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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of
February 12, 1998, is entered into by and between THE MANAGEMENT NETWORK GROUP,
INC., a Kansas corporation (the "Company"), with offices at 00000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx X, Xxxxxxx, Xxxxxx 00000, and XXXXXXX X. XXXXXXX, an individual
("Employee"), residing at 00000 Xxxxxxxx Xxxxx Xxxxxxx, Xxxxx X, Xxxxxxx, Xxxxxx
00000.
RECITALS
The Company wishes to obtain the services of Employee and
Employee wishes to perform such services on the terms and conditions contained
herein.
Therefore, the parties hereby agree as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, effective as of the date first written above (the "Effective Date"),
the Company hereby employs Employee as President and Chief Executive Officer of
the Company to perform the duties described in Section 4 hereof.
2. Term. The term of this Agreement shall begin on the
Effective Date and will continue until February 11, 2003, unless extended on
terms mutually agreed upon between Employee and the Company's Board of Directors
or unless earlier terminated pursuant to the provisions of Sections 7 or 8
hereof. The period from the Effective Date until the date of termination of
employment pursuant to this Agreement is herein referred to as the "Term".
3. Compensation.
3.1. Salary. Subject to the adjustment provisions
herein, Employee shall be paid $15,384.62 in biweekly installments based upon an
annual base salary of $400,000, pro rated to the number of months in 1998 that
this Agreement is in effect. For each fiscal year of the Term commencing on or
after January 1, 1999, Employee's annual base salary for such fiscal year may be
increased or decreased by such amounts as determined by the Board of Directors
of the Company, provided, however, that in no event shall the Board of Directors
decrease Employee's annual base salary below $400,000. Amounts paid pursuant to
this Section 3 are hereinafter referred to as "Base Salary."
3.2. Bonus. In addition to Employee's Base Salary and
subject to such deductions as are required by law, Employee shall be entitled to
receive a bonus ("Bonus") to be paid as provided in this Section 3.2. With
respect to each fiscal year commencing with the fiscal year ending December 31,
1998, the Board of Directors of the Company may in its discretion create a bonus
pool (the "Bonus Pool"). The amount of funds allocated and distributed from such
Bonus Pool, if any, to Employee shall be determined in the sole discretion of
the Board of Directors of the Company and the funds remaining in such Bonus Pool
and not distributed to Employee shall be allocated among, and distributed to,
officers of the Company other than
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Employee, in the sole discretion of Employee or any successor President and
Chief Executive Officer of the Company.
3.3. Other Compensation. As a part of Employee's
compensation package, the Board of Directors of the Company shall periodically
(and in any event, annually) review Employee's compensation and consider such
modifications as may be appropriate for the President and Chief Executive
Officer of the Company. In connection with such review, the Board of Directors
may consider extraordinary bonuses and other forms of compensation to Employee
as a result of successful acquisitions by the Company, the initial public
offering of the Company's (or any successor entity's) common stock or similar
events.
4. Duties. Employee shall, during the term hereof, be an
officer of the Company and have the title of President and Chief Executive
Officer of the Company, and shall perform such duties as and have such authority
as are customary and usual for such position and as may be directed by the Board
of Directors of the Company. Without limiting the generality of the foregoing:
4.1. Full Time. Employee shall devote Employee's full
working time to the business of the Company and shall, in accordance with the
highest professional standards, seek to maximize the financial success of the
Company's business and to optimize the goodwill and reputation of the Company
within its industry and with its customers. During the term of this Agreement,
Employee agrees that he will not become involved in the active ownership or
management of any business enterprise that will interfere with the performance
of his duties hereunder. Employee further warrants that he will not engage,
directly or indirectly, in any other business activity (whether or not pursued
for pecuniary advantage) that is or may be in conflict with or that might place
him in a conflicting position to that of the Company. So that the Company may be
aware of the extent of any other demands upon Employee's time and attention,
Employee shall disclose in confidence to the Company the nature and scope of any
other business activity in which he is or becomes engaged during his employment
with the Company. Employee also warrants that he is not a party to any valid or
binding agreement or legal relationship whose performance or execution would
interfere with the performance of his duties under this Agreement. Employee may
serve as a director of other corporations or entities with the prior approval of
the Board of Directors, which approval will not be unreasonably withheld.
