EMPLOYMENT AGREEMENT
(Xxxxxxx Xxxxx)
AGREEMENT, made as of this 25th day of June, 1998, by and between OAO
Technology Solutions, Inc., a Delaware corporation (the "Corporation"), and
Xxxxxxx Xxxxx ("Employee").
W I T N E S S E T H :
WHEREAS, the Corporation is engaged in the business of providing a full
range of outsourcing, systems reengineering and systems integration services;
WHEREAS, the Corporation desires to employ Employee as President and Chief
Executive Officer of the Corporation in connection with the conduct of the
business of the Corporation, and Employee desires to accept such employment on
the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
legally to be bound, hereby agree as follows:
1. Employment. The Corporation hereby employs Employee as its President and
Chief Executive Officer, and Employee hereby accepts such employment, upon the
terms and conditions hereinafter set forth.
2. Term. The employment of Employee under this Agreement shall be on an "at
will" basis.
3. Office and Duties.
(a) During the term hereof, Employee shall serve as President and Chief
Executive Officer of the Corporation. Subject to the Bylaws of the Corporation
and the direction of the Board of Directors of the Corporation, Employee shall
perform such duties as are customary for a President and Chief Executive Officer
of businesses in the United States similar in kind and size to the Corporation,
and such other duties as may from time to time be assigned to him by the
Directors of the Corporation.
(b) During the term hereof, Employee shall use his best efforts to carry
out his duties and responsibilities hereunder and devote his entire working time
to the business and affairs of the Corporation and shall not, in any advisory or
other capacity, work for any other individual, firm or company without first
having obtained the written consent of the Corporation; provided, however, that
Employee may engage in investment activities so long as they do not materially
interfere with the performance of his duties hereunder.
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(c) During the term hereof, the principal place of employment of Employee
shall be the Corporation's headquarters in Greenbelt, Maryland, or such other
locations as may be selected for the Corporation's facilities, although it is
understood that in connection with his duties under this agreement, Employee
will be required to travel to and perform services at other locations.
(d) Employee represents and warrants to the Corporation that he is not
subject or a party to any employment agreement, non-competition covenant,
non-disclosure agreement or other agreement, covenant, understanding or
restriction which would prohibit Employee from executing this Agreement and
performing fully his duties and responsibilities hereunder, or which would in
any manner, directly or indirectly, limit or affect the duties and
responsibilities which may now or in the future be assigned to Employee by the
Corporation.
(e) Employee agrees to cooperate at the request of the Corporation in any
efforts to obtain "key-man" life insurance on Employee's life.
4. Compensation. As compensation for the services to be rendered hereunder
by Employee, the Corporation agrees to pay or provide to Employee:
(a) Salary. A basic salary for such services at the annual rate of
$250,000, payable in semi-monthly installments in accordance with the normal
payroll policies of the Corporation. This rate of compensation shall be reviewed
by the Board of Directors at least once per fiscal year.
(b) Bonus. Employee shall be eligible to earn an incentive bonus of up to
100% of the base salary, subject to the achievement of certain company and
individual milestones determined annually by the Compensation Committee of the
board of Directors.
(c) Restricted Stock. Upon commencement of employment, Employee shall
purchase and the Corporation shall sell 750,000 shares of common stock of the
Corporation at a per share price equal to then current market price of the
common stock. The Corporation will have the right to repurchase 100% of the
shares at the lesser of the exercise price and the then current fair market
value upon any termination of employment on or before June 30, 1999, and
reducing by 25% on each July 1 thereafter, provided, that if the Corporation
terminates the Employee without cause, the repurchase right shall be further
reduced by the pro rata portion of the next scheduled reduction. This repurchase
right will expire in the event the stock closing price is $25 or more for 20
consecutive trading days. The Corporation will provide Employee with a
full-recourse five-year loan with interest at the Federal statutory rate to
cover the purchase price of the shares. The loan will be secured by a pledge of
the shares, and will be payable in full upon a termination of Employee's
employment. The restricted stock will be subject to the terms and conditions of
the Plan.
