45
EMPLOYMENT AGREEMENT
--------------------
This is an amendment and restatement of the employment agreement
between CDI Corporation, (the "Company"), and Xxxxxx X. Xxxxxxx,
("Employee"). The parties desire to amend and restate the terms of
their employment relationship pursuant to the terms and subject to the
conditions set forth in this amended and restated employment agreement
("Agreement"), which replaces and supersedes all prior employment
agreements between the parties and which is entered into as of Insert
Date of Agreement.
Accordingly, in consideration of the mutual promises and
undertakings set forth herein, with each party acknowledging that its
promises and undertakings are adequately supported by the consideration
received from the other party, and intending to be legally bound
hereby, the parties agree as follows:
TERMS
-----
Section 1. Employment.
----------
The Company hereby employs Employee as Senior Vice President and
General Counsel, and Employee hereby accepts such employment and agrees
to serve in such capacity and to render services to the Company during
the Employment Period defined in Section 3, below, subject to the terms
and conditions hereinafter set forth.
Section 2. Duties.
------
Employee shall carry out such duties as are customarily associated
with the position described in Section 1, above. Employee agrees to
perform such duties in compliance with all policies and directives
established by the Company.
Section 3. Term.
----
The term of Employee's employment under this Agreement (the
"Employment Period") shall commence as of the date set forth above and
shall continue until terminated as provided in this Agreement.
Section 4. Compensation and Benefits.
-------------------------
(a) Compensation. During the Employment Period, Employee shall
be eligible to receive the cash compensation set forth on Schedule A
hereto.
(b) Employee Benefits. During the Employment Period, Employee
shall be entitled to participate in all employee benefit plans and
programs that the Company provides generally to other employees of the
Company in positions similar to Employee's. The Company reserves the
right to amend or terminate such plans in accordance with the terms of
those plans.
46
Section 5. Expense Reimbursements.
----------------------
During the Employment Period, the Company shall reimburse Employee
for all reasonable, necessary and itemized out-of-pocket expenses
incurred by Employee in the ordinary course of the Company's business,
provided such expenses are properly reported to the Company in
accordance with its accounting procedures.
Section 6. Termination.
-----------
The Employment Period may be terminated as follows:
(a) "For Cause". The Company will have the right at any time to
terminate the Employment Period for Cause. "For Cause" includes the
following:
(1) a material breach by Employee of any provision of this
Agreement;
(2) Employee's rendering services while under the influence
of alcohol or illegal drugs;
(3) Employee's performing any act of dishonesty in
rendering services hereunder, including falsification
of records, expense accounts or other reports;
(4) Employee's conviction, whether by judgment or plea, of
any crime which constitutes a felony or which
constitutes a misdemeanor involving violence, fraud,
embezzlement, theft or business activities;
(5) Employee's violation of any law or agreement which
results in the entry of a judgment or order enjoining
or preventing Employee from such activities as are
essential for Employee to perform services under this
Agreement;
(6) Employee's violation of any of the Company's policies
which provide for termination of employment as a
possible consequence of such violation;
(7) conduct engaged in by Employee which is injurious
(other than to an immaterial extent) to the Company;
(8) the Company's receipt of reliable information from any
source of Employee's entering into or intending to
enter into competition with the Company; or
(9) insubordination by Employee toward Employee's superior.
In the event the Employment Period is terminated for Cause, Employee
will be paid Base Salary through the date of termination of the
Employment Period.
47
(b) Other Than "For Cause". Employee and the Company agree that
Employee's employment hereunder is on an at-will basis. Accordingly,
in addition to the Company's right, described above, to terminate the
Employment Period "for Cause", Employee or the Company may terminate
the Employment Period at any time for any reason whatsoever, and
without being required to specify a reason for the termination to the
other. For such terminations, both Employee and the Company do agree,
however, to give the other thirty (30) calendar days' advance notice of
such termination. If such notice is given by either party to the
other, the Company will have the option of terminating Employee's
services at any time prior to the date of termination of the Employment
Period set forth in such 30 day notice. In the event the Employment
Period is terminated pursuant to this Section 6(b), Employee will be
paid Base Salary through the date of termination of the Employment
Period.
