EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by Innova Solutions, Inc.
(the "Company"), a wholly-owned subsidiary of Cotelligent Group, Inc.
("Cotelligent"), and Xxxxx X. Xxxxx ("Employee") is hereby entered into and
effective as of the 28 day of June, 1996, ("Effective Date"). This Agreement
hereby supersedes any other employment agreements or understandings, written or
oral, among the Company, Cotelligent and Employee.
R E C I T A L S
WHEREAS, as of the date of this Agreement, the Company is engaged
primarily in the business of providing computer consulting and contract
programming services; and
WHEREAS, as of the date of this Agreement, Employee is the owner of all
the issued and outstanding capital stock of Innova Solutions, Inc., a Texas
corporation ("Innova"), and for several years has been the president, secretary,
treasurer and sole director of Innova; and
WHEREAS, as of the date of this Agreement, the Company, is acquiring
all the capital stock of Innova pursuant to the statutory merger of a
wholly-owned subsidiary of the Company with and into Innova and as a result,
Innova will be operated as a subsidiary of the Company; and
WHEREAS, the assets, business and goodwill of Innova have in large part
been developed over a period of years and sustained by the efforts, knowledge
and skill of Employee; and
WHEREAS, in order to facilitate, and as a condition to, the closing of
the merger agreement between the Company, Innova and Employee, Employee must
enter into this Agreement with the Company, including the non-complete
provisions contained herein; and
WHEREAS, Employee is employed hereunder by the Company in a
confidential relationship wherein Employee, in the course of her employment with
the Company, has and will continue to become familiar with and aware of
information as to the Company's and Cotelligent's customers, specific manner of
doing business, including the processes, techniques and trade secrets utilized
by the Company and Cotelligent, and future plans with respect thereto, all of
which has been and will be established and maintained at great expense to the
Company and Cotelligent; this information is a trade secret and constitutes the
valuable goodwill of the Company and Cotelligent; and
WHEREAS, the Company desires to assure itself that the experience and
skill of Employee will remain available to the Company or its successors;
Therefore, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
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A G R E E M E N T S
1. Employment and Duties.
a. The Company hereby employs Employee as President. As such,
Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a President and will
report directly to the Board of Directors of the Company (the
"Board"). Employee hereby accepts this employment upon the terms
and conditions herein contained and, subject to paragraph 1(c),
agrees to devote her time, attention and efforts to promote and
further the business of the Company.
b. Employee shall faithfully adhere to, execute and fulfill all
lawful policies established by the Company.
c. Employee shall not, during the term of her employment hereunder,
be engaged in any other business activity pursued for gain,
profit or other pecuniary advantage if such activity interferes
with Employee's duties and responsibilities hereunder. The
foregoing limitations shall not be construed as prohibiting
Employee from making personal investments in such form or manner
as will neither require her services in the operation or affairs
of the companies or enterprises in which such investments are
made nor violate the terms of paragraph 3 hereof.
2. Compensation. For all services rendered by Employee, the Company shall
compensate Employee as follows:
a. Base Salary. Effective on the Effective Date, the base salary
payable to Employee shall be $150,000 per year, payable on a
regular basis in accordance with the Company's standard payroll
procedures but not less than monthly. On at least an annual
basis, the Board will review Employee's performance and may make
increases to such base salary if, in its reasonable discretion,
any such increase is warranted. Such recommended increase would,
in all likelihood, require approval by the Board or a duly
constituted committee thereof.
b. Incentive Bonus Plan. For fiscal year 1996 and subsequent fiscal
years, Employee shall be eligible to participate in the
Cotelligent Compensation Plan, which sets forth the criteria
under which Employee and other officers and key employees will be
eligible to receive bonus awards.
c. Executive Perquisites, Benefits and Other Compensation. Employee
shall be entitled to receive additional benefits and compensation
from the Company in such form and to such extent as specified
below:
(1) Participation for Employee in coverage for Employee and her
dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the
Company or Cotelligent may have in effect from time to time.
(2) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of
services pursuant to this Agreement. All reimbursable expenses
shall be appropriately documented in reasonable detail by
Employee upon submission of any request for reimbursement, and in
a format and manner consistent with the Company's expense
reporting policy.
