executive agrees that he shall not, during or
after the term of his employment, disclose such list or any part thereof to any
person, firm, partnership, association, corporation, or business organization,
entity or enterprise for any reason or purpose whatsoever, nor shall Executive
use such customer list for his own benefit or purposes or for the benefit or
purposes of any business with whom Executive may become associated.
11. Discoveries. Executive agrees with the Corporation that any and all
inventions, discoveries, improvements, designs, methods, systems, developments,
know how, ideas, suggestions, devices, trade secrets and processes (hereinafter
collectively referred to as "Discoveries"), whether patentable or not, which are
discovered, disclosed to or otherwise obtained by Executive during his
employment with the Corporation are confidential, proprietary information and
are the sole and absolute property of the Corporation. Executive agrees to
disclose promptly to the Corporation all such Discoveries and to assist the
Corporation in making any application in the United States and in foreign
jurisdictions for patents or other intellectual property protection of any kind
with respect thereto.
12. Works for Hire. All works and writings of a professional nature
which are produced by Executive during his employment with the Corporation
constitute works made for hire and are the sole and absolute property of the
Corporation. Executive grants the Corporation the exclusive right to copyright
all such works and writings in the United States and in foreign jurisdictions.
To the extent any such works or writings are deemed to not be works for hire,
Executive hereby assigns and agrees to assign all his interests therein to the
Corporation or its nominee. Whenever requested to do so by the Corporation,
Executive shall execute any and all applications, assignments, or other
instruments that the Corporation may deem necessary to protect the Corporation's
interest therein.
13. Use of Confidential Information of Other Persons. Executive
represents and warrants that he has not brought and will not bring with him to
the Corporation or use at the Corporation any materials or documents or
intellectual property belonging to Executive or to a former employer or any
other person that are not generally available to the public, unless express
written authorization for their possession and use has been obtained from such
person and the Corporation. Executive understands that he is not to breach any
obligation of confidentiality that is owed to any former employer or other
person, and Executive agrees to fulfill all such obligations during the period
of his affiliation with the Corporation.
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14. Nondisclosure Agreement. In addition to the obligations set forth
herein, Executive shall execute and deliver to the Corporation a Nondisclosure
Agreement in the Corporation's standard form.
15. Remedies. Executive acknowledges and agrees that the provisions of
this Agreement are essential to the Corporation and are reasonable and necessary
to protect the legitimate interests of the Corporation and its subsidiaries and
that the damages sustained by the Corporation or its subsidiaries as a result of
a breach of the agreements contained herein will subject the Corporation or its
subsidiaries to immediate, irreparable harm and damage, the amount of which,
although substantial, cannot be reasonably ascertained, and that recovery of
damages at law will not be an adequate remedy. Executive therefore agrees that
the Corporation and its subsidiaries, in addition to any other remedy they may
have under this Agreement or at law, shall be entitled to injunctive and other
equitable relief to prevent or curtail any breach of any provision of this
Agreement. In the event suit or action is instituted to enforce this Agreement
or any of the terms and conditions hereof, including, but not limited to, suit
for preliminary injunction, the prevailing Party shall be entitled to costs and
reasonable attorneys' fees. Executive waives any right to the posting of a bond
in the event of an issuance of a temporary restraining order, preliminary
injunction or permanent injunction upon the issuance of said order by a court of
competent jurisdiction.
16. Death During Employment. This Agreement shall terminate upon
Executive's death. In such event, the Corporation shall pay a death benefit
equal to Executive's base monthly salary for the balance of the month of
Executive's death and for the month following his death. Any amounts payable
under this Agreement following Executive's death shall be paid to the
beneficiary named in writing by Executive, or if none, to Executive's surviving
spouse, or if none, to the executors and administrators of Executive's estate
and shall be paid within sixty (60) days of Executive's death.
17. Disability. This Agreement shall terminate upon Executive's
Disability (as defined herein). "Disability" shall be deemed to exist only if
Executive is disabled according to the definition of "disability" which is
contained in the disability insurance policy paid for by the Corporation for its
executives.