(c) Death or Disability. The Employment Period will
automatically terminate upon Employee's death and may be terminated by
the Company if it is determined that Employee is unable to perform the
services specified under this Agreement due to a Disability (i.e.,
employee's suffering from an injury, illness or impairment such that
Employee is unable to perform the essential functions of Employee's job
after reasonable accommodation for a period in excess of that
permissible under applicable state or federal law). In the event of
Employee's death or disability, the Company will pay Employee Base
Salary through the date of termination of the Employment Period.
Section 7. Representations, Warranties and Acknowledgments of
Employee.
--------------------------------------------------
(a) Employee represents and warrants that Employee's experience
and capabilities are such that the provisions of Section 8, below, will
not prevent Employee from earning a livelihood, and acknowledges that
it would cause the Company serious and irreparable injury and cost if
Employee were to use Employee s ability and knowledge in competition
with the Company or to otherwise breach the obligations contained in
Section 8.
(b) Employee acknowledges that (1) during the Employment Period,
Employee will have access to Confidential Information (defined below);
(2) such Confidential Information is proprietary, material and
important to the Company and it being maintained as confidential is
essential to the effective and successful conduct of the Company's
business; (3) the Company's business, its customers' business and the
businesses of other companies with which the Company may have
commercial relationships could be damaged by the unauthorized use or
disclosure of this Confidential Information; and (4) it is essential to
the protection of the Company's goodwill and to the maintenance of the
Company's competitive position that the Confidential Information be
kept secret, and that Employee not disclose the Confidential
Information to others or use the Confidential Information to Employee's
advantage or the advantage of others.
48
(c) Employee acknowledges that Employee will be put in a position
of trust and confidence and have access to Confidential Information,
will be supervising operations and employees of the Company, will be in
contact with customers and prospective customers and will participate
in the preparation and submission of bids and proposals to customers
and prospective customers.
(d) Employee acknowledges that it is essential for the Company's
protection that Employee be restrained following the termination of
Employee's employment with the Company from soliciting or inducing any
of the Company's employees to leave the Company's employ, hiring or
attempting to hire any of the Company's employees, soliciting the
Company's customers and suppliers for a competitive purpose, and
competing against the Company for a reasonable period of time.
(e) Employee represents and warrants that Employee is not bound
by any other agreement, written or oral, which would preclude Employee
from fulfilling all the obligations, duties and covenants in this
Agreement. Employee also represents and warrants that Employee will
not use, in connection with the employment under this Agreement, any
materials which may be construed to be confidential to a prior employer
or other persons or entities. In the event of a breach of this Section
7, which results in damage to the Company, Employee will indemnify and
hold the Company harmless with respect to such damage.
References in this Section 7 to the Company shall include the Company,
its parent, subsidiaries, divisions and affiliates.
Section 8. Employee's Covenants and Agreements.
-----------------------------------
(a) Employee agrees to maintain full and complete records of all
transactions and of all services performed by Employee on behalf of the
Company and to submit this information to the Company in the manner and
at the times that the Company may, from time to time, direct.
(b) Employee agrees to devote Employee's entire productive
business time, ability and attention to the Company's business during
the term of this Agreement. Employee further agrees not to, directly
or indirectly, render any services of a business, commercial or
professional nature to any other person or organization, whether for
compensation or otherwise, without the Company's prior written consent.
(c) Employee agrees to abide by and comply with all personnel and
Company practices and policies applicable to Employee.
