EX-10.5
6
a5555115-ex105.htm
EXHIBIT 10.5
Exhibit
10.5
EXECUTIVE
EMPLOYMENT, NON-COMPETE
AND
CONFIDENTIALITY AGREEMENT
THIS
EXECUTIVE EMPLOYMENT, NON-COMPETE AND CONFIDENTIALITY AGREEMENT (“Agreement”),
is entered into as of the date set forth on the signature page, by and between
Xxxxx Xxxxxxx (the “Executive”) and MAXIMUS, Inc., a Virginia
corporation with its principal place of business in Reston, Virginia (the
“Corporation”) with reference to the following:
WHEREAS,
the parties believe the Executive possesses the experience and capabilities
to
provide valuable service on behalf of the Corporation; and
WHEREAS,
the Corporation desires to employ the Executive as Group
President of the MAXIMUS Family Services Group;
and
WHEREAS,
the Executive desires to be employed by the Corporation at the salary, benefits
and other terms and conditions specified herein.
NOW,
THEREFORE, in consideration of these premises and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
the
parties agree as follows:
1. Employment.
1.1 Duties. The
Corporation hereby employs the Executive, and the Executive hereby accepts
such
employment, to serve as the Group President of the MAXIMUS Family Services
Group. The Executive hereby represents and warrants that he is in
good health and capable of performing the services required
hereunder. The Executive shall perform such services and duties as
are appropriate to such office or delegated to the Executive by his
supervisor. During the term of this Agreement, the Executive
shall be a full-time employee of the Corporation and shall devote such time
and
attention to the discharge of his duties as may be necessary and appropriate
to
accomplish and complete such duties.
1.2 Compensation.
(a) Salary. As
compensation for performance of his obligations hereunder, the Corporation
shall
pay the Executive an annual salary of not less than $350,000, such salary
to be
reviewed annually beginning on or about September 30, 2005.
(b) Signing
Bonus. Executive will receive a signing bonus of $35,000 on or
about his first day of employment. Executive agrees to repay
a
prorated portion of the signing bonus to the Corporation if, during the first
12
months of this Agreement, he terminates his employment for any reason or
the
Corporation terminates his employment for cause.
(c) Year-End
Bonus. The Executive will participate in the Corporation’s annual
bonus program, with any awards dependent on the performance of the Executive
and
the Corporation. Executive’s annual “target” bonus will be 30% of his
annual base salary, but his actual bonus may be higher or lower based upon
his
and the Corporation’s achievement of specified goals and
objectives. The goals and objectives that govern Executive’s annual
bonus determination will be agreed upon in writing by Executive and the
Corporation within 30 days following the start of each
year.
(d) Stock
Options. Upon the Effective Date the Executive shall be awarded a
non-qualified option to acquire 50,000 shares of MAXIMUS Common Stock in
accordance with the MAXIMUS 1997 Equity Incentive Plan. On the
succeeding first through third anniversaries of the Effective Date, the
Executive will receive non-qualified option grants to purchase MAXIMUS stock
in
the amounts of not less than 50,000, 20,000, and 20,000 shares
respectively. All option grants shall have a strike price equal to
the New York Stock Exchange closing price of MAXIMUS Common Stock as of the
trading day immediately preceding the date of grant, a four-year vesting
schedule, a ten-year term and such other terms and conditions as are included
in
the standard MAXIMUS Stock Option Agreement which will be subsequently executed
by the parties.
The Executive
shall also be awarded 3,000 restricted stock units (RSUs)
upon the Effective Date. The RSUs will vest in equal installments
over a six-year term, subject to possible acceleration in accordance with
the
terms of the RSU Award Program. The Executive shall also be eligible
to participate in stock option, RSU, and similar plans as currently exist
or may
be established by the Corporation from time to time.
(e) Vacation,
Insurance, Expenses, Etc. The Executive shall be entitled to
20 days accrual paid vacation per year, and such benefits, health,
disability and life insurance and other benefits and expense reimbursements
in a
manner consistent with the Corporation’s past practices and as are provided to
executives at a similar level.
(f) Indemnity. Except
to the extent the Board of Directors determines that the Executive violated
the
law or acted in bad faith or except as otherwise prohibited by law, the
Corporation shall indemnify and hold harmless Executive from and against
any and
all claims, damages, expenses (including, but not limited to, attorneys’ fees
and litigation and court costs), costs, and/or liabilities incurred or suffered
by Executive that are based upon or arise out of any acts or omissions, or
alleged acts or omissions, by Executive during his employment with the
Corporation.
