EXHIBIT 10.5
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made this 1st day of July, 1997, between Condor
Technology Solutions, Inc., a Delaware corporation (the "Company"), and
Xxxxxxx Xxxxxx (the "Executive").
WHEREAS, the parties hereto wish to enter into an employment agreement to
employ the Executive as the Chief Financial Officer of the Company and to set
forth certain additional agreements between the Executive and the Company.
NOW, THEREFORE, in consideration of the mutual covenants and representations
contained herein, the parties hereto agree as follows:
1. TERM.
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The Company will employ the Executive, and the Executive will serve the
Company, under the terms of this Agreement for an initial term of three (3)
years, commencing on the date hereof. Effective as of the expiration of such
initial three-year term and as of each anniversary date thereof, the term of
this Agreement shall be extended for an additional 12-month period unless,
not later than two months prior to each such respective date, either party
shall have given notice to the other party that the term shall not be so
extended. Notwithstanding the foregoing, the Executive's employment hereunder
may be earlier terminated, as provided in Section 4 hereof. The term of this
Agreement, as in effect from time to time in accordance with the foregoing,
shall be referred to herein as the "Term." The period of time between the
commencement and the termination of the Executive's employment hereunder
shall be referred to herein as the "Employment Period."
2. EMPLOYMENT
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(a) Position and Reporting. The Company hereby employs the Executive for
the Employment Period as Chief Financial Officer of the Company on the terms
and conditions set forth in this Agreement.
(b) Authority and Duties. The Executive shall exercise such authority,
perform such executive duties and functions and discharge such
responsibilities as are reasonably associated with the Executive's position,
commensurate with the authority vested in the Executive's position, pursuant
to this Agreement and consistent with the By-Laws of the Company. Without
limiting the generality of the foregoing, the Executive shall report directly
and be responsible to the President and Chief Executive Officer of the
Company. During the Employment Period, the Executive shall devote his full
business time, skill and efforts to the business of the Company.
Notwithstanding the foregoing, the Executive may (i) make and manage passive
personal business investments of his choice (in the case of publicly-held
corporations, not to exceed one percent (1%) of the outstanding voting stock)
and serve in any capacity with any civic, educational or charitable
organization, or any trade association, without seeking or obtaining approval
by the Board of Directors of the Company (the "Board"), provided such
activities and service do not materially interfere or conflict with the
performance of his duties hereunder and (ii) with the approval of the Board,
which shall not be unreasonably withheld, serve on the boards of directors of
other corporations.
3. COMPENSATION AND BENEFITS.
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(a) Salary. During the Employment Period, the Company shall pay to the
Executive, as compensation for the performance of his duties and obligations
under this Agreement, a base salary at the rate of $150,000 per annum,
payable in arrears not less frequently than monthly in accordance with the
normal payroll practices of the Company. Such base salary shall be subject to
review each year for possible increase by the Board, but shall in no event be
decreased from its then-existing level during the Employment Period.
(b) Annual Bonus. During the Employment Period, the Executive shall have
the opportunity to earn an annual bonus in accordance with a Company annual
bonus program to be established by the Board for senior executives of the
Company and its subsidiaries. The payment of any annual bonus under any such
program shall be contingent upon the achievement of certain corporate and/or
individual performance goals established by the Board in its direction and
shall not exceed an amount equal to the Executive's base salary.
(c) Other Benefits. During the Employment Period, the Executive shall be
entitled to participate in all of the employee benefit plans, programs and
arrangements in effect during the Employment Period that are generally
available to senior executives of the Company, subject to and on a basis
consistent with the terms, conditions and overall administration of such
plans, programs and arrangements. In addition, during the Employment Period,
the Executive shall be entitled to fringe benefits and perquisites comparable
to those of other senior executives of the Company, including, but not
limited to, four (4) weeks of paid vacation per year.
(d) Business Expenses. During the Employment Period, the Company shall
reimburse the Executive for all documented reasonable business expenses
incurred by the Executive in the performance of his duties under this
Agreement, in accordance with the Company's policies.
(e) Indemnification. During the Employment Period and thereafter, the
Company shall indemnify the executive to the fullest extent permitted by
applicable law, and the Executive shall be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the
benefit of the directors and officers of the Company, with respect to all
costs, charges and expenses, including attorneys' fees, whatsoever incurred
or sustained by the Executive in connection with any action, suit or
proceeding (other than any action, suit or proceeding brought by or in the
name of the Company against the Executive) to which he may be made a party by
reason of being of having been a director, officer or employee of the Company
or his serving or having served any other enterprise as a director, officer
or employee at the request of the Company.
