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Exhibit number 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
November 1, 1999, effective as of October 7, 1999, by and between Xxxxxxx X.
Xxxxxxxx, an individual ("Executive") and Gartner Group, Inc., a Delaware
corporation (the "Company").
RECITALS
A. Executive is currently Executive Vice President and Chief
Financial Officer of the Company. The parties desire that Executive be named
President and Chief Executive Officer of the Company effective as of October 7,
1999, and in connection therewith desire that the terms of Executive's
employment be set forth herein.
B. The Company and Executive have previously entered into an
Employment Agreement dated as of November 12, 1998 (the "Prior Agreement"). The
Company and Executive desire to amend the Prior Agreement as provided herein.
C. The Company and Executive desire to provide for Executive's
continued employment with the Company upon and subject to the terms and
conditions set forth herein.
AGREEMENT
THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereby agree as follows:
1. Employment. Executive will serve as President and Chief Executive
Officer of the Company for the Employment Term specified in Section 3 below.
Executive will report solely to the Board of Directors and will render such
services consistent with the foregoing role as the Board of Directors may from
time to time direct. Executive's office shall be located at the executive
offices of the Company in Stamford, Connecticut. Executive may (i) serve on
corporate, civic or charitable boards or committees and (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, to the
extent consistent with the Company's policies (as applicable) or are disclosed
to the board of directors and the board determines in good faith that such
activities do not interfere with the performance of Executive's
responsibilities hereunder.
2. Board of Directors. Executive shall be immediately appointed to
the Board of Directors of the Company (the "Board"). During the Employment
Term, the Company shall include Executive on the Company's slate of nominees to
be elected to the Board at each annual meeting of stockholders of the Company.
Upon termination of the Employment Term for any reason, Executive shall
promptly resign as a director of the Company.
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3. Term. The employment of Executive pursuant to this Agreement
shall continue through October 1, 2002 (the "Employment Term"), unless extended
or earlier terminated as provided in this Agreement. The Employment Term shall
automatically be extended for additional one-year periods commencing on October
2, 2002 and continuing each year thereafter, unless either Executive or the
Company gives the other written notice, in accordance with Section 13(a) and at
least 90 days prior to the then scheduled expiration of the Employment Term, of
such party's intention not to extend the Employment Term.
4. Salary. As compensation for the services rendered by Executive
under this Agreement, the Company shall pay to Executive a base salary
initially equal to $37,500 per month ("Base Salary") for fiscal year 2000,
payable to Executive on a monthly basis in accordance with the Company's
payroll practices as in effect from time to time during the Employment Term.
The Base Salary shall be subject to adjustment by the Board of Directors of the
Company or the Compensation Committee of the Board of Directors, in the sole
discretion of the Board or such Committee, on an annual basis; provided,
however, that Executive's salary may not be decreased other than any such
reduction consistent with a general reduction of pay across the executive staff
as a group, as an economic or strategic measure due to poor financial
performance by the Company.
5. Bonus. In addition to his Base Salary, Executive shall be
entitled to participate in the Company's executive bonus program. The annual
target bonus shall be established by the Board or its Compensation Committee,
in the discretion of the Board or such Committee, and shall be payable based on
achievement of specified Company and individual objectives. Executive's target
bonus for the fiscal year ending September 30, 2000 has previously been set at
$450,000, with a maximum bonus of $900,000. Such bonus amounts shall be subject
to annual adjustment by the Board or the Compensation Committee of the Board,
in the sole discretion of the Board or such Committee, on an annual basis;
provided, however, that Executive's target bonus may not be decreased without
Executive's consent other than any such reduction consistent with a general
reduction of pay across the executive staff as a group, as an economic or
strategic measure due to poor financial performance by the Company. For the
fiscal year ending September 30, 2000, Executive's bonus may not be less than
$225,000.
6. Executive Benefits.
(a) Stock Options. In addition to the options and restricted
stock awards previously held by Executive, on September 30, 1999 Executive was
granted by the Compensation Committee options to purchase an aggregate of
500,000 shares of Class A Common Stock of the Company ("Stock") (the "Fiscal
1999 Option Grant") under the Company's 1991 Stock Option Plan (the "1991
Plan") and 1998 Long Term Stock Option Plan (the "1998 Plan"). In addition,
Executive shall be granted, at the next meeting of the Board or the
Compensation Committee following the date hereof, options to purchase an
additional 500,000 shares of Stock under the Plan, at an exercise price equal
to fair market value of the Stock on the date of grant, determined as provided
under the Plan (the "Fiscal 2000 Option Grant"). Each of the Fiscal 1999 Option
Grant and the Fiscal 2000 Option Grant shall vest 25% one year after grant and
1/48th per month thereafter, subject to continuous status as an employee or
consultant (such that all the options subject to each grant shall have vested 4
years from the date of grant assuming continuous service) ; provided that
vesting of all or a portion of such options shall accelerate upon certain
events as described below.
