EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated January 16, 1998 is made and entered into by and
between ClientLink, Inc., a Delaware corporation ("Employer"), and Xxxxx X.
Xxxxxxxx, 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 1. 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 President
and Chief Executive Officer.
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 shall faithfully perform his duties and
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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
$19,167. 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 a bonus subject to the
parameters set forth by the Compensation Committee each year, the amount of
which will be determined by such Committee, but will be in an amount of not
less than 100% of base salary subject to achievement of certain goals as
determined by the 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. As long as this Agreement is in effect, Employer will purchase and
maintain for Executive's benefit a guaranteed renewable term life insurance
policy having a death benefit of not less than $1 million. Unless prohibited by
any policy or plan under which such insurance is provided, Executive will have
the right to purchase at Executive's cost additional coverage under such policy
or plan. Employer will not permit, even in the event of termination of this
Agreement for any reason, any such policy to lapse without offering Executive
the opportunity to take up the premium payments and continue the policy in
force.
2.4. Executive shall have the right to participate in any additional
compensation, medical and dental insurance plan, 401(k) plan, other benefit,
life insurance or other plan or arrangement of Employer now or hereafter
existing for the benefit of executive officers of Employer.
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2.5. 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.
2.6. Executive agrees to submit to and Employer agrees to pay for one
complete physical examination on an annual basis at a medical clinic mutually
acceptable to Employer and Executive.
2.7. As long as this Agreement is in effect, Employer will purchase and
maintain for Executive's benefit a comprehensive long-term disability insurance
policy. Employer will not permit, even in the event of termination of this
agreement for any reason, any such policy to lapse without offering Executive
the opportunity to take up the premium payments and continue the policy in
force.
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.
4.1. The term of this Agreement shall commence on the effective date
hereof and shall end on January 2, 2002.
4.2. The term of this Agreement shall automatically be extended for
additional one-year periods commencing on January 3, 2002 and continuing each
year thereafter, unless Executive gives written notice to Employer on or before
December 2, 2001 and each year thereafter on December 2nd, of his intention not
to extend this Agreement.
Section 5. Termination other than by Expiration of the Term. 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:
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(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 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.
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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 that 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 the salary compensation (payable
in the manner as prescribed in the second sentence of Subsection 2.1) and retain
the ability to participate in the Employer's group insurance plan to the extent
allowed by the plan, for the remaining term of this Agreement.
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, or (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, the Executive shall
be entitled to receive, in a lump sum within ten (10) days after the date of the
Constructive Termination, an amount equal to the salary that would have been
paid for the remainder of the Agreement; provided, however, the amount paid
shall not be less than one year's salary determined as of the date of such
Constructive Termination.
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
average annual cash bonuses or other cash incentive compensation paid to
Executive by Employer for the two 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 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 is employed with Employer and for a
period of one (1) year after the date of termination of employment (the
"Restricted Period") or one (1) year after the date of the final Constructive
Termination payment, he shall not, directly or indirectly, individually or as an
owner,
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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 identified by the SIC codes of 5045. Executive also agrees that,
for the Restricted Period, he 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.
7.2. Executive represents and acknowledges to Employer that his education,
experience and/or abilities are such that he 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 $9,000 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. Change in Control.
8.1. Notwithstanding anything to the contrary in this Agreement, if a
"Change in Control" (as defined below) of the Employer occurs and, within six
months from the date of the Change in Control, the Executive voluntarily
terminates his employment under Subsection 5.1, then the Executive, even though
no longer employed by the Employer, shall be entitled to all payments provided
in Subsection 6.3, payable in a lump sum within thirty (30) days after the date
of termination.
8.2. If a Change of Control occurs during the course of this Agreement,
the Board of Directors will cause to vest, within ten (10) days of the effective
date of the Change of Control, all remaining unvested stock options granted to
Executive.
