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EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated this 13th day of
August, 1999 (the "Effective Date"), and entered into by and between Xxxxx X.
Xxxxxx (subsequently called the "Executive") and Convergent Group Corporation, a
Delaware corporation, having its principal office at 0000 Xxxxx Xxxxxxxx Xxx,
Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 (subsequently called the "Corporation"). In
consideration of the mutual promises and the terms and conditions set forth
below, the Executive and the Corporation (together, the "Parties," and each, a
"Party") agree as follows:
1. Nature and Purpose of Agreement. The Executive desires to provide
essential management to the Corporation. The Board of Directors of the
Corporation has determined the reasonable method of compensation of the
Executive and has offered him compensation of an annual base salary and bonuses
as set forth in Sections 3 and 4, and participation in a 401(k) Plan in
accordance with law, together with the other employee benefits generally set
forth in the Corporation's policies and procedures manual.
2. Employment; Term. The Corporation hereby employs the Executive as
Vice President of Finance and Chief Financial Officer and the Executive hereby
agrees to be employed by the Corporation under the terms and conditions set
forth in this Agreement. The term of this Agreement shall begin on the date
hereof and shall end on December 31, 2000, unless terminated prior to that date
as provided herein.
3. Compensation and Benefits.
(a) For all services rendered by the Executive under this
Agreement, the Corporation shall pay compensation to the Executive consisting of
an annual base salary and an incentive bonus. The annual base salary effective
as of August 15, 1999, is $168,000. The Executive's annual base salary shall not
be reduced during the term of this Agreement and shall be subject to annual
adjustments as set forth herein. Effective on January 1 of each year during the
term of this Agreement, the Executive's annual base salary shall be increased by
5% of the amount in effect immediately prior to such adjustment. The Executive's
annual base salary shall be paid in twenty-six (26) bi-weekly payments during
each annual period.
(b) The Executive shall be entitled to participate in such life
insurance, disability, medical, dental, pension, profit sharing and retirement
plans and other programs as may be made generally available from time to time by
the Corporation for the benefit of executives of the Executive's level or its
employees generally (the "Benefits").
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4. Bonus Arrangements.
(a) Bonus Opportunity. The Corporation and the Executive
acknowledge that the Executive is critical to the success of the Corporation as
an essential part of the management of the Corporation. The Corporation desires
to retain the Executive and ensure that the Executive receives reasonable
compensation for his critical role. The Corporation therefore agrees to pay the
balance of the Executive's reasonable compensation by way of an Incentive Bonus
(as defined below).
(b) Incentive Bonus. Commencing with calendar year 1999, the
Executive shall be eligible to earn an "Incentive Bonus" for each year in
addition to his annual base salary. The targeted amount of the Incentive Bonus
shall be 50% of the amount of the Executive's annual base salary as in effect
for such year (the "Bonus Target"). Two-thirds of the Incentive Bonus shall be
earned based upon the attainment by the Corporation of targeted EBITDA (as
defined in Section 5(e) below) during the period (the "EBITDA Bonus"), and
one-third of the Incentive Bonus shall be earned based upon the attainment by
the Corporation of targeted margins during the period (the "Margins Bonus"). The
EBITDA and margins targets used for purposes of determining the EBITDA Bonus and
the Margins Bonus shall be set forth in the Corporation's Annual Operating Plan
(as defined in Section 4(d) below). Separate calculations shall be made with
respect to each of the EBITDA Bonus and the Margins Bonus. Notwithstanding
anything herein to the contrary, the Corporation must achieve more than 90% of
the targeted EBITDA or margins, whichever is being tested, during the period for
the Executive to receive a bonus with respect to that component. To the extent
that the Corporation achieves 90% or more of the target, the Executive shall be
entitled to receive an Incentive Bonus based upon the following formula:
Percentage Attainment of Targeted EBITDA or Margins (each tested separately)
for the Period
(Determined to the Nearest Hundredth of a Percent)
Minus
-----
90
Divided By
----------
10
For example, if the Corporation achieves 95% of the targeted EBITDA and 85% of
the targeted margins as set forth in the Corporation's Annual Operating Plan for
the period, the Executive shall receive 33.33% of the Bonus Target, determined
as follows:
Bonus Target for EBITDA = 66.67% of total Bonus Target ("EBITDA Target")
% of EBITDA Target = (95-90) / 10 = 50%
% of total Bonus Target from EBITDA = 66.67% x 50% = 33.33%
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Bonus Target for Margins = 33.33% of total Bonus Target ("Margins Target")
% of Margin Target = 0% (performance below 90%)
% of total Bonus Target from Margins = 33.33% x 0% = 0%
% of total Bonus Target from Revenue and Margins = 33.33% + 0% = 33.33%
Notwithstanding anything herein to the contrary, for calendar year 1999, (i) the
Bonus Target shall be $35,000, which is 50% of the Executive's annual base
salary for the period August 1, 1999, through December 31, 1999 ($70,000), and
(ii) the amount of the Incentive Bonus earned by the Executive shall be
determined based on actual margins and EBITDA and targeted margins and EBITDA
for the entire calendar year 1999.