4.2. Reporting. Employee shall report to the Board of
Directors of the Company.
5. Expenses. Employee will be authorized to incur
reasonable and necessary expenses in connection with the discharge of Employee's
duties and in promoting the business of the Company. The Company will reimburse
Employee for all such reasonable and necessary expenses in accordance with its
expense reimbursement policy and upon presentation of a properly itemized
account of such expenditures, setting forth the business reasons for such
expenditures.
6. Other Benefits; Vacation. Except as otherwise set forth
herein, Employee shall be entitled to paid vacation and the other fringe
benefits as set forth below.
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6.1. Annual Accrual of Vacation. Employee shall be
entitled to four (4) weeks paid vacation for each year of service under this
Agreement, during which time Employee's compensation shall be paid in full. On
the first day of the term of this Agreement, and on each anniversary date during
the term of this Agreement, Employee shall earn the four (4) weeks of paid
vacation time. Employee may accumulate vacation time to a maximum of six (6)
weeks and may carry such accumulated (earned and unused) vacation time from one
year of service to another of service, subject to such maximum. At the end of
each year of service during the term of this Agreement, Employee shall have the
option to require the Company to pay to Employee an amount for any part or all
of the Employee's earned and unused vacation time. Upon termination of
employment, the Company shall purchase any earned and unused vacation time up to
the maximum carry-over vacation time of six (6) weeks.
6.2. Fringe Benefits. Employee shall be entitled to
use of an automobile of his choice provided by the Company with all operating
expenses paid by the Company, and shall receive such pension, profit sharing and
fringe benefits such as hospitalization, medical, life and other insurance
benefits, vacation, sick pay and short-term disability as the Board of Directors
of the Company may, from time to time, determine to provide for the key
executives of the Company. Employee shall be provided a health club membership
(and dues), including initiation fees, for a club of his choice. Employee shall
be entitled to (i) executive health benefits providing for annual physicals and
supplementary medical coverage consistent with his status as President and Chief
Executive Officer and may submit to the Board of Directors other executive
plans, and (ii) reimbursement for estate and financial planning services in an
amount not to exceed $10,000 per year. The benefits described in this Section
6.2 are collectively referred to herein as "Fringe Benefits."
7. Termination By the Company Due To Death, Disability or
Cause.
7.1. Death, Disability. In the event of Employee's
death during the Term, this Agreement and the employment of Employee hereunder
shall terminate automatically as of the date of death, except that Sections 10,
11, 12, 13, 14 and 15 shall survive such termination. In the event of Employee's
Disability (as hereinafter defined) for ninety (90) consecutive calendar days or
one hundred and twenty (120) calendar days in the aggregate during any twelve
(12) months of the Term, the Company shall have the right, by written notice to
Employee, to terminate this Agreement and the employment of Employee hereunder
as of the date of such notice, except that Sections 10, 11, 12, 13, 14 and 15
shall survive such termination. "Disability" for the purposes of this Agreement
shall mean Employee's physical or mental disability so as to render Employee
substantially incapable of carrying out Employee's duties under this Agreement.
In the event of termination pursuant to this Section 7.1, the Company shall not
be under any further obligation to Employee hereunder except to (a) promptly pay
Employee (i) salary and benefits (and Bonuses, if any) accrued and payable up to
the date of termination and (ii) reimbursement for expenses accrued and payable
under Section 5 hereof, and (b) continue Employee's Fringe Benefits for a period
of six months from the date of termination.
