Exhibit 10.17
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by and
between Xxxx Xxxxxx ("Employee") and Kinderhook Systems, Inc., a Delaware
corporation (the "Company"), to be effective upon the occurrence of the events
described in Paragraph 18 below.
Recitals:
A. Employee and the Company desire to enter into an agreement to set forth
the terms and conditions of Employee's employment with the Company.
B. Employee and the Company acknowledge the receipt and adequacy of the
consideration for this Agreement, including the premises and covenants in this
Agreement, the employment of Employee by the Company, and other good and
valuable consideration.
Agreements:
1. Definitions. For purposes of this Agreement, the following terms,
including both the singular and the plural, shall have the meanings assigned to
them below, as follows:
(a) "Affiliate" means any corporation or business entity that either
controls or is controlled by the Company or is controlled by the shareholders
that control the Company. For the purposes of this definition, "control" means
the ownership, either directly or through an unbroken chain of control, of more
than sixty percent (60%) of the equity interest or combined voting or management
rights of an entity.
(b) "Board" shall mean the Board of Directors of the Company,
(c) "Employment Period" means the period during which Employee is
employed pursuant to this Agreement.
(d) "Initial Term" means the period commencing on the Closing (as
hereinafter defined) and ending two years after the Closing (as defined herein),
unless sooner terminated as provided by the terms of this Agreement.
(e) "Renewal Term" means each period for which this Agreement is
renewed pursuant to the provisions of Paragraph 7.
(f) "Stock Purchase Agreement" means that certain Stock Purchase
Agreement dated September 17, 1999 among Xpedior Incorporated ("Xpedior"), the
Company and the shareholders of the Company.
2. Employment. The Company hereby employs Employee and Employee hereby
accepts such employment by the Company for the Initial Term and any Renewal Term
on the
terms and conditions set forth in this Agreement. Upon termination of
Employee's employment with the Company pursuant to the terms contained in this
Agreement, except as provided in Paragraph 8 below, the Company shall have no
further liability to Employee with respect to this Agreement except for
compensation, fringe benefits and perquisites accrued and unpaid on the date of
such termination and except as otherwise specifically set forth herein
(including, without limitation, Section 8 hereof). Upon termination of this
Agreement by Employee pursuant to the terms contained in this Agreement,
Employee shall have no further liability to the Company with respect to this
Agreement except for the covenants of the Employee which survive the term of
this Agreement and except as specifically set forth herein.
3. Position, Duties and Place of Performance. Employee agrees to serve as
Senior Vice President, Northeast Region of the Company, shall perform the
duties, if so requested, which are consistent therewith and shall undertake and
perform such additional or other duties which are commensurate with such
position. The place where such services are to be performed is the state of New
York, provided that Employee agrees to travel to other offices of the Company as
appropriate in accordance with the Company's past practices.
4. Time and Efforts Devoted. Employee shall, during the period of his
employment by the Company, devote substantially all of his business time, energy
and best efforts to the business and affairs of the Company, and not engage,
directly or indirectly, in any other business or businesses without the consent
of the Company. Nothing contained herein shall preclude Employee from managing
his personal finances.
5. Compensation.
(a) During the Initial Term, Employee's base compensation shall be
$300,000 per year, payable in regular intervals at least monthly.
(b) Subject to approval of the Board, Employee shall be eligible to
participate in an employee bonus program based on Employee's attainment of
mutually agreed upon goals and objectives.
(c) During the Initial Term and any Renewal Term, Employee shall
receive compensation adjustments as mutually determined by the Company and
Employee from time to time.
(d) During the Initial Term and any Renewal Term, Employee shall
receive the fringe benefits and perquisites set forth in Paragraph 6 below and
such other perquisites as the Board may determine from time to time.
6. Benefits and Perquisites. During the Initial Term and any Renewal Term,
Employee shall be entitled to the following benefits and perquisites:
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(a) Payment or reimbursement of reasonable travel and other business
expenses in accordance with the Company's applicable policies, provided Employee
properly accounts therefor in accordance with such policies.
(b) Vacations, holidays and sick leave in accordance with the
Company's current policies.