(c) Payment of Incentive Bonuses. The entire amount of the EBITDA
Bonus up to 100% of the EBITDA Target and the entire amount of the Margins Bonus
up to 100% of the Margins Target (each determined separately) shall be paid in
cash or by check. To the extent the EBITDA Bonus or the Margins Bonus exceeds
100% of the EBITDA Target or the Margins Target, as applicable, one-third of
such excess amount shall be paid in cash or by check, and the remaining
two-thirds shall be paid by the issuance to the Executive of a nonqualified
stock option (the "Option") to purchase Common Stock of the Corporation, par
value $0.001 per share ("Common Stock"). The cash amount of the Incentive Bonus
shall be paid, and the Option portion of the Incentive Bonus shall be issued,
within ten (10) days after the Calculation Date (as defined in Section 4(e)
below). In any event, the effective date of the grant of the Option shall be the
last day of the period for which the Incentive Bonus was calculated. The
exercise price per share of the Option shall be twenty-five percent (25%) of the
Fair Market Value per share of the Common Stock as of the last day of the period
for which the Incentive Bonus was calculated. For purposes of this Section 4(c),
Fair Market Value per share shall be determined in accordance with Section 4(f).
The number of shares subject to the Option shall be determined by dividing the
dollar amount of the Incentive Bonus payable in the form of the Option by an
amount equal to seventy-five percent (75%) of the Fair Market Value per share of
the Common Stock as of the last day of the period for which the Incentive Bonus
was calculated. The Option shall be fully vested and exercisable as of the date
of its grant and shall have a ten (10) year term. An example of the above
calculation is as follows: Assume the EBITDA Bonus exceeds the EBITDA Target by
$50,000. Assume further that the Fair Market Value per share is $12.00. The
exercise price per share would be $12.00 x .25, or $3.00. The number of shares
subject to the Option would be ($50,000 x .667) / ($12.00 x .75), or 3,704
shares.
(d) Annual Operating Plan. On or before December 15 of the
preceding calendar year, management of the Corporation shall prepare in good
faith and submit to the Board of Directors, and the Board of Directors shall
adopt, an annual business plan for the Corporation. In preparing the annual
business plan, management shall consider, among other factors, the past
performance of the Corporation and the Corporation's current outlook based upon
the Corporation's backlog and such other factors as management shall deem
appropriate. Upon adoption by the Board of Directors by a
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majority vote, provided that the Chief Executive Officer of the Corporation (the
"CEO") and at least one of the members of the Board of Directors designated by
the Investors, as such term is defined in that certain Recapitalization
Agreement (the "Recapitalization Agreement") by and among the Corporation and
the additional parties named therein dated as of August 13, 1999 (each, an
"Investor Director") in accordance with that certain Shareholders' Agreement
(the "Shareholders' Agreement") by and among the Corporation and the parties
named therein dated as of August 13, 1999 (assuming that there are then such
members of the Board of Directors) must have voted in favor of adoption, the
annual business plan shall be the "Annual Operating Plan" for purposes of this
Agreement. If the Board of Directors (including the CEO and at least one
Investor Director) fails to approve the annual business plan as set forth
herein, the plan for the prior year multiplied by 140% shall be the "Annual
Operating Plan" for purposes of this Agreement. Notwithstanding the foregoing,
the Annual Operating Plan to be used for purposes of calendar year 1999 shall be
the annual business plan adopted by the Corporation's Board of Directors on
December 14, 1998, as amended by the Corporation's Forecast dated May 23, 1999.
