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EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of August 7, 1997 among
DecisionOne Holdings Corp., a Delaware corporation ("HOLDINGS"), DecisionOne
Corporation, a Delaware corporation (the "COMPANY"), and Xxxxxxx X. Xxxxxx
("EXECUTIVE").
WHEREAS, each of Holdings and the Company desires to employ
Executive as President and Chief Operating Officer;
WHEREAS, Holdings, the Company and Executive desire to enter
into an agreement (the "AGREEMENT") embodying the terms of such employment;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
parties agree as follows:
1. Employment Term. Executive's employment by the Company and
Holdings shall be for a period which shall commence on the date hereof and
shall terminate on the second anniversary of the date hereof (the "INITIAL
TERM"); provided that the employment term shall be automatically extended upon
the terms hereof for successive one year periods unless not later than six
months prior to the date of automatic extension, Holdings, the Company or
Executive shall have given notice to the contrary. The period commencing as
of the date hereof and ending on the scheduled expiration (the "EXPIRATION
DATE") pursuant to the foregoing provisions of Executive's employment hereunder
is referred to as the "EMPLOYMENT TERM". Notwithstanding the foregoing, the
Employment Term shall terminate in any and all events upon the termination of
Executive's employment hereunder.
2. Positions. During the Employment Term, Executive shall
serve as President and Chief Operating Officer of the Company and Holdings.
Executive shall report directly to the Chief Executive Officer of Holdings and
shall have such duties and authority commensurate with such position as shall
be determined from time to time by the Board of Directors of Holdings (the
"BOARD") and the Chief Executive Officer. Executive shall devote
substantially all of his business time and best efforts to the performance of
his duties hereunder and shall not engage in any other business, profession or
occupation for compensation or otherwise. Notwithstanding the foregoing,
Executive may serve on boards of directors (with the prior approval of the
Chief Executive Officer of the Company), participate in civic associations,
charities and similar activities so long as such activities do not materially
detract from his ability to carry out
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his duties hereunder.
3. Base Salary. During the Employment Term, the Company
shall pay Executive a base salary (the "BASE SALARY") at the annual rate of
$250,000, payable in arrears, in accordance with the usual payment practices of
the Company. Executive's Base Salary shall be subject to periodic review by
the Compensation Committee of Holdings, not less frequently than annually, and
shall be adjusted on or before each anniversary date of this Agreement in order
to place Executive in at least the 40th percentile for base cash compensation
received by the highest paid executives in Holdings' industry. Holdings'
industry peer group and the classification of compensation for purposes of
computing such comparison and establishing such increases in Base Salary shall
be as specified on Exhibit A attached to this Agreement (as such data shall be
updated from time to time, the "PEER GROUP COMPARISON"). Any such adjusted
rate will thereafter be the Base Salary for all purposes of this Agreement. In
no event shall Executive's Base Salary in any year be adjusted below the Base
Salary for the prior year.
4. Annual Cash Bonus. The Company shall pay Executive, for
each fiscal year of his employment, beginning with the fiscal year ending in
1998, a cash bonus (the "BONUS") in an amount established by the Board based
upon the achievement of certain levels of performance. If for any fiscal year
the target levels are achieved, then Executive's cash bonus for such fiscal
year shall be in an amount which would place Executive in at least the 75th
percentile for total cash compensation (less base compensation) received by the
highest paid executives indicated by the Peer Group Comparison. In no event
shall Executive's target Bonus for any fiscal year be less than 100% of Base
Salary. The timing of the payment of the Bonus shall be in accordance with the
Company's normal procedures.
5. To the extent a Change of Control (as defined in the
Investors' Agreement dated as of August 7, 1997, among the Company, DLJ
Merchant Banking II, L.P. ("DLJMBII"), DLJ Merchant Banking Partners XX-X,
X.X., XXX Xxxxxxxx Xxxxxxxx XX, X.X., XXX Diversified Partners, L.P., DLJ
Diversified Partners-A, L.P., DLJ Millenium Partners, L.P., DLJ Millenium
Partners-A, L.P., DLJMB Funding II, Inc., UK Investment Plan 1997 Partners, DLJ
EAB Partners, L.P., DLJ First ESC, LLC, and certain other shareholders listed
on the signature pages thereto) event occurs on or before Executive's
employment terminates or at any time thereafter if prior to the termination of
Executive's employment, the Company, Holdings, DLJMBII, any affiliates of
DLJMBII, or any authorized representative of such parties engages in
substantive discussions concerning the possible change of control and DLJMBII
generates an internal rate of return on its original investment in excess of
40% per annum, Executive will be paid a special bonus (the "SPECIAL BONUS") by
Holdings. The Special Bonus will be paid in cash within 10 days of the Special
Bonus event occurring. If the internal rate of return is in excess of 40%, the
Special Bonus shall be $2.5 million. For each 1% increase above 40%, Executive
shall receive an additional $250,000 but in no event shall the Special
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Bonus exceed $7.5 million. The Special Bonus, together with any special bonus
awarded to Xx. Xxxxxxx, shall be taken into account in calculating internal
rate of return.
