Exhibit 10.5
EMPLOYMENT AGREEMENT
This agreement ("Agreement") is made effective the date set forth at
the end of this Agreement by and between THE A CONSULTING TEAM, INC., a New York
corporation (the "Corporation") and Xxxxxx XxxXxx, an individual residing at 000
Xxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the "Executive").
WHEREAS, the Executive currently serves as the Chief Executive Officer;
and
WHEREAS, the Corporation believes that the services performed to date
by Executive have been of substantial value to the Corporation and that
Executive's continued service would be of great value to the Corporation.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and of the mutual benefits herein provided, the Corporation and
Executive hereby agree as follows:
1. Position and Responsibilities.
1.1 The Executive agrees to serve as Chief Executive Officer of the
Corporation on the terms and conditions hereinafter set forth.
1.2 The Executive shall devote his entire time, energy and skill during
regular business hours (other than during periods of illness, vacation and other
approved absences) to the affairs of the Corporation and to the promotion of its
interests.
1.3 The Executive shall be accountable to the Board of Directors, or
any of its committees, whichever is appropriate.
1.4 The Executive shall abide by the policies, standards and rules
established from time to time by the Board of Directors for the conduct of the
business of the Corporation. The Executive will not intentionally or negligently
act in any manner to cause financial or other damage to the Corporation or the
Corporation's reputation in the community in which its business is located. The
Board of Directors reserves the right to change, interpret, withdraw or add to
any of the policies, standards and rules of the Corporation at any time as it
deems appropriate.
1.5 In the operations of the Corporation, the Executive will continue
to cooperate in allowing information from key employees of the Corporation to be
communicated to the Board of Directors. The Executive will not interfere with
members of the Board of Directors making reasonable inquiry into the affairs of
the Corporation and will not stifle free flow of information to them.
2. Employment Term.
2.1 The initial term of employment shall be for a period of two years,
commencing with the effective date of this Agreement and ending on December 31,
2004, unless earlier terminated as provided in this Agreement.
2.2 Notwithstanding the provisions of Section 2.1 above, the
Corporation shall have the right to terminate the Executive's employment for
Cause. For purposes of this Agreement, the term "Cause" shall mean: (a) a
finding by the Board of Directors of the Corporation that the Executive has
willfully and materially failed, refused or neglected to perform and discharge
his duties and responsibilities hereunder for at least 15 business days after
written notice from the Corporation setting forth the actions or omissions, as
the case may be, which constitute such failure, refusal or neglect, (b) the
Executive's violation of any of the covenants set forth in Sections 6 and 7
hereof, (c) a material breach of the Executive's fiduciary duties to the
Corporation which results in a material detriment to the Corporation, (d) the
Executive's engagement in gross misconduct materially injurious to the
Corporation, (e) the Executive's intentional misappropriation of property or
corporate opportunity of the Corporation for use by the Executive or third
parties, (f) the Executive's commission of an act of fraud or embezzlement, or
(g) the Executive's conviction for a crime (excluding minor traffic offenses).
2.3 Any purported termination of the Executive's employment by the
Corporation hereunder shall be communicated by a Notice of Termination to the
Executive in accordance with Section 13 hereof. For purposes of this Agreement,
a "Notice of Termination" shall mean a written notice which shall indicate those
specific termination provisions in this Agreement relied upon and which sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provisions so
indicated.
2.4 For purposes of this Agreement the "Termination Date" shall be: (a)
if this Agreement is terminated by the Corporation for any reason (other than
death), the date of the Notice of Termination, (b) if the Executive's employment
is terminated by reason of the Executive's death, then the date on death, or (c)
if the Executive terminates his employment for any reason, the date on which the
Executive delivers to the Corporation a Notice of Termination.
3. Compensation.
3.1 For all services rendered by the Executive for each contract year,
the Executive shall receive a salary of Three Hundred Thousand Dollars
($300,000) per year. Subject to the approval of the non-employee members of the
Corporation's Executive Compensation Committee and further subject to the
Corporation meeting certain financial performance criteria to be determined by
such members of the committee, the Executive shall also be entitled to receive a
cash bonus with respect to each whole fiscal year of the Corporation during
which he is employed hereunder, commencing with the year ending December 31,
2002, in an amount to be determined by the non-employee members of the Committee
not to exceed one percent (1%) of the Corporation's total revenues for the year
in question.