(e) Determination of Margins and EBITDA. For purposes of this
Agreement, "EBITDA" means earnings before interest, taxes, depreciation and
amortization; provided, however, that notwithstanding anything herein to the
contrary, EBITDA shall be adjusted as necessary to exclude the effects of (i)
the payment of transaction costs associated with the consummation of the
transactions contemplated by the Recapitalization Agreement, which shall include
but not be limited to bank fees, finance fees, legal fees, accounting fees, and
any other similar types of fees or expenses; (ii) the payment of transaction
costs associated with the consummation of a major capital event such as a sale
of all or substantially all of the Corporation's stock or assets, a merger or
consolidation, or an initial public offering; and (iii) payment of any
"Transaction Fee" or "Management Fee", as those terms are defined in the
Shareholders' Agreement. When calculated for a full calendar year, margins and
EBITDA shall be as determined in connection with the preparation of the
Corporation's audited financial statements for the year, which statements shall
be prepared in accordance with generally accepted accounting principles
consistently applied as in effect from time to time in the United States. When
calculated for any period which is less than a full calendar year, margins and
EBITDA shall initially be determined in connection with the preparation of the
Corporation's unaudited financial statements for such period, which statements
shall be prepared in accordance with generally accepted accounting principles
consistently applied as in effect from time to time in the United States and
shall be certified by the Corporation's controller. When the Incentive Bonus is
calculated for a partial year as described above, fifty percent (50%) of such
Incentive Bonus (including both cash and options, pro-rata) shall be paid or
issued immediately to the Executive and the remaining fifty percent (50%) shall
be retained by the Corporation until the regular audit of the financial
statements for such year has been completed. The amount of the Incentive Bonus
for such period shall then be re-determined based upon the Corporation's audited
financial statements, and the Corporation shall pay and issue to the Executive
any shortfall, and the Executive shall refund or return for cancellation to
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the Corporation any over-payment, based upon the amount of the Incentive Bonus
as re-determined and the amount previously paid and issued. Margins and EBITDA
for a full calendar year period shall be determined within fifteen (15) days
after the release of the Corporation's audited financial statements. Margins and
EBITDA for a period which is less than a full calendar year shall be determined
within fifteen (15) days after the end of the month in which such period
terminates. The date by which margins and EBITDA are to be determined or
re-determined is referred to as the "Calculation Date." The Corporation shall
use its best efforts to cause audited financial statements prepared by an
independent certified public accountant to be released no later than April 15th
of the following year. The Corporation shall notify the Executive of the amount
of the Incentive Bonus no later than five (5) days after the Calculation Date.
(f) Determination of Fair Market Value. If the Common Stock is
listed upon an established stock exchange or exchanges, then the Fair Market
Value per share shall be deemed to be the average of the quoted closing prices
of the Common Stock on such stock exchange or exchanges on each of the thirty
(30) days immediately preceding the day for which the determination is made. If
the Common Stock is not listed upon an established stock exchange but is traded
in the NASDAQ National Market System, the Fair Market Value per share shall be
deemed to be the average of the closing prices of the Common Stock in the
National Market System on each of the thirty (30) days immediately preceding the
day for which the determination is made. If the Common Stock is not listed upon
an established stock exchange and is not traded in the National Market System,
the Fair Market Value per share shall be deemed to be the average of the mean
between the dealer "bid" and "ask" closing prices of the Common Stock on the
NASDAQ System on each of the thirty (30) days immediately preceding the day for
which the determination is made. If none of these conditions apply, Fair Market
Value shall be the amount (the "Formula Price") determined as follows: (i) if
the date of determination is on or before the date which is six (6) months after
the closing of the transactions contemplated by the Recapitalization Agreement,
an amount equal to $1.085 per share, subject to equitable adjustment in the
event of any increase or decrease in the shares of Common Stock by way of stock
split, share reclassification, stock dividend or other similar transaction, or
(ii) if the date of determination is after the date which is six (6) months
after the closing of the transactions contemplated by the Recapitalization
Agreement, the fair value of each share determined by multiplying EBITDA for the
twelve month period ending on the day for which the determination is made times
an industry multiple equal to the average multiples of a list of ten comparable,
publicly-traded companies, which list has initially been determined by mutual
agreement of the CEO and InSight Capital Partners. Such list shall be revised
each year on January 1 upon the mutual agreement of the CEO and InSight Capital
Partners. A minority/liquidity discount of 20% shall be applied in determining
the Formula Price pursuant to clause (ii) above.
(g) Determination of Incentive Bonuses Following Termination of
Employment. In the event of the termination of the Executive's employment by the
Corporation for Cause (as defined in Section 20(a)) or by the Executive without
Good Reason (as defined in Section 20(c)), the Executive shall be entitled to
receive an
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Incentive Bonus for any calendar year concluded prior to such termination of
employment but shall not be entitled to receive an Incentive Bonus for the
calendar year in which such termination of employment occurs. In the event of
the termination of the Executive's employment for any reason other than by the
Corporation for Cause or by the Executive without Good Reason, including without
limitation the Executive's death or disability, the Executive shall be entitled
to receive an Incentive Bonus both with respect to any calendar year concluded
prior to such termination of employment and with respect to the calendar year in
which such termination of employment occurs. The amount of the Bonus Target for
the year in which such termination occurs shall be prorated based upon the
amount of the Executive's base salary which accrued during the portion of the
year during which the Executive was employed by the Corporation, and the amount
of the Incentive Bonus for such year shall be determined based upon actual
margins and EBITDA and targeted margins and EBITDA under the Annual Operating
Plan for that year through either the end of the calendar month in which the
termination occurs or the end of the preceding calendar month, whichever is more
favorable to the Executive.
