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EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of
September 24, 1999, between Cysive, Inc., a Delaware corporation (together with
any Subsidiary (as defined herein), the "COMPANY"), and Xxxx X. Xxxx
("EXECUTIVE").
The parties hereto agree as follows:
1. EMPLOYMENT. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending on the third anniversary of the date hereof or upon Executive's earlier
separation pursuant to Section 1(d) hereof (the "EMPLOYMENT PERIOD"); provided,
however, that the Employment Period shall automatically be renewed for an
additional two year period commencing on the third anniversary of the date
hereof unless either the Company or the Executive gives the other at least 60
days written notice prior to the third anniversary of its desire to terminate
this Agreement.
(a) Position and Duties. During the Employment Period, Executive shall
serve as Chief Financial Officer, Treasurer and Secretary of the Company and
shall have the normal duties, responsibilities and authority of the Chief
Financial Officer, Treasurer and Secretary, subject to the power of the
Chairman, the Chief Executive Officer or the Company's board of directors (the
"BOARD") to expand or limit such duties, responsibilities and authority and to
override actions of the Chief Financial Officer, Treasurer and Secretary.
Executive shall report to the Chairman of the Company and Executive shall devote
his best efforts and of his full business time and attention to the business and
affairs of the Company and its Subsidiaries.
(b) Salary, Bonus and Benefits. The Company will pay Executive a base
salary of $135,000 per annum, subject to any annual increase during the
Employment Period as determined by the Board based upon the Company's
achievements of budgetary and other objectives set by the Board (the "ANNUAL
BASE SALARY"). In addition, Executive shall be eligible to receive an annual
bonus (commencing with the Company's fiscal year ending December 31, 1999) of up
to 75% of Executive's Base Salary based upon the Company's achievement of
budgetary and other objectives set by the Board (the "BASE BONUS"). In addition,
Executive shall be eligible to receive an additional bonus as determined by the
Board and consistent with the Company's past practices if the Company achieves
budgetary and
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other objectives in excess of those set by the Board. Executive's Annual Base
Salary for any partial year will be prorated based upon the number of days
elapsed in such year. In addition, during the Employment Period, Executive will
be entitled to such other benefits approved by the Board and made available to
the Company's senior executives, including, but not limited to, vacation time,
tuition reimbursement, reimbursement of business expenses, car allowance and
healthcare benefits.
(c) Issuance of Stock and Stock Options. Executive shall also receive
options, at a strike price equal to the price of the Common Stock on the date of
the initial public offering of the Company (the "IPO"), for the purchase of
150,000 shares of the Common Stock upon implementation of the Company's employee
stock option plan on the date of the IPO. Executive's options will vest 25% on
the first anniversary of the date of the IPO and 25% on each of the next three
anniversary dates of the IPO; provided, however, that all of Executive's options
will vest immediately upon (A) the occurrence of an event which constitutes a
Change of Control (as defined herein) of the Company and (B) (i) the termination
of Executive's employment without Cause (as defined herein) or (ii) termination
of employment by Executive with Good Reason (as defined herein), in either case
within one (1) year of the date on which the Change of Control takes place.
Notwithstanding the foregoing, all shares shall be fully vested no later than
the fourth anniversary of the IPO. Executive will be eligible for grants of
additional options during the Employment Period approved by the Board based on
Executive's and the Company's performance. All shares and options issued to
Executive shall be made through stock purchase agreements or options agreements,
as appropriate, based on the Company's standard form for its executives.
(d) Separation. Executive's employment by the Company during the
Employment Period will continue until Executive's resignation at any time or
until Executive's disability or death or until the Board terminates Executive's
Employment at any time during the Employment Period (the "SEPARATION"). If the
Employment Period is terminated by the Executive without Good Reason, then the
termination will be effective sixty (60) days after the date of delivery of
written notice of termination. If the Employment Period is terminated by the
Board without Cause or by the Executive with Good Reason, then the termination
will be effective thirty (30) days after the date of delivery of written notice
of termination. If the Employment Period is terminated by the Board with Cause,
termination will be effective as of the date of notice of termination. If the
Employment Period is terminated by the Board with Cause or by the Executive
without Good Reason, then the Executive shall be entitled to receive his Annual
Base Salary, bonuses, options vested and all fringe benefits only through the
effective date of termination. If the
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Employment Period is terminated by the Board without Cause or by the Executive
with Good Reason, then the Executive shall be entitled to receive all vested and
unvested options and his Annual Base Salary and all fringe benefits for one year
from the effective date of termination (such payments and fringe benefits are
referred hereinafter as the "SEVERANCE PAYMENT") payable over time in accordance
with normal payroll practices. If the Employment Period is terminated due to
death, then the Annual Base Salary and medical insurance will be continued
through the next full calendar month following the month in which the Executive
died. If the Employment Period is terminated due to Disability (as defined
herein), then the Annual Base Salary, medical insurance and disability insurance
will be continued until the last day of the six-month period following
Disability; provided, however, that such Annual Base Salary shall be reduced by
the amount of any disability income payments made to the Executive during such
six-month period from any insurance or other policies provided by the Company.
