EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of this 4th
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day of December, 2003 by and between Delta Communications Group, Inc., a
Delaware corporation ("Company"), and Xxxxxx Xxxxxx ("Executive").
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Background
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WHEREAS, simultaneously with the execution of this Agreement,
pursuant to an Agreement and Plan of Merger, dated as of November 30, 2003
(the "Merger Agreement"), by and among the Company, Zanett, Inc. ("Zanett"), a
Delaware corporation, Executive and DeltaData, Inc., a California corporation
("DCG"), DCG is being merged with and into the Company, with the Company
surviving the merger as a Delaware corporation named Delta Communication Group
Inc. (the "Merger") (capitalized terms not otherwise defined herein shall have
the respective meanings assigned to such terms in the Merger Agreement); and
WHEREAS, Company desires to employ Executive, and Executive desires
to be employed by Company, on the terms and conditions contained in this
Agreement. Executive will be substantially involved with Company's operations
and management and will learn trade secrets and other confidential information
relating to Company and its customers; accordingly, the noncompetition
covenant and other restrictive covenants contained in Section 14 of this
Agreement constitute essential elements hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
Terms
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1. Definitions. The following words and phrases shall have the
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meanings set forth below for the purposes of this Agreement (unless the
context clearly indicates otherwise):
(a) "Base Salary" shall have the meaning set forth in
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Section 5.
(b) "Board" shall mean the Board of Directors of Company
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or any successor thereto.
(c) "Cause," as determined by the Board in good faith,
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shall mean Executive has --
(1) failed to perform his stated duties (including
by omission) and not cured such failure (if curable) within 15
days of his receipt of written notice of the failure, which
notice shall identify the duties not performed and shall
request performance of such duties; If the Company
experiences a loss of revenue of more than 20% in any year,
Executive shall be deemed to have failed to perform his stated
duties.
(2) materially breached any provision of this
Agreement and not cured such breach (if curable) within 15
days of his receipt of written notice of the breach;
(3) demonstrated his personal dishonesty in
connection with his employment by the Company that may
reasonably be expected to have a material adverse effect,
determined in the judgment of the Board, on the Company;
(4) engaged in willful misconduct;
(5) engaged in a breach of fiduciary duty;
(6) willfully violated any law, rule or regulation,
or final cease-and-desist order (other than minor traffic
violations or similar offenses) that may reasonably be
expected to have a material adverse effect, determined in the
judgment of the Board, on the Company; or
(7) engaged in other serious misconduct of such a
nature that may reasonably be expected to have a material
adverse effect, determined in the judgment of the Board, on
the Company
(d) "Disability," as determined by the Board in good faith,
shall mean Executive's inability to perform his duties hereunder by reason of
any physical or mental impairment which is expected to result in death or
which has lasted or is expected to last for a continuous period of not fewer
than 3 months.
(e) "Good Reason" shall mean:
(1) a material breach of this Agreement by Company
which is not cured by Company within 15 days of its receipt
of written notice of the breach;
(2) without Executive's express written consent, the
Board reduces Executive's Base Salary or the aggregate fringe
benefits provided to Executive (except to the extent
permitted by Section 5 or Section 6, respectively); provided,
Executive resigns within 30 days after the change objected
to; or
(3) Company fails to obtain the assumption of this
Agreement by any successor to Company.
(f) "Principal Executive Office" shall mean Company's
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principal office for executives, presently located at 00 Xxxxxxxxxx, Xxxxx
000, Xxxxx Xxxxx, XX 00000.
(g) "Termination Date" shall mean the date specified in
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the Termination Notice.
(h) "Termination Notice" shall mean a dated notice which:
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(i) indicates the specific termination provision in this Agreement relied upon
(if any); (ii) sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for the termination of Executive's employment under
such provision; (iii) specifies a Termination Date; and (iv) is given in the
manner specified in Section 15(e).