5. Executive's Duties. The Executive is employed on a full-time basis
as Vice President of Finance and Chief Financial Officer and as an essential
member of the management of the Corporation. So long as this Agreement is in
effect, the Executive will not be employed or engaged by any other person or
firm other than the Corporation unless otherwise authorized in writing by the
Board of Directors of the Corporation. Any and all compensation received in
money or other property from any person or entity other than the Corporation for
professional services rendered by the Executive shall be deemed to be the
property of the Corporation. The Executive agrees that upon the receipt of any
such money or property, he shall promptly remit such compensation to the
Corporation together with a full accounting thereof.
6. Facilities. The Corporation shall furnish facilities, equipment,
services and assistance suitable to the Executive's position for the performance
of the Executive's duties.
7. No Copies of Documents and Materials. The Executive shall not
(except in the performance of his duties in the ordinary course of business for
which he is employed by the Corporation) at any time or in any manner make or
cause to be made any copies, pictures, duplicates, facsimiles or other
reproductions or recordings or any abstracts or summaries of any reports,
studies, memoranda, correspondence, manuals, records, plans or other written,
printed, computerized or otherwise recorded materials of any kind or nature
whatsoever belonging to or in the possession of the Corporation or any of its
subsidiaries.
8. Materials Remain on Premises. The Executive shall have no right,
title or interest in any material referenced in Section 7. The Executive agrees
that, except in the performance of his duties in the ordinary course of business
for which he is employed by the Corporation, the Executive will not, without the
prior written consent of the Corporation, remove any such material from any
premises of the Corporation. The
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Executive further agrees that, immediately upon the termination of his
employment with the Corporation or upon the termination of this Agreement,
whichever occurs earlier, or at any time prior thereto upon the request of the
Corporation, he shall surrender all such material to the Corporation and execute
a document acknowledging that he has complied with the provisions of this
Agreement.
9. Trade Secrets. The Executive shall not at any time, whether during
or after the term of this Agreement, use for the Executive's own benefit or
purposes or for the benefit or purposes of any other person, firm, partnership,
association, corporation or business organization, entity or enterprise, or
disclose (except in the performance of his duties in the ordinary course of
business for which he is employed by the Corporation) in any manner to any
person, firm, partnership, association, corporation or business organization,
entity or enterprise any trade secret, information, data, know how or knowledge
(including, but not limited to, that relating to service techniques, purchasing
organization and methods, sales organization and methods, inventories, client
lists, market development and expansion plans, personnel training and
development programs and client and supplier relationships) or any other
Discoveries (as defined in Section 11) belonging to or relating to the affairs
of the Corporation or any of its subsidiaries or to the clients of the
Corporation or any of its subsidiaries; provided, however, that this Section 9
shall not apply to any trade secret, information, data, know how, knowledge, or
Discovery that is or becomes generally available to the public through no fault
or action of the Executive.
10. Customers. In furtherance of and not in limitation of Section 9,
the Executive acknowledges that the list of the Corporation's and its
subsidiaries' customers as it may exist from time to time constitutes a valuable
and unique asset of the Corporation, and the Executive agrees that he shall not,
during or after the term of his employment, disclose such list or any part
thereof to any person, firm, partnership, association, corporation, or business
organization, entity or enterprise for any reason or purpose whatsoever, nor
shall the Executive use such customer list for his own benefit or purposes or
for the benefit or purposes of any business with whom the Executive may become
associated.
11. Discoveries. The Executive agrees with the Corporation that any and
all inventions, discoveries, improvements, designs, methods, systems,
developments, know how, ideas, suggestions, devices, trade secrets and processes
(hereinafter collectively referred to as "Discoveries"), whether patentable or
not, which are discovered, disclosed to or otherwise obtained by the Executive
during his employment with the Corporation are confidential, proprietary
information and are the sole and absolute property of the Corporation. The
Executive agrees to disclose promptly to the Corporation all such Discoveries
and to assist the Corporation in making any application in the United States and
in foreign jurisdictions for patents of any kind with respect thereto.
12. Works for Hire. All works and writings of a professional nature
which are produced by the Executive during his employment with the Corporation
constitute works made for hire and are the sole and absolute property of the
Corporation. The Executive
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grants the Corporation the exclusive right to copyright all such works and
writings in the United States and in foreign jurisdictions. To the extent any
such works or writings are deemed to not be works for hire, the Executive hereby
assigns and agrees to assign all his interests therein to the Corporation or its
nominee. Whenever requested to do so by the Corporation, the Executive shall
execute any and all applications, assignments, or other instruments that the
Corporation may deem necessary to protect the Corporation's interest therein.