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(d) Benefits. For the term hereof, and thereafter to the extent provided in
Exhibit A, the Corporation shall provide Employee with the benefits (the
"Benefits") specified or referred to in Exhibit A.
5. Termination of Employment.
(a) The Corporation may terminate this Agreement with cause immediately
upon written notice to Employee. "Termination for cause" shall mean discharge by
the Corporation on the following grounds:
(i) Employee's conviction in a court of law of any crime or offense,
which conviction makes him unfit for continuing employment, prevents him
from effective management of the Corporation or materially adversely
affects the reputation or business activities of the Corporation.
(ii) Dishonesty or willful misconduct which materially, adversely
affects the reputation or business activities of the Corporation and which
continues after written notice thereof to Employee.
(iii) Substance abuse, including abuse of alcohol or use of illegal
narcotics, and other drugs or substances, for which Employee fails to
undertake and maintain treatment after 15 days after requested by the
Corporation, or misappropriation of funds.
(iv) Employee's continuing material failure or refusal to perform his
duties in accordance with the terms of this Agreement or to carry out in
all material respects the lawful directives of the Board of Directors;
provided that discharge pursuant to this subparagraph (iii) shall
constitute discharge for cause only if Employee has first received written
notice from the Board of Directors of the Corporation stating with
specificity the nature of such failure or refusal and, if requested by
Employee within 10 days thereafter, Employee is afforded a reasonable
opportunity to be heard before the Board.
Upon such termination for cause, Employee shall lose all right, title and
interest in and to all payments required to be made in accordance with the
provisions of this Agreement, and the Corporation shall have no further
obligation to Employee hereunder, except for compensation pursuant to Paragraphs
4(a) and 4(d) to which Employee is entitled through the date of termination,
bonus compensation to which Employee is entitled for and in respect of the
preceding fiscal year if not theretofore paid, and any benefits referred to in
Exhibit A hereof to which Employee has a vested right under the terms and
conditions of the plan or program pursuant to which such benefits were granted.
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(b) The Corporation may terminate the Employee without cause at any time.
In the event of termination of Employee without cause, the Corporation shall pay
or provide to Employee (in addition to the salary, bonus and other compensation
to which Employee shall be entitled or shall have earned pursuant to Paragraph 4
hereof through the date of such termination and any benefits referred to in
Exhibit A hereof in which Employee has a vested right under the terms and
conditions of the plan or program pursuant to which such benefits were granted),
(i) the basic salary pursuant to the provisions of Paragraph 4(a) hereof for a
period of 12 months from the effective date of such termination, payable ratably
over such 12 month period, and (ii) the benefits referred to in Exhibit A hereof
(excluding the 401K plan and country club dues) for a period of 12 months from
the effective date of such termination.
(c) Employee may terminate this Agreement by resignation and giving the
Corporation three (3) months' notice. The Corporation can waive this notice and
agree with Employee to an earlier termination date. Upon termination by
Employee, all obligations of the Corporation and Employee under this Agreement
will cease as of the date of final termination, except as provided in Section 8
below.
6. Restrictive Covenants and Confidentiality; Injunctive Relief.
(a) Employee agrees, as a condition to the Corporation agreeing to employ
Employee and to the performance by the Corporation of its obligations hereunder,
particularly its obligations under Paragraph 4 hereof, that during the term of
Employee's employment with the Corporation and for a period of one (1) year
thereafter, or such lesser term, but not less than 6 months, as the Board of
Directors may determine within 60 days of any such termination, Employee shall
not, without prior written approval of the Board of Directors of the
Corporation, directly or indirectly through any other person, firm or company,
whether individually or in conjunction with any other person, or as an employee,
agent, consultant, representative, partner or holder of any interest in any
other person, firm, company or other association: (i) solicit, entice or induce
any Customer (as defined below) to become a client, customer, OEM, distributor
or reseller of any other person, firm or company with respect to products and/or
services then sold or under development by the Corporation or to cease doing
business with the Corporation, and Employee shall not approach any such person,
firm or company for such purpose or authorize or knowingly approve the taking of
such actions by any other person; or (ii) solicit, entice or induce any person
who presently is or at any time during the term hereof shall be an employee of
the Corporation to become employed by any other person, firm or company or to
leave their employment with the Corporation, and Employee shall not approach any
such employee for such purpose or authorize or knowingly approve the taking of
such actions by any other person. For purposes of this Paragraph 5, a Customer
means any person or entity which at the time of determination shall be, or shall
have been within two years prior to such time, a client, customer, OEM,
distributor or reseller of the Corporation.