(3) _______ (___) weeks paid vacation for each year during the period
of employment ending on the anniversary of the date on which the
period of employment commenced (pro rated for any year in which
Employee is employed for less than the full year).
(4) The Company shall reimburse Employee $500 per month for expenses
incurred in connection with the leasing or acquisition of an
automobile.
(5) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for
Employee by the Board and participation in all other Company-wide
or Cotelligent-wide employee benefits as available from time to
time.
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3. Non-Competition Agreement. Employee agrees that, if Employee voluntarily
resigns her employment hereunder or is terminated by the Company for good cause
or for a disability, as set forth in Section 5(c) and 5(b) respectively, during
the term of her employment and for a period expiring two years following the
termination of her employment under this Agreement, she shall be bound by and
shall comply with the covenants and restrictions set forth in Section 12 of the
Agreement and Plan of Reorganization and Merger ("Merger Agreement") among the
Company, Cotelligent and Employee dated June 28, 1996, which is hereby
incorporated by reference as if it were copied herein in its entirety. If the
Employee is terminated by the Company without cause prior to the expiration of
this Agreement then Employee shall be bound by the covenants and restrictions
set forth in Section 12 of the Merger Agreement during the term of her
employment and for a period of one (1) year following the termination of her
employment under this Agreement. Nothing contained or set forth in this Section
3 is intended to limit or modify the Employee's obligations and duties under the
Merger Agreement.
4. Place of Performance.
a. Employee understands that she may be requested by the Board
or Cotelligent to relocate from her present residence to another
geographic location in order to more efficiently carry out her duties
and responsibilities under this Agreement or as part of a promotion or
other increase in duties and responsibilities. In such event, if
Employee agrees to relocate, the Company will pay all reasonable
relocation costs to move Employee, her immediate family and their
personal property and effects. Such costs may include, by way of
example, but are not limited to, attorney and escrow fees, appraisal
costs, inspection costs, mileage expense for two (2) cars at prevailing
Internal Revenue Service rates, down payment for a similar new house
which is in excess of such costs for house sold, moving, packing, and
unpacking assistance at both ends, all real estate fees, pre-move
visits to search for a new residence, investigate schools or for other
purposes; temporary lodging and living costs prior to moving into a new
permanent residence; duplicate home carrying costs (including mortgage
payments, insurance, utilities, taxes and yard maintenance until the
house is sold); all closing costs on the sale of Employee's present
residence and on the purchase of a comparable residence in the new
location; and added income taxes that Employee may incur if any
relocation costs are not deductible for tax purposes. The general
intent of the foregoing is that Employee shall not personally bear any
out-of-pocket cost as a result of the relocation, with an understanding
that Employee will use her best efforts to incur only those costs which
are reasonable and necessary to effect a smooth, efficient and orderly
relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and her family. Nothing set
forth in this Section 4 shall limit or restrict in any way the
Company's right to offer the Employee employment requiring relocation
or otherwise on terms substantially different from those set forth
herein, and in the event Employee rejects such other Company offer, the
Company may terminate Employee without cause as described on Section
5(d). In the event that Employee has been relocated and is terminated
without cause or that the Employee's services are not retained at the
end of the Term of this Agreement, the Company will pay all reasonable
relocation costs to move Employee, her immediate family and their
personal property and effects to the city of her choice within the
continental United States consistent with the terms set forth above.
b. Notwithstanding the above, if Employee is requested by the Board
to relocate and Employee refuses, such refusal shall not
constitute "cause" for termination of this Agreement under the
terms of paragraph 5(c).