13. Non-Competition.
(a) The Executive acknowledges that his employment as a member of
the Corporation's executive management team creates a relationship of confidence
and trust between the Executive and the Corporation with respect to confidential
and proprietary information applicable to the business of the Corporation, its
subsidiaries and its clients. The Executive further acknowledges the highly
competitive nature of the business of the Corporation. Accordingly, the
Corporation and the Executive agree that the restrictions contained in this
Section 13 are reasonable and necessary for the protection of the immediate
interests of the Corporation and that any violation of these restrictions would
cause substantial injury to the Corporation.
(b) For purposes of this Agreement, the term "Competitive
Business" means any person, firm, partnership, association, corporation, or
business organization, entity or enterprise which derives or which expects
during the following two (2) years to derive either (i) ten percent (10%) or
more of its revenues, or (ii) more than $10,000,000 in revenues from providing
technical management consulting and/or systems integration services for
Automated Mapping/Facilities Management Systems and/or Geographic Information
Systems and/or utility transmission and distribution systems. The term
"Competitive Business" is not intended to include mere vendors or suppliers of
the Corporation.
(c) For purposes of this Agreement, the term "Existing Client"
means a client for whom the Corporation or any of its subsidiaries is performing
consulting services as of the date of the termination of the Executive's
employment with the Corporation or for whom the Corporation or any of its
subsidiaries performed consulting services within the two (2) year period
immediately preceding the termination of the Executive's employment with the
Corporation. The term "Existing Client" is not intended to include mere vendors
or suppliers of the Corporation.
(d) During the Executive's employment with the Corporation and for
a period of one (1) year following the termination of the Executive's employment
with the Corporation for any reason other than termination occasioned by the
expiration of this Agreement, the Executive shall not (nor shall the Executive
cause, or provide assistance to anyone else to):
i. Employ or otherwise engage, or attempt to employ or
otherwise engage, in or on behalf of the Executive or any Competitive Business,
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person who is employed or engaged as an employee, consultant, agent or
representative of the Corporation or any of its subsidiaries as of the date of
the Executive's termination or at any time during the one-year period following
such termination; or
ii. Solicit directly or indirectly on behalf of the Executive
or any Competitive Business, the customer business or account of any Existing
Client of the Corporation.
(e) If any court shall determine that the duration, geographic
limitations, subject or scope of any restriction contained in this Section 13 is
unenforceable, it is the intention of the Parties that this Section 13 shall not
thereby be terminated but shall be deemed amended to the extent required to make
it valid and enforceable, such amendment to apply only with respect to the
operation of this Section 13 in the jurisdiction of the court that has made the
adjudication.
(f) Notwithstanding anything herein to the contrary, the
provisions of this Section 13 shall not be applicable to any termination which
occurs after December 31, 2000.
14. Employability. The Executive recognizes and acknowledges that he
has sufficient abilities and talents to be able to obtain, upon the termination
of this Agreement, comparable employment from another business organization or
entity while fully honoring and complying with the above covenants concerning
confidential information and contacts with the Corporation's or any of its
subsidiaries' existing customers or employees. The Executive recognizes and
acknowledges the importance to the Corporation and its subsidiaries of the above
covenants and, therefore, agrees that, for a period of one (1) year following
the termination of the Executive's employment with the Corporation and upon the
Corporation's reasonable request of the Executive, he will advise the
Corporation of the identity of his new employer and will provide a general
description, in reasonable detail, of his new duties and responsibilities
sufficient to inform the Corporation of its need to request a court order to
enforce the above covenants.
15. Remedies. The Executive acknowledges and agrees that the provisions
of this Agreement are essential to the Corporation and are reasonable and
necessary to protect the legitimate interests of the Corporation and its
subsidiaries and that the damages sustained by the Corporation or its
subsidiaries as a result of a breach of the agreements contained herein will
subject the Corporation or its subsidiaries to immediate, irreparable harm and
damage, the amount of which, although substantial, cannot be reasonably
ascertained, and that recovery of damages at law will not be an adequate remedy.
The Executive therefore agrees that the Corporation and its subsidiaries, in
addition to any other remedy they may have under this Agreement or at law, shall
be entitled to injunctive and other equitable relief to prevent or curtail any
breach of any provision of this Agreement. In the event suit or action is
instituted to enforce this Agreement or any of the terms and conditions hereof,
including, but not limited to, suit for preliminary injunction, the prevailing
Party shall be entitled to costs
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and reasonable attorneys' fees. The Executive waives any right to the posting of
a bond in the event of an issuance of a temporary restraining order, preliminary
injunction or permanent injunction upon the issuance of said order by a court of
competent jurisdiction.