4. TERMINATION OF EMPLOYMENT.
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(a) Termination for Cause. The Company may terminate the Executive's
employment hereunder for cause. For purposes of this Agreement and subject to
the Executive's opportunity to cure as provided in Section 4 (c) hereof, the
Company shall have "cause" to terminate the Executive's employment hereunder
if such termination shall be the result of:
(i) willful fraud or dishonesty in connection with the
Executive's performance hereunder that results in material harm to the
Company.
(ii) the failure by the Executive to substantially perform his
duties hereunder that results in material harm to the Company; or
(iii) the conviction for, or plea of nolo contendere to, a
charge of commission of a felony.
(b) Termination for Good Reason. The Executive shall have the right at
any time to terminate his employment with the Company at any time and for any
good reason. For purposes of this Agreement and subject to the Company's
opportunity to cure as provided in Section 4 (c) hereof, the Executive shall
have "good reason" to terminate his employment hereunder if such termination
shall be the result of:
(i) a material diminution during the Employment Period in the
Executive's duties or responsibilities as set forth in Section 2 hereof;
(ii) a material breach by the Company of the compensation and
benefits provisions set forth in Section 3 hereof;
(iii) a notice of termination by the Executive under
Section 4 (c) hereof within 12 months following the occurrence of a Change
in Control (as defined in Section 4 (e) hereof); or
(iv) a material breach by the Company of any other term of this
Agreement.
(c) Notice and Opportunity to Cure. Notwithstanding the foregoing, it
shall be a condition precedent to the Company's right to terminate the
Executive's employment for "cause" and the Executive's right to terminate his
employment for "good reason" that (1) the party seeking the termination shall
first have given the other party written notice stating with specificity the
reason for the termination ("breach"); (2) if the Executive is terminated for
"cause," the Company provides the Executive an opportunity to appear before
the Board to answer such ground for termination; and (3) if such breach is
susceptible of cure or remedy, a period of 30 days from and after the giving
of such notice shall have elapsed without the breaching party having
effectively cured or remedied such breach during such 30-day period, unless
such breach cannot be cured or remedied within 30 days, in which case the
period for remedy or cure shall be extended for a reasonable time (not to
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exceed an additional 30 days), provided the breaching party has made and
continues to make a diligent effort to effect such remedy or cure.
(d) Termination Upon Death or Permanent and Total Disability. The
Employment Period shall be terminated by the death of the Executive. The
Employment Period may be terminated by the Company if the Executive shall be
rendered incapable of performing his duties to the Company by reason of a
"disability," defined as either (i) any medically determined physical or
mental impairment that can be expected to result in death or that can be
expected to last for a period of six or more consecutive months from the
first date of the Executive's absence, or (ii) due to a total and permanent
"disability" that can be expected to last for a period of six or more
consecutive months from the first date of the Executive's absence, as such
term is defined in the Company's long term disability insurance policy or
contract as may be in effect from time to time for the benefit of employees
of the Company (either, a "Disability"). If the Employment Period is
terminated by reason of a Disability of the Executive, the Company shall give
30 days' advance written notice to that effect to the Executive. If the
existence of a Disability hereunder is in dispute, it shall be resolved by
two physicians, one appointed by the Executive and one appointed by the
Company. If the two physicians so selected cannot agree as to whether or not
the Executive has a Disability, the two physicians so selected shall
designate a third physician and a majority of the three physicians so
selected shall determine whether or not the Executive has a Disability.
