EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated March 13, 2000 is made and entered into by and
between CompuCom Systems, a Delaware corporation ("Employer"), and Xxxxxxx X.
Xxxxxxxxxx, an executive employee of Employer ("Executive").
Recitals
A. Executive is employed by Employer in an executive capacity and
Executive has agreed to continue as an employee of Employer pursuant to the
terms of this Agreement.
B. Employer desires that the Executive continue as an employee of
Employer in order to provide the necessary leadership and senior management
skills that are important to the success of Employer. Employer believes that
retaining the Executive's services as an employee of Employer and the benefits
of his business experience are of material importance to Employer and Employer's
shareholders.
Agreement
NOW, THEREFORE, in consideration of Executive's continued employment by
Employer and the mutual promises and covenants contained herein the receipt and
sufficiency of which is hereby acknowledged, Employer and Executive intend by
this Agreement to specify the terms and conditions of Executive's employment
relationship with Employer.
Section I. General Duties of Employer and Executive.
1.1 Employer agrees to employ Executive and Executive agrees to accept
employment by Employer and to serve Employer in an executive capacity upon the
terms and conditions set forth herein. The duties and responsibilities of
Executive shall include those described for the particular position held by
Executive while employed hereunder in the Bylaws of Employer or other documents
of Employer, and shall also include such other or additional duties, for
Employer, as may from time-to-time be assigned to Executive by the Board of
Directors of Employer or any duly authorized committee thereof. The executive
capacity that Executive shall hold while this Agreement is in effect shall be
that position as determined by the Board of Directors, or any duly authorized
committee thereof, from time to time in its sole discretion. While employed
hereunder, the initial position that Executive shall hold (until such time as
such position may be changed as aforesaid) shall be the position of Senior Vice
President of Sales.
1.2 While employed hereunder, Executive shall obey the lawful directions
of the Board of Directors of Employer, or any duly authorized committee thereof,
and shall use his best efforts to promote the interests of Employer and to
maintain and to promote the reputation thereof. While employed hereunder,
Executive shall devote his time, efforts, skills and attention to the affairs of
Employer in order that he/she shall faithfully perform his duties
and obligations hereunder and such as may be assigned to or vested in him by the
Board of Directors of Employer, or any duly authorized committee thereof.
1.3. While this Agreement is in effect, Executive may from time to
time engage in any businesses or activities that do not compete directly and
materially with Employer, provided that such businesses or activities do not
materially interfere with his performance of the duties assigned to him in
compliance with this Agreement by the Board of Directors of Employer or any duly
authorized committee thereof. In any event, Executive is permitted to (i) invest
his personal assets as a passive investor in such form or manner as Executive
may choose in his discretion, (ii) participate in various charitable efforts,
and (iii) serve as a director or officer of any other entity or organization
that does not compete with Employer.
Section 2. Compensation and Benefits.
2.1. As compensation for services to Employer, Employer shall pay to
Executive, while this Agreement is in effect, a salary at a monthly rate of
$16,666.67. Any increases to such rate shall be at the discretion of the
Compensation Committee duly elected by the Board of Directors. The salary shall
be payable in equal bi-weekly installments, subject only to such payroll and
withholding deductions as may be required by law and other deductions applied
generally to employees of Employer for insurance and other employee benefit
plans. In addition, Executive shall be entitled to participate in the Company's
Management Incentive Compensation Plan ("MICP") at a rate of 50% of base salary.
This bonus will be subject to the parameters set forth by the Compensation
Committee each year and the amount of payment will be determined by such
Committee.
2.2. Upon Executive's furnishing to Employer customary and reasonable
documentary support (such as receipts or paid bills) evidencing costs and
expenses incurred by him in the performance of his services and duties hereunder
(including, without limitation, travel and entertainment expenses) and
containing sufficient information to establish the amount, date, place and
essential character of the expenditure, Executive shall be reimbursed for such
costs and expenses in accordance with Employer's normal expense reimbursement
policy.
2.3. Executive shall have the right to participate in medical, dental
insurance plans, 401(k) plan, life insurance or other plans existing in benefit
of executive officers of Employer.
2.4. Executive shall be entitled to such vacation (in no event less
than three (3) weeks per year), holidays and other paid or unpaid leaves of
absence as consistent with Employer's normal policies or as otherwise approved
by the Board of Directors.
2.5. Executive agrees to submit to and Company agrees to pay for one
complete physical examination on an annual basis at the Xxxxxx Clinic (or
similar medical clinic) in Dallas, Texas.
Section 3. Preservation of Business; Fiduciary Responsibility.
3.1. Executive shall use his best efforts to preserve the business and
organization of Employer, to keep available to Employer the services of present
employees and to preserve the business relations of Employer. Executive shall
not commit any act, or in any way assist others to commit any act, that would
injure Employer. So long as the Executive is employed by Employer, Executive
shall observe and fulfill proper standards of fiduciary responsibility attendant
upon his service and office.