3.2 The Executive shall be entitled to participate in the employee
benefit and insurance plans, policies and programs that are available generally
to the Corporation's employees.
3.3 The Executive shall be entitled to paid time off ("PTO") days for
vacation, illness, or personal affairs in accordance with the Company's
policies. PTO may be used as long as such paid time does not interfere with
normal business operations and the Executive's duties as Chief Executive
Officer.
3.4 During the term of this Agreement, the Executive will participate
in the Corporation's annual and long term incentive compensation programs at a
level commensurate with his position at the Corporation and consistent with then
current policies and practices.
4. Incapacity; Death
4.1 If, during the Employment Term hereunder, because of illness or
other incapacity (other than death), the Executive shall fail for a period of
three (3) consecutive months ("Incapacity"), to render the services contemplated
hereunder, then the Corporation, at its option, may terminate the Employment
Term hereunder by notice to the Executive, effective on the giving of such
notice; provided, however, that the Executive shall be entitled to continue to
receive 100% of his then annual salary hereunder for a period of one year from
the Termination Date and payable in equal monthly installments commencing on the
30th day of the month following the Termination Date.
4.2 In the event of the death of the Executive during the Employment
Term, the Employment Term hereunder shall terminate on the date of death of the
Executive; provided, however, that the Executive's estate shall be entitled to
any benefits accrued under the Corporation's death, disability or other benefit
plan and shall be entitled to receive a lump sum payment equal to his annual
salary and payable within 90 days of the Termination Date.
5. Severance Compensation Upon Termination of Employment.
5.1 If the Executive's employment with the Corporation shall be
terminated (a) by the Corporation other than pursuant to Sections 2 or 4, or (b)
by the Executive for Good Reason (as defined in Paragraph 5.3 below), then the
Corporation shall pay to Executive as severance pay an amount equal to two times
his then annual salary and payable within 30 days of the termination date.
5.2 For purposes of this Agreement, the term "Good Reason" shall mean
any of the following:
(i) the assignment to the Executive by the Corporation of
duties inconsistent with, or a substantial reduction in the nature or status of,
Executive's responsibilities as Chief Executive Officer;
(ii) any material breach by the Corporation of any material
provision of this Agreement; provided, however, that the Executive shall give
written notice to the Corporation which shall indicate those specific provisions
in this Agreement relied upon and which shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for such termination.
6. Non-competition, Non-Solicitation.
6.1 During the term of this Agreement and for a period of two (2) year
after the Termination Date of this Agreement, the Executive shall not (i)
directly or indirectly, as an employee, agent, manager, director, officer,
controlling stockholder, partner or otherwise, engage or participate in any
business engaged in the continental United States in activities competitive with
any activities in which the Corporation is engaged during the term of the
Executive's employment with the Corporation, (ii) solicit from any client or
division, department or subsidiary of any client of the Corporation, or any
individual employed by any of the foregoing, for whom the Executive performed
services while he was employed by the Corporation, any business relating to
services similar to the services which were so performed by the Executive for
such clients during his employment with the Corporation. In addition, the
Executive shall not during such time request or cause any client of the
Corporation to cancel or terminate any business relationship with the
Corporation or any of its subsidiaries, or directly or indirectly solicit or
otherwise cause any employee to terminate such employee's relationship with the
Corporation.
6.2 If any portion of the restrictions set forth in this Paragraph 6
should, for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
6.3 The Executive declares that the foregoing scope, territorial and
time limitations are reasonable and properly required for the adequate
protection of the business of the Corporation. In the event any such scope,
territorial or time limitation is deemed to be unreasonable by a court of
competent jurisdiction, the Executive agrees to the reduction of said scope,
territorial or time limitation to such scope, area or period which said court
shall have deemed reasonable.
6.4 The existence of any claim or cause of action by the Executive
against the Corporation other than under this Agreement shall not constitute a
defense to the enforcement by the Corporation of the foregoing restrictive
covenants, but such claim or cause of action shall be litigated separately.