18. Termination for Other Than for Disability or Death. This Agreement
may terminate for reasons other than Executive's death or disability upon the
occurrence of any of the following events:
(a) The Corporation, at its option, may terminate Executive for
Cause upon written notice by the Corporation to Executive fully setting forth
such Cause. For this purpose, the Corporation shall be deemed to have "Cause"
following the occurrence of any of the following events:
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1) Commission by Executive of an act or omission which would
constitute a felony under the laws of the State of Colorado
or the United States, had such act or omission been performed
in either such jurisdiction.
2) Executive's alcoholism or illegal drug addiction, if
established by competent evidence. The Corporation shall have
the right, but not the obligation, upon reasonable cause, to
demand that Executive submit to a medical examination by a
qualified independent physician selected by the Corporation
to ascertain whether such condition exists.
3) Breach of Executive's duty of loyalty to the Corporation
which materially adversely affects the financial well-being
of the Corporation.
4) Executive's willful refusal to obey directions of the Board
of Directors or a superior officer of the Corporation (so
long as such directions do not involve illegal or immoral
acts), which Executive fails to cure within five (5) days of
receipt of written notice from the Corporation which
describes such refusal and makes reference to this Section
18(a).
5) Gross mismanagement by Executive of the business of the
Corporation, which Executive fails to cure within fifteen
(15) days of receipt of written notice from the Corporation
which describes the mismanagement in reasonable detail and
makes reference to this Section 18(a).
6) Breach of a material term of this Agreement, which Executive
fails to cure within fifteen (15) days of receipt of written
notice from the Corporation which describes the breach in
reasonable detail and makes reference to this Section 18(a).
For purposes of the preceding sentence, the "material terms"
of this Agreement shall be limited to those set forth in
Section 2 and Sections 7 through and including 14.
(b) The Corporation shall have the right to terminate this
Agreement without Cause at any time upon thirty (30) days' advance written
notice to Executive; provided, however, that the Corporation shall not be
entitled to terminate this Agreement without Cause prior to the first
anniversary of the Effective Date.
(c) Executive, at his option, may terminate employment for Good
Reason upon written notice by Executive to the Corporation fully setting forth
such Good Reason. For this purpose, Executive shall be deemed to have "Good
Reason" following the occurrence of any of the following events:
1) A material breach of this Agreement by the Corporation, which
the Corporation fails to cure within fifteen (15) days of
receipt of written notice from Executive which describes the
breach in reasonable detail and makes reference to this
Section 18(c).
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2) The Corporation's requiring Executive to be based at any
office or location other than the Boston Office without
Executive's approval, except for required travel on the
Corporation's business, which the Corporation fails to cure
within fifteen (15) days of receipt of written notice from
Executive which describes the matter in reasonable detail and
makes reference to this Section 18(c).
3) A change in Executive's job title (other than as a result of
a promotion), a reduction in Executive's base salary, or a
change in Executive's reporting responsibilities such that
Executive no longer reports to the Corporation's President
and Chief Executive Officer (other than as a result of a
promotion), in each case which the Corporation fails to cure
within fifteen (15) days of receipt of written notice from
Executive which describes the matter in reasonable detail and
makes reference to this Section 18(c).
(d) Executive shall have the right to terminate this Agreement
without Good Reason at any time upon thirty (30) days' advance written notice to
the Corporation.
(e) This Agreement may be terminated at any time upon the mutual
agreement of the Parties.
19. Rights Upon Termination.
(a) Upon termination of Executive's employment with the
Corporation, the Corporation shall have no further obligation to Executive
except as specifically provided under this Agreement. Termination of Executive's
employment shall not affect Executive's right to receive any compensation or
bonuses which have accrued but have not been paid through the date of
termination.