Section 4. Initial Term; Extensions of the Term.
The term of this Agreement shall commence on the effective date hereof and
be ongoing until the employment relationship is terminated for reasons outlined
in this agreement.
Section 5. Termination. Employer or Executive may terminate Executive's
employment under this Agreement at any time, but only on the following terms:
5.1. Executive may terminate his employment under this Agreement at any
time upon at least thirty (30) days prior written notice to Employer.
5.2. Employer may terminate Executive's employment under this Agreement at
any time, without prior notice, for "due cause" upon the good faith
determination by the Board of Directors of Employer that "due cause" exists for
the termination of the employment relationship. As used herein, the term "due
cause" shall mean any of the following events:
(i) any intentional misapplication by Executive of Employer's
funds, or any other act of dishonesty injurious to Employer committed by
Executive; or
(ii) Executive's conviction of a crime involving moral turpitude; or
(iii) Executive's illegal use or possession of any controlled
substance or chronic abuse of alcoholic beverages; or
(iv) Executive's breach, non-performance or non-observance of any of
the terms of this Agreement if such breach, non-performance or non-
observance shall continue beyond a period of ten (10) business days
immediately after notice thereof by Employer to Executive; or
(v) any other action by the Executive involving willful and
deliberate malfeasance or gross negligence in the performance of
Executive's duties.
5.3. In the event Executive is incapacitated by accident, sickness or
otherwise so as to render Executive mentally or physically incapable of
performing the services required under Section 1 of this Agreement for a period
of one hundred eighty (180) consecutive business days, and such incapacity is
confirmed by the written opinion of two (2) practicing
medical doctors licensed by and in good standing in the state in which they
maintain offices for the practice of medicine, upon the expiration of such
period or at any time reasonably thereafter, or in the event of Executive's
death, Employer may terminate Executive's employment under this Agreement upon
giving Executive or his legal representative written notice at least thirty (30)
days' prior to the termination date. Executive agrees, after written notice by
the Board of Directors of Employer or a duly authorized committee or officer of
Employer, to submit to examinations by such practicing medical doctors selected
by the Board of Directors of Employer or a duly authorized committee or officer
of Employer.
5.4 Employer may terminate Executive's employment under this Agreement
at any time for any reason whatsoever, even without "due cause," by giving a
written notice of termination to Executive, in which case the employment
relationship shall terminate immediately upon the giving of such notice.
Section 6. Effect of Termination.
6.1 In the event the employment relationship is terminated (a) by
Executive upon thirty (30) days' written notice pursuant to Subsection 5.1
hereof, (b) by Employer for "due cause" pursuant to Subsection 5.2 hereof, or
(c) by Executive breaching this Agreement by refusing to continue his employment
and failing to give the requisite thirty (30) days' written notice, all
compensation and benefits shall cease as of the date of termination, other
than: (i) those benefits that are provided by retirement and benefit plans and
programs specifically adopted and approved by Employer for Executive that are
earned and vested by the date of termination, (ii) Executive's pro rata annual
salary through the date of termination, and (iii) those benefits required by law
to be made available to terminating employees.
6.2 If Executive's employment relationship is terminated pursuant to
Subsection 5.3 hereof due to Executive's incapacity or death, Executive (or, in
the event of Executive's death, Executive's legal representative) will be
entitled to those benefits tht are provided by retirement and benefits plans and
programs specifically adopted and approved by Employer for Executive that are
earned and vested at the date of termination and, even though no longer employed
by Employer, shall continue to receive salary compensation (payable in the
manner as prescribed in the second sentence of Subsection 2.1) for one year.
6.3 If Employer (i) terminates the employment of Executive other than
pursuant to Subsection 5.2 hereof for "due cause" or other than for a disability
or death pursuant to Subsection 5.3 hereof, (ii) demotes the Executive to a
position below the level of the position described in Subsection 1.1, (iii)
decreases Executive's salary below the level or reduces the employee benefits
and perquisites below the level provided for by the terms of Section 2 hereof,
other than as a result of any amendment or termination of any employee and/or
executive benefit plan or arrangement, which amendment or termination is
applicable to all qualifying executives of Employer, then such action by
Employer, unless consented to in writing by Executive, shall be deemed to be a
constructive termination by Employer of Executive's employment (a "Constructive
Termination"). In the event of a Constructive Termination, at any time from the
start of this Agreement, March 13, 2000 through March 13, 2001, the Executive
shall be entitled to receive, the balance of payment remaining for the year
2000, in a lump sum within ten (10) days after the date of the Constructive
Termination, plus an amount equal to one year of salary. In the event of a
Constructive Termination at any time after March 13, 2001, the Executive shall
be entitled to receive, in a lump sum within (10) days after the date of the
Constructive Termination, an amount equal to one year of salary. The Company
will also provide outplacement assistance to Executive in an amount not to
exceed $25,000, is so desired by the Executive.