2. Employment. Company hereby employs Executive as President
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and Chief Executive Officer and Executive hereby accepts such employment and
agrees to render services to Company in such capacity (or in such other
capacity in the future as the Board may reasonably deem equivalent to such
position) on the terms and conditions set forth in this Agreement.
Executive's primary place of employment shall be at the Principal Executive
Office. It is understood that Executive may from time to time be reasonably
required to travel in furtherance of or in connection with the business of
Company.
3. Term. Unless earlier terminated by Executive or Company as
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provided in Section 10 hereof, the term of Executive's employment under this
Agreement shall commence on the date of this Agreement and terminate on
November 30, 2007.
4. Duties. Executive shall:
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(a) faithfully and diligently do and perform all such acts
and duties, and furnish such services as are assigned to Executive as of the
date this Agreement is signed, and such additional or different acts, duties
and services as the Board may assign in the future; and
(b) devote his full professional time, energy, skill and
best efforts to the performance of his duties hereunder, in a manner that will
faithfully and diligently further the business and interests of Company, and
shall not be employed by or participate or engage in or in any manner be a
part of the management or operations of any business enterprise other than
Company without the prior written consent of the Board, which consent may be
granted or withheld in its sole discretion.
5. Compensation.
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(a) Company shall compensate Executive for his services at
a minimum base salary of $96,000 per year ("Base Salary"), payable in periodic
installments in accordance with Company's regular payroll practices in effect
from time to time. Executive's Base Salary may be increased from time to time
in such amounts as may be determined by the Board, but may not be decreased
without Executive's express written consent (unless the decrease is pursuant
to a general compensation reduction applicable to all, or substantially all,
officers of Company).
(b) Within 10 days after execution of this Agreement, the
Company shall cause to be granted to Executive options to purchase 100,000
shares of Zanett common stock at a fair market value (as determined by the
Board of Directors of Zanett on the date of grant) and having such other terms
and conditions as are provided for in Zanett's Stock Incentive Plan.
6. Benefit Plans. Executive shall be entitled to participate in
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and receive benefits under any employee benefit plan or stock-based plan of
Company, and shall be eligible for any other plans and benefits covering
officers of Company, to the extent commensurate with his then duties and
responsibilities fixed by the Board. Company shall not make any change in
such plans or benefits which would adversely affect Executive's rights
thereunder, unless such change affects all, or substantially all, officers of
Company.
7. Vacation. Executive shall be entitled to paid annual
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vacation in accordance with the policies established from time to time by the
Board, which in no event shall be less than four weeks per annum. Regardless
of what the Company's standard vacation policy may be, Executive shall not be
entitled to extra cash payments for any vacation he does not utilize.
8. Business Expenses. Company shall reimburse Executive or
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otherwise pay for all reasonable expenses incurred by Executive in furtherance
of or in connection with the business of Company, including, but not limited
to, traveling expenses, subject to such reasonable documentation and other
limitations as may be established by the Board.
9. Disability. In the event Executive incurs a Disability,
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Executive's obligation to perform services under this Agreement will
terminate, and the Board may terminate this Agreement upon written notice to
Executive.
10. Termination
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(a) Termination without Salary Continuation. In the event
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(i) Executive terminates his employment hereunder other than for Good Reason,
or (ii) Executive's employment is terminated by Company due to his Disability
or death, or for Cause, Executive shall have no right to compensation or other
benefits pursuant to this Agreement for any period after his last day of
active employment.