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(i) Shares issuable under the Company's 1991 Plan and 1998 Plan
(including the shares issuable on exercise of Executive's Fiscal 1999 Option
Grant and Fiscal 2000 Option grant) have been registered on Form S-8 under the
Securities Act of 1933, as amended.
(ii) In the event that during the Employment Term the Company
should create a material spin-off entity in which the Company intends to offer
an equity stake to third party investors or the public and in which executives
or employees of the Company or such entity are to receive capital stock or
options to purchase capital stock, then Executive shall be granted capital
stock in such entity, or an option to purchase such capital stock, in such
amounts as the Board of Directors of the Company or its Compensation Committee
shall deem appropriate in connection with the formation or spin-off.
(b) Other Employee and Executive Benefits. Executive will be entitled
to receive all benefits provided to senior executives, executives and employees
of the Company generally from time to time, including medical, dental, life
insurance and long-term disability, and the executive split-dollar life
insurance and executive disability plan, in each case so long as and to the
extent the same exist; provided, that in respect to each such plan Executive is
otherwise eligible and insurable in accordance with the terms of such plans.
Executive will also be entitled to automobile benefits pursuant to a policy to
be implemented by the Company with the concurrence of the Chairman of the
Compensation Committee of the Board of Directors.
(c) Vacation, Sick Leave, Holidays and Sabbatical. Executive shall be
entitled to vacation, sick leave, holidays and sabbatical in accordance with
the policies of the Company as they exist from time to time. Executive
understands that under the current policy he is entitled to up to four (4)
weeks vacation per calendar year. Vacation which is not used during any
calendar year will roll over to the following year only to the extent provided
under the Company's vacation policies as they exist from time to time.
7. Severance Benefits.
(a) At Will Employment. Executive's employment shall be "at will."
Either the Company or Executive may terminate this agreement and Executive's
employment at any time, with or without Business Reasons (as defined in Section
8(a) below), in its or his sole discretion, upon sixty (60) days' prior written
notice of termination.
(b) Involuntary Termination. If at any time during the term of this
Agreement other than following a Change in Control to which Section 7(c)
applies the Company terminates the employment of Executive involuntarily and
without Business Reasons or a Constructive Termination occurs, then Executive
shall be entitled to receive the following: (i) salary and vacation accrued
through the Termination Date plus continued salary for a period of three (3)
years following the Termination Date, payable in accordance with the Company's
regular payroll schedule as in effect from time to time, (ii) at the
Termination Date 100% of Executive's target bonus for the fiscal year in which
the Termination Date occurs plus any unpaid bonus from the prior fiscal year,
(iii) following the end of the fiscal year in which the Termination Date occurs
and management bonuses have been determined, a pro rata share (based on the
proportion of the fiscal year during which Executive remained an employee of
the Company) of the bonus that would have been payable to Executive
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under the bonus plan in excess of 100% of Executive's target bonus for the
fiscal year, (iv) following the end of the first fiscal year following the
fiscal year in which the Termination Date occurs, 100% of Executive's target
bonus for such following fiscal year (or, if the target bonus for such year was
not previously set, then 100% of Executive's target bonus for the fiscal year
in which the Termination Date occurred), (v) acceleration in full of vesting of
all outstanding stock options, TARPs and other equity arrangements subject to
vesting and held by Executive (and in this regard, all such options and other
exercisable rights held by Executive shall remain exercisable for (A) in the
case of the Fiscal 1999 Option Grant, the Fiscal 2000 Option Grant, any future
option grants, and all prior option grants having an exercise price per share
equal to or less than the fair market value of the Company's Common Stock on
the date hereof, one year following the Termination Date and (B) in the case of
all other option grants, 90 days following the Termination Date, or in the case
of any option such longer period as may be provided in the applicable plan or
agreement), (vi) (A) for three (3) years following the Termination Date,
continuation of group health benefits at the Company's cost pursuant to the
Company's standard programs as in effect from time to time (or at the Company's
election substantially similar health benefits as in effect at the Termination
Date, through a third party carrier) for Executive, his spouse and any
children, and (B) thereafter, to the extent COBRA shall be applicable to the
Company, continuation of health benefits for such persons at Executive's cost,
for a period of 18 months or such longer period as may be applicable under the
Company's policies then in effect, provided the Executive makes the appropriate
election and payments, (vii) continuation of Executive's auto benefits for one
year following the Termination Date, and (viii) no other compensation,
severance or other benefits, except only that this provision shall not limit
any benefits otherwise available to Executive under Section 7(c) in the case of
a termination following a Change in Control. Notwithstanding the foregoing,
however, the Company shall not be required to continue to pay the bonus
specified in clauses (iii) or (iv) hereof for any period following the
Termination Date if Executive violates the noncompetition agreement set forth
in Section 12 during the three (3) year period following the Termination Date.
