EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of the 5th day of
September, 2000, by and between TECHSYS, INC., a New Jersey corporation with its
principal place of business at 00 Xxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000,
(the "Company") and H. Xxxxxxx Xxxxxx, an individual residing at 0000 Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxx Xxxxxxxx 00000 ("Xxxxxx").
WHEREAS, the Company believes that given Xxxxxx'x experience and
knowledge of the information technology industry and his business and management
skills, it would be to the benefit of the Company for Xxxxxx to serve as Chief
Executive Officer of the Company; and
WHEREAS, Xxxxxx is willing to serve the Company in such capacity and
enter into the obligations hereunder set forth,
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. RETENTION OF XXXXXX. Effective as of September 5, 2000 and for the
duration of the Employment Term, the Company hereby retains Xxxxxx, and Xxxxxx
hereby agrees to serve the Company, as its Chief Executive Officer, upon and
subject to the terms and conditions hereinafter set forth.
2. EMPLOYMENT TERM. The term of Xxxxxx'x employment pursuant to this
Agreement shall be from September 5, 2000 to and including September 4, 2002
unless sooner terminated as provided in this Agreement (the "Initial Employment
Term"). Thereafter, the term shall automatically continue for additional
two-year terms (the "Additional Terms"; the Initial Employment Term and any
Additional Terms are hereinafter referred to as the "Employment Term") unless
either party notifies the other in writing at least six months prior to the
expiration of the then existing term of its intention not to extend the term,
unless sooner terminated as provided herein.
3. DUTIES. During the Employment Term, Xxxxxx shall faithfully perform
the duties of Chief Executive Officer to the best of his ability and shall
devote substantially all of his working time and efforts to the affairs of the
Company; provided, however, that he may also (a) serve on such boards of a
reasonable number of other business entities, trade associations and/or
charitable organizations as the Board of Directors of the Company (the "Board")
may reasonably approve, (b) engage in charitable activities and community
affairs and (c) manage his personal investments and affairs, provided that such
activities do not interfere with the proper performance of his duties and
responsibilities under this Agreement. Xxxxxx shall report solely to the Board
of Directors of the Company; shall have the authority and responsibilities
customarily associated with the position of Chief Executive Officer of a
publicly-held corporation, which may include substantial national and
international travel; and shall perform such duties relating to the management
and operations of the Company as may from time to time be assigned to him by the
Board.
4. COMPENSATION. As compensation for the services to be rendered by
Xxxxxx, the Company shall pay to Xxxxxx:
(a) During the Employment Term, a salary at a rate of no less
than $325,000 per year, payable in accordance with the customary payroll
practices applicable to senior executives of the Company, but not less often
than monthly. The Board shall at least annually review with Xxxxxx the salary in
effect at the time of such review and the performance of Xxxxxx and the Company
through such time, and may, as the board shall determine, increase such salary.
(b) As an inducement to Xxxxxx'x acceptance of the terms of
this Agreement, the Company shall award to Xxxxxx a signing bonus in the amount
of $75,000 payable by the Company no later than October 20, 2000, subject to
return to the Company as set forth in Section 5(l).
(c) Until such time as Xxxxxx relocates his family from North
Carolina to the New Jersey/New York area, and sells his residence in North
Carolina, the Company agrees to reimburse Xxxxxx for his reasonable expenses for
duplicate housing and/or relocation of his family up to a maximum reimbursement
of $75,000 per annum upon presentation of appropriate expense vouchers. The
Board shall review and re-evaluate the amount of the maximum relocation
reimbursement after six months following the commencement of the Initial
Employment Term.