(c) All other specific and applicable employee benefits including,
without limitation, family group medical and dental plans and pension and/or
profit sharing plans sponsored or contributed to by the Company for which the
Employee is eligible under the terms of such plans, as they currently exist or
may be amended from time to time.
7. Term. Prior to or after expiration of the Initial Term and any Renewal
Term, the Company and Employee may mutually agree to extend the term of this
Agreement on terms and conditions mutually acceptable to Employee and the
Company.
8. Termination.
(a) By Employee. Employee may terminate his employment at any time
during the Employment Period by giving thirty (30) days' prior written notice of
termination to the Company, with or without cause.
(b) By the Company. The Company may terminate Employee's employment
at any time during the Employment Period by giving thirty (30) days' prior
written notice of termination to Employee, with or without cause, subject to the
severance payments and other terms of this Agreement. The term "cause" shall be
strictly construed to mean only the occurrence of any of the following events:
(i) Employee shall be determined by the Board to have materially
failed or refused to diligently perform the material duties assigned to
Employee under this Agreement provided such assigned duties are legal, or
otherwise to have breached any material term or provision contained herein
and not to have remedied the situation within fifteen (15) days following
receipt of written notice from the Company;
(ii) Employee shall be determined by the Board to have
materially failed or refused to abide by the Company's written policies,
rules, procedures or directives, provided such policies, rules, procedures
or directives are legal and not to have remedied the situation within
fifteen (15) days following receipt of written notice from the Company;
(iii) Employee shall be determined by the Board to have become
"permanently disabled." For purposes hereof, the term "permanently
disabled" shall mean a condition (certified by two licensed physicians, one
selected by the Company and one by Employee) rendering Employee unable to
perform his responsibilities under this Agreement for a period of at least
six (6) consecutive months;
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(iv) Employee shall have been convicted of a felony or Employee
shall be determined by the Board to be guilty of fraud or dishonesty in
connection with the performance of his duties hereunder;
(v) Upon a determination by the Board, after notice to Employee
and an opportunity for him to be heard, that Employee engaged in gross
negligence or willful misconduct that had a material adverse effect on the
Company, its reputation or its relationship with its customers, suppliers,
employees, lenders or investors;
(vi) Employee shall have failed to achieve at least 70% of its
EBIT budget as mutually agreed by Employee and Xpedior for any of the
fiscal years during the Employment Period; provided that such failure to
achieve such objective is not a result of general adverse industry
conditions affecting businesses substantially similar to the Company or a
result of changes in the budget that adversely affect EBIT and are not
otherwise agreed to by Employee; provided, further, that if Employee is
terminated solely by reason of this paragraph (vi), Employee's vested
options in Xpedior shall terminate as set forth in Employee's option
agreement as if such Employee were terminated for other than "cause"; or
(vii) Employee's violation in any material respect of any non-
competition agreement between Employee and the Company.
In making the determinations described above, the Board shall act in good
faith. In the event that the Company terminates Employee's employment during the
Initial Term and any Renewal Term without cause, Employee shall continue to be
entitled to receive the base compensation under paragraph 5(a) above for one (1)
year and reimbursement for the actual cost to Employee of COBRA benefits for up
to one (1) year from the date of termination.
(c) Automatic Termination. Employee's employment shall automatically
terminate on the death of Employee.
9. Property of the Company. Employee agrees that, upon the termination of
this Agreement, Employee will immediately surrender to the Company all of the
Company's property, including, without limitation, equipment, funds, lists,
manuals, books, or records (including all copies of the foregoing) in the
possession of, or provided to, Employee.