(c) Change in Control.
(i) Benefits. If during the term of this Agreement a "Change in
Control" occurs (as defined below), then Executive shall be entitled to receive
the following: (i) salary and vacation accrued through the date of the Change
in Control plus an amount equal to three (3) years of Executive's salary as
then in effect, payable immediately upon the Change in Control, (ii) an amount
equal to three times Executive's target bonus for the fiscal year in which the
Change in Control occurs (as well as any unpaid bonus from the prior fiscal
year), all payable immediately upon the Change in Control, (iii) acceleration
in full of vesting of all outstanding stock options, TARPs and other equity
arrangements subject to vesting and held by Executive (and in this regard, all
such options and other exercisable rights held by Executive shall remain
exercisable for (A) in the case of the Fiscal 1999 Option Grant, the Fiscal
2000 Option Grant, any future option grants, and all prior option grants having
an exercise price per share equal to or less than the fair market value of the
Company's Common Stock on the date hereof, one year following the date of the
Change in Control and (B) in the case of all other option grants, 90 days
following the date of the Change in Control, or in the case of any option such
longer period as may be provided in the applicable plan or agreement) (iv) (A)
for at least three (3) years following the date of the Change in Control (even
if Executive ceases employment), continuation of group health benefits at the
Company's cost pursuant to the Company's standard programs as in effect from
time to time (or at the Company's election
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substantially similar health benefits as in effect at the Termination Date (if
applicable), through a third party carrier) for Executive, his spouse and any
children, and (B) thereafter, to the extent COBRA shall be applicable,
continuation of health benefits for such persons at Executive's cost, for a
period of 18 months or such longer period as may be applicable under the
Company's policies then in effect, provided the Executive makes the appropriate
election and payments, and (v) no other compensation, severance or other
benefits.
(ii) Additional Payments by the Company.
A. If it is determined (as hereafter provided) that any
payment or distribution by the Company to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without limitation any stock
option, stock appreciation right or similar right, or the lapse or termination
of any restriction on or the vesting or exercisability of any of the foregoing
(a "Payment"), would be subject to the excise tax imposed by Section 4999 of
the Code (or any successor provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties, are
hereafter collectively referred to as the "Excise Tax"), then Executive will be
entitled to receive an additional payment or payments (a "Gross-Up Payment") in
an amount such that, after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
B. Subject to the provisions of clause F below, all
determinations required to be made under this Section 7(c)(ii), including
whether an Excise Tax is payable by Executive and the amount of such Excise Tax
and whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, will be made by the Company's independent certified public accountants
prior to the Change in Control (the "Accounting Firm"). The Company will direct
the Accounting Firm to submit its determination and detailed supporting
calculations to both the Company and Executive within 15 calendar days after
the date of the Change in Control or the date of Executive's termination of
employment, if applicable, and any other such time or times as may be requested
by the Company or Executive. If the Accounting Firm determines that any Excise
Tax is payable by Executive, the Company will pay the required Gross-Up Payment
to Executive within five business days after receipt of such determination and
calculations. If the Accounting Firm determines that no Excise Tax is payable
by Executive, it will, at the same time as it makes such determination, furnish
Executive with an opinion that he has substantial authority not to report any
Excise Tax on his federal, state, local income or other tax return. Any
determination by the Accounting Firm as to the amount of the Gross-Up Payment
will be binding upon the Company and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code (or any successor provision
thereto) and the possibility of similar uncertainty regarding applicable state
or local tax law at the time of any determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts or fails to pursue its remedies pursuant to clause F below and
Executive thereafter is required to make a payment of any Excise Tax, the
Company or Executive may direct
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the Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations
to both the Company and Executive as promptly as possible. Any such
Underpayment will be promptly paid by the Company to, or for the benefit of,
Executive within twenty days after receipt of such determination and
calculations.