6. Employee Benefits. (a) During the Employment Term,
Executive shall be entitled to participate on a basis no less favorable than
other senior executives of the Company and Holdings in all retirement, welfare
benefit, incentive compensation, perquisite and other plans and arrangements of
the Company applicable to senior executives of the Company and Holdings, as in
effect from time to time.
(b) Executive shall be entitled to participate in the
Management Stock Incentive Plan of Holdings (the "MSIP").
(c) Executive shall have the use of a Company automobile and
shall be reimbursed for (i) the reasonable costs of one country club
membership, (ii) the establishment and use of telephone lines in Pennsylvania
and Executive's automobile, (iii) an annual physical examination for Executive
and his spouse and (iv) first class air travel.
(d) Executive shall be entitled to five weeks of vacation for
each 12 month period that Executive is employed hereunder.
(e) Executive shall be entitled to reimbursement for
reasonable tax planning and estate planning services.
7. Business Expenses. During the Employment Term, the
Company shall reimburse such of Executive's travel, entertainment and other
business expenses as are reasonably and necessarily incurred by Executive
during the Employment Term in the performance of his duties hereunder, in
accordance with the Company's policies as in effect from time to time.
8. Termination. Upon a termination of the Employment Term
prior to its scheduled expiration, Executive shall be entitled to the payments
described in this Section 8.
(a) For Cause by the Company; by Executive without Good
Reason. The Employment Term may be terminated prior to the Expiration Date by
the Company and Holdings for Cause or by Executive without Good Reason (each as
defined below).
If the Employment Term is terminated by the Company or
Holdings for Cause or by Executive without Good Reason, Executive shall be
entitled to receive his Base Salary through the date of termination, any Bonus
that has been earned in accordance with Section 4 for a prior fiscal year but
not yet paid and any unreimbursed business expenses, payable promptly following
the later of the date of such termination
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and the date on which the appropriate documentation is provided.
All other benefits following termination of the Employment
Term pursuant to this Section 8(a) shall be determined in accordance with the
plans, policies and practices of the Company.
(b) Death or Disability (as defined below). The Employment
Term shall terminate prior to the Expiration Date upon Executive's death or
Disability. If the Employment Term is terminated prior to the Expiration Date
by reason of death or Disability, Executive or Executive's estate, as
applicable, shall receive (i) the amounts described under Section 8(a), (ii)
continued payment of Base Salary through the first anniversary of the date of
death or the first anniversary of the date of termination based upon
Disability, (iii) continued participation by Executive's family in all health,
medical and dental plans of the Company, or comparable coverage, for such one
year period and (iv) the Bonus that would have been payable to Executive for
the year of termination pursuant to paragraph 4 hereof (if the target is met)
pro-rated to the date of termination and payable upon termination. Such
amounts shall be in addition to any proceeds otherwise payable to Executive or
his estate, as the case may be, on account of any life or disability insurance
policy provided as a benefit to Executive hereunder.
All other benefits following termination of the Employment Term
pursuant to this Section 8(b) shall be determined in accordance with the plans,
policies and practices of the Company.
(c) By the Company without Cause; by Executive with Good
Reason; Election by the Company not to Renew. The Employment Term may be
terminated prior to the Expiration Date by the Company or Holdings without
Cause or by Executive with Good Reason.
If the Employment Term is terminated prior to the Expiration
Date by the Company or Holdings without Cause or by Executive with Good Reason
or the Company elects (other than for Cause) not to extend the Employment Term
for an additional one year period in accordance with Section 1, subject to
Executive's continued compliance with the covenants (other than an inadvertent
breach) set forth in Section 9, Executive shall receive (i) the amounts
described under Section 8(a), (ii) continued payment of Executive's Base Salary
for an eighteen (fifteen in the case of a termination for Good Reason) month
period at the rate in effect for the year of termination, payable in eighteen
(fifteen in the case of a termination for Good Reason) monthly installments,
(iii) continued participation by Executive's family in all health, medical and
dental plans of the Company, or comparable coverage, for such eighteen (or
fifteen) month period or, if earlier, until Executive is covered by comparable
programs of a subsequent employer and (iv) payment in an amount equal to 1 1/2
(1 1/4 in the case of a termination for Good Reason) times the Bonus Executive
would have received (assuming for this purpose that
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the target was met) had Executive remained employed hereunder for the entire
year, payable in eighteen (fifteen in the case of a termination for Good
Reason) monthly installments; provided that if Executive obtains employment
prior to the payment of all such monthly installments of Base Salary and Bonus,
Executive shall only receive one-half of the amount of each remaining
installment.