1.3 Non-Involvement
In Certain Activities. Prior to his employment by the
Corporation, Executive was involved in two procurements for eligibility services
in Florida and Texas on behalf of his former employer (the “Procurements”), and
the Corporation is currently involved in the Procurements as
well. Neither Executive nor the Corporation wishes to have Executive
utilize or disclose any proprietary information or trade secrets of his former
employer in the course of his employment with the Corporation, and in
furtherance of that desire, the parties agree that (i) the Corporation shall
not
request nor require that Executive be involved in any way with its work on
the
Procurements, (ii) Executive shall not become involved in any way with the
Corporation’s work on the Procurements, and (iii) the Corporation shall issue to
all of its employees who are involved in any way with its work on the
Procurements written instructions that they are not to discuss, share
any information concerning, or seek any information concerning, the Procurements
with/from Executive. Executive and the Corporation agree that in the
event that the nature, circumstances or timing of the Procurements changes
then Executive shall discuss the changed circumstances with outside counsel
to
the Company to determine whether Executive may no longer have confidential
or
proprietary information relating to the Procurements. In the event that
outside counsel determines that Executive does not have confidential or
proprietary information relating to the Procurements, then the Corporation
may
request that Executive be involved in the Procurements. However, the
foregoing shall not prohibit the Corporation from assigning the Executive
to
work on any programs or contracts that the Corporation may be awarded as
a
result of the Procurements, so long as the Executive does not share confidential
information of his previous employer.
1.4 Term;
Termination Without Severance. The term of the
employment agreement set forth in this Section 1 shall be for a period
commencing at the Effective Date and continuing for two (2) years thereafter
(the “Scheduled Term”) provided that this Agreement shall
terminate:
(a) by
mutual
written consent of the parties;
(b) upon
Executive’s death or inability, by reason of physical or mental
impairment, to perform substantially all of Executive’s duties
as contemplated herein for a continuous period of 120 days or more;
or
(c) by
the
Corporation for cause, which shall mean the Executive’s (i) breach of any
material duty or obligation hereunder, (ii) intentional or grossly negligent
misconduct that is materially injurious to the Corporation, (iii) willful
failure to follow the reasonable directions of the Executive’s supervisor, or
(iv) failure to carry out his duties in a professional manner consistent
with
the standards of his profession and position; provided, however, that
subsections (i), (iii) and (iv) of this paragraph are contingent upon the
Corporation providing 30 days’ written notice to Executive and Executive’s
failure to correct such breach, failure to follow instructions or failure
to
carry out his duties, as applicable.
Upon
any termination of employment under this Section 1.4, neither party shall
have
any further obligation to the other pursuant to this Section 1, but such
termination shall have no effect on the obligations of the parties under
other
provisions of this Agreement.
“Effective
Date” means the date Executive commences work for the Corporation, which the
parties anticipate will occur on or before October 1, 2004.
1.5 Termination
By Executive For Good Reason. In the event that the Corporation
terminates the Executive without cause or the Executive resigns from his
employment with the Corporation for Good Reason (as defined below), Executive
shall be entitled to receive a lump sum severance payment equal to six months’
base salary (at Executive’s highest base salary rate during his employment with
the Corporation) plus the pro-rated portion of Executive’s then-current annual
“target” bonus. The severance payment described in the previous
sentence will be paid to Executive within five business days following his
resignation for Good Reason.
For
purposes of this Agreement, “Good Reason” means any of the following conditions,
which condition(s) remain(s) in effect 30 days after written notice from
the
Executive to the Corporation of such condition(s):
(a) a
decrease in Executive’s existing base salary or annual “target” bonus
percentage, and/or a material decrease in any of his employee benefits; provided
that such decrease is not applicable to all officers of the
Corporation;
(b) a
material diminution in Executive’s authority, responsibilities or duties
(however, this clause shall not apply in the event of a reorganization of
the
company or a change in reporting relationships so long as the Executive’s
authority, responsibilities or duties are not materially diminished thereby);
(c) the
relocation of Executive’s work place for the Corporation as of the Effective
Date to a location that is not agreed to in writing by Executive;
or
(d) any
failure by any successor to the Corporation to expressly assume, in writing,
the
Corporation’s obligations and liabilities under this Agreement.
1.6 Accelerated
Vesting of Stock Options Upon Change of Control. In the event
there is a change of control of the Corporation such that the unvested stock
options of the Corporation’s executive officers are accelerated, then the
vesting of the unvested stock options of the Executive shall be accelerated
as
well.