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Nothing in the foregoing shall prohibit Employee from investing in the
securities of any company having securities listed on a national securities
exchange, provided that such investment does not exceed 5% of any class of
securities of any company engaged in business in competition with the
Corporation, and provided that such ownership represents a passive investment
and that neither Employee nor any group of persons including him, in any way,
either directly or indirectly, manages or exercises control of any such company,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising his rights as a shareholder, or seeks to do any
of the foregoing.
(b) Employee acknowledges that during the term of his employment, he will
have access to confidential information of the Corporation, including
information about "Developments" (as defined in Paragraph 7 below), business
plans, costs, customers, profits, markets, sales, products, key personnel,
pricing policies, operational methods and other business affairs and methods and
other information not available to the public or in the public domain
(hereinafter referred to as "Confidential Information"). In recognition of the
foregoing, Employee covenants and agrees that, except as required by his duties
to the Corporation, Employee will keep secret all Confidential Information of
the Corporation and will not, directly or indirectly, either during the term of
his employment hereunder or at any time thereafter while such Confidential
Information remains confidential, disclose or disseminate to anyone or make use
of, for any purpose whatsoever except for the benefit of the Corporation in the
course of his employment, any Confidential Information, and upon termination of
his employment, Employee will promptly deliver to the Corporation all tangible
materials and objects containing Confidential Information (including all copies
thereof, whether prepared by Employee or others) which he may possess or have
under his control. The term "Confidential Information" shall not include any
information which can be demonstrated (i) to be generally known in the industry
or to the public other than through breach of Employee's obligations hereunder,
(ii) to have been in Employee's possession prior to his employment with the
Corporation and not assigned to the Corporation, or (iii) to have been disclosed
to Employee by an independent third party not under any obligation of
confidentiality.
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(c) Employee represents (i) that his experience and capabilities are such
that the restrictions contained herein will not prevent him from obtaining
employment or otherwise earning a living at the same general economic benefit as
reasonably required by him and (ii) that he has, prior to the execution of this
Agreement, reviewed this Agreement thoroughly with his legal counsel.
(d) Employee acknowledges that the restrictions contained in this Paragraph
6 are reasonable and necessary to protect the legitimate business interests of
the Corporation and that the Corporation would not have entered into this
Agreement in the absence of such restrictions. By reason of the foregoing,
Employee agrees that if he violates any of the provisions of this Paragraph 6,
the Corporation would sustain irreparable harm and, therefore, irrevocably and
unconditionally (i) agrees that in addition to any other remedies which the
Corporation may have under this Agreement or otherwise, all of which remedies
shall be cumulative, the Corporation shall be entitled to apply to any court of
competent jurisdiction for preliminary and permanent injunctive relief and other
equitable relief, (ii) that such relief and any other claim by the Corporation
pursuant hereto may be brought in the United States District Court for the
District of Delaware, or if such court does not have subject matter jurisdiction
or will not accept jurisdiction, in any court of general jurisdiction in
Delaware; (iii) consents to the non-exclusive jurisdiction of any such court in
any such suit, action or proceeding, and (iv) waives any objection which
Employee may have to the laying of venue of any such suit, action or proceeding
in any such court. Employee also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner permitted
by the notice provisions hereof. In the event that any of the provisions of this
Paragraph 6 hereof should ever be adjudicated to exceed the time, geographic,
product or service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, product or service, or other limitations
permitted by applicable law.