16. Expenses. In the promotion and execution of the business of the
Corporation, the Executive is expected to incur certain reasonable expenses for
entertainment, travel, company automobile expenses (including insurance,
maintenance, fuel and depreciation, if applicable), and business fax and
telephone bills which shall be subject to approval by the Corporation. The
Corporation recognizes the necessity for such expenditures in order to retain
and further the professional skills, abilities and standing of the Executive and
to properly maintain, promote and develop the Corporation's consulting practice.
The Corporation shall also pay the Executive's dues and fees for attending
professional meetings and institutes, costs of professional books and
periodicals and promotion, entertainment and travel expenses reasonably related
to the business of the Corporation. All payments made by the Corporation
pursuant to this Section 16 shall be made in a manner consistent with the
Corporation's practices in years prior to the execution of this Agreement.
Unusual and extraordinary expenses incurred by the Executive and not approved in
advance by the Corporation may not be reimbursed.
17. Vacation Leave Time. Vacation leave shall accrue at the rate of
four (4) weeks per year. Any unused vacation leave time accumulated during the
year shall carry over to subsequent years.
18. Disability. The Corporation may terminate this Agreement upon
written notice to the Executive if the Executive is physically or mentally
incapacitated and unable to perform his duties under this Agreement for a period
of (i) any one hundred eighty (180) days out of any three hundred sixty (360)
days, if the Common Stock of the Corporation is not then publicly traded, or
(ii) ninety (90) out of any one hundred eighty (180) days if the Common Stock of
the Corporation is then publicly traded. If at any time a question arises as to
the incapacity of the Executive, then the Corporation shall promptly employ one
physician who is a member of the American Medical Association and who is
mutually agreeable to the Corporation and the Executive to examine the Executive
and determine if his physical and/or mental condition is such as to render him
unable to perform his duties under this Agreement. The decision of the physician
shall be certified in writing to the Corporation, shall be sent by the
Corporation to the Executive or his representative and shall be conclusive for
purposes of this Agreement. Any compensation payments payable to the Executive
hereunder shall be reduced by the amount of any disability payments the
Executive receives as a result of disability policies on which the Corporation
has paid the premiums.
19. Death During Employment. This Agreement shall terminate upon the
Executive's death. In such event, the Corporation shall pay a death benefit
equal to the Executive's base monthly salary for the balance of the month of the
Executive's death and for the month following his death. Any amounts payable
under this Agreement
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following the Executive's death shall be paid to the beneficiary named in
writing by the Executive, or if none, to the Executive's surviving spouse, or if
none, to the executors and administrators of the Executive's estate and shall be
paid within sixty (60) days of the Executive's death.
20. Termination for Other Than for Disability or Death. This Agreement
may terminate for reasons other than the Executive's disability or death upon
the occurrence of any of the following events; provided, however, that neither
the Executive nor the Corporation may terminate this Agreement pursuant to this
Section 20 in 1999 except for a termination by the Corporation for Cause as
provided in Section 20(a) or a termination by the Executive for Good Reason as
provided in Section 20(c).
(a) The Corporation, at its option, may terminate the Executive
for Cause (as defined below) upon thirty (30) days' advance written notice by
the Corporation to the Executive fully setting forth such Cause, which notice of
termination may be appealed to the Board of Directors of the Corporation.
Termination shall be effective on the thirtieth (30th) day following the
Executive's receipt of written notice from the Corporation. "Cause" shall be
limited to a situation in which the Executive has:
i. Committed a criminal offense that, if committed in the
State of Colorado, would have constituted a felony under the laws of the State
of Colorado or the United States (other than a traffic offense or other similar
violation); or
ii. Committed a fraudulent act which is materially harmful to
the Corporation (materiality, for purposes of this clause, means in excess of
$50,000); or
iii. Committed an act of willful misconduct which results in
actual damages against the Corporation of $500,000 or more; or
iv. Committed an act of gross insubordination by willfully
and repeatedly refusing to obey written directions of the Board of Directors (so
long as such directions do not involve illegal or immoral acts), which refusal
continues for a period of ten (10) days after written notice to the Executive by
the Corporation which notice references such refusal and this Section 20(a); or
v. Committed repeated acts of alcohol or illegal drug abuse,
and has failed to take reasonable steps to address such issues within ten (10)
days after written notice to the Executive by the Corporation which notice
references such acts and this Section 20(a); or
vi. Except during periods of vacation leave permitted
pursuant to Section 17, failed to devote substantially all of his professional
time and attention to the performance of his obligations under this Agreement,
as determined by the Board of Directors of the Corporation, which failure
continues for a period of fifteen (15) days after Actual Receipt (as defined in
Section 20(b) below) of written notice by
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the Executive from the Corporation which notice references such failure and this
Section 20(a).