1.7 Renewal
of Agreement. At the end of the Scheduled Term, this Agreement
shall automatically renew on a month-to-month basis (the “Renewal Term”) on the
terms and conditions set forth herein, unless one of the parties hereto has
given the other party written notice prior to the end of the Scheduled Term
or
any Renewal Term of his/its desire not to have the Renewal Term take
effect. If such notice is given by the Corporation to Executive,
Executive shall be entitled to receive all of the severance benefits described
in Section 1.5 at the end of the Scheduled Term.
2. Non-Competition.
2.1 Prohibited
Activities.
(a) In
the
event that Executive resigns from the Corporation other than for Good Reason,
the Executive agrees that, during his employment with the Corporation and
for a
period of two (2) years after the termination of such employment, the Executive
will not engage in any Unethical Behavior which may adversely affect the
Corporation. For the purpose of this Section 2.1, “Unethical
Behavior” is defined as:
(i) any
attempt, successful or unsuccessful, by the Executive to divert any existing
or
pending contracts or subcontracts from the Corporation to any other firm,
whether or not affiliated with the Executive;
(ii) any
attempt, successful or unsuccessful, by the Executive, to solicit the business
of any clients of the Corporation in the areas of business for which Executive
has had responsibility (so long as such clients were clients of the Corporation
during Executive’s employment with the Corporation);
(iii) any
attempt, successful or unsuccessful, by the Executive to offer his services,
or
to influence any other employee of the Corporation to offer their services,
to
any firm to compete against the Corporation in the areas of business for
which
Executive had responsibility; or
(iv) any
attempt, successful or unsuccessful, by the Executive to employ or offer
employment to, or cause any other person to employ or offer employment to
any
other employee of the Corporation that is under the supervision of
Executive.
(b) The
Executive shall notify any new employer, partner, association or any other
firm
or corporation actually or potentially in competition with the Corporation
with
whom the Executive shall become associated in any capacity whatsoever of
the
provisions of this Section 2 and the Executive agrees that the Corporation
may give such notice to such firm, corporation or other person.
2.2 Business
Opportunities; Conflicts of Interest; Other Employment and Activities of
the
Executive.
(a) The
Executive agrees promptly to advise the Corporation of, and provide the
Corporation with an opportunity to pursue, all business opportunities that
reasonably relate to the present business conducted by the
Corporation.
(b) The
Executive, in his capacity as an employee of the Corporation, shall not engage
in any business with any member of the Executive’s immediate family or with any
person or business entity in which the Executive or any member of the
Executive’s immediate family has any ownership interest or financial interest,
unless and until the Executive has first fully disclosed such interest to
and
received written consent from the Chief Executive Officer. As used
herein, the term “immediate family” means the Executive’s spouse, natural or
adopted children, parents or siblings and the term “financial interest” means
any relationship with such person or business entity that may monetarily
benefit
the Executive or member of the Executive’s immediate family, including any
lending relationship or the guarantying of any obligations of such person
or
business entity by the Executive or member of his immediate
family. Provided, however, that the restrictions set forth in
this subsection shall not apply to (i) Executive’s
personal/family investment activities, and (ii) Executive’s participation in the
business activities of Sherwood Forest Coffee Company, Ltd. including, but
not
limited to, his role as a director and advisor to that entity so long as
they do
not compete with the business of the Corporation, interfere with the
Corporation’s business operations, divert resources away from the Corporation or
take the Executive’s time away from the Corporation.
(c) The
parties hereto agree that the Executive may, consistent with this Section
2.2,
receive and retain speaking fees, referral fees from business opportunities
not
accepted by the Corporation, and fees from outside business activities and
opportunities of the Executive consented to by the Chief Executive
Officer.
3. Confidentiality. The
Executive agrees that the Corporation’s books, records, files and all other
non-public information relating to the Corporation, its business, clients
and
employees are proprietary in nature and contain trade secrets and shall be
held
in strict confidence by the Executive, and shall not, either during the term
of
this Agreement or after the termination hereof, be used by Executive or
disclosed by Executive, directly or indirectly, to any third party, except
to
the extent such use or disclosure is in furtherance of the Corporation’s
business or required by court order or other legal process. The trade
secrets or other proprietary or confidential information referred to in the
prior sentence includes, without limitation, all proposals to clients or
potential clients, contracts, client or potential client lists, fee policies,
financial information, administration or marketing practices or procedures
and
all other information regarding the business of the Corporation and its clients
not generally known to the public.