(d) Employee shall promptly and completely disclose to the
Company and the Company or its customers will own all rights, title and
interest to any Inventions (defined below) made, recorded, written,
first reduced to practice, discovered, developed, conceived, authored
or obtained by Employee, alone or jointly with others, during the term
of Employee's employment with the Company (whether or not
49
such Inventions are made, recorded, written, first reduced to practice,
discovered, developed, conceived, authored or obtained during working
hours) and for one year after termination of Employee's employment with
the Company. Employee agrees to take all such action during the term
of Employee's employment with the Company or at any time thereafter as
may be necessary, desirable or convenient to assist the Company or its
customers in securing patents, copyright registrations, or other
proprietary rights in such Inventions and in defending and enforcing
the Company's or such customer's rights to such Inventions, including
without limitation the execution and delivery of any instruments of
assignment or transfer, affidavits, and other documents, as the Company
or its customers may request from time to time to confirm the Company's
or its customers' ownership of the Inventions. Employee represents and
warrants that as of the date hereof there are no works, software,
inventions, discoveries or improvements (other than those included in a
copyright or patent or application therefor) which were recorded,
written, conceived, invented, made or discovered by Employee before
entering into this Agreement and which Employee desires to be removed
from the provisions of this Agreement.
(e) For purposes of this Agreement, "Inventions" means concepts,
developments, innovations, inventions, information, techniques, ideas,
discoveries, designs, processes, procedures, improvements,
enhancements, modifications (whether or not patentable), including, but
not limited to, those relating to hardware, software, languages,
models, algorithms and other computer system components, and writings,
manuals, diagrams, drawings, data, computer programs, compilations and
pictorial representations and other works (whether or not
copyrightable). Inventions does not include any of the foregoing which
are made, developed, conceived, authored or obtained by Employee
without the use of the Company's resources and which do not relate to
any of the Company's past, present or prospective activities.
(f) During and after the term of Employee's employment with the
Company, Employee will hold all Confidential Information in the
strictest confidence and will not use any Confidential Information for
any purpose and will not publish, disseminate, disclose or otherwise
make any Confidential Information available to any third party, except
as may be required in connection with the performance of Employee's
duties hereunder.
(g) For purposes of this Agreement, "Confidential Information"
means all information, data, know-how, systems and procedures of a
technical, sensitive or confidential nature in any form relating to the
Company or its customers, including without limitation, all business
and marketing plans, marketing and financial information, pricing,
profit margin, cost and sales information, operations information,
forms, contracts, bids, agreements, legal matters, unpublished written
materials, names and addresses of customers and prospective customers,
systems for recruitment, contractual arrangements, market research
data, information about employees, suppliers and other companies with
which the Company has a commercial
50
relationship, plans, methods, concepts, computer programs or software
in various stages of development, passwords, source code listings and
object code.
(h) All files, records, reports, programs, manuals, notes,
sketches, drawings, diagrams, prototypes, memoranda, tapes, discs, and
other documentation, records and materials in any form that in any way
incorporate, embody or reflect any Confidential Information or
Inventions will belong exclusively to the Company and its customers and
Employee will not remove from the Company's or its customers' premises
any such items under any circumstances without the prior written
consent of the party owning such item. Employee will deliver to the
Company all copies of such materials in Employee's control upon the
Company's request or upon termination of Employee's employment with the
Company and, if requested by the Company, will state in writing that
all such materials were returned.
(i) If Employee's employment is terminated for any reason,
including resignation by Employee or termination by the Company, with
or without Cause, then, for the time periods described below, Employee
agrees not to:
(1) own, manage, operate, finance, join, control, or
participate in the ownership, management, operation,
financing or control of, or be connected, directly or
indirectly, as proprietor, partner, shareholder,
director, officer, employee, agent, creditor,
consultant, independent contractor, joint venturer,
investor, representative, trustee or in any other
capacity or manner whatsoever with any entity that
engages or intends to engage in any Competing Business
in the geographic area where Employee had managerial
responsibility for the Company's business under this
Agreement. "Competing Business" means any business or
other enterprise which provides personnel to customers
on a contract or temporary basis; provides engineering,
design, drafting, data processing, software develop-
ment, light industrial, or related services to
customers; provides "vendor on premises" services such
as providing personnel and administrative supervision
of such personnel for customers in their facility; or
which provides any other services then provided by the
Company; and
(2) directly or indirectly, solicit, interfere with or
attempt to entice away from the Company, any employee
of the Company; and
(3) contact, solicit, interfere with or attempt to entice
away from the Company any customer on behalf of a
Competing Business.