(b) The Corporation shall have the right to terminate this
Agreement without Cause at any time after thirty (30) days after Actual Receipt
of written notice by the Executive from the Corporation. Non-renewal of this
Agreement shall not be deemed to be a termination of employment for purposes of
this Agreement. For purposes of this Agreement, "Actual Receipt" of notice shall
mean actual physical receipt (or refusal of acceptance) of notice by the
Executive; provided, however, that in the event the Executive has been away from
the office for more than two weeks and either the Executive's whereabouts are
unknown to the Corporation or the Executive is at a location where the
Corporation cannot reasonably communicate with him, the Executive will be deemed
to have refused delivery of notice on the day such notice is delivered (or
delivery is attempted) to the Executive's last known residence. In such event,
the Corporation shall nonetheless provide a copy of the notice to the Executive
as soon as it is reasonably possible to do so.
(c) The Executive at his option, may terminate this Agreement for
Good Reason (as defined below) upon thirty (30) days' advance written notice by
the Executive to the Corporation, which notice shall reference this Section
20(c) and shall describe in reasonable detail the cause for such Good Reason.
Such termination shall be effective on the thirtieth (30th) day following the
Corporation's receipt of written notice from the Executive; provided, however,
that such termination shall not be effective if the Corporation has cured the
cause for such Good Reason to the Executive's reasonable satisfaction within
such thirty (30) day period. For purposes of this Section 20(c), "Good Reason"
shall mean any of the following:
i. A material breach of this Agreement by the Corporation;
ii. The Corporation's requiring the Executive to be based at
any office or location other than one within the Denver, Colorado metropolitan
area, except for required travel on the Corporation's business to an extent
substantially consistent with the Executive's obligations immediately prior to
the Effective Date;
iii. Any purported termination by the Corporation of the
Executive's employment other than as permitted in this Agreement, it being
understood that any such purported termination shall not be effective for any
purpose of this Agreement, and it being further understood that the nonrenewal
of this Agreement shall not be deemed to be a termination of employment for
purposes of this Agreement; or
iv. A material reduction in the character of the duties
assigned to the Executive or in the Executive's level of work responsibility,
unless mutually agreed upon by the Executive and the Corporation;
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(d) The Executive shall have the right to terminate this Agreement
without cause at any time upon sixty (60) days' advance written notice to the
Corporation.
21. Rights Upon Termination.
(a) Upon termination of the Executive's employment with the
Corporation, the Corporation shall have no further obligation to the Executive
except as specifically provided under this Agreement. Termination of the
Executive's employment shall not affect the Executive's right to receive any
compensation or bonuses which have accrued but have not been paid through the
date of termination, including, but not limited to, the Incentive Bonuses for
that portion of the calendar year prior to the termination.
(b) Upon termination of this Agreement by mutual agreement of the
parties, or by the Corporation other than for Cause pursuant to Section 20(a),
or by the Executive for any reason whatsoever, the Corporation shall, both
verbally and in writing, acknowledge that the Executive performed the services
provided under this Agreement in a good and proficient manner and shall provide
a positive reference to any person or entity that may request a reference with
regard to the Executive.
(c) Upon the termination of the Executive's employment with the
Corporation for any reason other than by the Corporation for Cause pursuant to
Section 20(a), the Executive shall be entitled to keep, free and clear of any
liens and encumbrances and any claim of title by the Corporation, (i) equipment
owned by the Corporation and used by the Executive with the approval of the
Corporation in the Executive's home, to the extent that the value of such
equipment does not exceed $10,000, and (ii) the automobile provided by the
Corporation for the Executive's use.
22. Default in Payments. If any payment is due and payable to the
Executive following a termination of this Agreement and such payment is not made
when due and such non-payment continues for a period of ten (10) days after
written notice thereof from the Executive to the Corporation, which notice
describes such payment default and references this Section 22, the following
shall occur:
(a) The Executive shall be immediately released from Section 13
hereof regarding non-competition; and
(b) The Executive shall retain all other rights and remedies
against the Corporation.
23. Withholding Tax. The Corporation shall be entitled to withhold from
any compensatory payments which it makes to the Executive under this Agreement
or otherwise an amount sufficient to satisfy all Federal, state and local income
and employment tax withholding requirements with respect to any and all
compensation paid to the Executive by the Corporation.