C. The Company and Executive will each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by clause B above.
D. The federal, state and local income or other tax
returns filed by Executive will be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by Executive. Executive will make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his federal income tax return as filed
with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, Executive
will within twenty days thereafter pay to the Company the amount of such
reduction.
E. The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
clauses B and D above will be borne by the Company. If such fees and expenses
are initially advanced by Executive, the Company will reimburse Executive the
full amount of such fees and expenses within twenty days after receipt from
Executive of a statement therefor and reasonable evidence of his payment
thereof.
F. Executive will notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification will be given
as promptly as practicable but no later than 10 business days after Executive
actually receives notice of such claim and Executive will further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by Executive).
Executive will not pay such claim prior to the earlier of (i) the expiration
of the 30-calendar-day period following the date on which he gives such notice
to the Company and (ii) the date that any payment of amount with respect to
such claim is due. If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
will:
(i) provide the Company with any written records or
documents in his possession relating to such claim
reasonably requested by the Company;
(ii) take such action in connection with contesting
such claim as the Company will reasonably request in writing
from time to
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time, including without limitation accepting legal
representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company will bear and pay directly all
costs and expenses (including interest and penalties) incurred in connection
with such contest and will indemnify and hold harmless Executive, on an
after-tax basis, for and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing provisions of this clause F, the Company will control all proceedings
taken in connection with the contest of any claim contemplated by this clause F
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided that Executive may participate therein at his
own cost and expense) and may, at its option, either direct Executive to pay
the tax claimed and xxx for a refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company will determine; provided, however,
that if the Company directs Executive to pay the tax claimed and xxx for a
refund, the Company will advance the amount of such payment to Executive on an
interest-free basis and will indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Executive with respect to
which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested
claim will be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
G. If, after the receipt by Executive of an amount
advanced by the Company pursuant to clause F above, Executive receives any
refund with respect to such claim, Executive will (subject to the Company's
complying with the requirements of clause F above) within twenty days
thereafter pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company pursuant to
clause F above, a determination is made that Executive will not be entitled to
any refund with respect to such claim and the Company does not notify Executive
in writing of its intent to contest such denial or refund prior to the
expiration of 30 days after such determination, then such advance will be
forgiven and will not be required to be repaid and the amount of such advance
will offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid pursuant to this Section 7(c)(ii).
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(d) Termination for Disability. If at any time during the term
of this Agreement other than following a Change in Control to which Section
7(c) applies Executive shall become unable to perform his duties as an employee
as a result of incapacity, which gives rise to termination of employment for
Disability, then Executive shall be entitled to receive the following: (i)
salary and vacation accrued through the Termination Date plus continued salary
for a period of three (3) years following the Termination Date, payable in
accordance with the Company's regular payroll schedule as in effect from time
to time, (ii) at the Termination Date, 100% of Executive's target bonus for the
fiscal year in which the Termination Date occurs (plus any unpaid bonus from
the prior fiscal year), (iii) following the end of the fiscal year in which the
Termination Date occurs and management bonuses have been determined, any bonus
that would have been payable to Executive under the bonus plan in excess of
Executive's target bonus, (iv) acceleration in full of vesting of all
outstanding stock options held by Executive (and in this regard, all such
options and other exercisable rights held by Executive shall remain exercisable
for (A) in the case of the Fiscal 1999 Option Grant, the Fiscal 2000 Option
Grant, any future option grants, and all prior option grants having an exercise
price per share equal to or less than the fair market value of the Company's
Common Stock on the date hereof, one year following the Termination Date and
(B) in the case of all other option grants, 90 days following the Termination
Date, or in the case of any option such longer period as may be provided in the
applicable plan or agreement), (v) (A) for three (3) years following the
Termination Date, continuation of group health benefits at the Company's cost
pursuant to the Company's standard programs as in effect from time to time (or
at the Company's election substantially similar health benefits as in effect at
the Termination Date, through a third party carrier) for Executive, his spouse
and any children, and (B) thereafter, to the extent COBRA shall be applicable
to the Company, continuation of health benefits for such persons at Executive's
cost, for a period of 18 months or such longer period as may be applicable
under the Company's policies then in effect, provided the Executive makes the
appropriate election and payments, and (vi) no other compensation, severance or
other benefits, except only that this provision shall not limit any benefits
otherwise available to Executive under Section 7(c) in the case of a
termination following a Change in Control. Notwithstanding the foregoing,
however, the Company may deduct from the salary specified in clause (i) hereof
the amount of any payments then received by Executive under any disability
benefit program maintained by the Company.