Employee agrees to be bound by Sections 8(i)(2) and 8(i)(3), above, for
a period of two years following the termination of the Employment
51
Period. In addition, Employee agrees to be bound by Section 8(i)(1),
above, for so long following the termination of the Employment Period
as the Company pays Employee the additional consideration of one-half
of Employee's Base Salary (at the rate of salary being paid Employee at
the time of termination of the Employment Period) up to a maximum of
two years.
References in this Section 8 to the Company shall include the Company,
its subsidiaries, divisions and affiliates.
Section 9. Remedies
--------
Employee acknowledges that Employee's promised services hereunder
are of a special, unique, unusual, extraordinary and intellectual
character, which give them peculiar value the loss of which cannot be
reasonably or adequately compensated in an action of law, and that, in
the event there is a breach hereof by Employee, the Company will suffer
irreparable harm, the amount of which will be impossible to ascertain.
Accordingly, the Company shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent
jurisdiction, either at law or in equity, to obtain damages for any
breach or to enforce specific performance of the provisions or to
enjoin Employee from committing any act in breach of this Agreement.
The remedies granted to the Company in this Agreement are cumulative
and are in addition to remedies otherwise available to the Company at
law or in equity. If the Company is obliged to resort to the courts
for the enforcement of any of the covenants of Employee contained in
Section 8 hereof, each such covenant shall be extended for a period of
time equal to the period of such breach, if any, which extension shall
commence on the later of (a) the date on which the original
(unextended) term of such covenant is scheduled to terminate or (b) the
date of the final court order (without further right of appeal)
enforcing such covenant.
Section 10. Waiver of Breach.
----------------
The waiver by the Company of a breach of any provision of this
Agreement by Employee shall not operate or be construed as a waiver of
any other or subsequent breach by Employee of such or any other
provision. No delay or omission by the Company or Employee 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 Company or Employee from time
to time and as often as may be deemed expedient or necessary by the
Company or Employee.
Section 11. Notices.
-------
All notices required or permitted hereunder shall be made in
writing by hand-delivery, certified or registered first-class mail, or
air courier guaranteeing overnight delivery to the other party at the
address which the party giving the notice reasonably believes to be the
then current address of the other party. All notices required or
permitted hereunder shall be deemed duly given and received when
52
delivered by hand, if personally delivered; on the third day next
succeeding the date of mailing if sent by certified or registered
first-class mail; and on the next business day, if timely delivered to
an air courier guaranteeing overnight delivery.
Section 12. Severability.
------------
If any term or provision of this Agreement or the application thereof
to any person or circumstance shall, to any extent, be held invalid or
unenforceable by a court of competent jurisdiction, the remainder of
this Agreement or the application of any such term or provision to
persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. If any of the provisions contained in
this Agreement shall for any reason be held to be excessively broad as
to duration, scope, activity or subject, it shall be construed by
limiting and reducing it, so as to be valid and enforceable to the
extent compatible with the applicable law or the determination by a
court of competent jurisdiction.
Section 13. Binding Effect and Assignability.
--------------------------------
The rights and obligations of both parties under this Agreement
shall inure to the benefit of and shall be binding upon their heirs,
successors and assigns. Employee's rights under this Agreement shall
not, in any voluntary or involuntary manner, be assignable and may not
be pledged or hypothecated without the prior written consent of the
Company.
Section 14. Counterparts: Section Headings.
------------------------------
This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument. The section headings of
this Agreement are for convenience of reference only.