(e) Definition of Change in Control. A "Change in Control" shall be
deemed to have taken place if:
(i) there shall be consummated any consolidation or merger of
the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's capital stock are
converted into cash, securities or other property other than a
consolidation or merger of the Company in which the holders of the
Company's voting stock immediately prior to the consolidation or merger
shall, upon consummation of the consolidation or merger, own at least 50%
of the voting stock of the surviving corporation, or any sale, lease,
exchange or other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of the Company; or
(ii) any person (as such term is used in Sections 13(d) and 14
(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) shall after the date hereof become the beneficial owner (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly,
of securities of the Company representing 35% or more of the voting power
of all then outstanding securities of the Company having the right under
ordinary circumstances to vote in an election of the Board (including,
without limitation, any securities of the Company that any such person has
the right to acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise, which shall be deemed
beneficially owned by such person); or
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(iii) individuals who at the date hereof constitute the entire
Board and any new directors whose election by the Board, or whose
nomination for election by the Company's stockholders, shall have been
approved by a vote of at least a majority of the directors then in office
who either were directors at the date hereof or whose election or
nomination for election shall have been so approved (the "Continuing
Directors") shall cease for any reason to constitute a majority of the
members of the Board;
5. CONSEQUENCES OF TERMINATION
(a) Termination Without Cause or for Good Reason. In the event of
termination of the Executive's employment hereunder by the Company without
"cause" (other than upon death or Disability) or by the Executive for "good
reason" (each as defined in Section 4 hereof), the Executive shall be
entitled to the following severance pay and benefits:
(i) Severance Pay - severance payments in the form of
continuation of the Executive's base salary as in effect immediately prior
to such termination over the longer of: (A) the then-remaining Term hereof;
or (b) 12 months (the "Severance Period").
(ii) Benefits Continuation - continuation for the Severance
Period of coverage under the group medical care, disability and life
insurance benefit plans or arrangements in which the Executive is
participating at the time of termination; provided, however, that the
Company's obligation to provide or cause to be provided such coverages
shall be terminated if the Executive obtains comparable substitute coverage
from another employer at any time during the Severance Period. The
Executive shall be entitled, at the expiration of the Severance Period, to
elect continued medical coverage in accordance with section 4980B of the
Internal Revenue Code of 1986, as amended (or any successor provision
thereto); and
(iii) Stock Options - all options to purchase shares of the
Company's Common Stock held by the Executive immediately prior to
termination of employment shall become immediately vested and exercisable
and, subject to the terms of the Company's 1997 Long-Term Incentive Plan,
shall remain exercisable for the duration of the Severance Period.
(b) Other Terminations. In the event of termination of the Executive's
employment hereunder for any reason other than those specified in Section
5(a) hereof, the Executive shall not be entitled to any severance pay,
benefits continuation or stock option rights contemplated by the foregoing,
except as may otherwise be provided under the applicable benefit plans or
award agreements relating to the Executive.
(c) Accrued Rights. Notwithstanding the foregoing provisions of this
Section 5, in the event of termination of the Executive's employment
hereunder for any reason, the Executive shall be entitled to payment of any
unpaid portion of his base salary through the effective date of termination,
and payment of any accrued but unpaid rights solely in accordance with the
terms of any incentive bonus, stock option or employee benefit plan or
program of the Company.
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6. CONFIDENTIALITY.
The Executive agrees that he will not at any time during the Term hereof or
at any time thereafter for any reason, in any fashion, form or manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company and its subsidiaries, including, without limiting the generality of
the foregoing, the techniques, methods or systems of its operation or
management, any information regarding its financial matters, or any other
material information concerning the business of the Company and its
subsidiaries, their manner of operation, their plans or other material data.
The provisions of this Section 6 shall not apply to (i) information that is
public knowledge other than as a result of disclosure by the Executive in
breach of this Section 6; (ii) information disseminated by the Company or any
of its subsidiaries to third parties in the ordinary course of business;
(iii) information lawfully received by the Executive from a third party who,
based upon inquiry by the Executive, is not bound by a confidential
relationship to the Company or any of its subsidiaries; or (iv) information
disclosed under a requirement of law or as directed by applicable legal
authority having jurisdiction over the Executive.
7. INVENTIONS.
The Executive is hereby retained in a capacity such that the Executive's
responsibilities include the making of technical and managerial contributions
of value to the Company and its subsidiaries. The Executive hereby assigns to
the Company all right, title and interest in such contributions and
inventions made or conceived by the Executive alone or jointly with others
during the Employment Period that relate to the business of the Company or
any of its subsidiaries. This assignment shall include (a) the right to file
and prosecute patent applications on such inventions in any and all
countries, (b) the patent applications filed and patents issuing thereon, and
(c) the right to obtain copyright, trademark or trade name protection for any
such work product. The Executive shall promptly and fully disclose all such
contributions and inventions to the Company and assist the Company in
obtaining and protecting the rights therein (including patents thereon) in
any and all countries; provided, however, that said contributions and
inventions will be the property of the Company, whether or not patented or
registered for copyright, trademark or trade name protection, as the case may
be. The Executive hereby agrees to execute any documentation requested by the
Company to be so executed if such request is made in order to carry out the
purpose and terms of this paragraph. Inventions conceived by the Executive
that are not related to the business of the Company or any of its
subsidiaries will remain the property of the Executive.