6.4. For purposes of this Section 6, the term "salary" shall mean the
sum of (i) the annual rate of compensation provided to Executive by Employer
under Subsection 2.1 immediately prior to the Constructive Termination plus (ii)
the earned cash annual bonuses or other cash incentive compensation paid to
Executive (based upon most recent position) by Employer for the only calendar
year period immediately preceding the year in which there shall occur a
Constructive Termination.
6.5. In the event of a Constructive Termination, all other rights and
benefits Executive may have under the employee and/or executive benefit plans
and arrangements of Employer generally shall be determined in accordance with
the terms and conditions of such plans and arrangements.
Section 7. Covenants of Noncompetition.
7.1. Executive acknowledges that he/she has received and/or will
receive specialized knowledge and training from Employer during the term of this
Agreement, and that such knowledge and training would provide an unfair
advantage if used to compete with Employer. In order to avoid such unfair
advantage, Executive agrees that while he/she is employed with Employer and for
a period equal to one (1) year after the date of a voluntary termination of
employment (the "Restricted Period"), he shall not, directly or indirectly,
individually or as an owner, lender, consultant, adviser, independent
contractor, employee, partner, officer, director or in any other capacity, alone
or in association with other persons or entities, own, assist, finance,
participate in or be employed by any business or other endeavor that is in any
way in competition with Employer in any business at the time the termination
occurs, including, but not limited to, computer resellers, service companies
providing the same services as CompuCom, and computer retail companies.
Executive also agrees that, for the Restricted period, he/she will not, either
directly or indirectly, solicit any employee or other independent contractor of
the Employer to terminate his employment or contract with the Employer. In the
event of a Constructive Termination or termination due to change in control,
Executive will not compete for the same period of time for which payments are
received in accordance with Subsection 6.3.
7.2. Executive represents and acknowledges to Employer that his
education, experience and/or abilities are such that he/she can obtain
employment in a non-competing business, and that enforcement of the terms of
this Agreement through temporary and/or permanent injunctive relief will not
prevent him from earning a livelihood and will not cause an undue hardship upon
him. Executive hereby acknowledges that $16,666.67 of his monthly salary
described in Subsection 2.1 is paid by Employer in consideration for Executive's
agreement to be bound by the non-competition provisions of this Agreement.
Section 8. Inventions.
8.1. Any and all inventions, product, discoveries, improvements,
processes, formulae, manufacturing methods or techniques, designs or styles
(collectively, "Inventions") made, developed or created by Executive, alone or
in conjunction with others, during regular hours of work or otherwise, during
the term of Executive's employment with the Employer and for a period of one (1)
year thereafter that may be directly or indirectly related to the business of,
or tests being carried out by, the Employer, or any of its subsidiaries, shall
be promptly disclosed by Executive to Employer and shall be the Employer's
exclusive property.
8.2. Executive will, upon the Employer's request and without
additional compensation, execute any documents necessary or advisable in the
opinion of the Employer's counsel to direct the issuance of patents to the
Employer with respect to Inventions that are to be the Employer's exclusive
property under this Section 8 or to vest in the Employer title to such
Inventions; the expense of securing any patent, however, shall be borne by the
Employer.
8.3. Executive will hold for the Employer's sole benefit any
Invention that is to be the Employer's exclusive property under this Section 8
for which no patent is issued.
8.4. Executive grants to Employer a royalty-free, nonexclusive
irrevocable license for any Inventions developed prior to the employment with
the Company that he has not reserved that are used by Executive in the
performance of his duties for the Employer. Employee represents and warrants
that any work produced by Executive will not, to the best knowledge of
Executive, infringe on any other person's or entity's copyright or other
proprietary rights, and Employee will hold the Employer harmless from any claims
and losses based on such infringements.
Section 9. No Violation. Executive represents that he is not bound
by any agreement with any former employer or other party that would be violated
by Executive's work for Employer.
Section 10. Confidential and Proprietary Information.
10.1. Executive acknowledges and agrees that he/she will not, without
the prior written consent of the Employer, at any time during the term of this
Agreement or any time thereafter, except as may be required by competent legal
authority or as required by the Employer to be disclosed in the course of
performing Executive's duties under this Agreement for the Employer, use or
disclose to any person, firm or other legal entity, any confidential records,
secrets or information related to the Employer or any parent, subsidiary or
affiliated person or entity (collectively, "Confidential Information").
Confidential Information shall include, without limitation, information about
the Employer's Inventions, customer lists, customer contracts, vendor contracts,
and non-public financial information. Executive acknowledges and agrees that
all Confidential Information of Employer and/or its affiliates that he has
acquired, or may acquire, were received, or will be received in confidence and
as a fiduciary of the Employer. Executive will exercise utmost diligence to
protect and guard such Confidential Information.