Section 15. Survival.
--------
Notwithstanding the termination of this Agreement or the
Employment Period for any reason, Sections 7, 8, 9, 12 and 15 hereof
shall survive any such termination.
Section 16. Entire Agreement.
----------------
This instrument constitutes the entire agreement with respect to
the subject matter hereof between the parties hereto and replaces and
supersedes as of the date hereof any and all prior oral or written
agreements and understandings between the parties hereto. This
Agreement may only be modified by an agreement in writing executed by
both Employee and the Company.
53
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date and year first written above.
COMPANY:
-------
By:
-------------------------------------
Title: President and Chief Executive Officer
EMPLOYEE:
--------
--------------------------------------------
Xxxxxx X. Xxxxxxx
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Schedule A
----------
Compensation
------------
This Schedule A sets forth the compensation for Xxxxxx X. Xxxxxxx
(Employee) under this Employment Agreement. If at any time during the
Employment Period the Company and Employee agree that compensation
different from the compensation set forth in this Schedule A should be
paid to Employee, and the Company pays Employee and Employee accepts
such different compensation from the Company, then the terms of this
Schedule A will be deemed to have been amended to reflect the different
compensation.
1. Base Salary. During the Employment Period, Employee shall be paid
a salary at the rate of $248,000 per year ("Base Salary").
2. Bonus Awards. Employee will be eligible to receive an Annual Bonus
during the Employment Period pursuant to the terms of the Annual Bonus
Program, attached as Exhibit 1. Employee s Target Bonus for the first
Bonus Year under this Agreement is $62,000. The following are the
Performance Goals for the first Bonus Year under this Agreement:
a) Operating Plan Goals Bonus Opportunity
-------------------- -----------------
CDI Revenue 20%
CDI Operating Profit Margin 20%
CDI Return on Total Capital 20%
b) Qualitative Goals 40%
-----------------
As agreed upon between Employee and the President/CEO of the
Company.
c) EPS Threshold. Bonus will only be paid for a Bonus Year if CDI
Corp.'s Earnings Per Share ("EPS") for that year equals or exceeds the
threshold percentage of Target EPS established by CDI Corp.'s Board of
Directors.
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EXHIBIT I
Annual Bonus Program
--------------------
This exhibit describes the terms and workings of the Company s
Annual Bonus Program.
A. Summary.
-------
Employee will be eligible to receive an Annual Bonus for each
calendar year during the Employment Period. Annual Bonus is payable in
recognition of Employee's performance over the course of a calendar
year (called a Bonus Year in this Annual Bonus Program) and is
calculated based upon the achievement of Performance Goals for the
Bonus Year. There are two types of Performance Goals: Operating Plan
Goals and Qualitative Goals. Operating Plan Goals are based on
selected elements of the Operating Plan for the Bonus Year.
Qualitative Goals are based on discretionary criteria chosen by
Employee's superior and Employee. When a Bonus Year has been
completed, an evaluation will be done to compare the Bonus Year's
actual performance with the Bonus Year's Performance Goals to determine
how much, if any, of the year's Target Bonus will be paid to Employee.
The Target Bonus will be paid for Target Performance, a portion of the
Target Bonus will be paid for Threshold Performance and additional
bonus will be paid for Superior Performance.
B. Procedure.
---------
1. Prior to or at the beginning of each Bonus Year the following
steps will be taken:
o Employee's supervisor, with input from Employee, will set
the goals that Employee will be expected to achieve for that Bonus
Year;
o A Target Bonus amount will be set for Employee for that
year;
o A Bonus Opportunity will be set for each Performance Goal.
Each Bonus Opportunity reflects the percentage of the Target Bonus that
will be paid to Employee for Target Performance of the related
Performance Goal, i.e., for 100% achievement of that Performance Goal.