8. NON-COMPETITION.
The Executive agrees that he shall not during the Employment Period and, if
applicable, the Severance Period, without the approval of the Board, directly
or indirectly, alone or as partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor or stockholder (other
than as provided below) of any company or business, engage in any
"Competitive Business" within the United States. For purposes of the
foregoing, the term "Competitive Business" shall mean any
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business involved in providing information technology solutions, including,
but not limited to, desktop services, software development, system design and
integration, large scale survey research, recruiting and comprehensive
marketing and sales, which is in direct competition with the Company or any
of its subsidiaries in any community in which the Company or any of its
subsidiaries is doing business. Notwithstanding the foregoing, the Executive
shall not be prohibited during the non-competition period applicable above
from acting as a passive investor where he owns not more than one percent
(1%) of the issued and outstanding capital stock of any publicly-held
company. During the period that the above non-competition restriction
applies, the Executive shall not, without the written consent of the Company,
solicit or encourage any employee of the Company or any current or future
subsidiary or affiliate thereof to terminate his or her employment.
9. BREACH OF RESTRICTIVE COVENANTS.
The parties agree that a breach or violation of Section 6, 7 or 8 hereof will
result in immediate and irreparable injury and harm to the innocent party,
which party shall have, in addition to any and all remedies of law and other
consequences under this Agreement, the right to an injunction, specific
performance or other equitable relief to prevent the violation of the
obligation hereunder.
10. NOTICES.
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
(a) If to the Company, to:
CONDOR TECHNOLOGY SOLUTIONS, INC.
0000 XXXXXX XXXXXXXXX
XXXXX 000
XXXXXX, XX 00000
(b) If to the Executive, to:
XXXXXXX XXXXXX
C/O CONDOR TECHNOLOGY SOLUTIONS, INC.
0000 XXXXXX XXXXXXXXX
XXXXX 000
XXXXXX, XX 00000
or to such other address as a party hereto shall designate to the other party
by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
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11. ARBITRATION: LEGAL FEES.
Except as provided in Section 9 hereof, any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in McLean, Virginia in accordance with the rules of the American
Arbitration Association then in effect. Judgement may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall
reimburse the Executive for all reasonable legal fees and costs and other
fees and expenses that the Executive may incur in respect of any dispute or
controversy arising against the Company under or in connection with this
Agreement; provided, however, that the Company shall not reimburse any such
fees, costs and expenses if the fact finder determines that an action brought
by the Executive was substantially without merit or the Executive is
otherwise unsuccessful in such an action.
12. WAIVER OF BREACH
Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part of either
the Executive or of the Company.
13. NON-ASSIGNMENT; SUCCESSORS.
Neither party hereto may assign his or its rights or delegate his or its
duties under this Agreement without the prior written consent of the other
party; provided, however, that (i) subject to the rights of the Executive
under Section 4(b) hereof, this Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the Company upon any sale of
all or substantially all of the Company's assets, or upon any merger,
consolidation or reorganization of the Company with or into any other
corporation, all as though such successors and assigns of the Company and
their respective successors and assigns were the Company; and (ii) this
Agreement shall inure to the benefit of and be binding upon the heirs,
assigns or designees of the Executive to the extent of any payments due to
the Executive hereunder. As used in this Agreement, the term "Company" shall
be deemed to refer to any such successor or assign or the Company referred to
in the preceding sentence.
14. WITHHOLDING OF TAXES.
All payments required to be made by the Company to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any,
relating to tax, and other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation.
15. SEVERABILITY.
To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
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16. COUNTERPARTS.
This AGreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute
one and the same instrument.
17. GOVERNING LAW.
This Agreement shall be construed, interpreted and enforced in accordance
with the laws of the State of Virginia.
18. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement by the Company and the
Executive with respect to the subject matter hereof and supersedes any and all
prior agreements or understandings between the Executive and the Company with
respect to the subject matter hereof, whether written or oral. This
Agreement may be amended or modified only by a written instrument executed by
the Executive and the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
July 1, 1997.
CONDOR TECHNOLOGY SOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: President and Chief
Executive Officer
THE EXECUTIVE
/s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
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