8.3. For the purposes of this Agreement, the term "Change in Control" of
the Employer shall be deemed to have occurred if (i) any "person" (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended) other than any Employer employee stock ownership plan or the
Employer, becomes the beneficial owner (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of the Employer representing 25% or more of the combined voting power
of the Employer's then outstanding securities, (ii) the Board ceases to consist
of a majority of Continuing Directors (as defined below) or (iii) a person (as
defined in clause (i) above) acquires (or, during the 12-month period ending on
the date for the most recent acquisition by such person or group of persons, has
acquired) gross assets of Employer that have an aggregate market value greater
than or equal to over 50% of the fair market value of all of the gross assets of
Employer immediately prior to such acquisition or acquisitions. It is clearly
understood, however, that no change of control will be considered as having
occurred as long as CompuCom Systems, Inc.continues to maintain effective
control of the Company, evidenced by their ownership of more than 35% of the
outstanding common shares of the Company and/or the effective control of the
Board of Directors. It is also understood that the change of control provisions
will not become
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effective if Executive is offered and willingly accepts a position in a newly
formed Company in the event a merger occurs.
8.4. For purposes of this Agreement, a "Continuing Director" shall mean a
member of the Board of Directors who either (i) is a member of the Board of
Directors at the date of this Agreement or (ii) is nominated or appointed to
serve as a director by a majority of the then Continuing Directors.
8.5. Notwithstanding any other provision of this Agreement, if (a) there
is a change in the ownership or effective control of the Employer or (b) in the
ownership of a substantial portion of the assets of the Employer within the
meaning of Section 280G of the Internal Revenue Code ("Section 280G"), the
payments to be paid to the Executive in the nature of compensation to be
received by or for the benefit of the Executive and contingent upon such event
(the "Termination Payments") would create an "excess parachute payment" within
the meaning of Section 280G, then the Employer shall make the Termination
Payments in substantially equal installments, the first installment being due
within thirty (30) days after the date of termination and each subsequent
installment being due on January 31st of each year, such that the aggregate
present value of all Termination Payments, whether pursuant to this Agreement or
otherwise, will be as close as possible to two times the Executive's base salary
and average cash bonuses, within the meaning of Section 280G. It is the
intention of this Subsection 8.5 to avoid excise taxes on the Executive under
Section 4999 of the Code and the disallowance of a deduction to the Employer
pursuant to Section 280G. However, if the Company makes an error which triggers
the excise tax, Executive will be entitled to receive a gross up to cover
incremental taxes owed due to such error.
Section 9. Inventions.
9.1. 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.
9.2. 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 9 or to vest in the Employer title to such Inventions; the expense
of securing any patent, however, shall be borne by the Employer.
9.3. Executive will hold for the Employer's sole benefit any Invention
that is to be the Employer's exclusive property under this Section 9 for which
no patent is issued.
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9.4. 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 10. 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 11. Confidential and Proprietary Information.
11.1. Executive acknowledges and agrees that he 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.
11.2. 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 12. 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 excepted.
Section 13. 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
or threatened violation of this Agreement.
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Section 14. Arbitration.
14.1. 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, 9 and 11, will, on the written notice of one party
served on the other, be submitted to arbitration complying with and governed by
the rules and procedures of the American Arbitration Association.
14.2. 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.
14.3. The expenses of such arbitration will be borne by the losing party
or in such proportion as the arbitrators decide.
14.4 A material or anticipatory breach of any section of this Agreement
shall not release either party from the obligations of this Section 14.
Section 15. Miscellaneous.
15.1. 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.
15.2 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:
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Chief Financial Officer
if to Executive:
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
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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 15.2.
15.3. 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.
15.4. 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.
15.5. The laws of the State of Georgia 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 Xxxxxx County, Georgia shall have personal
jurisdiction over Employer and Executive to hear all disputes arising under this
Agreement.
15.6. 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.
15.7. The descriptive headings of the several sections of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
15.8. 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 attorneys' fees and costs of suit in addition to any other
relief awarded such prevailing party.
15.9. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement.
15.10 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.
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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:
ClientLink, Inc.
By: /s/ X. Xxxxxx Xxxxx
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X. Xxxxxx Xxxxx, CFO, Secretary
EXECUTIVE:
/s/ Xxxxx X. Xxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxx
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