10.2. Executive agrees that he will not take with him upon the
termination of this Agreement, any document or paper, or any photocopy or
reproduction or duplication thereof, relating to any Confidential Information.
Section 11. Return of Employer's Property. Upon the termination of
this Agreement or whenever requested by Employer, Executive shall immediately
deliver to Employer all property in his possession or under his control
belonging to Employer, in good condition, ordinary wear and tear expected.
Section 12. Injunctive Relief. Executive acknowledges that the
breach, or threatened breach, by the Executive of the provisions of this
Agreement shall cause irreparable harm to the Employer, which harm cannot be
fully redressed by the payment of damages to the Employer. Accordingly, the
Employer shall be entitled, in addition to any other right or remedy it may have
at law or in equity, to an injunction enjoining or restraining Executive from
any violation of threatened violation of this Agreement.
Section 13. Arbitration.
13.1. As concluded by the parties and as evidenced by the signatures
of the parties, any dispute between the parties arising out of any section of
this Agreement except Sections 7, 8 and 10, will, on the written notice of one
party served on the other, be submitted to arbitration complying with and
governed by the provisions of the Texas General Arbitration Act, Articles 224
through 238-20 of the Texas Revised Civil Statutes.
13.2. Each of the parties will appoint one person as an arbitrator to
hear and determine the dispute and if they are unable to agree, then the two
arbitrators so chosen will select a third impartial arbitrator whose decision
will be final and conclusive upon the parties.
13.3. The expenses of such arbitration will be borne by the losing
party or in such proportion as the arbitrators decide.
13.4. A material or anticipatory breach of any section of this
Agreement shall not release either party from the obligations of this Section
13.
Section 14. Miscellaneous.
14.1. If any provision contained in this Agreement is for any reason
held to be totally invalid or unenforceable, such provision will be fully
severable, and in lieu of such invalid or unenforceable provision there will be
added automatically as part of this Agreement a provision as similar in terms
as may be valid and enforceable.
14.2. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when mailed by registered mail or
certified mail, return receipt requested, as follows (provided that notice of
change of address shall be deemed given only when received):
if to Employer: CompuCom Systems, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
if to Executive: Xxxxxxx X. Xxxxxxxxxx
or to such other names or addresses as Employer or Executive, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Subsection 14.2.
14.3. This Agreement shall be binding upon and inure to the
benefit of Employer, its successors, legal representatives and assigns, and upon
Executive, his heirs, executors, administrators, representatives, legatees and
assigns. Executive agrees that his rights and obligations hereunder are personal
to him and may not be assigned without the express written consent of Employer.
14.4. This Agreement replaces and merges all previous agreements
and discussions relating to the same or similar subject matters between
Executive and Employer with respect to the subject matter of this Agreement.
This Agreement may not be modified in any respect by any verbal statement,
representation or agreement made by any employee, officer, or representative of
Employer or by any written agreement unless signed by an officer of Employer who
is expressly authorized by Employer to execute such document.
14.5. The laws of the State of Texas will govern the interpretation,
validity and effect of this Agreement without regard to the place of execution
or the place for performance thereof, and Employer and Executive agree that the
state and federal courts situated in Dallas County, Texas shall have personal
jurisdiction over Employer and Executive to hear all disputes arising under this
Agreement. This agreement is to be at least partially performed in Dallas
County, Texas, and, as such, Employer and Executive agree that venue shall be
proper with the state or federal courts in Dallas County, Texas to hear such
disputes. In the event either Employer or Executive is not able to effect
service of process upon the other with respect to such disputes, Employer and
Executive expressly agree that the Secretary of State for the State of Texas
shall be an agent of Employer and/or the Executive to receive service of process
on behalf of Employer and/or the Executive with respect to such disputes.
14.6. Executive and Employer shall execute and deliver any and all
additional instruments and agreements that may be necessary or proper to carry
out the purposes of this Agreement.
14.7. The descriptive headings of the several sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
14.8. If either party should file a lawsuit against the other to
enforce any right such party has hereunder, the prevailing party shall also be
entitled to recover reasonable attorney's fees and costs of suit in addition to
any other relief awarded such prevailing party.
14.9. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement.
14.10. Executive acknowledges that Executive has had the opportunity
to read this Agreement and discuss it with advisors and legal counsel, if
Executive has so chosen. Executive also acknowledges the importance of this
Agreement and that Employer is relying on this Agreement in continuing an
employment relationship with Executive.
The undersigned, intending to be legally bound, have executed this
Agreement on the date first written above.
EMPLOYER:
CompuCom Systems, Inc.
By:
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Its:
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EXECUTIVE:
/s/ XXXXXXX X. XXXXXXXXXX 2/25/2000
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