All other benefits following termination of the Employment Term
pursuant to this Section 8(c) shall be determined in accordance with the plans,
policies and practices of the Company.
(d) Definitions. For purposes of this Section 8, the
following terms shall have the following meanings:
(i) "CAUSE" shall mean:
(A) Executive's willful and continued failure substantially
to perform his duties under the Agreement (other than as a result of total or
partial incapacity due to physical or mental illness);
(B) the conviction of Executive or the plea of guilty by
Executive for a felony under the laws of the United States or any state thereof
or any other jurisdiction in which the Company or Holdings conducts business;
(C) Executive's repeatedly being under the influence of
illegal drugs or alcohol while performing his duties hereunder; or
(D) Executive's breach (other than an inadvertent breach) of
the provisions of Section 9;
provided that, in the case of any action or omission described in clause (A) or
(D) above (a "DEFICIENCY"), the Company must first provide Executive 30 days
written notice of the Deficiency and the opportunity to cure such Deficiency.
For purposes of this definition, no act or failure to act shall be deemed
"willful" unless effected by Executive not in good faith and without a
reasonable belief that such action or failure to act was in or not opposed to
the Company's or Holdings' best interests.
(ii) "GOOD REASON" shall mean the happening of any of the
following events followed within six months by a Notice of Termination by
Executive:
(A) Xx. Xxxxxxx Xxxxxxx is replaced as Chief Executive
Officer of the Company and Executive is not promoted to such position;
(B) there is an adverse change to Executive's title or a
material adverse
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change in Executive's responsibilities or duties; or
(C) the Company's current principal place of business in
Pennsylvania is relocated more than 35 miles from its current site;
provided that, in the case of clause (B), Executive must first provide the
Company 30 days written notice of the change and the opportunity to cure.
(iii) "DISABILITY" shall mean Executive's inability, as a
result of physical or mental illness, to perform the duties of the position(s)
specified in Section 2 for a period of three consecutive months or for periods
aggregating more than six months during any 24 month period. Any question as
to the existence of the Disability of Executive as to which Executive and the
Company cannot agree shall be determined in writing by a qualified independent
physician selected by the Company and reasonably acceptable to Executive. The
determination of Disability made in writing to the Company and Executive shall
be final and conclusive for all purposes of the Agreement.
(e) Notice of Termination. Any purported termination of the
Employment Term prior to its scheduled expiration by the Company or Holdings or
by Executive shall be communicated by written notice of termination to the
other party hereto. For purposes of this Agreement, a "NOTICE OF TERMINATION"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination under the
provision so indicated.
9. Non-Competition/Confidential Information. (a) Executive
acknowledges and recognizes the highly competitive nature of the businesses of
the Company, Holdings and their affiliates and accordingly agrees that during
the Employment Term and through the first anniversary of the date of
termination of employment, Executive will not directly or indirectly accept an
engagement with any person or entity, a substantial business of which is
multivendor computer maintenance business or any other line of business of the
Company or Holdings or any of their affiliates accounting for 10% or more of
the Company's or Holding's gross revenues (each a "COMPETITIVE BUSINESS")
(including without limitation by performing or soliciting the performance of
services for any person who is a customer or client of the Company or any of
its affiliates), whether such engagement is as an officer, director,
proprietor, employee, partner, investor (other than as a holder of less than 1%
of the outstanding capital stock of a publicly traded corporation), consultant,
advisor, agent, sales representative or other participant, in any geographic
area in which Holdings, the Company or any of their affiliates conducted any
such competing line of business. Notwithstanding the foregoing, Executive may
accept an engagement with a division of a business so long as a substantial
business of such division is not a Competitive Business.
(b) During the Employment Term and through the second
anniversary of
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the date of termination of employment, Executive will not induce, or cause any
person or entity to induce, any employee of Holdings, the Company or any of
their affiliates to engage in any activity in which Executive is prohibited to
engage by paragraph (a) above or to terminate his employment with Holdings, the
Company or any of their affiliates, and will not employ or offer employment, or
cause any person or entity to employ or offer employment, to any person who was
employed by Holdings, the Company or any of their affiliates unless such person
shall have ceased to be employed by Holdings, the Company or any of their
affiliates for a period of at least 12 months.
(c) Executive will not at any time (whether during or after
his employment with Holdings and the Company) disclose or use for his own
benefit or purposes or the benefit or purposes of any other person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise other than Holdings, the Company and any of
their affiliates, any trade secrets, information, data, or other confidential
information relating to customers, development programs, costs, marketing,
trading, investment, sales activities, promotion, credit and financial data,
manufacturing processes, financing methods, plans, or the business and affairs
of Holdings or the Company generally, or of any of their affiliates, provided
that the foregoing shall not apply to information which is not unique to
Holdings or the Company or which is generally known to the industry or the
public other than as a result of Executive's breach of this covenant.