(d) Upon execution of this Agreement, as an inducement to
Xxxxxx'x acceptance of the terms of this Agreement, the Company shall award to
Xxxxxx an incentive stock option (the "Incentive Stock Option") pursuant to the
Company's 2000 Incentive Compensation Plan, to purchase a maximum of 300,000
shares of the Company's Common Stock (adjusted as hereinafter set forth) at a
price per share equal to the closing price of the Company's Common Stock as
reported by the NASDAQ SmallCap Market ("NASDAQ") on the first day of the
Employment Term. The Incentive Stock Option shall vest as follows: 10% after six
months after the date of the award, and an additional 10% every 60 days
thereafter, and each portion of the Incentive Stock Option so vesting shall be
exerciseable 5 years after such vesting. Upon termination of Xxxxxx by the
Company without cause, the unvested portion of the Incentive Stock Option shall
thereupon vest. As set forth below, the Company has represented to Xxxxxx the
number of shares of Common Stock of the Company outstanding and issuable as the
first day of the Employment Term. In the event there is any change in the Common
Stock of the Company, through Merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, stock combination, or sale or
issuance of the Company's Common Stock, the number of shares of Common Stock
issuable pursuant to the Incentive Stock Option shall be appropriately adjusted
to preserve the ratio, as of the first day of the Employment Term, that the
number of shares included in the Incentive Stock Option bears to the total
number of shares of the Company's Common Stock issued and outstanding, issuable
pursuant to any outstanding warrant, right, or option, or issuable under any
employee benefit plan of the Company existing as of the first day of the
Employment Term. In connection with the determination of the maximum number of
shares for which the Incentive Stock Option may be exercised, the Company
represents to Xxxxxx that the number of shares of common stock of the Company
outstanding on the date hereof and the number of shares issuable upon exercise
of rights, options and warrants is as set forth in the Proxy Statement used in
connection with the Company's 2000 annual meeting of shareholders, as increased
by shares issued in the transaction described in the current report on Form 8-K
dated August 31, 2000, by shares issued to Ryan, Beck, and by shares issued and
to be issued pursuant to stock option plans of the Company.
(e) During the Employment Term, Xxxxxx shall be entitled to
four weeks paid vacation each calendar year in accordance with the Company's
standard vacation policy. Up to four weeks of vacation time not previously used
may be carried into any vacation year during the Employment Term. Xxxxxx shall
be entitled to all regular Company holidays and personal days.
(f) During the Employment Term, Xxxxxx shall be entitled to
participate in any medical, dental, hospitalization, disability, life insurance,
vision, prescription, accidental death and dismemberment, travel accident, and
other employee welfare benefit plan, program or arrangement that is made
available generally to senior executives of the Company on terms and conditions
that are commensurate with such other senior executives. During the Employment
Term, no such benefit, coverage, term or condition shall be changed in a manner
that is materially adverse to Xxxxxx without his consent unless such change is
part of an across-the- board change applying generally to senior executives of
the Company.
(g) During the Employment Term, Xxxxxx shall be entitled to
such other pension, profit sharing, savings, employee stock purchase, 401(k) or
retirement plan, program or arrangement, whether funded or unfunded and whether
qualified or unqualified as are made available generally to senior executives of
the Company.
(h) During the Employment Term, Xxxxxx is authorized to incur
reasonable expenses in carrying out his duties and responsibilities under this
Agreement, and the Company shall promptly reimburse him for all such expenses,
subject to policies of the Company (which, as to certain expenses may require
approval in advance of the expenditure) relating to expenses and the
documentation of expenses.
5. TERMINATION OF EMPLOYMENT
(a) The Employment Term
(1) shall terminate at the expiration of the term as
set forth in Section 2 of this Agreement;
(2) shall terminate in the event of Xxxxxx'x death or
"permanent disability" (as hereinafter defined);
(3) may be terminated by the Company for "cause" (as
hereinafter defined) or "without cause" (as
hereinafter defined); or
(4) may be terminated by Xxxxxx "voluntarily" (as
hereinafter defined).
On any termination by the Company "without cause" or any termination by Xxxxxx
"voluntarily," such party will give the other at least six (6) months prior
notice of such termination.
(b) Xxxxxx'x obligation to perform and observe the
obligations, terms and conditions of Sections 7 and 8 of this Agreement shall
survive any termination of the Employment Term.
(c) Upon any termination of the Employment Term, unless
otherwise provided herein, Xxxxxx shall be entitled to (i) salary through the
date of termination; (ii) any annual bonus or other incentive compensation award
earned but not yet paid; (iii) any amounts earned or accrued, but not yet paid,
under Sections 4(f) through 4(h); (iv) a lump sum payment in respect of
permitted accrued but unused vacation days at the rate provided by policies of
the Company as of the date of termination; (v) prompt payout when due of all
amounts due and payable under the terms of this Agreement as a result of his
termination; and (vi) other or additional benefits, if any, in accordance with
the terms and conditions of applicable plans, programs and arrangements of the
Company.
(d) Upon termination of the Employment Term by reason of the
death or "permanent disability" of Xxxxxx, Xxxxxx shall be entitled to all
rights and benefits provided under Section 5(c).
