EXHIBIT 10.14
XXXX, XXXXXX & ASSOCIATES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of December 2, 1996, by
and between Xxxxxxxx Xxxxxx ("Employee") and Xxxx, Xxxxxx & Associates, Inc., a
California corporation ("Company").
1. Employment; Termination.
-----------------------
(a) Agreement of Employment. Company agrees to continue
-----------------------
Employee's Employment (as hereinafter defined) and Employee agrees to remain in
Employment with Company, from the date of this Agreement until the date
Employee's Employment terminates pursuant to this Agreement. Prior to
commencement of Employee's Employment, Employee shall enter into Company's
standard Proprietary Information and Inventions Agreement. This Agreement is
made of even date with and as a condition to that certain Asset Purchase
Agreement ("Asset Purchase Agreement") by and between Company, TA Acquisition
Corporation, TeamAlliance Technology Partners, L.P., Team Alliance Technology
Partners, Inc., Team Visions, Inc., certain limited liability companies,
Xxxxxxxx Xxxxxx, Xxxxxxxxx Xxxx and Employee. This Agreement shall terminate
upon the earlier of (i) the satisfaction of all of the obligations hereunder or
(ii) December 2, 2000.
(b) Termination. Employee's Employment shall terminate
-----------
automatically in the event of his death. In addition, Company may terminate
Employee's Employment and Employee may terminate his Employment, in either case
at any time and for any reason, by giving Employee or Company, as the case may
be, notice thereof in writing. Upon termination of Employment, Employee shall
only be entitled to compensation, benefits and reimbursements described herein
for the period preceding the effective date of the termination; provided,
--------
however, that if Employee's Employment is terminated without his consent for any
-------
reason other than Cause, including but not limited to by reason of death or
disability or if Employee voluntarily terminates his Employment for Good Reason
(as defined below), then Company shall pay Employee all accrued but unpaid
salary and bonus and other accrued benefits through the date of termination and
shall continue to pay Employee's Base Compensation (at the annual rate then in
effect) and bonus (at the monthly rate then in effect) for one hundred eighty
(180) days following such termination. "Cause" shall mean (i) any failure of
Employee to perform or observe any of the material terms or provisions of this
Agreement and the continued failure of Employee to cure such default within
thirty (30) days after written notice of such default and demand for performance
has been given to Employee by Company which notice and demand shall describe
specifically the nature of such alleged failure to perform or observe such
material terms or provisions; provided, however, that if cure is impossible
-----------------
within said thirty (30) day period, it shall be sufficient for Employee to
commence such cure within said period and pursue such cure diligently to
completion within the shortest possible time (but in no event for an aggregate
period longer than thirty (30) additional days); (ii) breach by Employee of
Section 6.6(a) of the Asset Purchase Agreement; or (iii) conviction of, or a
plea of "guilty" or "no contest" to, a crime involving a felony, fraud,
embezzlement or the like. "Good Reason" shall mean the (i) failure of Company to
perform or observe any of the material terms or provisions of
this Agreement, and the continued failure of Company to cure such default within
30 days after written notice of such default and demand for performance has been
given to Company by Employee, which notice and demand shall describe
specifically the nature of such alleged failure to perform or observe such
material terms or provisions; provided, however, that if cure is impossible
-----------------
within said thirty (30) day period, it shall be sufficient for Company to
commence such cure within said period and pursue such cure diligently to
completion within the shortest possible reasonable time (but in no event for an
aggregate period longer than thirty (30) additional days); (ii) assignment of
duties materially and adversely inconsistent with Employee's position, duties,
title and status as set forth on Schedule A, without Employee's consent; (iii)
failure by any successor of the Company to expressly assume Company's
obligations to perform this Agreement; (iv) failure by any successor of Company
to expressly assume or replace any stock options granted pursuant to this
Agreement; (v) as provided in paragraph 2(a) below, or (vi) relocation of
Employee outside of Manhattan, New York City without his consent;
provided that, Employee shall not be deemed to have been relocated without his
-------------
consent because of required travel on Company's business, including, without
limitation, travel to the Company's offices in California and the Purchased LLC
offices (as defined in the Asset Purchase Agreement) and travel to such other
regional offices now existing, or as may be established from time to time.