Executive agrees that upon termination of his employment with Holdings and the
Company for any reason, he will return immediately all memoranda, books,
papers, plans, information, letters and other data, and all copies thereof or
therefrom, in any way relating to the business of Holdings, the Company and
their affiliates, except that he may retain personal notes, notebooks and
diaries. Executive further agrees that he will not retain or use for his
account at any time any trade names, trademark or other proprietary business
designation used or owned in connection with the business of Holdings, the
Company or their affiliates.
10. Specific Performance and Other Remedies. Executive
acknowledges and agrees that Holdings and the Company have no adequate remedy
at law for a breach or threatened breach of any of the provisions of Section 9
and, in recognition of this fact, Executive agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, Holdings
and/or the Company, without posting any bond and without notice to the
Executive, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available. Nothing in this
Agreement shall be construed as prohibiting Holdings or the Company from
pursuing any other remedies at law or in equity that it may have or any other
rights that they may have under any other agreement.
11. Miscellaneous.
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(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without reference to principles of conflict of laws.
(b) Entire Agreement/Amendments. This Agreement, any
purchase agreement to be entered into on the date hereof regarding the purchase
of shares of the Company, the MSIP to be adopted by Holdings and any award
agreements entered into under the MSIP, and the provisions of any employee plan
or arrangement maintained from time to time by the Company or Holdings in which
Executive participates contain the entire understanding of the parties with
respect to the employment of Executive by Holdings and the Company and
supersede any prior agreements between the Company, Holdings (and their
predecessors) and Executive. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein and therein.
No provision in this Agreement may be amended unless such amendment is agreed
to in writing.
(c) No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement. No waiver by either party of any breach by the other party of any
condition or provision contained in this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Executive or Holdings or the Company, as the case may
be.
(d) Severability. It is expressly understood and agreed that
although Executive, Holdings and the Company consider the restrictions
contained in Section 9 to be reasonable, if a final judicial determination is
made by a court of competent jurisdiction that the time or territory
restriction in Section 9 or any other restriction contained in Section 9 is an
unenforceable restriction against Executive, such provision shall not be
rendered void but shall be deemed amended to apply to such maximum time and
territory, if applicable, or otherwise to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any
court of competent jurisdiction finds that any restriction contained in Section
9 is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein. In the event that any one or more of the
other provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by any
party without the consent of the other parties.
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(f) Mitigation. Except as set forth in Section 8(c),
Executive shall not be required to mitigate the amount of any payment or
benefit to be provided pursuant to Section 8 by seeking other employment or
otherwise.
(g) Successors. This Agreement shall inure to the benefit of
and be binding upon the personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees of the
parties hereto. The Executive shall be entitled to select (and change, to the
extent permitted under any applicable law) a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the Executive'
death by giving Holdings or the Company written notice thereof. In the event
of the Executive's death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.
(h) Communications. For the purpose of this Agreement,
notices and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when faxed or delivered or
two business days after being mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed (A) to the Executive
at his address then appearing in the personnel records of the Company, (B) to
Holdings at Holding's then current headquarters, with a copy to Holding's
Secretary, (C) to the Company at the Company's then current headquarters, with
a copy to the Company's Secretary and (D) to DLJMBII at DLJMBII's then current
headquarters with a copy to Xxxxx Xxxxxx or (E) to such other address as any
party may have furnished to the others in writing in accordance herewith, with
such notice of change of address being effective only upon receipt.
(i) Withholding Taxes. Holdings and/or the Company, as
applicable, may withhold from any and all amounts payable under this Agreement
such federal, state, local and any other applicable taxes as may be required to
be withheld pursuant to any applicable law or regulation.
(j) Survivorship. The respective rights and obligations of
the parties hereunder shall survive any termination of Executive's employment
to the extent necessary to the agreed preservation of such rights and
obligations.
(k) Representations. Each party represents and warrants to
the others that he or it is fully authorized and empowered to enter into this
Agreement and that the performance of his or its obligations under this
Agreement will not violate any agreement between him or it and any other person
or entity.
(l) Fees and Expenses. In the event of a dispute by
Holdings, the Company or Executive as to the validity or enforceability of, or
liability under, any
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provision of this Agreement and with respect to any claims arising in
connection with Executive's employment with Holdings and the Company, each
party shall pay its own legal fees and expenses incurred in connection with
such dispute or claim.
(m) Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
(n) Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement. Any reference
to the Executive in the masculine gender herein is for convenience and is not
intended to express any preference by the Company for executives of any gender.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
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Xxxxxxx X. Xxxxxx
DECISIONONE HOLDINGS CORP.
By:
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Name:
Title:
DECISIONONE CORPORATION
By:
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Name:
Title:
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