(e) Upon termination of the Employment Term at any time during
the Employment Term by the Company "without cause" Xxxxxx shall be entitled to
(i) all rights and benefits provided under Section 5(c); (ii) the right to
exercise the Incentive Stock Option in full (as such termination would
automatically accelerate the vesting of the unvested portion of the Incentive
Stock Option) commencing on the date of termination through the earlier of (A)
the fifth anniversary of such date, or (B) the fifth anniversary of the date of
grant, although, pursuant to the terms of the Company's 2000 Incentive
Compensation Plan and applicable regulations, the Incentive Stock Option may
lose favorable tax treatment during such time; (iii) the continued right to
exercise any outstanding stock option other than the Incentive Stock Option, to
the extent that such option had vested and was exercisable on the date of
termination, until the end of the 180th day following such date of termination
although any such options may lose favorable tax treatment, if any, during that
time; and (iv) payment (to be paid over the period referred to in this clause)
of an amount equal to the sum of (A) the lesser of (I) salary for a period of 18
months (at the then current rate of salary) and (II) the salary (at the then
current rate of salary) for the period then remaining under the Employment Term,
plus (B) bonus and incentive compensation, if any, that would be due to him in
connection with the then current fiscal year of the Company, through the date of
termination. This Section 5(e) shall be the maximum liability and obligation of
the Company (including the officers and directors of the Company) in the event
of any such termination of Xxxxxx "without cause" at any time.
(f) As used herein, "permanent disability" shall mean a
disability which renders Xxxxxx mentally or physically unable to perform his
usual and regular duties and responsibilities for a continuous period of 120
days or for a non-continuous period of 180 days in any 365 day period, as
determined by a medical doctor selected by the Company, subject to the approval
of such medical doctor by Xxxxxx, which approval shall not be unreasonably
withheld..
(g) As used herein, "cause" shall mean (i) the continuing
willful failure by Xxxxxx to devote substantially all his business time and
effort to performing his duties hereunder; (ii) the engaging by Xxxxxx in
willful gross misconduct or willful gross neglect in carrying out his duties
under this Agreement; (iii) Xxxxxx engages in any activity that constitutes a
felony or misdemeanor involving moral turpitude; (iv) Xxxxxx engages in any
activity that constitutes embezzlement, theft, fraud or similar criminal
conduct; or (v) Xxxxxx fails to meet the Minimum Performance Standards set forth
in Section 5(h) of this Agreement.
(h) The Minimum Performance Standards referred to in Section
5(g) are attached hereto as Schedule A.
(i) As used herein, "without cause" is any termination by the
Company that is not with "cause."
(j) As used herein, "voluntary" termination (including
termination "voluntarily") by Xxxxxx shall mean any termination by him that is
not by death or by reason of "disability"; a "voluntary" termination by Xxxxxx,
with the notice to the Company as set forth in the last sentence of Section
5(a), shall not be deemed a breach of this Agreement.
(k) Notwithstanding anything to the contrary elsewhere in this
Agreement, in no event may any stock option be exercised after the expiration of
its maximum stated term. Upon termination of Xxxxxx by the Company for cause or
by Xxxxxx voluntarily, all options, including the Incentive Stock Option, shall
expire and be no longer exercisable effective on such termination except that
options vested and exercisable on such date of termination, shall thereafter be
exerciseable for the lesser of 30 days or the period of such exerciseability.
(l) In the event of any termination of his employment with the
Company, Xxxxxx shall be under no obligation to seek other employment and there
shall be no offset against amounts due him under this Agreement on account of
any remuneration or other benefit attributable to any subsequent employment that
he may obtain except as specifically provided herein. In the event Xxxxxx
voluntarily terminates his employment on or before September 4, 2002, he shall,
on or before the effective date of such termination, return to the Company all
amounts paid by the Company to him pursuant to Sections 4(b) of this Agreement
and if not paid in full by such date, the balance shall thereafter, until repaid
to the Company, bear interest at the rate of 8% per annum.
(m) Xxxxxx and the Company agree that amounts due under this
Section 5 are in the nature of severance payments considered to be reasonable by
the Company and are not in the nature of a penalty.
(n) At no time during the Employment Term or thereafter shall
either party make any public statement that intentionally disparages or defames
the goodwill or reputation of the other party; provided that it shall not be a
violation of this Section 5(n) for either party to make truthful statements when
required to do so by law or by a court, governmental agency, administrative
body, or legislative body with apparent jurisdiction to require such statements.
6. WITHHOLDING. The Company shall withhold or deduct all amounts
required by law to be withheld or deducted from any payments made pursuant to
this Agreement, including any and all amounts required to be withheld or
deducted by any applicable Federal, state, or foreign country's income tax act,
and any applicable city, county, or municipality's earnings or income tax act.
7. CONFIDENTIAL INFORMATION AND DUTY OF NONDISCLOSURE. Xxxxxx
acknowledges and agrees that his employment with the Company pursuant to this
Agreement necessarily involves his access to secrets and confidential
information pertaining to the business of the Company and its subsidiaries.