2. CONFIDENTIAL INFORMATION.
(a) Executive acknowledges that the Company is engaged in the business
of software engineering and it builds and implements complex and highly
customized systems supporting large scale electronic commerce businesses (the
"BUSINESS"). Executive further acknowledges that the Business and its continued
success depend upon the use and protection of a large body of confidential and
proprietary information, and that he holds a position of trust and confidence by
virtue of which he necessarily possesses, has access to and, as a consequence of
his signing this Agreement, will continue to possess and have access to, highly
valuable, confidential and proprietary information of the Company not known to
the public in general, and that it would be improper for him to make use of this
information for the benefit of himself and others. All of such confidential and
proprietary information now existing or to be developed in the future will be
referred to in this Agreement as "CONFIDENTIAL INFORMATION." This includes,
without specific limitation, information relating to the nature and operation of
the Business or any other business conducted by the Company, the persons, firms
and corporations which are customers or active prospects of the Company during
Executive's employment by the Company, the Business' development transition and
transformation plans, methodology and methods of doing business, strategic,
acquisition, marketing and expansion plans, including plans regarding planned
and potential acquisitions and sales, financial and business plans, employee
lists, numbers and location of sales representatives, new and existing programs
and services (and those under development), prices and terms, customer service,
integration processes requirements, costs of providing service, support and
equipment and equipment maintenance costs. Confidential Information shall not
include any
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information that has become generally known to, and available for use by, the
public other than as a result of Executive's acts or omissions in contravention
of the terms and provisions of this Agreement.
(b) Disclosure of any Confidential Information of the Company shall
not be prohibited if such disclosure is directly pursuant to a valid and
existing order of a court or other governmental body or agency within the United
States; provided, however, that (i) Executive shall first have given prompt
notice to the Company of any such possible or prospective order (or proceeding
pursuant to which any such order may result) and (ii) Executive shall afford the
Company a reasonable opportunity to prevent or limit any such disclosure.
(c) During the Employment Period and for a period of three (3) years
thereafter, Executive will preserve and protect as confidential all of the
Confidential Information known to Executive or at any time in Executive's
possession. In addition, during the Employment Period and at all times
thereafter, Executive will not disclose to any unauthorized person or use for
his own account any of such Confidential Information without the Board's written
consent. Executive agrees to deliver to the Company at a Separation, or at any
other time the Company may request in writing, all memoranda, notes, plans,
records, reports and other documents (and copies thereof) containing or
otherwise relating to any of the Confidential Information (including, without
limitation, all acquisition prospects, lists and contact information) which he
may then possess or have under his control. Executive acknowledges that all such
memoranda, notes, plans, records, reports and other documents are, and at all
times shall be and shall remain, the property of the Company.
(d) Executive will fully comply with any agreement reasonably required
by any of the Company's customers, both actual and potential, business partners,
suppliers or contractors with respect to the protection of the confidential and
proprietary information of such persons or entities.
3. NONCOMPETITION AND NONSOLICITATION. Executive acknowledges that in
the course of his employment with the Company, he will become familiar with the
Confidential Information concerning the Company and the Business, and that his
services will be of special, unique and extraordinary value to the Company.
Executive agrees that the Company has a protectable interest in the Confidential
Information acquired by Executive during the course of his employment with the
Company. Therefore, Executive agrees to the following:
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(a) Noncompetition. So long as Executive is employed or affiliated
with the Company or any Subsidiary and for an additional two (2) years
thereafter (the "NONCOMPETE PERIOD"), he shall not, anywhere within 100 miles of
any of the Company's offices in the United States, directly or indirectly own,
manage, control, participate in, consult with, render services for, or in any
manner engage in, any business competing with the Business of the Company or any
other business in which the Company has commenced negotiations or has requested
and received information relating to the acquisition of such business within
eighteen months prior to the termination of Executive's employment with the
Company.