(b) In addition to any accrued compensation or bonuses, and
depending upon the circumstances of Executive's termination of employment, the
Corporation shall pay or provide certain severance benefits (the "Severance
Benefits"). The nature and extent of the Severance Benefits to be provided shall
be determined in accordance with the table set forth in Exhibit A attached
hereto. For purposes of Exhibit A, the following terms shall have the following
meanings:
(1) "Severance Pay" shall be expressed as a monthly amount
and shall mean one-twelfth of Executive's annual base salary pursuant
to Section 4(a). Any Severance Pay due to Executive shall be paid in
cash or by check on the same dates on which Executive would otherwise
have received payment of his annual base salary hereunder if employment
had continued.
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(2) "Continuation Benefits" shall mean the continuation of
the Benefits, including any Benefits which cover Executive's family,
but excluding any contribution to any qualified or nonqualified
pension, profit sharing or retirement plan or other deferred
compensation arrangement (each a "Retirement Plan").
(3) A "Change in Control" shall mean and shall be deemed to
have occurred if any of the following events shall have occurred:
(a) A Third Person (as defined below), including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended from time to time, and any successor act (the
"Exchange Act"), becomes the "beneficial owner," as defined in the
Exchange Act, of shares of the Corporation having 50% or more of the
total number of votes that may be cast for the election of a majority
of the Directors of the Corporation; or
(b) The Board of Directors or the stockholder(s) of the
Corporation approve: (i) any agreement for a merger or consolidation or
like business recombination or reorganization of the Corporation with
another entity, the consummation of which would result in the
occurrence of any event described in Section 19(b)(3)(a) above or (ii)
any sale, exchange or other disposition of all or substantially all of
the Corporation's assets; or
(c) An asset sale which results in the sale, exchange or
other disposition of greater than 67% in fair market value of the
Corporation's total assets, other than in the ordinary course of
business, whether in a single transaction or a series of related
transactions; provided, however, that no sale or disposition of assets
shall be taken into account to the extent that the proceeds of such
sale or disposition (whether in cash or in-kind) are reinvested or are,
in the case of proceeds received in-kind, used in the ongoing conduct
of the Corporation, provided further that such a reinvestment shall not
be deemed to have occurred unless made within six (6) months of such
sale or disposition and provided further that, the term reinvestment
shall include the use of proceeds to repay debt incurred in connection
with the operation of the business in which the assets sold or disposed
of were used; or
(d) The dissolution of the Corporation.
Notwithstanding anything herein to the contrary, none of the events
described above shall be considered to be a "Change in Control" if (i)
such event results in the acquisition of control by the then existing
management of the Corporation, or (ii) Xxxxx X. Xxxxxxxxxx, Xx. remains
the President and Chief Executive Officer of the Corporation or its
successor for a period of at least ninety (90) days following such
event. Subject to the preceding sentence, a Change in Control shall be
deemed to have occurred on the effective date of such event. For
purposes of determining whether there has been a Change in Control, the
Third
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Person owning shares must be someone other than a person or entity, or
an Affiliate of a person or entity, that, as of the Effective Date, was
the beneficial owner of shares of the Corporation having 5% or more of
the total number of votes that may be cast for the election of any of
the Directors of the Corporation. "Affiliate" shall mean, with respect
to any person or entity, a person or entity that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or
is under common control with, such person or entity.
(c) Upon the termination of Executive's employment with the
Corporation for any reason, Executive shall be return to the Corporation any and
all equipment owned by the Corporation and used by Executive.
(d) If any portion of the Benefits (excluding any contributions to
any Retirement Plan) cannot reasonably be made available to Executive as
required following a termination of employment, then the Corporation shall pay
to Executive an amount in cash equal to 150% of the cost which must be incurred
by Executive to acquire benefits equivalent to any tax-exempt Benefits
previously provided by the Corporation and 100% of the cost which must be
incurred by Executive to acquire benefits equivalent to any taxable Benefits
previously provided by the Corporation. The Corporation shall determine the cost
to Executive of such Benefits in good faith and shall provide reasonable
documentation to support its findings to Executive.