(e) Voluntary Termination, Involuntary Termination for Business
Reasons or Termination following a Change in Control. If (A) Executive
voluntarily terminates his employment (other than in the case of a Constructive
Termination), (B) Executive is terminated involuntarily for Business Reasons,
or (C) Executive is terminated involuntarily, is terminated in a Constructive
Termination or is terminated upon the Disability of Executive, in any such case
following a Change in Control to which Section 7(c) applies, then in any such
event Executive or his representatives shall be entitled to receive the
following: (i) salary and accrued vacation through the Termination Date only,
(ii) the right to exercise all stock options held by Executive for thirty (30)
days following the Termination Date (or such longer period as may be provided
in the applicable stock option plan or agreement), but only to the extent
vested as of the Termination Date, (iii) to the extent COBRA shall be
applicable to the Company, continuation of group health plan benefits pursuant
to the Company's standard programs as in effect from time to time (or at the
Company's election continuation by the Company of substantially similar group
health benefits as in effect at the Termination Date, through a third party
carrier), for Executive, his spouse and any children, for a period of 18 months
(or such longer period as may be applicable under the Company's policies then
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in effect) following the Termination Date provided Executive makes the
appropriate election and payments, and (iv) no further severance, benefits or
other compensation, except only that this provision shall not limit any
benefits otherwise available to Executive under Section 7(c) in the case of a
termination following a Change in Control.
(f) Termination Upon Death. If Executive's employment is
terminated because of death, then Executive's representatives shall be entitled
to receive the following: (i) salary and vacation accrued through the
Termination Date, (ii) a pro rata share of Executive's target bonus for the
year in which death occurs, based on the proportion of the fiscal year during
which Executive remained an Employee of the Company (plus any unpaid bonus from
the prior fiscal year), (iii) except in the case of any such termination
following a Change in Control to which Section 7(c) applies, acceleration in
full of vesting of all outstanding stock options, TARPs and other equity
arrangements subject to vesting and held by Executive (and in this regard, all
such options and other exercisable rights held by Executive shall remain
exercisable for (A) in the case of the Fiscal 1999 Option Grant, the Fiscal
2000 Option Grant, any future option grants, and all prior option grants having
an exercise price per share equal to or less than the fair market value of the
Company's Common Stock on the date hereof, one year following the Termination
Date and (B) in the case of all other option grants, 90 days following the
Termination Date, or in the case of any option such longer period as may be
provided in the applicable plan or agreement), (iv) to the extent COBRA shall
be applicable to the Company, continuation of group health benefits pursuant to
the Company's standard programs as in effect from time to time (or at the
Company's election continuation by the Company of substantially similar group
health benefits as in effect at the Termination Date, through a third party
carrier), for Executive's spouse and any children for a period of 18 months (or
such longer period as may be applicable under the Company's policies then in
effect) provided Executive's estate makes the appropriate election and
payments, (v) any benefits payable to Executive or his representatives upon
death under insurance or other programs maintained by the Company for the
benefit of the Executive, and (vi) no further benefits or other compensation,
except only that this provision shall not limit any benefits otherwise
available to Executive under Section 7(c) in the case of a termination
following a Change in Control..
(g) Exclusivity. The provisions of this Section 7 are intended
to be and are exclusive and in lieu of any other rights or remedies to which
Executive or the Company may otherwise be entitled, either at law, tort or
contract, in equity, or under this Agreement, in the event of any termination
of Executive's employment. Executive shall be entitled to no benefits,
compensation or other payments or rights upon termination of employment other
than those benefits expressly set forth in paragraph (b), (c), (d), (e) or (f)
of this Section 7, whichever shall be applicable and those benefits required to
be provided by law.
8. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Business Reasons. "Business Reasons" means (i) gross
negligence, willful misconduct or other willful malfeasance by Executive in the
performance of his duties, (ii) Executive's conviction of a felony, or an other
criminal offense involving moral turpitude, (iii) Executive's material breach
of this Agreement, including without limitation any repeated breach of Sections
9 through 12 hereof, provided that, in the case of any such breach, the Board
provides
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written notice of breach to the Executive, specifically identifying the manner
in which the Board believes that Executive has materially breached this
Agreement, and Executive shall have the opportunity to cure such breach to the
reasonable satisfaction of the Board within thirty (30) days following the
delivery of such notice. For purpose of this paragraph, no act or failure to
act by Executive shall be considered "willful" unless done or omitted to be
done by Executive in bad faith or without reasonable belief that Executive's
action or omission was in the best interests of the Company or its affiliates.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by Executive
in good faith and in the best interests of the Company. The Board must notify
Executive of any event constituting Business Reasons within ninety (90) days
following the Board's actual knowledge of its existence (which period shall be
extended during the period of any reasonable investigation conducted in good
faith by or on behalf of the Board) or such event shall not constitute Business
Reasons under this Agreement.