(e) Employee agrees that the Corporation may provide a copy of this
Paragraph 6 to any business or enterprise (i) which the Employee may directly or
indirectly own, manage, operate, finance, join, control or participate in the
ownership, management, operation, financing, or control of, or (ii) with which
he may be connected with as an officer, director, employee, partner, principal,
agent, representative, consultant or otherwise, or in connection with which he
may use or permit his name to be used; provided, however, that this provision
shall not apply as to subparagraph (a) or (b) after expiration of the time
periods set forth therein or with respect to any activities, entities or persons
excluded by the terms hereof. Employee will provide the names and addresses of
any of such persons or entities as the Corporation may from time to time
reasonably request.
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(f) In the event of any breach or violation of the restriction contained in
subparagraph (a) above, the period therein specified shall xxxxx during the time
of any violation thereof and that portion remaining at the time of commencement
of any violation shall not begin to run until such violation has been fully and
finally cured.
7. Ownership of Inventions and Ideas. Employee acknowledges that the
Corporation shall be the sole owner of all the results and proceeds of
Employee's service hereunder, including but not limited to, all patents, patent
applications, patent rights, formulas, copyrights, inventions, developments,
discoveries, other improvements, data, documentation, drawings, charts, and
other written, audio and/or visual materials relating to equipment, methods,
products, processes, or programs in connection with or useful to the
Corporation's business (collectively, the "Developments") which Employee, by
himself or in conjunction with any other person, may conceive, make, acquire,
acquire knowledge of, develop or create during the term of Employee's employment
hereunder, free and clear of any claims by Employee (or any successor or
assignee of him) of any kind or character whatsoever other than Employee's right
to compensation hereunder. Employee acknowledges that all copyrightable
Developments shall be considered works made for hire under the Federal Copyright
Act. Employee hereby assigns and transfers his right, title and interest in and
to all such Developments, and agrees that he shall, at the request of the
Corporation, execute or cooperate with the Corporation in any patent
applications, execute such assignments, certificates or other instruments, and
do any and all other acts, as the Board of Directors of the Corporation from
time to time reasonably deems necessary or desirable to evidence, establish,
maintain, perfect, protect, enforce or defend the Corporation's right, title and
interest in or to any such Developments.
8. Survival. The provisions of Paragraphs 6, 7 and 9 shall survive the
termination of this Agreement for any reason whatsoever.
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9. Dispute Resolution.
(a) Good-Faith Negotiations. If any dispute arises under this Agreement
that is not settled promptly in the ordinary course of business, the parties
shall seek to resolve any such dispute between them, first, by negotiating
promptly with each other in good faith in face-to-face negotiations. If the
parties are unable to resolve the dispute between them within 20 business days
(or such period as the parties shall otherwise agree) through these face-to-face
negotiations, then the controversy or claim shall be settled by arbitration
conducted on a confidential basis, under the U.S. Arbitration Act, if
applicable, and the then current Commercial Arbitration Rules of the American
Arbitration Association (the "Association") strictly in accordance with the
terms of this Agreement and the substantive law of the State of Delaware. The
arbitration shall be conducted at the Association's regional office located
closest to Corporation's principal place of business by one arbitrator
experienced in employment matters. Judgment upon the arbitrator's award may be
entered and enforced in any court of competent jurisdiction. Neither party shall
institute a proceeding hereunder unless at least 10 days prior thereto such
party shall have given written notice to the other party of its intent to do so.
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(b) Notwithstanding the foregoing, the Corporation shall not be precluded
hereby from securing equitable remedies in courts of any jurisdiction,
including, but not limited to, temporary restraining orders and preliminary
injunctions to protect its rights and interests but shall not be sought as a
means to avoid or stay arbitration.
10. Miscellaneous.
(a) Any notice authorized or required to be given or made by or pursuant to
this Agreement shall be made in writing and either personally delivered or
mailed by overnight express mail to the respective address of the party to
receive such notice, which address is the one designated below the name of such
party on the signature page hereof, or to such other address as a party may
specify by notice to the other parties hereto.