7.2. Cause. The Company shall have the right to
discharge Employee and terminate this Agreement for Cause (as hereinafter
defined) during the Term by written notice to Employee and this Agreement shall
be deemed terminated as of the date of such notice, except
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that Sections 10, 11, 12, 13, 14 and 15 shall survive such termination. For the
purpose of this Agreement, "Cause" shall mean (a) conviction of, or a plea of
nolo contendere to, a felony, (b) gross neglect, gross misconduct or gross
failure in the carrying out of Employee's duties in accordance with Section 4
hereof, (c) the engaging by Employee in a material act or acts of dishonesty
affecting the Company, any affiliate or any client of the Company, or (d)
drunkenness or the illegal use of drugs by Employee materially interfering with
performance of Employee's obligations under this Agreement. In the event of a
termination pursuant to this Section 7.2, the Company shall not be under any
further obligation to Employee hereunder, except to promptly pay Employee (a)
salary and benefits (and Bonuses, if any) accrued and payable up to the date of
termination and (b) reimbursement for expenses accrued and payable under Section
5 hereof.
7.3. Termination By the Company Other Than Due to
Death, Disability or Cause. This Agreement and the employment of Employee
hereunder may be terminated by the Company other than due to death, Disability
or Cause by giving thirty (30) days' prior written notice to the Employee at any
time, during the Term and such termination shall be effective as of the date of
termination stated in such notice, except that Sections 10, 11, 12, 13, 14 and
15 shall survive such termination. In the event of a termination pursuant to
this Section 7.3, the Company shall not be under any further obligation to
Employee hereunder, except to (a) promptly pay Employee (i) salary and benefits
(and Bonuses, if any) accrued and payable up to the date of termination, and
(ii) reimbursement for expenses accrued and payable under Section 5 hereof, and
(b) pay Employee the Severance Benefits (as defined below) pursuant to Section
7.4.
7.4. Severance Benefits. "Severance Benefits" shall
mean, for purposes of this Agreement, (a) one-half of Employee's Base Salary as
of the date of termination (the "Severance Base Salary") for a period of six
full calendar months from the date of termination and (b) continuation of all of
Employee's Fringe Benefits for a period of twelve full calendar months from the
date of termination. Any Severance Base Salary payable under this Agreement
shall be paid to Employee in six equal installments on the last business day of
each of the six calendar months following the date of termination of employment.
To the extent any of the Fringe Benefits are not readily available to Employee
following termination of employment, the monthly cost thereof shall be paid to
Employee on the last business day of each of the twelve calendar months
following the date of termination of employment.
8. Termination by the Employee. The Employee shall have the
right to terminate Employee's employment under this Agreement by giving thirty
(30) days prior written notice to the Company at any time, and such termination
shall be effective as of the date of termination stated in such notice, except
that Sections 10, 11, 12, 13, 14 and 15, shall survive such termination.
8.1. Termination Other Than for Constructive
Termination. In the event Employee terminates employment under this Section 8,
the Company shall not be under any further obligation to Employee hereunder,
except to promptly pay Employee (a) salary and benefits (and Bonuses, if any)
accrued and payable up to the date of termination, and (b) reimbursement for
expenses accrued and payable under Section 5 hereof.
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8.2. Constructive Termination. Notwithstanding
anything in this Agreement to the contrary, a termination will be deemed to have
occurred pursuant to this Section 8 if there should occur the following
("Constructive Termination"):
(a) a material adverse change in Employee's
position causing it to be of materially less stature or responsibility without
Employee's written consent, and such a materially adverse change shall in all
events be deemed to occur if Employee no longer serves as President and Chief
Executive Officer, unless Employee consents in writing to such change,
(b) a reduction, without Employee's written
consent or except as expressly permitted by this Agreement, in Employee's Base
Salary and Fringe Benefits by more than five percent (5%), or
(c) a relocation of his principal place of
employment by more than 50 miles without Employee's consent.
In the event Employee terminates his employment due to a Constructive
Termination, the Company shall not be under any further obligation to Employee
hereunder, except to pay Employee (a) within thirty (30) days of such
termination (i) salary and benefits (and Bonuses, if any) accrued and payable up
to the date of termination, and (ii) reimbursement for expenses accrued and
payable under Section 5 hereof, and (b) Severance Benefits pursuant to Section
7.4.
9. Change In Control Benefits. Should there occur a Change
in Control (as defined below), then the following provisions shall become
applicable:
9.1. During the period (if any) following a Change in
Control that Employee shall continue to provide services under this Agreement,
then the terms and provisions of this Agreement shall continue in full force and
effect.