6.5 The Executive recognizes that the employees of the Corporation are
a valuable resource of each such member. Executive agrees that Executive shall
not, for a period of one (1) year following the Termination Date, either alone
or in conjunction with any other person or entity solicit, induce or recruit any
employee to leave the employ of the Corporation.
7. Confidentiality. It is understood that in the course of Executive's
employment with the Corporation, the Executive has become and will continue to
become acquainted with Confidential Information (as defined below). The
Executive recognizes that Confidential Information has been developed by the
Corporation at great expense, is confidential and proprietary to the
Corporation, and is and shall remain the exclusive property of the Corporation.
"Confidential Information" shall mean all proprietary and other information
concerning the Corporation and its business, including but not limited to
information concerning the Corporation's customers, vendors and others with whom
it transacts business, its methods of operation and other trade secrets, its
future plans and strategies, and any financial information concerning the
Corporation. The Executive agrees that all Confidential Information is the
exclusive property of the Corporation and that Executive will not remove the
originals or make copies of any Confidential Information without the
Corporation's prior written consent. The Executive shall not use Confidential
Information for any purposes other than to carry out his obligations under this
Agreement and will not divulge Confidential Information to any other person or
entity during or after the term of this Agreement without the Corporation's
prior written consent, unless required by law or judicial or other process. The
provisions of this Section 7 shall continue to apply to the parties after this
Agreement is terminated. As of the Termination Date, the Executive shall
promptly return to the Corporation originals or copies of any and all materials,
documents, notes, manuals or lists containing or embodying Confidential
Information, or relating directly or indirectly to the business of the
Corporation, in the possession or control of Executive.
8. Applicable Law and Forum.
The Agreement shall be governed by and construed in all respects under
the laws of the State of New York, without reference to its conflict of laws
rules or principles. Any suit, action, proceeding or litigation arising out of
or relating to the Agreement shall be brought and prosecuted in such federal or
state court or courts located within the State of New York as provided by law.
The parties hereby irrevocably and unconditionally consent to the jurisdiction
of each such court or courts located within the State of New York and to service
of process by registered or certified mail, return receipt requested, or by any
other manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding or
litigation so commenced has been commenced in an inconvenient forum.
9. Successor to the Corporation. (a) The Corporation will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Corporation, by agreement expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Corporation would be required to perform it if
no such succession or assignment had taken place. As used in this Agreement,
"Corporation" shall mean the Corporation as hereinabove defined and any
successor or assign to its business and/or assets as aforesaid which executes
and delivers the agreement provided for in this paragraph 9 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
heirs, distributees, devises and legatees. If the Executive should die while any
amounts are still payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Executive's estate. This Agreement shall not otherwise be assignable by the
Executive.
10. No Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement, except as provided in Section 9 hereof.
11. Headings. The headings of the paragraphs hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
12. Interpretation. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.
13. Notices. All notices under this Agreement shall be in writing and shall
be deemed to have been given at the time when delivered personally or by
facsimile transmission, sent by recognized overnight courier service, or mailed
by registered or certified mail, addressed to the address set forth at the end
of this Agreement, or to such changed address as such party may have fixed by
notice; provided, however, that any notice of change of address shall be
effective only upon receipt.
14. Waivers. If either party should waive any breach of any provision of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
15. Complete Agreement; Amendments. The foregoing is the entire agreement
of the parties with respect to the subject matter hereof and supersedes in its
entirety any letter agreements or other writings by and among the Executive and
the Corporation. This Agreement may not be amended, supplemented, cancelled or
discharged except by written instrument executed by both parties hereto.
16. Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of New York, without giving effect to principles of
conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date set forth below, and the parties acknowledge that this Agreement
memorializes their agreement since the effective date set forth below.
THE A CONSULTING TEAM, INC. EXECUTIVE
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx XxxXxx
Authorized Representative Xxxxxx XxxXxx
Address for Notices: Address for Notices:
000 Xxxx Xxxxxx Xxxxx 000 Xxxxxxxx Xxxx
Xxx Xxxx, XX 00000 Xxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (fax)
Effective Date of Agreement: January 1, 2002
Execution Date: January 2, 2002
--------------------------------------------------------------------------------
Name of Executive: Xxxxxx XxxXxx
