1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
RELATING TO CHANGE OF CONTROL
EMPLOYMENT AGREEMENT (the "Agreement") by and between National Tech
Team, Inc., a Delaware corporation (the "Company") and
(the "Executive") dated as of the day of .
The Board of Directors of the Company (the `Company Board") has
determined that it is in the best interests of the Company and its shareholders
to diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or potential Change of
Control and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any potential or pending Change of
Control, and to provide the Executive with a severance package if the Executive
is terminated after a Change of Control. Therefore, in order to accomplish these
objectives, the Company Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" shall mean the date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if a Change
of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) otherwise arose in connection with or in
anticipation of the Change of Control, then for all purposes of this Agreement,
the "Effective Date" shall mean the date immediately prior to the date of such
termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on Twenty four (24) months after such
date.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" of the Company shall mean:
(a) The sale of all then outstanding shares of common stock of
the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of the
directors (the Outstanding Company Voting Securities"), in an amount sufficient
to elect a majority of the Company Board; or
(b) The consummation of the sale or other disposition of all
or substantially all of the assets or operations of the Company.
2
3. Employment Period. The "Employment Period" shall be the period
commencing on the Effective Date and ending on the anniversary of such date.
4. Terms of Employment.
(a) Position and Duties. During the Employment Period,
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities.
(b) Compensation. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary") at least equal to
twelve times the highest monthly base salary paid or payable to the Executive by
the Company in the twelve-month period immediately preceding the month in which
the Effective Date occurs. Executive shall be eligible to participate in any
bonus program adopted by the Company. Executive shall be entitled to participate
in all savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company. Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by the Company (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs).
5. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period
or Disability that continues for 30 days after the Company provides Executive of
notice of its determination of Disability. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) violations by the Executive of the Executive's
obligations under Section 4(a) (other than as a result of incapacity due to
physical or mental illness) which are demonstrably, willful and deliberate on
the Executive's part, which are committed in bad faith or without reasonable
belief that such violations are in the best interests of the Company and which
are not remedied in a reasonable period of time after receipt of written notice
from the Company specifying such violations or (ii) the conviction of the
Executive of a felony involving moral turpitude.
2
3
(c) The Executive's employment may be terminated during the
Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position, authority, duties or
responsibilites prior to the Change of Control, or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities that a reasonable person holding a similar position would find
untenable, and the continuance of such assignment of duties or other such action
for a period of six (6) months;
(ii) the Company's requiring the Executive to be
based at any office or location other than in Southeastern Michigan, except for
any short-term assignment where the Company pays all travel or temporary
relocation costs incurred by the Executive;
(iii) any failure by the Company to comply with and
satisfy Section 10(c), or any failure by any successor to assume and offer to
perform this Agreement in accordance with Section 10(c) provided that such
successor has received at least ten days prior written notice from the company
or the Executive of the requirements of Section 10(c).
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b).
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, and (ii) to the extent practicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. The Company and the
Executive are not precluded from asserting any other fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be; (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination; and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. Obligations of the Company upon Termination.
(a) Good Reason: Other than for Cause, Death or Disability.
If, during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, Death or Disability or the Executive shall
terminate employment for Good Reason the Company shall;
3
4
(i) pay to the Executive in a lump sum in cash within
30 days after the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the extent not theretofore paid,
and (2) the product of (x) the Annual Bonus as if earned at the target level and
(y) a fraction, the numerator of which is the number of days from beginning of
the calendar year in which the Date of Termination occurs through the Date of
Termination, and the denominator of which is 365, and (3) any accrued vacation
pay, in which case to the extent not theretofore paid (the sum of the amounts
described in clauses (1), (2) and (3) shall be hereinafter referred to as the
"Accrued Obligations");
B. the amount (such amount shall be
hereinafter referred to as the "Severance Amount") equal to the Executive's
Annual Base Salary; and
(ii) provide the Executive with executive
outplacement services for a period of up to twelve (12) months through a
recognized outplacement provider that is agreed to by the Company and the
Executive;
(iii) continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies of the
company as if the Executive's employment had not been terminated for a period of
twelve (12) months; provided, however, that if the Executive becomes re-employed
with another employer and is eligible to receive medical or other welfare
benefits under another employer provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under such other
plan during such applicable period of eligibility (such continuation of such
benefits for the applicable period herein set forth shall be hereinafter
referred to as "Welfare Benefit Continuation"). Any benefits received by the
Executive pursuant to this Section 6(a)(iii) shall not reduce the period of time
the Executive is entitled to receive COBRA continuation health coverage as a
result of the Executive's termination of employment.