(b) Disability. "Disability" shall mean that Executive has been
unable to perform his duties as an employee as the result of his incapacity due
to physical or mental illness, and such inability, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to Executive or Executive's legal
representative (such Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least sixty (60) days written notice by the Company of its intention to
terminate Executive's employment. In the event that Executive resumes the
performance of substantially all of his duties hereunder before the termination
of his employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.
(c) Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated on account of death, the date of death; (ii) if this
Agreement is terminated for Disability, the date specified in Section 8(b);
(iii) if this Agreement is terminated by the Company, the date on which
indicated in a notice of termination is given to Executive by the Company in
accordance with Sections 7(a) and 13(a); (iv) if the Agreement is terminated by
Executive, the date indicated in a notice of termination given to the Company
by Executive in accordance with Sections 7(a) and 13(a); or (v) if this
Agreement expires by its terms, then the last day of the term of this
Agreement.
(d) Constructive Termination. A "Constructive Termination" shall
be deemed to occur if (A) (1) Executive's position changes as a result of an
action by the Company such that (w) Executive shall no longer be Chief
Executive Officer of the Company, (x) Executive shall have duties and
responsibilities demonstrably less than those typically associated with a Chief
Executive Officer, (y) Executive shall no longer report directly to the
Company's Board of Directors or (z) Executive is involuntarily removed from the
Board of Directors of the Company or, having consented to stand for reelection,
is not reelected to the Board of Directors, (2) Executive is required to
relocate his place of employment, other than a relocation within fifty (50)
miles of Executive's current residence or the Company's current Stamford
headquarters, (3) there is a reduction in Executive's base salary or target
bonus other than any such reduction consistent with a general reduction of pay
across the executive staff as a group, as an economic or strategic measure due
to poor financial performance by the Company or (4) there occurs any other
material breach of this
11
Agreement by the Company (other than a reduction of Executive's base salary or
target bonus which is not described in the immediately preceding clause (3))
after a written demand for substantial performance is delivered to the Board by
Executive which specifically identifies the manner in which Executive believes
that the Company has materially breached this Agreement, and the Company has
failed to cure such breach to the reasonable satisfaction of Executive within
thirty (30) days following the delivery of such notice and (B) within the
ninety (90) day period immediately following an action described in clauses
(A)(1) through (4), Executive elects to terminate his employment voluntarily.
(e) Change in Control. A "Change in Control" shall be deemed to
have occurred if:
(i) any "Person," as such term is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than (i) the Company, (ii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
(iii) any company owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company), becomes the "Beneficial Owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing (A) in the case of any Person filing as a "passive investor" on
Schedule 13G under the Exchange Act, 25% or more of the combined voting power
of the Company's then-outstanding securities (but only for so long as such
Person continues to report as a 13G passive investor), and (B) in the case of
any Person not filing or no longer filing as a 13G passive investor, 20% or
more of the combined voting power of the Company's then-outstanding securities;
(ii) during any period of twenty-four months (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
(i) a director nominated by a Person who has entered into an agreement with the
Company to effect a transaction described in Section (8)(e)(i), (iii) or (iv)
hereof, (ii) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (iii) a director nominated
by any Person who is the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company's securities) whose election by the Board or nomination for
election by the Company's stockholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
lease a majority thereof;
(iii) the stockholders of the Company approve any
transaction or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or consolidation (A)
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 66 2/3% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation and (B) after which no Person holds 20% or more of
12
the combined voting power of the then-outstanding securities of the Company or
such surviving entity;
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or
(v) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Change in Control has occurred.
9. Confidential Information.
(a) Executive acknowledges that the Confidential Information (as
defined below) relating to the business of the Company and its subsidiaries
which Executive has obtained or will obtain during the course of his
association with the Company and subsidiaries and his performance under this
Agreement are the property of the Company and its subsidiaries. Executive
agrees that he will not disclose or use at any time, either during or after the
Employment period, any Confidential Information without the written consent of
the Board of Directors of the Company, other than proper disclosure or use in
the performance of his duties hereunder. Executive agrees to deliver to the
Company at the end of the Employment Term, or at any other time that the
Company may request, all memoranda, notes, plans, records, documentation and
other materials (and copies thereof) containing Confidential Information
relating to the business of the Company and its subsidiaries, no matter where
such material is located and no matter what form the material may be in, which
Executive may then possess or have under his control. If requested by the
Company, Executive shall provide to the Company written confirmation that all
such materials have been delivered to the Company or have been destroyed.