20. Mitigation. Executive shall inform the Corporation if he should
assume any position, whether as proprietor, partner, employee, principal, agent,
consultant, director, officer, or in any other capacity, in any other firm or
business. To the extent Executive shall accrue compensation from such other firm
or business (whether such compensation shall be payable immediately or on a
deferred basis), any Severance Pay payable by the Corporation shall be reduced
on a dollar for dollar basis for each dollar earned by Executive during the
period in which such Severance Pay is to be paid. Continuation Benefits shall be
subject to mitigation under the limited circumstances described in Exhibit A if
and only if Executive, in his sole discretion, has accepted employment with
another firm or business and is eligible to receive benefits which are
equivalent in all material respects to the Continuation Benefits. In determining
benefit equivalence, the parties shall consider all factors, including the level
of coverage, the cost, if any, to Executive, and the effect, if any, of
provisions limiting coverage for pre-existing conditions. Notwithstanding
anything herein to the contrary, this Section shall not apply, and there shall
be no mitigation, following a termination of Executive's employment pursuant to
Section 18(b) or 18(c) or voluntarily by Executive within one year after a
Change in Control.
21. Arbitration. Any controversy or claim arising out of or related to
this Agreement shall be settled by arbitration in Englewood, Colorado, under the
Commercial Rules of the American Arbitration Association in effect at the time
such controversy or claim arises (the "Rules") by one arbitrator appointed by
the American Arbitration Association in accordance with the Rules, the
arbitrator also apportioning the costs of arbitration. The award of the
arbitrator shall be in writing, shall be final
12
13
and binding upon the Parties, shall not be appealed from or contested in any
court and may, in appropriate circumstances, include injunctive relief. Should
any Party fail to appear or be represented at the arbitration proceedings after
due notice in accordance with the Rules, then the arbitrator may nevertheless
render a decision in the absence of said Party, and such decision shall have the
same force and effect as if the absent Party had been present, whether or not it
shall be adverse to the interests of that Party. Any award rendered hereunder
may be entered for enforcement, if necessary, in any court of competent
jurisdiction, and the Party against whom enforcement is sought shall bear the
expenses, including attorneys' fees, of enforcement. Notwithstanding the
foregoing, the Corporation shall be entitled to seek injunctive or other
equitable relief to enforce any of the provisions in Sections 6 through 14 from
any court of competent jurisdiction without the need to resort to arbitration.
22. Survival. The covenants contained in this Agreement shall survive
any termination of Executive's employment with the Corporation and shall survive
any termination of this Agreement. The existence of any claim or cause of action
of Executive against the Corporation, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Corporation
of any of the covenants contained in this Agreement.
23. Severability. If the scope of any restriction contained in this
Agreement is too broad to permit enforcement of such restriction to its fullest
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and Executive and the Corporation hereby consent and agree that the
scope of such restriction may be judicially modified in any proceeding brought
to enforce such restriction. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted from this Agreement
and the remainder of this Agreement shall remain in full force and effect.
24. Notice. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered by personal delivery,
air courier, or if mailed by registered or certified first-class mail, return
receipt requested, to the residence of Executive as it appears in the corporate
records for notice to Executive, or to the principal office of the Corporation
for notice to the Corporation. All notices delivered in accordance with this
Section shall be deemed to have been received and shall be deemed effective if
delivered in person or by air courier, upon actual receipt by the intended
recipient, or if mailed, upon the date of delivery or refusal to accept delivery
as shown by the return receipt therefor.
25. No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any provision of
this Agreement, except by a statement in writing signed by the Party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, and shall operate
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any act other than that
specifically waived.
13
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26. Amendments. No amendment or modification of this Agreement shall be
deemed effective unless made in writing and signed by the Parties hereto.
27. Assignment. The rights and obligations of the Corporation under
this Agreement shall, without the prior written consent of Executive, inure to
the benefit of and be binding upon the successors and assigns of the
Corporation. If the Corporation shall at any time be merged or consolidated with
any other corporation or shall sell or otherwise transfer a substantial portion
of its assets to another corporation or entity, the provisions of this Agreement
shall be binding upon and inure to the benefit of the corporation or entity
surviving or resulting from such merger or consolidation or to which such assets
have been sold or transferred. Upon Executive's request, the Corporation shall
obtain an agreement to expressly assume this Agreement from any such successor.