(b) Nonsolicitation. During the Noncompete Period, other than
individuals employed in administrative capacities by the Company whose job
skills can be found in other individuals and who if they left the employment of
the Company would not have a material adverse effect on the Company, the
Executive shall not directly or indirectly through another entity (i) induce or
attempt to induce any employee of the Company to leave the employ of the
Company, or in any way interfere with the relationship between the Company and
any employee thereof, (ii) hire any person who was an employee of the Company
within ninety (90) days prior to the time such employee was hired by the
Executive, (iii) induce or attempt to induce any owner of a site location,
customer, supplier, licensee or other business relation of the Company to cease
doing business with the Company or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company, or (iv) directly or indirectly acquire or attempt to acquire an
interest in any business relating to the Business of the Company and with which,
to Executive's knowledge, the Company has entertained discussions or has
requested and received information relating to the acquisition of such Business
by the Company in the one-year period immediately preceding a Separation.
(c) Enforcement. If, at the time of enforcement of Section 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the parties hereto agree
that the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or geographical
area and that the court shall be allowed to revise the restrictions contained
herein to cover the maximum duration, scope and geographical area permitted by
law. Because Executive's services are unique and because Executive has access to
Confidential Information, the parties hereto agree that money damages would be
an inadequate remedy for any breach of this Agreement. Therefore, in the event
of a breach or threatened breach of Section 2 or Section 3 of this Agreement,
the Company or any of its successors or assigns shall, in addition to other
rights and remedies existing in its favor, be entitled to specific
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performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions of Section 2 or Section 3 from any court of
competent jurisdiction.
(d) Additional Acknowledgments. Executive acknowledges that the
provisions of this Section are in consideration of: (i) employment with the
Company and (ii) additional good and valuable consideration as set forth in this
Agreement. Executive expressly agrees and acknowledges that the restrictions
contained in Sections 2 and 3 do not preclude Executive from earning a
livelihood, nor does it unreasonably impose limitations on Executive's ability
to earn a living. In addition, Executive agrees and acknowledges that the
potential harm to the Company of its non-enforcement outweighs any harm to the
Executive of its enforcement by injunction or otherwise. Executive acknowledges
that he has carefully read this Agreement and has given careful consideration to
the restraints imposed upon the Executive by this Agreement, and is in full
accord as to their necessity for the reasonable and proper protection of the
Confidential Information. Executive expressly acknowledges and agrees that each
and every restraint imposed by this Agreement is reasonable with respect to
subject matter, time period and geographical area.
(e) Executive's Representations and Warranties. Executive 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 that would prevent or restrict him in any way from
rendering the services hereunder anywhere in the world, and that his past,
present and anticipated future activities have not, and will not, infringe on
the proprietary rights of others. Executive 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
Executive, 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 Executive is now obligated.
4. DEFINITIONS.
"BENEFICIAL OWNER" means a beneficial owner within the meaning of Rule
13d-3 under the Exchange Act.
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"CAUSE" means (i) the commission of a felony or a crime involving moral
turpitude or the intentional commission of any other act or omission involving
dishonesty or fraud with respect to the Company or any of its customers or
suppliers, (ii) conduct tending to bring the Company into substantial public
disgrace or disrepute, (iii) substantial and repeated failure to perform duties
of the office held by Executive as reasonably directed by the Board not cured
within thirty (30) business days after written notice thereof, (iv) gross
negligence or willful misconduct with respect to the Company or (v) any
intentional breach of Section 2 or 3 of this Agreement by Executive not cured
within ten (10) business days after written notice thereof from the Company. Any
election by the Company not to renew the Employment Period on the third
anniversary of the date hereof or any renewal thereof shall be deemed to be a
termination by the Company without Cause. The failure of the Company or the
Executive to achieve budgetary or other operational objectives established by
the Board of Directors shall not in and of itself constitute Cause.