Executive shall take all appropriate steps to safeguard Confidential
Information and to protect it against disclosure, misuse, espionage, loss and
theft.
(b) "Confidential Information" shall mean information which
is not generally known to the public and which is used, developed, or obtained
by the Company or its subsidiaries relating to the businesses of any of the
Company and its subsidiaries or the business of any customer thereof including,
but not limited to: products or services; fees, costs and pricing structure;
designs; analyses; formulae; drawings; photographs; reports; computer software,
including operating systems, applications, program listings, flow charts,
manuals and documentation; databases; accounting and business methods;
inventions and new developments and methods, whether patentable or unpatentable
and whether or not reduced to practice; all copyrightable works; the customers
of any of the Company and its subsidiaries and the Confidential Information of
any customer thereof; and all similar and related information in whatever form.
Confidential Information shall not include any information which (i) was
rightfully known by Executive prior to the Employment Term; (ii) is publicly
disclosed by law or in response to an order of a court or governmental agency;
(iii) becomes publicly available through no fault of Executive or (iv) has been
published in a form generally available to the public prior to the date upon
which Executive proposes to disclose such information. Information shall not be
deemed to have been published merely because individual portions of the
information have been separately published, but only if all the material
features comprising such information have been published in combination.
13
10. Inventions and Patents. In the event that Executive, as a part of
Executive's activities on behalf of the Company, generates, authors or
contributes to any invention, new development or method, whether or not
patentable and whether or not reduced to practice, any copyrightable work, any
trade secret, any other Confidential Information, or any information that gives
any of the Company and its subsidiaries an advantage over any competitor, or
similar or related developments or information related to the present or future
business of any of the Company and its subsidiaries (collectively "Developments
and Information"), Executive acknowledges that all Developments and Information
are the exclusive property of the Company. Executive hereby assigns to the
Company, its nominees, successors or assigns, all rights, title and interest to
Developments and Information. Executive shall cooperate with the Company's
Board of Directors to protect the interests of the Company and its subsidiaries
in Developments and Information. Executive shall execute and file any document
related to any Developments and Information requested by the Company's Board of
Directors including applications, powers of attorney, assignments or other
instruments which the Company's Board of Directors deems necessary to apply for
any patent, copyright or other proprietary right in any and all countries or to
convey any right, title or interest therein to any of the Company's nominees,
successors or assigns.
11. No Conflicts.
(a) Executive agrees that in his individual capacity he will
not enter into any agreement, arrangement or understanding, whether written or
oral, with any supplier, contractor, distributor, wholesaler, sales
representative, representative group or customer, relating to the business of
the Company or any of its subsidiaries, without the express written consent of
the Board of Directors of the Company.
(b) As long as Executive is employed by the Company or any of
its subsidiaries, Executive agrees that he will not, except with the express
written consent of the Board of Directors of the Company, become engaged in,
render services for, or permit his name to be used in connection with, any
for-profit business other than the business of the Company, any of its
subsidiaries or any corporation or partnership in which the Company or any of
its subsidiaries have an equity interest.
12. Non-Competition Agreement.
(a) Executive acknowledges that his services are of a special,
unique and extraordinary value to the Company and that he has access to the
Company's trade secrets, Confidential Information and strategic plans of the
most valuable nature. Accordingly, Executive agrees that for the period of
three (3) years following the Termination Date, Executive shall not directly or
indirectly own, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the businesses of
the Company or any of its subsidiaries as such businesses exist or are in
process of development on the Termination Date (as evidenced by written
proposals, market research or similar materials), including without limitation
the publication of periodic research and analysis of the information technology
industries. Nothing herein shall prohibit Executive from being a passive owner
of not more than 1% of the outstanding stock of any class of a corporation
which is publicly traded, so long as Executive has no active participation in
the business of such corporation.
14
(b) In addition, for a period of three (3) years commencing on
the Termination Date, Executive shall not (i) directly or indirectly induce or
attempt to induce any employee of the Company or any subsidiary (other than his
own assistant) to leave the employ of the Company or such subsidiary, or in any
way interfere with the relationship between the Company or any subsidiary and
any employee thereof, (ii) hire directly or through another entity any person
who was an employee of the Company or any subsidiary at any time during the
then preceding 12 months, or (iii) directly or indirectly induce or attempt to
induce any customer, supplier, licensee or other business relation of the
Company or any subsidiary to cease doing business with the Company or such
subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any
subsidiary.