10. ARBITRATION WITH RESPECT TO CERTAIN MATTERS. THE PARTIES AGREE TO
SUBMIT TO ARBITRATION, IN ACCORDANCE WITH THESE PROVISIONS, ANY CLAIM OR
CONTROVERSY ARISING FROM OR RELATED TO THE ALLEGED BREACH OF THIS AGREEMENT. THE
PARTIES FURTHER AGREE THAT THE ARBITRATION PROCESS AGREED UPON HEREIN SHALL BE
THE EXCLUSIVE MEANS FOR RESOLVING ALL DISPUTES MADE SUBJECT TO ARBITRATION
HEREIN, BUT THAT NO ARBITRATOR SHALL HAVE AUTHORITY TO EXPAND THE SCOPE OF THESE
ARBITRATION PROVISIONS. ANY
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ARBITRATION HEREUNDER SHALL BE CONDUCTED UNDER THE MODEL EMPLOYMENT PROCEDURES
OF THE AMERICAN ARBITRATION ASSOCIATION (AAA). EITHER PARTY MAY INVOKE
ARBITRATION PROCEDURES HEREIN BY WRITTEN NOTICE FOR ARBITRATION CONTAINING A
STATEMENT OF THE MATTER TO BE ARBITRATED. THE PARTIES SHALL THEN HAVE FOURTEEN
(14) DAYS IN WHICH THEY MAY IDENTIFY A MUTUALLY AGREEABLE, NEUTRAL ARBITRATOR.
AFTER THE FOURTEEN (14) DAY PERIOD HAS EXPIRED, THE PARTIES SHALL PREPARE AND
SUBMIT TO THE AAA A JOINT SUBMISSION, WITH EACH PARTY TO CONTRIBUTE HALF OF
THE APPROPRIATE ADMINISTRATIVE FEE. IN THE EVENT THE PARTIES CANNOT AGREE UPON A
NEUTRAL ARBITRATOR WITHIN FOURTEEN (14) DAYS AFTER WRITTEN NOTICE FOR
ARBITRATION IS RECEIVED THEIR JOINT SUBMISSION TO THE AAA SHALL REQUEST A PANEL
OF NINE ARBITRATORS WHO ARE PRACTICING ATTORNEYS WITH PROFESSIONAL EXPERIENCE IN
THE FIELD OF LABOR AND/OR EMPLOYMENT LAW, AND THE PARTIES SHALL ATTEMPT TO
SELECT AN ARBITRATOR FROM THE PANEL ACCORDING TO AAA PROCEDURES. UNLESS
OTHERWISE AGREED BY THE PARTIES, THE ARBITRATION HEARING SHALL TAKE PLACE IN NEW
YORK, NEW YORK AT A PLACE DESIGNATED BY THE AAA. ALL ARBITRATION PROCEDURES
HEREUNDER SHALL BE CONFIDENTIAL. EACH PARTY SHALL BE RESPONSIBLE FOR ITS COSTS
INCURRED IN ANY ARBITRATION, AND THE ARBITRATOR SHALL NOT HAVE AUTHORITY TO
INCLUDE ALL OR ANY PORTION OF SAID COSTS IN AN AWARD, REGARDLESS OF WHICH PARTY
PREVAILS. THE ARBITRATOR MAY INCLUDE EQUITABLE RELIEF. ANY ARBITRATION AWARDED
SHALL BE ACCOMPANIED BY A WRITTEN STATEMENT CONTAINING A SUMMARY OF THE ISSUES
IN CONTROVERSY, A DESCRIPTION OF THE AWARD, AND AN EXPLANATION OF THE REASONS
FOR THE AWARD. IT IS UNDERSTOOD AND AGREED BY THE PARTIES THAT THEIR AGREEMENTS
HEREIN CONCERNING ARBITRATION DO NOT OTHERWISE ALTER THE TERMS AND CONDITIONS OF
EMPLOYEE'S EMPLOYMENT AS PROVIDED BY THIS AGREEMENT.
11. Captions and Number. The captions of the paragraphs of this Agreement
have been inserted for convenience of reference only and shall not affect the
interpretation of this Agreement, Whenever it appears appropriate from the
context, each term stated in either the singular or plural shall include both
the singular and the plural.
12. Severability. If any provision of this Agreement is held to be
unenforceable, such provision shall be fully severable and the remaining
provisions of this Agreement shall remain in fully force and effect and shall
not be affected by the severance of such provision from this Agreement. In
addition, in lieu of such severed provision, a provision shall be added
automatically which is as similar in terms to the severed provision as possible
and enforceable, if such reformation is allowable under applicable law.