5. Term; Termination; Rights on Termination.
The term of this Agreement shall begin on the date hereof and
continue for three (3) years (the "Term"), unless terminated
sooner as herein provided. This Agreement and Employee's
employment may be terminated in any one of the followings ways:
a. Death. The death of Employee shall immediately terminate
this Agreement with no severance compensation due to
Employee's estate.
b. Disability. If, as a result of incapacity due to physical or
mental illness or injury, Employee shall have been absent
from her full-time duties hereunder for four (4) consecutive
months, then thirty (30) days after receiving written notice
(which notice may occur before or after the end of such four
(4) month period, but which shall not be effective earlier
than the last day of such four (4) month period), the
Company may terminate Employee's employment hereunder
provided Employee is unable to resume her full-time duties
at the conclusion of such notice period. Also, Employee may
terminate her employment hereunder if her health should
become impaired to an extent that makes the continued
performance of her duties hereunder hazardous to her
physical or mental health or her life, provided that
Employee shall have furnished the Company with a written
statement from a qualified doctor to such effect and
provided, further, that, at the Company's request made
within thirty (30) days of the date of such written
statement, Employee shall submit to an examination by a
doctor selected by the Company who is reasonably acceptable
to Employee or Employee's doctor and such doctor shall have
concurred in the conclusion of Employee's doctor. In the
event this Agreement is terminated pursuant to this
paragraph 5(b), Employee shall receive from the Company, the
base salary at the rate then in effect [and Employee's
Incentive Bonus Plan, executive prerequisites, benefits and
other compensation equivalent to such compensation received
by Employee during the preceding twelve (12) months] for
whatever time period is remaining under the Term of this
Agreement or for one (1) year, whichever amount is greater.
c. Good Cause. The Company may terminate the Agreement ten (10)
days after written notice to Employee for good cause, which
shall be: (1) Employee's willful, material and irreparable
breach of this Agreement; (2) Employee's gross negligence in
the performance or intentional nonperformance (continuing
for ten (10) days after receipt of written notice of need to
cure) of any of Employee's material duties and
responsibilities hereunder; (3) Employee's willful
dishonesty, fraud or misconduct with respect to the business
or affairs of the Company or Cotelligent which materially
and adversely affects the operations or reputation of the
Company or Cotelligent; (4) Employee's conviction of a
felony crime; or (5) chronic alcohol abuse or illegal drug
abuse by Employee. In the event of a termination for good
cause, as enumerated above, Employee shall have no right to
any severance compensation.
d. Without Cause. Should Employee be terminated by the Company
without cause, Employee shall continue to receive from the
Company the base salary at the rate then in effect [and
Employee's Incentive Bonus Plan, executive prerequisites,
benefits and other compensation equivalent to such
compensation received by Employee during the preceding
twelve (12) months] for whatever time period is remaining
under the Term of this Agreement or for one (1) year,
whichever amount is greater.
If Employee resigns or otherwise terminates her employment
without cause pursuant to this paragraph 5(d), Employee
shall receive no severance compensation.
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6. Return of Company Property. All records, designs, patents, business plans,
financial statements, financial records, manuals, memoranda, software, lists and
other property delivered to or compiled by Employee by or on behalf of the
Company, Cotelligent or their representatives, vendors or customers which
pertain to the business of the Company or Cotelligent shall be and remain the
property of the Company or Cotelligent, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials and other similar data
pertaining to the business, activities or future plans of the Company or
Cotelligent which is collected by Employee shall be delivered promptly to the
Company without request by it upon termination of Employee's employment.
7. Inventions. Employee shall disclose promptly to Cotelligent and the Company
any and all significant conceptions and ideas for software, inventions,
improvements and valuable discoveries, whether patentable or copyrightable or
not, which are conceived or made by Employee, solely or jointly with another,
during the period of employment or within one (1) year thereafter, and which are
directly related to the business or activities of the Company or Cotelligent and
which Employee conceives as a result of her employment by the Company. Employee
hereby assigns and agrees to assign all her interests therein to the Company or
its nominee. Whenever requested to do so by the Company, Employee shall execute
any and all applications, assignments or other instruments that the Company
shall deem necessary to apply for and obtain Letters Patent of the United States
or any foreign country or to otherwise protect the Company's interest therein.
8. Trade Secrets. Employee agrees that she will not, during or after the term of
this Agreement with the Company, disclose the specific terms of the Company's or
Cotelligent's relationships or agreements with their respective significant
vendors or customers or any other trade secret of the Company or Cotelligent,
whether in existence or proposed, to any person, firm, partnership, corporation
or business for any reason or purpose whatsoever other than as required by law
or to attorneys or accountants or other agents of the Company.