(c) Executive agrees that these restrictions on competition and
solicitation shall be deemed to be a series of separate covenants
not-to-compete and a series of separate non-solicitation covenants for each
month within the specified periods, separate covenants not-to-compete and
non-solicitation covenants for each state within the United States and each
country in the world, and separate covenants not-to-compete for each area of
competition. If any court of competent jurisdiction shall determine any of the
foregoing covenants to be unenforceable with respect to the term thereof or the
scope of the subject matter or geography covered thereby, such remaining
covenants shall nonetheless be enforceable by such court against such other
party or parties or upon such shorter term or within such lesser scope as may
be determined by the court to be enforceable.
(d) Because Executive's services are unique and because
Executive has access to Confidential Information and strategic plans of the
Company of the most valuable nature, the parties agree that the covenants
contained in this Section 12 are necessary to protect the value of the business
of the Company and that a breach of any such covenant would result in
irreparable and continuing damage for which there would be no adequate remedy
at law. The parties agree therefore that in the event of a breach or threatened
breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
hereof.
13. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing, shall be effective when given, and in any
event shall be deemed to have been duly given (i) when delivered, if personally
delivered, (ii) three (3) business days after deposit in the U.S. mail, if
mailed by U.S. registered or certified mail, return receipt requested, or (iii)
one (1) business day after the business day of deposit with Federal Express or
similar overnight courier, if so delivered, freight prepaid. In the case of
Executive, notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Corporate Secretary.
(b) Notice of Termination. Any termination by the Company or
Executive shall be communicated by a notice of termination to the other party
hereto given in accordance with
15
paragraph (a) hereof. Such notice shall indicate the specific termination
provision in this Agreement relied upon.
(c) Successors.
(i) Company's Successors. Any successor to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets shall be entitled to assume the rights and
shall be obligated to assume the obligations of the Company under this
Agreement and shall agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent as the Company would be
required to perform such obligations in the absence of a succession. For all
purposes under this Agreement, the term "Company" shall include any successor
to the Company's business and/or assets which executes and delivers the
assumption agreement described in this subsection (i) or which becomes bound by
the terms of this Agreement by operation of law.
(ii) Executive's Successors. The terms of this Agreement
and all rights of Executive hereunder shall inure to the benefit of, and be
enforceable by, Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
(iii) No Other Assignment of Benefits. Except as provided
in this Section 12(c), the rights of any person to payments or benefits under
this Agreement shall not be made subject to option or assignment, either by
voluntary or involuntary assignment or by operation of law, including (without
limitation) bankruptcy, garnishment, attachment or other creditor's process,
and any action in violation of this subsection (iii) shall be void.
(d) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Executive and by an authorized officer of the Company
(other than Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of
the same condition or provision at another time.
(e) Entire Agreement. This Agreement shall supersede any and
all prior agreements, representations or understandings (whether oral or
written and whether express or implied) between the parties with respect to the
subject matter hereof, including without limitation the Prior Agreement.
(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(g) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
New York, New York, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. No party shall be entitled to seek or be
16
awarded punitive damages. All attorneys fees and costs shall be allocated or
apportioned as agreed by the parties or, in the absence of an agreement, in
such manner as the arbitrator or court shall determine to be appropriate to
reflect the final decision of the deciding body as compared to the initial
positions in arbitration of each party. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York as they apply
to contracts entered into and wholly to be performed within such State by
residents thereof.
(h) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable taxes.
(i) Indemnification. In the event Executive is made, or
threatened to be made, a party to any legal action or proceeding, whether civil
or criminal, by reason of the fact that Executive is or was a director or
officer of the Company or serves or served any other entity of which the
Company owns 50% or more of the equity in any capacity, Executive shall be
indemnified by the Company, and the Company shall pay Executive's related
expenses when and as incurred, all to the full extent permitted by law,
pursuant to Executive's existing indemnification agreement with the Company in
the form made available to all Executive and all other officers and directors
or, if it provides greater protection to Executive, to the maximum extent
allowed under the law of the State of the Company's incorporation.
(j) Legal Fees. The Company will pay directly the fees and
expenses of counsel retained by Executive in connection with the preparation,
negotiation and execution of this Agreement.
(k) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
17
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
GARTNER GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx, Chairman,
Compensation Committee of Board of
Directors
XXXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
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