(iv) immediately upon termination vest any options
granted to Executive, pursuant to the Company's 1990 Nonqualified Stock Option
Plan (the "Plan") or any Plan which succeeds the Plan.
(v) pay to the Executive the proceeds of the
Executive Savings Plan, including all accumulated interest and dividends.
(b) Death, Retirement or Disability. If the Executive's
employment is terminated by reason of the Executive's death, retirement or
Disability during the Employment Period, this Agreement shall terminate without
further obligations to the Executive's legal representatives or the Executive,
as the case may be, under this Agreement.
(c) Cause, Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period or if the
4
5
Executive terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
Annual Base Salary through the Date of Termination plus the amount of any
compensation previously deferred by the Executive, in each case to the extent
theretofore unpaid.
7. Limitation on Payment. In the event that the Executive is a
"disqualified individual" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended ("the Code"), the parties expressly agree that
the payments described in Paragraph 6 of this Agreement and all other payments
to the Executive under any other agreements or arrangements with any persons
that constitute "parachute payments" within the meaning of Section 280G of the
Code are collectively subject to an overall maximum limit. The maximum limit
shall be One Dollar ($1.00) less than the aggregate amount that would otherwise
cause any such payments to be considered a "parachute payment" within the
meaning of Section 280G of the Code, as determined by the Corporation.
Accordingly, to the extent that the payments would be considered a "parachute
payment" with respect to the Executive, then the portions of such payments shall
be reduced or eliminated in the following order until the remaining payments
with respect to the Executive are within the maximum described in this Paragraph
7.
(a) First, any cash payment to the Executive;
(b) Second, any "parachute payments" not described in this
Agreement; and
(c) Third, any forgiveness of indebtedness of the Executive to
the Corporation.
The Executive expressly and irrevocably waives any and all
rights to receive any "parachute payments" that exceed the maximum limit
described in this Paragraph 7.
8. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company and its respective businesses, which
has been obtained by the Executive during the Executive's employment by the
Company which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
9. Non-Competition Covenant.
(a) In consideration for entry into this Agreement, Executive
covenants and agrees that he/she shall not, either directly or indirectly, for
his/her own account or
5
6
as agent, servant or employee, or as a shareholder of any corporation, or as a
member of any firm engage or attempt to engage in the production, development,
sale, distribution, solicitation or promotion of the sale or distribution of the
Services (as herein defined) for one (1) year after the Date of Termination
(hereinafter referred to as "the Restriction Period"), in any areas within a
fifty (50) mile radius of any of the Company's offices ("the Restricted Area").
Executive further covenants and agrees that he/she will not directly or
indirectly solicit or call on any customer (as hereinafter defined) with respect
to the Services during the Restriction Period. The Executive will not assist any
member of his family, including his spouse, parents, brothers, sisters,
children, aunts, uncles or cousins, in any business venture which engages in the
production, development, sale or distribution of the Services or which calls on
any Customer with respect to the Services. However, the Executive may at any
time own, as an inactive investor, or acquire securities of any competitor
corporation listed on a national securities exchange or the over-the-counter
market, so long as his/her holdings in any one such corporation shall not
constitute more than 5% of the voting stock or 5% of the outstanding capital
stock of such corporation.