"CHANGE IN CONTROL" means: (A) any Person, other than any Person who was
a Beneficial Owner of the Company's securities before the IPO, becomes, after
the IPO, the beneficial owner, directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the Company's
then outstanding securities; (B) during any two-year period, individuals who at
the beginning of such period constitute the Board (including, for this purpose,
any director who after the beginning of such period filled a vacancy on the
Board caused by the resignation, mandatory retirement, death, or disability of a
director and whose election or appointment was approved by a vote of at least
two-thirds of the directors then in office who were directors at the beginning
of such period) cease for any reason to constitute a majority thereof; (C)
notwithstanding clauses (A) or (E) of this paragraph, the Company consummates a
merger or consolidation of the Company with or into another corporation or
entity, the result of which is that the Persons who were stockholders of the
Company at the time of the execution of the agreement to merge or consolidate
own less than 80% of the total equity of the corporation or entity surviving or
resulting from the merger or consolidation or of a corporation or entity owning,
directly or indirectly, 100% of the total equity of such surviving or resulting
corporation or entity; or (D) the sale in one or a series of transactions of all
or substantially all of the assets of the Company; (E) any Person has commenced
a tender or exchange offer, or entered into an agreement or received an option
to acquire beneficial ownership of 40% or more of the total number of voting
shares of the Company, unless the Board has made a determination that such
action does not constitute and will not constitute a material change in the
Persons having control of the Company; or (F) there is a change of control in
the Company of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of
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Regulation 14A promulgated under the Exchange Act, other than in circumstances
specifically covered by clauses (A) through (E) above.
"DISABILITY" means a physical or mental condition which, for a continuous
period of at least six (6) months has or will prevent the Executive from
performing his duties on a full time basis and in a professional and consistent
manner. Any dispute as to the Executive's Disability shall be referred to and
resolved by a licensed physician selected and approved by the Company and the
Executive.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended.
"GOOD REASON" means Executive's resignation within 30 days after his
discovery of any material breach of Section 1 of this Agreement by the Company
which is not cured within thirty (30) business days after written notice thereof
from Executive; provided, however, that in the context of a Change of Control,
"Good Reason" shall also mean a reduction in Executive's title, duties,
responsibilities or authority, or the failure of Executive to receive a
compensation package substantially similar to Executive's salary, bonus and
benefits immediately prior to the Change of Control.
"PERSON" means an individual, a partnership, a limited liability company,
a corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization and a governmental entity or any department,
agency or political subdivision thereof.
"SUBSIDIARY" means any corporation of which fifty percent (50%) or more
of the securities having ordinary voting power in electing the board of
directors are, at the time as of which any determination is being made, owned by
the Company either directly or through one or more Subsidiaries. The term
Subsidiary shall also include any joint venture arrangement between the Company
and any other entity.
5. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
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If to the Company:
Cysive, Inc.
00000 Xxxxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Xx.
with a copy to (which shall not constitute notice):
Xxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx
If to the Executive:
Xxxx X. Xxxx
Cysive, Inc.
00000 Xxxxxx Xxxxx Xxxx
Xxxxxx, XX 00000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
6. EXISTING OPTIONS. The Company hereby undertakes to amend and
restate each option agreement executed with Executive prior to the date hereof
to provide that all such option shall vest immediately upon (A) the occurrence
of an event which constitutes a Change of Control (as defined herein) of the
Company and (B)(i) the termination of Executive's employment without Cause (as
defined herein) or (ii) termination of employment by Executive with Good Reason
(as defined herein), in either case within one (1) year of the date on which the
Change of Control takes place.
7. GENERAL PROVISIONS.
(a) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
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(c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by Executive
and the Company and their respective successors and assigns.
(e) Choice of Law. All questions concerning the construction, validity
and interpretation of this Agreement and the exhibits hereto will be governed by
and construed in accordance with the internal laws of the State of Delaware,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
(f) Remedies. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages and
costs (including attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(g) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and the
Executive.
(h) Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
state in which the Company's principal place of business is located, the time
period shall be automatically extended to the business day immediately following
such Saturday, Sunday or holiday.
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(i) Termination. This Agreement (except for the provisions of Sections
1(a) and 1(b)) shall survive a Separation and shall remain in full force and
effect after such Separation.
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IN WITNESS WHEREOF, the parties hereto have executed this Executive
Employment Agreement on the date first written above.
CYSIVE, INC.
By:
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Name: Xxxxxx X. Xxxxxxxxx, Xx.
Title: Chief Executive Officer and
President
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Xxxx X. Xxxx
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