(b) Termination with Salary Continuation. In the event
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(i) Executive's employment is terminated by Company for a reason other than
Disability, death or Cause, or (ii) Executive terminates his employment for
Good Reason, then Company shall:
(1) pay Executive a severance amount equal to the
lesser of (i) one-half (1/2) times Executive's Base Salary
(determined without regard to any reduction in violation of
Section 5) as of his last day of active employment, or
(ii) the unpaid portion of Executive's Base Salary
(determined without regard to any reduction in violation of
Section 5) for the remainder of the term of this Agreement;
the severance amount shall be paid in a single sum within 30
days following the Termination Date; the Company shall also
pay to Executive additional severance obligations as may be
agreed upon by Executive and Company on any schedule to this
Agreement; and
(2) maintain and provide to Executive, at no cost
to Executive, for a period ending at the earliest of (i) the
expiration of six-months from Executive's last day of active
employment; (ii) the date of Executive's full-time employment
by another employer; or (iii) Executive's death, continued
participation in all group insurance, life insurance, health
and accident, disability, and other employee benefit plans in
which Executive would have been entitled to participate had
his employment with Company continued throughout such period,
provided that such participation is not prohibited by the
terms of the plan or by Company for legal reasons.
(c) Termination Notice. Except in the event of
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Executive's death, a termination under this Agreement shall be effected by
means of a Termination Notice.
11. Withholding. Company shall have the right to withhold from
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all payments made pursuant to this Agreement any federal, state, or local
taxes and such other amounts as may be required by law to be withheld from
such payments.
12. Assignability. Company may assign this Agreement and its
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rights and obligations hereunder in whole, but not in part, to any entity to
which Company may transfer all or substantially all of its assets, if in any
such case said entity shall expressly in writing assume all obligations of
Company hereunder as fully as if it had been originally made a party hereto.
Company may not otherwise assign this Agreement or its rights and obligations
hereunder. This Agreement is personal to Executive and his rights and duties
hereunder shall not be assigned except as expressly agreed to in writing by
Company.
13. Death of Executive. Any amounts due Executive under this
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Agreement (not including any Base Salary not yet earned by Executive) unpaid
as of the date of Executive's death shall be paid in a single sum as soon as
practicable after Executive's death to Executive's surviving spouse, or if
none, to the duly appointed personal representative of his estate.
14. Restrictive Covenants.
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(a) Covenant Not to Compete. During the term of this
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Agreement and for a period of four years following the date of this Agreement,
Executive shall not, directly or indirectly, in the United States (i) engage
in the business of providing information technology consulting services (the
"Business"), (ii) be or become a stockholder, partner, owner, officer,
director or employee of, or a consultant to, any person or entity engaging in
such activities; (iii) solicit the employment of any person who is an employee
of Company as of the Termination Date; (iv) hire or employ any person who is
an employee of Company as of the Termination Date; or (v) solicit any Person
who is a client or customer of the Company, Zanett or any of their affiliates
to sell such Person services competitive with those being offered by the
Company, Zanett or any of their affiliates. Notwithstanding anything herein
to the contrary, nothing herein shall prohibit Executive from owning, as a
passive investor, in the aggregate not more than five percent (5%) of the
outstanding shares of capital stock or other beneficial ownership interests of
any entity (other than a successor in interest to Company) engaged in the
Business.
(b) Confidentiality. Executive acknowledges a duty of
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confidentiality owed to Company and shall not, at any time during or after his
employment by Company, retain in writing, use, divulge, furnish, or make
accessible to anyone, without the express authorization of the Board, any
trade secret, private or confidential information or knowledge of Company,
Zanett or any of their affiliates obtained or acquired by him while so
employed. All computer software, business cards, telephone lists, customer
lists, price lists, contract forms, catalogs, Company books, records, files
and know-how acquired while an employee of Company are acknowledged to be the
property of Company and shall not be duplicated, removed from Company's
possession or premises or made use of other than in pursuit of Company's
business or as may otherwise be required by law or any legal process, or as is
necessary in connection with any adversarial proceeding against Company and,
upon termination of employment for any reason, Executive shall deliver to
Company, without further demand, all copies thereof which are then in his
possession or under his control. The above restrictions do not apply to
information which is currently in the possession of Executive, which
information is not subject to any prior confidentiality agreement, shown by
written records, and shall cease when, but only to the extent that, through no
fault of Executive, such information comes into the public domain or is
received by Executive from a third party having a bona fide right to disclose
such information.