(For example, if the Performance Goal "Revenue Growth" has a Bonus
Opportunity of 15%, then 15% of the Target Bonus can be earned for
Target Performance, or 100% achievement, of the Revenue Growth
Performance Goal.) The total of all Bonus Opportunities will be 100%.
2. At the end of each Bonus Year, the degree of achievement of
Employee's Performance Goals for that year will be determined. For the
Operating Plan Goals, the degree of achievement will be determined by
comparing actual performance as reflected in the Company's final
56
financial statements for the Bonus Year with the Performance Goal for
that year. For the Qualitative Goals, the degree of achievement will
be determined in the judgment of Employee's supervisor, with input from
Employee.
If less than 90% of a Performance Goal has been achieved, no
bonus will be paid. If 90% of a Performance Goal has been achieved
(called "Threshold Performance" in this Program), the Bonus Opportunity
for that goal will be reduced by 50%. If 110% or more of a Performance
Goal has been achieved (called "Superior Performance" in this Program),
the Bonus Opportunity for that goal will be increased by 50%. And for
achievement of a Performance Goal which is between 90% and 110%, the
Bonus Opportunity for that goal will be increased on a straight line
basis from 50% to 150% depending on the degree of achievement (i.e., a
5% increase for every 1% increase in achievement).
Examples: Assume a Bonus Opportunity of 15% for the
Performance Goal "Revenue Growth" and a Target Bonus for the year of
$30,000.
(a) If actual Revenue Growth for the Bonus Year is 87%
of the Revenue Growth in the Operating Plan, no
bonus would be payable for this Performance Goal
because less than 90% of the goal had been achieved.
(b) If actual Revenue Growth is 94% of the Operating
Plan, then 70% of the Revenue Growth Bonus
Opportunity would be payable, and bonus for this
Performance Goal would be calculated as follows:
70% x 15% x $30,000 = $3,150
(c) If actual Revenue Growth is 106.4% of Operating
Plan, then 132% of the Bonus Opportunity would be
payable, and bonus for this Performance Goal would
be calculated as follows:
132% x 15% x $30,000 = $5,940
(d) If actual Revenue Growth were 112% of Operating
Plan, then 150% (i.e., the maximum adjustment) of
the Bonus Opportunity would be payable.
The bonus payable for all Performance Goals will be combined to
make up the Annual Bonus for the Bonus Year.
C. Payment of Bonuses.
------------------
Annual Bonuses (or any proportionate amounts of Annual Bonus which
may be payable with respect to Employee's first or last year of
employment) will be paid to Employee within thirty days after the
delivery of audited financial statements to CDI Corporation for the
Bonus Year.
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D. First Year of Employment.
------------------------
In the event that Employee s first year of employment is not a
full calendar year, Employee will be paid a proportionate amount of the
Annual Bonus for that year. The proportionate amount will be a
percentage of the Annual Bonus payable for such year which will be
equal to the percentage of the year during which Employee was employed
by the Company.
E. Last Year of Employment.
-----------------------
No Annual Bonus will be paid to Employee for the Bonus Year during
which Employee's employment with the Company terminates if the
termination occurs as a result of (a) Employee's resignation or (b)
termination by the Company for cause. If Employee's employment with
the Company terminates due to Employee's death or disability or due to
termination by the Company other than for cause, then a proportionate
amount of the Annual Bonus for that year will be paid to Employee or,
in the event of Employee's death, to Employee's designated beneficiary
or estate. The proportionate amount will be a percentage of the Annual
Bonus payable for such year which will be equal to the percentage of
the year during which Employee was employed by the Company.
F. Future Years' Performance Goals.
-------------------------------
At the end of each Bonus Year, Employee's superior, with input
from Employee, will establish the Performance Goals for the next Bonus
Year. These goals will be recorded in writing.
G. Definition of Financial Measures.
--------------------------------
All financial measures which are used in setting or calculating
performance goals in connection with this Agreement will have the
meanings ascribed to them in the Company's accounting and financial
reporting systems.