9.2. Notwithstanding any other provision of Sections
7 or 8, in the event of (a) a termination by the Company pursuant to Section 7.3
at any time within twelve (12) months after a Change in Control or (b) a
Constructive Termination by the Company pursuant to Section 8 at any time within
twelve (12) months after a Change in Control or (c) a material reduction in
Employee's line of reporting responsibility solely by virtue of the Company
being acquired and made part of a larger entity where the Employee's line of
reporting responsibility is not comparable to those of other executives of the
acquiring entity who are the senior managers of the acquiring entity's
subsidiaries, divisions or other major operating units, the Company shall (x)
pay Employee within thirty (30) days of such event (i) salary and benefits (and
Bonuses, if any) accrued and payable up to the date of such event, (ii)
reimbursement for expenses accrued and payable under Section 5 hereof, (y) pay
Employee Severance Benefits pursuant to Section 7.4 and (z) pay $500,000 to a
charitable organization designated in writing by Employee within thirty (30)
days of such event.
For purposes of this Section 9, a Change of Control shall be
deemed to occur upon:
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(I) the sale, lease, conveyance or other disposition
of all or substantially all of the Company's assets as an entirety or
substantially as an entirety to any person, entity or group of persons acting in
concert other than in the ordinary course of business;
(II) any transaction or series of related
transactions (as a result of a tender offer, merger, consolidation or otherwise)
that results in any Person (as defined in Section 13(h)(8)(E) under the
Securities Exchange Act of 1934) becoming the beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of more than 50% of the aggregate voting power of all classes of common equity
of the Company, except if such Person is (A) a subsidiary of the Company, (B) an
employee stock ownership plan for employees of the Company or (C) a company
formed to hold the Company's common equity securities and whose stockholders
constituted at the time such company became such holding company, substantially
all the stockholders of the Company; or
(III) the liquidation or winding up of the business of
the Company.
10. Confidentiality. Employee agrees that during and after
the Term any confidential information concerning the Company or its business or
any Affiliates of the Company (including, without limitation, trade secrets,
plans, processes, customer lists, contracts and compilations of information,
records and specifications) which comes to Employee in the course of Employee's
employment and which is not (independent of disclosure by Employee) public
knowledge or general knowledge in the trade, shall remain confidential and,
except as required by legal process, may not be used or made available for any
purpose except as necessary in the performance of Employees duties hereunder.
Employee agrees that, upon termination of Employee's employment hereunder,
Employee will promptly deliver to the Company all materials constituting
confidential information (including all copies thereof) that are in the
possession of, or under the control of, the Employee, and Employee will not make
or retain any copies or extracts of such materials.
11. Remedies.
11.1. Nothing herein contained is intended to waive or
diminish any rights the Company or Employee may have at law or in equity at any
time to protect and defend its legitimate property interests including its
business relationship with third parties, the foregoing provisions being
intended to be in addition to and not in derogation or limitation of any other
rights the Company or Employee may have at law or in equity.
11.2. A breach by Employee of the provisions of
Section 10 of this Agreement may cause the Company irreparable injury and
damage. Employee therefore agrees that damages may be an inadequate remedy and
the Company shall be entitled to seek injunctive and/or other equitable relief
to prevent any breach of Section 10 of this Agreement and to secure its
enforcement.
12. Employee for Hire. In addition to Employee's services,
the Company shall own forever and throughout the world (exclusively during the
current and renewed or extended term of copyright anywhere in the world and
thereafter, non-exclusively) all rights of any kind or
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nature now or hereafter known in and to all of the products of Employee's
services performed under this Agreement in any capacity and any and all parts
thereof, including, without limitation, copyright, patent and all other property
or proprietary rights in or to any ideas, concepts, designs, drawings, plans,
prototypes or any other similar creative works and to the product of any or all
of such services under this Agreement ("Inventions"), Employee acknowledging and
agreeing that for copyright purposes, Employee is performing services as the
Company's employee-for-hire; provided, however, that such term shall not include
Inventions that do not relate to the Company's current business or research and
development and were developed without use of any Company trade secret
information or Company facilities or equipment. Without limiting the generality
of the previous sentence, Employee acknowledges and agrees that all memoranda,
notes, records and other documents made or compiled by Employee or made
available to Employee during the Term of this Agreement concerning the Company
business shall be the Company's property and shall be delivered by Employee to
the Company upon termination of this Agreement or at any other time at the
Company's request. In addition, the Employee hereby agrees to assign to Company
in writing (and take any and all other actions as shall be reasonably requested
by Company in order to carry out the intent of this Section) any and all rights,
title or interest of Employee in any such copyrights, patents, property or
proprietary rights relating to such Inventions.