(b) Executive further covenants and agrees that he/she shall
not, either directly or indirectly for his/her own account or as an agent,
servant or employee, or as a shareholder of any corporation, or member of any
firm, solicit or call on any Customer with respect to the Services during the
Restriction Period.
(c) Executive further covenants and agrees that he/she shall
not, either directly or indirectly, for his/her own account or either as an
agent, servant or employee, or as a shareholder of any corporation or member of
any firm, engage, hire, employ or solicit the employment of any employee of, or
independent contractor working for, the Company, or any of its subsidiaries or
affiliates, if any, during the Restriction Period.
(d) As used in this Section 10, the term "Services" shall mean
the goods, merchandise, products, data processing services, financing business,
training services, contract services, direct placement business, and other
services of the Company or its successors or assigns (or any goods, products or
services similar thereto), sold distributed, or rendered by the Company or its
subsidiaries or affiliates at the time the Executive's employment ceased or
during any period six (6) months prior thereto.
(e) As used in this Section 10, the term "Customer" shall mean
all persons, firms or corporations for whom the Company or its subsidiaries or
affiliates performed services or to whom the Company or its subsidiaries or
affiliates sold its Services at the time the Executive's employment ceased or
during any period six (6) months prior thereto, notwithstanding the fact that
some or all of such persons, firms or corporations may have been induced to give
their patronage or business to the Company or its subsidiaries or affiliates by
the solicitation of the Executive or due to Executive's employment by the
Company. The Executive will not violate this provision if he/she is selling
products or services other than Services to a Customer.
(f) If any of the restrictions set forth above should, for any
reason whatsoever, be declared invalid by a court of competent jurisdiction, the
validity or
6
7
enforceability of the remainder of such restrictions shall not thereby be
adversely affected.
(g) The Executive recognizes that the foregoing territorial
and time limitations are reasonable and properly required for the adequate
protection of the business of the Company, and that in the event that any such
territorial or time limitation is found to be unreasonable by a court of
competent jurisdiction, then the Executive agrees and submits to the reduction
of either said territorial or time limitation to such an area or period as the
court shall find reasonable.
(h) In the event that the Executive shall be in violation of
the aforementioned restrictive covenants, then the time limitation thereof in
respect of the Executive shall be extended for a period of time equal to the
period of time during which such breach or breaches should occur; and, in the
event the Company should be required to seek relief from such breach in any
court, board of arbitration or other tribunal, then the covenant shall be
extended for a period of time equal to the pendency of such proceedings,
including all appeals.
10. Successors and Assigns.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan, without reference to
principles or conflict of laws. All litigation related to this Agreement shall
be brought in a court located in the State of Michigan, and each party, for the
purposes of such litigation, hereby submits to the exclusive jurisdiction and
venue of that court. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
7
8
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
or at the most current address of record designated in the Executive's personnel
file.
If to the Company:
Xxxx Xxx
Chief Executive Officer
National TechTeam, Inc.
00000 Xxxx 00 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 5(c)(i)-(iii), shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company is "at
will" and, prior to the Effective Date, may be terminated by either the
Executive or the Company at any time. Moreover, if prior to the Effective Date,
the Executive's employment with the Company terminates, then the Executive shall
have no further rights under this Agreement. The Executive further acknowledges
that this Agreement does not give the Executive any additional right to
participate in any plan, program, etc.
(g) This Agreement constitutes the entire agreement between
the parties concerning the subject matter hereof. Any prior understandings,
8
9
representations, promises, undertakings, agreements or inducements, whether
written or oral, concerning the subject matter hereof not contained herein shall
have no force and effect.
(h) This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives. An agreement to amend this Agreement can
be entered into on behalf of the Company only by the President of the Company
after approval of the Company Board.
IN WITNESS WHEREOF, the Company has by its appropriate officer executed
this Agreement and Executive has executed this Agreement.
NATIONAL TECHTEAM, INC.
By: ____________________________
Xxxx Xxx
Chief Executive Officer
EXECUTIVE
By: ____________________________
9