4. Miscellaneous.
4.1 Notices. All
notices, requests, demands or other communications provided for in this
Agreement shall be in writing and shall be delivered by hand, sent prepaid
by
overnight delivery service or sent by the United States mail, certified,
postage
prepaid, return receipt request, to the following:
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If
to the Corporation:
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MAXIMUS,
Inc.
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00000
Xxxxxx Xxxxx Xxxx
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Xxxxxx,
Xxxxxxxx 00000
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Attention: General
Counsel
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If
to the Executive:
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Xxxxx
X. Xxxxxxx
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00000
Xxxxxxxxxx Xxxxxxx
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Xxxxxxxxxx,
XX 00000
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Any
notice, request, demand or other communication delivered or sent in the
foregoing manner shall be deemed given or made (as the case may be) upon
the
earliest of (i) the date it is actually received, (ii) the business-day after
the day on which it is delivered by hand, (iii) the business day after the
day
on which it is properly delivered to Federal Express (or a comparable overnight
delivery service), or (iv) the third business day after the date on which
it is
deposited in the United States mail. Either party may change its
address by notifying the other party of the new address in any manner permitted
by this paragraph.
4.2 Remedies. The
parties agree and acknowledge that any violation by the Executive of the
terms
hereof may result in irreparable injury and damage to the Corporation or
its
clients, which will not adequately be compensable in monetary damages, that
the
Corporation will have no adequate remedy at law therefore, and that the
Corporation may obtain such preliminary, temporary or permanent mandatory
or
restraining injunctions, orders or decrees as may be necessary to protect
it
against, or on account of, any breach of the provisions contained in this
Agreement.
4.3 No
Obligation of Continued Employment. The Executive understands
that this Agreement does not create an obligation on the part of the Corporation
to continue the Executive’s employment with the Corporation after the
termination of this Agreement. However, it is the present intention
that the Executive remain employed by the Corporation following the expiration
of this agreement, assuming a mutually satisfactory working
arrangement.
4.4 Benefit;
Assignment. This Agreement shall bind and inure to the benefit of
the parties and their respective personal representatives, heirs, successors
and
assigns, provided this Agreement may not be assigned by either party without
the
consent of the other, except that the Corporation may assign this Agreement
in
connection with the merger, consolidation or sale of all or substantially
all of
its business or assets.
4.5 Entire
Agreement. This Agreement supersedes all prior agreements,
written or oral, with respect to the subject matter of this
Agreement.
4.6 Severability. In
the event that any one or more of the provisions contained herein shall be
held
to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provisions of
this
Agreement, and all other provisions shall remain in full force and
effect. If any of the provisions of this Agreement is held to be
excessively broad, it shall be reformed and construed by limiting and reducing
it so as to be enforceable to the maximum extent permitted by law.
4.7 Waivers. No
delay or omission by the Corporation or Executive in exercising any right
under
this Agreement will operate as a waiver of that or any other right. A
waiver or consent given by the Corporation or the Executive on any occasion
is
effective only in that instance and will not be construed as a bar to or
waiver
of any right on any other occasion.
4.8 Captions. The
captions of the various sections and paragraphs of this Agreement have been
inserted only for the purpose of convenience; such captions are not a part
of
this Agreement and shall not be deemed in any manner to modify, explain,
enlarge
or restrict any of the provisions of this Agreement.
4.9 Governing
Law. This Agreement shall in all events and for all purposes be
governed by, and construed in accordance with, the laws of the Commonwealth
of
Virginia.
4.10 Amendments. No
changes to this Agreement shall be binding unless in writing and signed by
both
the parties.
4.11 Counterparts. This
Agreement may be executed in several counterparts, each of which shall be
deemed
an original, and all such counterparts shall constitute one
instrument.
4.12 Survival. Sections
1.4, 2.1 and 3 shall survive the expiration or earlier
termination of this Agreement in accordance with their terms.
THE
EXECUTIVE HAS READ ALL OF THE PROVISIONS OF THIS AGREEMENT AND THE EXECUTIVE
UNDERSTANDS, AND AGREES TO, EACH OF SUCH PROVISIONS. THE EXECUTIVE
UNDERSTANDS THAT THIS AGREEMENT MAY AFFECT THE EXECUTIVE’S RIGHT TO ACCEPT
EMPLOYMENT WITH OTHER COMPANIES SUBSEQUENT TO THE EXECUTIVE’S EMPLOYMENT WITH
THE CORPORATION.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
EXECUTIVE | | MAXIMUS,
Inc. |
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| | | By | |
Xxxxx
Xxxxxxx
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Xxxx
Xxxxxxxxx
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Chief
Operating Officer
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Date
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