(b) This Agreement cancels and supersedes any and all prior agreements and
understandings between or among any or all of the parties hereto with respect to
the employment by or obligations of Employee to any thereof. This Agreement
constitutes the entire agreement among the parties with respect to the matters
herein provided, and no modification or waiver of any provision hereof shall be
effective unless in writing and signed by the parties hereto.
(c) All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Employee
hereunder are of a personal nature and shall not be assignable or delegable in
whole or in part by Employee.
(d) Employee agrees that the obligations of the Corporation hereunder shall
be limited to the Corporation only, and Employee agrees that he shall not bring
any claim or suit against any director or shareholder of the Corporation or any
other person other than the Corporation for any breach or default by the
Corporation of its obligations hereunder.
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(e) If any provision of this Agreement or application thereof to anyone or
under any circumstances is adjudicated to be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect any other
provision or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and shall not invalidate or
render unenforceable such provision or application in any other jurisdiction.
(f) No remedy conferred upon any party by this Agreement is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity. No delay or omission by any party in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised by the party possessing the same from time to time and as often as
may be deemed expedient or necessary by such party in its sole discretion.
(g) This Agreement may be executed in several counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.
(h) In the event of a lawsuit or arbitration by either party to enforce any
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable costs, expenses and attorney's fees from the other party.
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11. Controlling Law. The validity, interpretation, construction,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Delaware.
IN WITNESS WHEREOF, Employee has hereunto set his hand and the Corporation
has caused this instrument to be duly executed as of the day and year first
above written.
Witness: Employee:
------------------------- -------------------------
Xxxxxxx X. Xxxxx
0000 Xxxxxx Xx.
Xxxxxxx Xxxxxx, XX 00000
OAO Technology Solutions, Inc.
------------------------- By:
------------------------------
Secretary Title:
0000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Chairman of the Board
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Exhibit A
Benefits
1. Group Insurance. The Corporation shall provide to Employee and his family the
group life, health, dental and disability insurance coverage that the
Corporation makes available to its most senior executives from time to time. For
purposes of this Exhibit A, the term "family" shall mean the spouse of the
Employee and his dependent children who may be insured from time to time as
dependents under such policies of the Corporation.
2. Automobile. The Corporation will provide Employee with a company car or a car
allowance, not to exceed $800 per month. Employee shall be responsible for the
payment of all insurance, maintenance, repairs, gasoline and other reasonable
and necessary costs incident to the operation of such automobile.
3. Expenses. It is contemplated that, in connection with his employment
hereunder, Employee may be required to incur reasonable business, entertainment
and travel expenses. The Corporation agrees to reimburse Employee in full for
all such reasonable and necessary business, entertainment and travel expenses
incurred or expended by him in connection with the performance of his duties
hereunder; provided Employee submits to the Corporation vouchers or expense
statements satisfactorily evidencing such expenses as may be reasonably required
by the Corporation and such expenses are in accordance with any corporate policy
with respect thereto.
4. Vacation. Employee shall be entitled to a paid vacation (taken consecutively
or in segments) of 4 weeks during each fiscal year, adjusted pro rata for any
partial fiscal year during the term hereof. Such vacation may be taken at such
times as is reasonably consistent with proper performance by Employee of his
duties and responsibilities hereunder.
5. 401K Plan. Employee will be eligible to participate in the Corporation's 401K
plan immediately through voluntary contributions, which the Corporation will
match $.20 for each $1.00 contributed by Employee up to the limits contained in
the Corporation's plan.
6. Other Benefits. The Corporation will pay for one reasonable annual country
club membership fee for Employee. Nothing contained herein shall be deemed to
limit or affect the right of Employee to receive additional bonuses or other
forms of additional compensation or to participate in any retirement,
disability, profit sharing, stock option, cash or stock bonus or other plan or
arrangement, or in any other benefits now or hereafter provided by the
Corporation for its employees or executives at the sole discretion of the Board
of Directors of the Corporation.
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