2. Duties and Scope of Employment.
-------------------------------
(a) Position. Company agrees to employ Employee, and Employee
--------
agrees to serve as Company's Vice President, Information Services Division, for
the term of his employment under this Agreement, with the duties,
responsibilities and capabilities generally set forth on Schedule A hereto and
such other duties customarily associated and consistent with such office and
duties as determined by Company and its Board of Directors ("Board") from time
to time ("Employment"). Employee shall report directly to either Xxxxxx Xxxx or
Xxxx Xxxxxxxx. If Employee shall be involuntarily required to report directly to
an officer of Company other than Xxxxxx Xxxx or Xxxx Xxxxxxxx in their then
respective capacities as executive officers of the Company, then Employee shall
be entitled for a period of one (1) year thereafter to terminate Employee's
Employment for Good Reason as set forth in Section 1(b) hereof.
(b) Obligations. During the term of his Employment, Employee
-----------
shall devote his full business efforts and time to Company and/or its
subsidiaries performing the duties as generally described in Schedule A. He
shall not render services to any other person or entity without the express
prior approval of Company's Chief Executive Officer.
(c) Place of Employment. Employee shall be based in Manhattan,
-------------------
New York City except for required travel on Company's business, including
without limitation, travel to the Company's offices in California and the
Purchased LLC offices (as defined in the Asset Purchase Agreement) and travel to
such other regional offices of Company as are now existing or as may be
established from time to time.
2
3. Cash Compensation.
------------------
(a) Salary. During the term of his Employment, Company agrees to pay
------
Employee as compensation for his services a base salary at the annual rate of
$125,000 or at such higher rate as Company may determine from time to time.
Such salary shall be payable in accordance with Company's standard payroll
procedures. (The annual compensation specified in this subsection (a), together
with any increases in such compensation that Company may grant from time to
time, is referred to in this Agreement as "Base Compensation.")
(b) Bonus. For the period ending on the first, second and third
-----
anniversary of his Employment, Employee shall be paid a monthly bonus of two
percent (2%) of all gross margin dollars generated by the Information Services
Division ("Division Revenue"). For purposes of calculating such bonus, "gross
margin" shall mean (x) Company's xxxx rate minus (y) an amount equal to (A) the
Company's aggregate pay rate times (B) 1.15. "Division Revenue" shall mean
revenue of the Information Services Division, including revenue of all profit
centers reporting directly to such Information Services Division.
EXAMPLE:
Month 1 Division Revenue $1,500,000
Gross Margin (Xxxx Rate 53.75; Pay Rate 25) 25%
Gross Margin $ (.25 times 1,500,000) $ 375,000
Monthly Bonus @2% $ 7,500
Total Monthly Comp. $ 17,916
(salary +bonus)
Subject to the foregoing, any increase in the amount of such annual
bonus using the formula provided above shall be determined and reviewed annually
by the Board of Directors in its sole discretion; provided, however, that unless
-----------------
otherwise agreed by Employee and the Company the Board of Directors shall not
apply a different formula than the formula provided above for determining
Employee's annual bonus for the periods ending on the first, second and third
anniversary of his Employment if such different formula would result in a
smaller annual bonus to Employee than is determined by the formula provided
above.
4. Employee Benefits; Employee Incentives. During the term of his
--------------------------------------
Employment, Employee shall be eligible to participate in employee benefit plans
maintained by Company, subject in each case to the generally applicable terms
and conditions of the plan in question and to the determinations of any person
or committee administering such plan. During the term of his Employment,
Employee shall be eligible to participate in employee fringe benefit incentives
and the like as may be established by the Board of Directors from time to time
and made available to the Company's Vice Presidents generally.
5. Business Operating Expenses. During the term of his Employment,
---------------------------
Employee shall be authorized to incur necessary and reasonable travel,
entertainment and other
3
business expenses in connection with his duties and responsibilities hereunder
in an amount not to exceed $5000 per month without the prior approval of the
President or the Chief Executive Officer of the Company. Company shall reimburse
Employee for such expenses upon presentation of an itemized account and
appropriate supporting documentation, all in accordance with Company's generally
applicable policies.