13. Notices. Any notices pertaining to this Agreement shall
be addressed to the parties at their addresses stated on the first page hereof.
All notices shall be in writing and shall be deemed duly given if personally
delivered or sent by registered or certified mail, overnight or express mail. If
sent by registered or certified mail, notice shall be deemed to have been
received and effective five days after mailing; if by overnight or express mail,
notice shall be deemed received the next business day after being sent. Any
party may change its address for notice hereunder by giving notice of such
change in the manner provided herein.
14. Entire Agreement. This Agreement contains the entire
agreement of the parties respecting the subject matter contained herein. No
modification of any provision hereof shall be effective except by a written
agreement signed by all of the parties hereto.
15. Arbitration (a) It is understood and agreed between the
parties hereto that, except with respect to claims for workers' compensation or
unemployment compensation benefits, any and all claims, grievances, demands,
controversies, causes of action or disputes of any nature whatsoever (including
but not limited to tort and contract claims, and claims upon any law, statute,
order, or regulation) (hereinafter "Claims"), arising out, in connection with,
or in relation to (i) this Agreement, (ii) questions of arbitrability under this
Agreement, or (iii) any relationship between Employee and the Company before, at
the time of entering, during the term of, upon or after expiration or
termination of this Agreement, shall be resolved by final, binding, nonjudicial
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"), which rules are incorporated herein by
reference. Such dispute resolution process shall be confidential and shall be
conducted in accordance with the Kansas Rules of Evidence.
(b) Notwithstanding any contrary provision that may
be contained in the applicable AAA rules, the parties hereby agree that
discovery shall be permitted in connection
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with any arbitration pursuant to this Agreement, in accordance with the
provisions of the Kansas Code of Civil Procedure. Neither party nor the
arbitrator shall disclose the existence, content, or results of any arbitration
hereunder without the prior written consent of all parties. Except as provided
herein, the Federal Arbitration Act shall govern the interpretation, enforcement
and all proceedings pursuant to this Section 15(b). The Arbitrator shall apply
the substantive law (and the law of remedies, if applicable) of the State of
Kansas, or federal law, or both, as applicable. The arbitrator is without
jurisdiction to apply any different substantive law. The arbitrator shall have
the authority to entertain a motion to dismiss and/or a motion for summary
judgment by any party and shall apply the standards governing such motions under
Kansas law. The arbitrator shall render an award and a written, reasoned opinion
in support thereof. Such award may include attorneys' fees and costs to the
prevailing party. Judgment upon the award may be entered in any court having
jurisdiction thereof.
(c) Adherence to this dispute resolution process
shall not limit the Company's right to obtain any provisional remedy, including
but without limitation, injunctive or similar relief, from any court of
competent jurisdiction in the event of a breach of Section 10 of this Agreement.
This dispute resolution process shall survive the termination of Employee's
employment.
(d) In the event that any party shall bring an
action in connection with the performance , breach or interpretation hereof,
then the prevailing party in such action as determined by the court or other
body having jurisdiction shall be entitled to recover from the losing party in
such action as determined by the court or either body having jurisdiction, all
reasonable costs and expense of litigation or arbitration, including reasonable
attorney's fees, court costs, costs of investigation and other costs reasonably
related to such proceeding.
(e) By signing this Agreement, both Employee and the
Company are giving up their respective right to a jury trial.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first set forth above.
THE COMPANY:
THE MANAGEMENT NETWORK GROUP, INC.,
a Kansas corporation
By:
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Xxxx X. Xxxxxxx,
Secretary
EMPLOYEE:
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XXXXXXX X. XXXXXXX
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