Accordingly, Xxxxxx agrees that at all times during his Employment Term and
thereafter, he will not, directly or indirectly, without the express written
authority of the Company, except as reasonably appropriate in connection with
the performance of his services under this Agreement or unless directed by
applicable legal authority having jurisdiction over Xxxxxx, knowingly disclose
or use for the benefit of any person, firm, corporation, or other business
entity or himself, any trade secrets, confidential information concerning the
Company or any subsidiary of the Company, including, without limitation, any
information concerning the past, present, or prospective clients, creditors,
customers, operations, systems, software or methods (collectively, the
"Confidential Information"). Notwithstanding the foregoing, the term
Confidential Information shall not include any information which is in, or
becomes in, the public domain without breach by Xxxxxx of this Section 7.
Further, Xxxxxx agrees that he will return to the Company upon
termination of the Employment Term all Confidential Information then in Xxxxxx'x
possession, except such as relates to him personally.
8. COVENANT NOT TO ENGAGE IN CERTAIN BUSINESS ACTIVITY
(a) During the Employment Term and for one year thereafter,
regardless of the reason for such termination, Xxxxxx shall not, directly or
indirectly, acting as employee, investor, officer, partner, principal or
otherwise, of any corporation or other entity, engage, within the United States
of America, in any activity involving products or services which are the same as
or similar to, products and services of the Company or any of its subsidiaries,
as such products and services exist as of the date hereof and during the
Employment Term.
(b) The parties hereto agree that in the event that either the
length of time or the geographical areas set forth in Section 8(a) above is
deemed too restrictive in any court proceeding, the court may reduce such
restrictions to those which it deems reasonable under the circumstances.
(c) Xxxxxx agrees and acknowledges that the Company and any of
its subsidiaries do not have adequate remedy at law for the breach or threatened
breach by Xxxxxx of the covenants under this Section 8 and agrees that the
Company or any subsidiary of the Company shall be entitled to apply for
injunctive relief to restrain Xxxxxx from such breach or threatened breach in
addition to any other remedies which might be available to the Company or any
subsidiary of the Company at law or equity.
For purposes of this Agreement, the term "subsidiary" includes any limited
liability company or other business directly affiliated with the Company, or in
which the Company has any financial interest or with which the Company has a
strategic relationship.
9. INDEMNIFICATION
(a) The Company agrees that (i) if the Executive is made a
party, or is threatened to be made a party, to any "proceeding" by reason of the
fact that he is or was a director, officer, employee, agent, manager, consultant
or representative of the Company or is or was serving at the request of the
Company as a director, office, member, employee, agent, manager, consultant or
representative of another "person", or (ii) if any "claim" is made, or is
threatened to be made, that arises out of or relates to Xxxxxx'x service in any
of the foregoing capacities, then Xxxxxx shall be indemnified by the Company to
the fullest extent permitted or authorized by the Company's certificate of
incorporation, bylaws, resolutions of the Board or, if greater, by the laws of
the State of New Jersey against any and all costs, expenses, liabilities and
losses (including, without limitation, attorney's fees, judgments, interest,
expenses of investigation, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) incurred or suffered by Xxxxxx in connection
therewith, and such indemnification shall continue as to Xxxxxx even if he has
ceased to be a director, member, employee, agent, manager, consultant or
representative of the Company or other "person", and shall inure to the benefit
of Xxxxxx'x successors and assigns.
(b) Xxxxxx shall indemnify the Company and its shareholders,
officers, directors, employees, agents, representatives, and permitted
successors and assigns (the "Company Indemnitees") in respect of, and defend,
save, and hold each Company Indemnitee harmless against and pay on behalf of or
reimburse each Company Indemnitee as and when incurred, any loss, cost, expense,
claim, or damage, which any Company Indemnitee suffers, sustains or becomes
subject to as a result of, in connection with, relating or incidental to,
Xxxxxx'x termination of employment with any prior employer or providing service
to the Company which conflict with any agreement with any prior employer.
(d) The Company shall at all times during the Employment Term
and for six years thereafter keep in place a directors' and officers' liability
insurance policy (or policies) covering Xxxxxx to the extent that the Company
provides such coverage for other senior executives.
(e) As used in this Agreement "person" shall mean any
individual, corporation, partnership, joint venture, trust, estate, board,
committee, agency, body, or other person or entity; "proceeding" shall mean any
threatened or actual action, suit, or other proceeding, whether civil, criminal,
administrative, investigative, appellate, or other; and "claim" shall mean any
claim, demand, request, investigation, dispute, controversy, threat, discovery
request, or request for testimony or information.