This is a personal service contract and may not be assigned by Executive.
28. Entire Agreement. This instrument contains the entire agreement of
the Parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, whether oral
or written, and all other communications relating to the subject matter hereof,
and the Parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement that are not set forth herein.
29. Governing Law. This Agreement is made under and shall be governed
by and construed in accordance with the internal laws of the State of Colorado
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
30. Headings. The headings of sections in this Agreement are solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.
31. Expenses. Each of the parties shall bear his or its own expenses in
connection with the preparation, negotiation and execution of this Agreement,
except that the Corporation shall reimburse Executive for up to an aggregate of
$2,500 of legal fees and related expenses incurred in connection with the
preparation, negotiation and execution of this Agreement and the Employment
Agreements for Xxxxxxx X. Xxxxxxxxxx and Xxxxx X. Xxxxxxxxxx.
14
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Signed by the Parties on the day and year first above written.
"CORPORATION"
CONVERGENT GROUP CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxxx, Xx.
President and Chief Executive
Officer
"EXECUTIVE"
/s/ Xxxx Xxxxxxx
-----------------------------------
Xxxx Xxxxxxx
Executive
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EXHIBIT A
TO
EMPLOYMENT AGREEMENT
BETWEEN
XXXX XXXXXXX
AND
CONVERGENT GROUP CORPORATION
TABLE OF SEVERANCE BENEFITS
---------------------------
ADDITIONAL MONTHS
EVENT OF TERMINATION ADDITIONAL MONTHS OF CONTINUATION BENEFITS SEVERANCE PAY
------------------------------ ---------------------------------------------------- -------------------------
1. BY CORPORATION FOR 0 0
CAUSE
-------------------------------------------------------------------------------------------------------------
2. BY CORPORATION
WITHOUT CAUSE OR
UPON MUTUAL
AGREEMENT
A) WITHIN ONE YEAR Six months, but only until Executive's eligibility 6 months
FOLLOWING EFFECTIVE for reasonably equivalent benefits from a third-
DATE party employer.
B) AFTER ONE YEAR 0 0
FOLLOWING EFFECTIVE
DATE
-------------------------------------------------------------------------------------------------------------
3. BY EXECUTIVE WITH Six months, but only until Executive's eligibility 6 months
GOOD REASON for reasonably equivalent benefits from a third-
party employer
-------------------------------------------------------------------------------------------------------------
4. BY EXECUTIVE 0 0
WITHOUT GOOD
REASON
-------------------------------------------------------------------------------------------------------------
5. DISABILITY Six months, but only until Executive's eligibility 0
for reasonably equivalent benefits from a third-
party employer
-------------------------------------------------------------------------------------------------------------
6. DEATH Six months [See Section 16]
-------------------------------------------------------------------------------------------------------------
DENVER:0944181.07
A-1
17
OCTOBER 11, 1999
Xx. Xxxx Xxxxxxx
--------------------
--------------------
RE: EXERCISE OF STOCK OPTIONS
Dear Xxxx:
This letter is being provided in connection with your exercise of
226,626 "Tranche 1" options granted to you pursuant to your Employment
Agreement. This will confirm that in recognition of the significance of your
contribution to the development of a digital utility strategy for Convergent's
e-business and your significant time commitment to Convergent prior to the
official date of commencing your employment, the shares of Common Stock issued
upon exercise of the "Tranche 1" options are not subject to any vesting
requirement as presently contemplated by your Employment Agreement. Any
provision in your Employment Agreement to the effect that Convergent may
repurchase such shares if you do not remain in the employ of Convergent as of
October 11, 2000 is hereby deleted.
Very truly yours,
/s/ Xxxxx X. Xxxxxxxxxx, Xx.
------------------------------------------
Xxxxx X. Xxxxxxxxxx, Xx.
President and Chief Executive Officer
Convergent Group Corporation