(c) Inventions and Improvements. Executive shall promptly
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communicate to Company all ideas, discoveries and inventions which are or may
be useful to Company or its business. Executive acknowledges that all such
ideas, discoveries, inventions, and improvements which heretofore have been or
are hereafter made, conceived, or reduced to practice by him at any time
during his employment with Company heretofore or hereafter gained by him at
any time during his employment with Company are the property of Company, and
Executive hereby irrevocably assigns all such ideas, discoveries, inventions,
and improvements to Company for its sole use and benefit, without additional
compensation. The provisions of this Section 14(c) shall apply whether such
ideas, discoveries, inventions, or improvements were or are conceived, made or
gained by him alone or with others, whether during or after usual working
hours, whether on or off the job, whether applicable to matters directly or
indirectly related to Company's business interests (including potential
business interests), and whether or not within the specific realm of his
duties. Executive shall, upon request of Company, but at no expense to
Executive, at any time during or after his employment with Company, sign all
instruments and documents reasonably requested by Company and otherwise coop-
erate with Company to protect its right to such ideas, discoveries,
inventions, or improvements including applying for, obtaining, and enforcing
patents and copyrights thereon in such countries as Company shall determine.
(d) Breach of Covenant. Any breach or violation of the
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provisions in this Section 14 by Executive will result in forfeiture by
Executive and all other persons of all rights to any further payments or
benefits under this Agreement, and in such event Company shall have no further
obligation to pay any amounts related thereto. Executive expressly
acknowledges that damages alone will be an inadequate remedy for any breach or
violation of any of the provisions of this Section 14 and that Company, in
addition to all other remedies, shall be entitled as a matter of right to
equitable relief, including injunctions and specific performance, in any court
of competent jurisdiction. If any of the provisions of this Section 14 are
held to be in any respect unenforceable, then they shall be deemed to extend
only over the maximum period of time, geographic area, or range of activities
as to which they may be enforceable.
15. Miscellaneous
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(a) Amendment. No provision of this Agreement may be
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amended unless such amendment is signed by Executive and such officer as may
be specifically designated by the Board to sign on Company's behalf.
(b) Prior Employment. Executive represents and warrants
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that his acceptance of employment with Company has not breached, and the
performance of his duties hereunder will not breach, any duty owed by him to
any prior employer or other person.
(c) Severability. If any provision of this Agreement or
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the application thereof to any person or circumstance shall be invalid or
unenforceable under any applicable law, such event shall not affect or render
invalid or unenforceable any other provision of this Agreement and shall not
affect the application of any provision to other persons or circumstances.
(d) Binding Effect. This Agreement shall be binding upon
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and inure to the benefit of the parties hereto and their respective
successors, permitted assigns, heirs, executors, and administrators.
(e) Notice. For purposes of this Agreement, notices and
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all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given if hand-delivered, sent by
documented overnight delivery service or by certified or registered mail,
return receipt requested, postage prepaid, addressed to the respective
addresses set forth below:
If to the Company:
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Delta Communications Group, Inc.
00 Xxxxxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
With a copy to:
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Zanett, Inc.
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Chief Legal Officer
Fax: (000) 000-0000
If to the Executive:
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Xxxxxx Xxxxxx
00 X Xxxxxxx
Xxxxxx Xxxxx, XX 00000
(f) Entire Agreement. This Agreement sets forth the entire
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understanding of the parties and supersedes all prior agreements, arrangements
and communications, whether oral or written, pertaining to the subject matter
hereof.
(g) Governing Law. The internal law, without regard for
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conflicts of law principles, of the State of New York will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
DELTA COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
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Title: Chief Executive Officer
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XXXXXX XXXXXX
/s/ Xxxxxx Xxxxxx
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