10. REPRESENTATIONS
(a) The Company represents and warrants that (i) it is fully
authorized by action of the Board (and of any other "person" whose action is
required) to enter into this Agreement and to perform its obligations under it;
(ii) the grant of the Incentive Stock Option has been approved in accordance
with Rules 16b-3(d)(i) and 16b-3(e) promulgated under the Securities Exchange
Act of 1934, as amended; (iii) the execution, delivery and performance of this
Agreement by the Company does not violate any law, regulation, order, judgment
or decree or any agreement, plan or corporate governance document of the
Company; and (iv) upon the execution and delivery of this Agreement by Xxxxxx
and the Company, this Agreement shall be a valid and binding obligation of the
Company, enforceable in accordance with its terms, except to the extent
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
(b) Xxxxxx represents and warrants that (i) delivery and
performance of this Agreement by him does not violate any law, regulation,
order, judgment or decree or any agreement to which he is a party or by which he
is bound, and (ii) upon the execution and delivery of this Agreement by Xxxxxx
and the Company, this Agreement shall be a valid and binding obligation of
Xxxxxx, enforceable in accordance with its terms, except to the extent
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
11. NO EMPLOYMENT GUARANTEE. This Agreement shall not be deemed to
entitle Xxxxxx to continued employment with the Company, and the rights of the
Company to terminate the employment of Xxxxxx shall continue as fully as if this
Agreement were not in effect, subject to the provisions in Section 5 above.
12. NOTICES. Any notice, consent, demand, request, or other
communication given by Xxxxxx or the Company in connection with this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the party specified or (b) three days after mailing by certified
or registered mail, return receipt requested, or (c) provided that a written
acknowledgment of receipt is obtained, upon delivery by a nationally recognized
overnight courier, to the address set forth below for the party specified (or to
such other address for such party as shall be specified by ten days advance
notice given pursuant to this Section 12).
If to the Company: TechSys, Inc.
00 Xxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Board of Directors
If to Xxxxxx: H. Xxxxxxx Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
13. ASSIGNMENT/BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of Xxxxxx, the Company, and their respective successors and
assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company, provided that the assignee or
transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee expressly assumes all the liabilities,
obligations and duties of the Company, as contained in this Agreement. In
connection with any transfer or assignment of its rights, duties, or obligations
under this Agreement, the Company shall take whatever action it legally can to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder. No rights, obligations or
duties of Xxxxxx under this Agreement may be assigned or transferred, other than
his rights to compensation and benefits, which may be transferred only by will
or operation of law, except as otherwise expressly provided.
14. DISPUTE RESOLUTION. Any dispute or controversy between Xxxxxx and
the Company that arises out of or relates to this Agreement (or any amendment
thereof) shall be resolved in the state or Federal courts located in New Jersey,
and Xxxxxx and the Company each agree that they shall be subject to the
jurisdiction of such courts and shall not attempt to resolve any such disputes
or controversies in courts located in any other jurisdiction.
15. INTEGRATION. This Agreement represents the entire understanding of
the parties with respect to the subject matter hereof. This Agreement supersedes
all other agreements, contracts, understandings and other arrangements, written
or oral, between the parties with respect to the subject matter hereof, all of
which are hereby terminated and shall be of no further force or effect,
including without limitation, any employment contracts, agreements, or
understandings in effect as of the date hereof.
16. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by Xxxxxx and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
any similar or dissimilar provision or condition at the same or any prior or
subsequent time. No representations, oral or otherwise, express or implied, with
respect the subject matter hereof have been made by either party which are not
set forth expressly in this Agreement. In the event that any provision or
portion of this Agreement shall be determined to be invalid or unenforceable for
any reason, in whole or in part, the remainder of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law so as to achieve the purposes of this Agreement. Except
as otherwise expressly set forth in this Agreement, the respective rights and
obligations of Xxxxxx and the Company hereunder shall survive any termination of
the Executive's employment or the Employment Term. This Agreement itself (as
distinguished from Xxxxxx'x employment with the Company or the Employment Term)
may not be terminated by either party without the written consent of the other
party. The headings of the Sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New Jersey without regard to conflict of law principles. This
Agreement may be executed in counterparts, each of which shall be deemed a
duplicate original all of which shall be deemed to be one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first set forth above.
TECHSYS, Inc.
XXXXXX X. XXXXX
By:___________________________________________
Xxxxxx X. Xxxxx
President
H. XXXXXXX XXXXXX
___________________________________________
H. XXXXXXX XXXXXX