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13. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party except for an assignment by
the Company to any Affiliate of the Company, but no such assignment shall
relieve the Company from its obligations hereunder.
14. Separate Agreements. This Agreement shall be deemed to consist of a
series of separate covenants. Should a determination be made by a court of
competent jurisdiction that the character, duration, or geographical scope of
any provision of this Agreement is unreasonable in light of the circumstances as
they then exist, then it is the intention and the agreement of the Company and
Employee that this Agreement shall be construed by the court in such a manner as
to impose only those restrictions on the conduct of Employee which are
reasonable in light of the circumstances as they then exist and as are necessary
to assure the Company of the intended benefit of this Agreement. If, in any
judicial proceeding, a court shall refuse to enforce all of the separate
covenants deemed included herein because, taken together, they are more
extensive than necessary to assure the Company of the intended benefit of this
Agreement, then it is expressly understood and agreed by the Company and
Employee that those covenants which, if eliminated, would permit the remaining
separate covenants to be enforced in such proceeding, shall, for the purpose of
such proceeding, be deemed eliminated from the provisions hereof
15. Policies, Regulations and Guidelines for Employees. The Company may
issue policies, rules, regulations, guidelines, procedures, or other
informational material, whether in the form of handbooks, memoranda, or
otherwise, relating to the Company's employees. These materials are general
guidelines for Employee's information and shall not be construed to alter,
modify or amend this Agreement for any purpose whatsoever.
16. Amendment. No amendment of this Agreement shall be valid unless made
in writing and signed by the Company and Employee.
17. Entire Agreement. Except for the Non-Competition/No Solicitation
Agreement between the Company and Employee dated the date hereof, this Agreement
contains the entire agreement and understanding between the Company and Employee
with respect to Employee's employment with the Company or Xpedior and supersedes
all prior agreements, whether written or oral, relating to Employee's employment
with the Company or Xpedior, including, without limitation, all existing
employment agreements, bonus programs, severance arrangements or employee
agreements between the Company and Employee. No representations, inducements, or
agreements have been made to induce either Employee or the Company to enter into
this Agreement which are not expressly set forth herein. This Agreement is the
sole source of rights and duties as between the Company and Employee relating to
Employee's employment.
18. Conditional Agreement. This Agreement and all of the rights, duties
and obligations of the Company and Employee contained herein are expressly
conditioned upon the closing of the transactions contemplated by the Stock
Purchase Agreement (the "Closing"). In the event of Closing, the date thereof
shall be the effective date of this Agreement.
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19. Law Governing. THIS AGREEMENT AND ALL ISSUES RELATING TO ITS
VALIDITY, INTERPRETATION AND PERFORMANCE SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
20. Employee's Representations and Warranties. Employee represents and
warrants that he has full right and authority to enter into this Agreement and
fully perform his obligations hereunder, that he is not subject to any non-
competition agreement other than with the Company, and that his past, present
and anticipated future activities have not and will not infringe on the
proprietary rights of others. Employee further represents and warrants that he
is not obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency which would conflict with
his obligation to use his best efforts to promote the interests of the Company
or which would conflict with the Company's business as conducted or proposed to
be conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business as an officer, director or employee by
Employee will conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under any contract, covenant or instrument
under which Employee is now obligated.
BY EXECUTING THIS AGREEMENT, YOU ARE AFFIRMING THAT NO REPRESENTATIONS OR
PROMISES HAVE BEEN MADE TO YOU REGARDING YOUR EMPLOYMENT WHICH ARE NOT SET FORTH
IN THIS AGREEMENT, AND THAT YOU ARE FREELY SIGNING THIS AGREEMENT TO OBTAIN
EMPLOYMENT WITH THE COMPANY.
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EXECUTED on the 17th day of September, 1999, but effective for all purposes
as of the effective date referred to in Section 19 hereof.
EMPLOYEE:
________________________________
Xxxx Xxxxxx
Address:
________________________________
________________________________
THE COMPANY:
KINDERHOOK SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxxx
____________________________
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice
President
Address:
c/o Xpedior Incorporated
0000 Xxxx Xxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
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