6. Option Grant. In addition to cash compensation, as of the date
------------
when Employee's Employment commences, Company shall grant him a stock option
covering 52,000 shares of Company's Common Stock. The exercise price of such
option shall be equal to the fair market value of such stock on the date of
grant. Company shall use its best efforts to provide that the annual maximum
number of such shares shall become exercisable in each year until all such
shares are exercisable as is permitted under applicable provisions of the
Internal Revenue Code of 1986, as amended, for such option to be treated as an
incentive stock option. Subject to the foregoing, it is intended that the term
of such option shall be 10 years and shall vest in two equal installments on
December 1, 1996 and January 1, 1997 if Employee shall remain in Employment on
such dates. Upon the exercise of each option, the Company agrees to pay to
Employee an amount equal to the aggregate exercise price of such option. In
addition, as of the date when Employee's Employment commences, Company shall
grant him an incentive stock option covering 40,000 shares of Company's Common
Stock. The exercise price of such option shall be equal to the fair market
value of such stock on the date of grant. The term of such option shall be 10
years and shall vest 20% on the first anniversary of the date of grant and the
balance shall vest in equal monthly installments over the succeeding 48 months
of service. The foregoing options shall be subject to the terms and conditions
set forth in the Xxxx, Xxxxxx & Associates, Inc. 1996 Stock Option Plan and in
Company's standard form of incentive stock option agreements; provided however,
that if Employee terminates his employment for Good Reason or is terminated by
Company without Cause, Employee shall have ninety (90) days within which to
exercise such options.
7. Successors. This Agreement shall be binding upon any successor
----------
to all or substantially all of Company's business and/or assets. For all
purposes under this Agreement, the term "Company" shall include any successor to
Company's business and/or assets. Employee's rights hereunder shall inure to
his personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
4
8. Miscellaneous Provisions.
------------------------
(a) Notice. Notices and all other communications contemplated
------
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered (including facsimile) or when mailed by U.S.
registered mail, return receipt requested and postage prepaid. In the case of
Employee, mailed notices shall be addressed to him at the home address which he
most recently communicated to Company in writing. In the case of Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
(b) 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 Employee and by an authorized officer of Company (other
than Employee). 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.
(c) Whole Agreement; Modifications. No agreements,
------------------------------
representations or understandings (whether oral or written and whether express
or implied) which are not expressly set forth in this Agreement have been made
or entered into by either party with respect to the subject matter hereof. This
Agreement, the Asset Purchase Agreement and the Proprietary Information and
Inventions Agreement contain the entire understanding of the parties with
respect to the subject matter hereof. A modification of this Agreement shall be
valid only if it is made in writing and executed by both parties hereto.
(d) Withholding Taxes. All payments made under this Agreement
-----------------
shall be subject to reduction to reflect taxes or other charges required to be
withheld by law.
(e) Choice of Law. The validity, interpretation, construction
-------------
and performance of this Agreement shall be governed by the laws of the State of
California (except their provisions governing the choice of law).
(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 controversy or claim arising out of or
-----------
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment on the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. All fees and expenses
of the arbitrator and such Association shall be paid equally by the parties.
(h) No Assignment. 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
5
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 sentence shall be void.
(i) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of Company by its duly authorized officer, as of the day and year
first above written.
EMPLOYEE
/s/ Xxxxxxxx Xxxxxx
By ______________________________
Vice President
Title ___________________________
Xxxx, Xxxxxx & Associates, Inc.
/s/ Xxxxxx Xxxx
By ______________________________
CEO
Title ___________________________
6
SCHEDULE A--DUTIES
Under the direction of the Chief Executive Officer of Xxxx, Xxxxxx and
Associates, Inc. (the "Company"), Employee shall operate and manage the
Information Services Division in accordance with an annual plan developed and
approved by the Chief Executive Officer of the Company. In addition, Employee
shall devote no more that 10% of his time to the supervision of the winding-up
of the operations of TeamAlliance Technology Partners, L.P., TeamAlliance
Technology Partners, Inc. and the non-Purchased LLCs (as described in the Asset
Purchase Agreement), which winding-up shall be completed as expeditiously as
possible but in no event later than April 30, 1997.
Employee accepts and agrees that nothing in this Schedule A, or the
Agreement of which it is a part, or the Asset Purchase Agreement and its related
agreements, or the Proprietary Information and Inventions Agreement, precludes
Company from engaging other employees or service providers, or making
acquisitions, that are overlapping or competitive with the duties assigned
herein to Employee.
7