9. Indemnification. In the event Employee is made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by the Company or
Cotelligent against Employee), by reason of the fact that she is or was
performing services under this Agreement, then the Company and Cotelligent shall
jointly and severally indemnify and hold harmless the Employee against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and the Company are made a party to
the same third-party action, complaint, suit or proceeding, the Company or
Cotelligent agrees to engage competent legal representation, and Employee agrees
to use the same representation, provided that if counsel selected by Cotelligent
shall have a conflict of interest that prevents such counsel from representing
Employee, Employee may engage separate counsel and the Company or Cotelligent
shall pay all attorneys' fees and costs of such separate counsel. Further, while
Employee is expected at all times to use her best efforts to faithfully
discharge her duties under this Agreement, Employee cannot be held liable to the
Company or Cotelligent for errors or omissions made in good faith where Employee
has not exhibited gross, willful and wanton negligence and misconduct or
performed criminal and fraudulent acts which materially damage the business of
the Company.
10. No Prior Agreements.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and her employment by the
Company and the performance of her duties hereunder will not
violate or be a breach of any agreement with a former employer,
client or any other person or entity. Further, Employee agrees to
indemnify the Company for any claim, including, but not limited
to, attorneys' fees and expenses of investigation, by any such
third party that such third party may now have or may hereafter
come to have against the Company based upon or arising out of any
non-competition agreement, invention or secrecy agreement between
Employee and such third party which was in existence as of the
date of this Agreement.
11. Assignment; Binding Effect.
Employee understands that she has been selected for employment by
the Company on the basis of her personal qualifications,
experience and skills. Employee agrees, therefore, she cannot
assign all or any portion of her performance under this
Agreement. Subject to the preceding two (2) sentences, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs,
legal representatives, successors and assigns.
12. Complete Agreement. This Agreement is not a promise of future employment.
Employee has no oral representations, understandings or agreements with the
Company or any of its officers, directors or representatives covering the same
subject matter as this Agreement. This written Agreement is the final, complete
and exclusive statement and expression of the agreement between the Company and
Employee and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements. This written Agreement may not be later modified except by a
further writing signed by a duly authorized officer of the Company and Employee,
and no term of this Agreement may be waived except by writing signed by the
party waiving the benefit of such term.
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13. Notice. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
To the Company:
Innova Solutions, Inc.
c/o Cotelligent Group, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
with a copy to:
Mayor, Day, Xxxxxxxx & Xxxxxx
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxxxxxxx
To Employee:
Xxxxx X. Xxxxx
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, Jr.
Notice shall be deemed given and effective one day after the deposit
with a reputable overnight courier service or three (3) business days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this paragraph 14.
14. Severability; Headings.
If any portion of this Agreement is held invalid or inoperative,
the other portions of this Agreement shall be deemed valid and
operative and, so far as is reasonable and possible, effect shall
be given to the intent manifested by the portion held invalid or
inoperative. The paragraph headings herein are for reference
purposes only and are not intended in any way to describe,
interpret, define or limit the extent or intent of the Agreement
or of any part hereof.
15. Arbitration. Any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in San Francisco, California,
in accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, (including travel costs) and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraphs 5(b) and 5(c), respectively, or that the Company
has otherwise materially breached this Agreement. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by the Company.
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16. Governing Law. This Agreement shall in all respects be construed according
to the laws of the State of Texas.
17. Counterparts. This Agreement may be executed simultaneously in two (2)
or more counterparts each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument. IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
INNOVA SOLUTIONS, INC.
By:
Name: Xxxxxx X. Xxxxxxx
Title: President and Secretary
EMPLOYEE:
Xxxxx X. Xxxxx
LIMITED JOINDER
The undersigned corporation hereby joins in the foregoing Agreement for
the sole purpose of guaranteeing the Company's obligation to make any payment to
Employee pursuant to the terms of this Agreement, subject to conditions,
defenses and rights of offset available to the Company; and except as explicitly
stated herein the undersigned shall have no other liability or obligation with
respect to the Agreement or the transactions contemplated thereby
COTELLIGENT GROUP, INC.
By:
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and General
Counsel
0309846.05
069825/ 924
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