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24. Registration Rights. The Executive shall be entitled to
registration rights with respect to shares of Common Stock of the Corporation
held by the Executive as set forth in that certain Registration Rights Agreement
by and among the Corporation and the parties named therein dated as of August
13, 1999.
25. Arbitration. Any controversy or claim arising out of or related to
this Agreement shall be settled by arbitration in Englewood, Colorado, under the
Commercial Rules of the American Arbitration Association in effect at the time
such controversy or claim arises (the "Rules") by one arbitrator appointed by
the American Arbitration Association in accordance with the Rules, the
arbitrator also apportioning the costs of arbitration. The award of the
arbitrator shall be in writing, shall be final and binding upon the Parties,
shall not be appealed from or contested in any court and may, in appropriate
circumstances, include injunctive relief. Should any Party fail to appear or be
represented at the arbitration proceedings after due notice in accordance with
the Rules, then the arbitrator may nevertheless render a decision in the absence
of said Party, and such decision shall have the same force and effect as if the
absent Party had been present, whether or not it shall be adverse to the
interests of that Party. Any award rendered hereunder may be entered for
enforcement, if necessary, in any court of competent jurisdiction, and the Party
against whom enforcement is sought shall bear the expenses, including attorneys'
fees, of enforcement. Notwithstanding the foregoing, the Corporation shall be
entitled to seek injunctive or other equitable relief to enforce any of the
provisions in Sections 7 through 13 from any court of competent jurisdiction
without the need to resort to arbitration.
26. Survival. The covenants contained in this Agreement shall survive
any termination of the Executive's employment with the Corporation and shall
survive any termination of this Agreement. The existence of any claim or cause
of action of the Executive against the Corporation, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Corporation of any of the covenants contained in this Agreement.
27. Severability. If the scope of any restriction contained in this
Agreement is too broad to permit enforcement of such restriction to its fullest
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and the Executive and the Corporation hereby consent and agree that the
scope of such restriction may be judicially modified in any proceeding brought
to enforce such restriction. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted from this Agreement
and the remainder of this Agreement shall remain in full force and effect. In
furtherance and not in limitation of the foregoing, should the duration or
geographical extent of or business activities covered by any provision of this
Agreement be in excess of that which is valid and enforceable under applicable
law, then such provision shall be construed to cover only that duration or
extent or those activities which may validly and enforceably be covered.
28. Subsidiaries. The "subsidiaries" of the Corporation as that term is
used in this Agreement include Utility Graphics Consultants Corporation, Graphic
Data Systems
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Corporation and their subsidiaries, together with any other corporation in which
the Corporation or its subsidiaries hold more than a fifty percent (50%)
interest at any time during the term of this Agreement.
29. Notice. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered by personal delivery,
air courier, or if mailed by registered or certified first-class mail, return
receipt requested, to the residence of the Executive as it appears in the
corporate records for notice to the Executive, or to the principal office of the
Corporation for notice to the Corporation. All notices delivered in accordance
with this Section shall be deemed to have been received and shall be deemed
effective if delivered in person or by air courier, upon actual receipt by the
intended recipient, or if mailed, upon the date of delivery or refusal to accept
delivery as shown by the return receipt therefor.
30. No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel to enforce any provision of
this Agreement, except by a statement in writing signed by the Party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, and shall operate
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any act other than that
specifically waived.
31. Amendments. No amendment or modification of this Agreement shall be
deemed effective unless made in writing and signed by the Parties hereto.
32. Assignment. The rights and obligations of the Corporation under
this Agreement shall, with the prior written consent of the Executive, inure to
the benefit of and be binding upon the successors and assigns of the
Corporation. If the Corporation shall at any time be merged or consolidated with
any other corporation or shall sell or otherwise transfer a substantial portion
of its assets to another corporation or entity, the provisions of this Agreement
shall be binding upon and inure to the benefit of the corporation or entity
surviving or resulting from such merger or consolidation or to which such assets
have been sold or transferred. Upon the Executive's request, the Corporation
shall obtain an agreement to expressly assume this Agreement from any such
successor. This is a personal service contract and may not be assigned by the
Executive.
33. Entire Agreement. This instrument contains the entire agreement of
the Parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, whether oral
or written, and all other communications relating to the subject matter hereof,
and the Parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement that are not set forth herein.
34. Governing Law. This Agreement is made under and shall be governed
by and construed in accordance with the internal laws of the State of Colorado
applicable to
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agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
35. Headings. The headings of sections in this Agreement are solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.
Signed by the Parties on the day and year first above written.
"CORPORATION"
CONVERGENT GROUP CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
--------------------------------
Xxxxx X. Xxxxxxxxxx, Xx.
Chief Executive Officer
"EXECUTIVE"
/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
Executive
DENVER:0930426.06
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