CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
EXHIBIT 10.47
EMPLOYMENT AGREEMENT BETWEEN REGISTRANT AND XXXX XXXXX
March 8, 1999
Xx. Xxxx X. Xxxxx
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
Dear Xxxx,
Following the close of our 1998 business, the development of our 1999 plan, and
our recent discussions, it is with pleasure that I confirm our verbal offer for
your continued employment with QRS Corporation. The following summarizes our
offer:
POSITION:
--------
Chief Executive Officer
You will have an overall corporate perspective and responsibility as Chief
Executive Officer. You are also an elected member of the Board of Directors. You
will have direct responsibility for the following functions:
- Strategy and planning
- Business Development
- Sales
- Marketing
REPORTING TO:
-------------
Chairman and Board of Directors
KEY OBJECTIVES:
---------------
As a key executive of QRS, your focus in 1999 should be on successfully
addressing the critical issues facing QRS:
- Increase revenue growth rate to exceed 30%
- Significantly reduce product time to market
- Improve product profitability and gross margins
- Ensure high quality and timely service
- Achieve Y2K readiness
- Hire, retain and provide growth opportunities for employees
Furthermore, as a key executive of QRS you should ensure continued focus on the
long-term mission of QRS:
- We are The leader in network-centric, inter-enterprise electronic commerce
solutions that materially improve our customers' performance.
- We serve the global consumer goods demand chain.
- We exceed customer expectations for service quality.
- We are recognized as THE place to work by our employees.
- We provide superior returns to our shareholders.
Finally, as a key executive of QRS you also have as continuing, significant
responsibility the development and maintenance of an environment at QRS that
fosters and emulates the tenants of QRS's core values among its associates.
ANNUAL COMPENSATION:
--------------------
Your annual compensation will be administered by me and reviewed by the
Compensation Committee of the Board of Directors.
- Your base compensation will be $240,000 per year.
- In addition, your targeted annual incentive compensation will be $160,000
or approximately 67 % of your base compensation.
- Therefore, the annual total target compensation (base plus incentive at
100%) shall be $400,000.
Your compensation, including incentives, will be reviewed in the first quarter
of each year (unless there is a change in objectives, location, etc. in which
case it will be reviewed at that time), to ensure that it continues to be
equitable, appropriate to the location, and provide appropriate incentives and
support to the agreed objectives.
ANNUAL INCENTIVE COMPENSATION COMPONENTS:
-----------------------------------------
1. General Corporate Financial Objectives (60%) - Incentive compensation
payment is subject to the achievement of the Company's overall financial
objectives as defined by the 1999 Plan as approved by the Board of
Directors. Should the Company not achieve these financial objectives,
incentive compensation will be subjectively determined based upon your
performance against your objectives and the Company's determination as to
available incentive compensation funding.
A. Achieve [*] QRS Revenue (30%) - Paid at year end on a prorata
basis from a minimum of 80% of plan and linearly thereafter with
results to 100% of plan. There is no payment below 50% attainment, and
payments accelerate proportionately with results over plan paid at
125% on achievement of 105% of plan and paid at 150% on achievement of
110% of plan. There is a maximum payout of $100,000 on this incentive.
B. Achieve [*] QRS Net Income (30%) - Paid at year end on a prorata
basis from a minimum of 80% of plan and linearly thereafter with
results to 100% of plan. There is no payment below 50% attainment, and
payments accelerate proportionately with results over plan paid at
125% on achievement of 105% of plan and paid at 150% on achievement of
110% of plan. There is a maximum payout of $100,000 on this incentive.
2. Personal Strategies and Objectives (40%) - Incentive compensation payment
is subject to fulfillment of your responsibilities as Chief Executive
Officer. While specific objectives particular to the Company's objectives
for 1999 are identified to measure your performance for incentive
compensation, such measurements assume the overall performance of you and
your direct reporting organization in the achievement of departmental
responsibilities, service levels and the support of overall Company
objectives.
A. Ensure the development and successful implementation of new sources of
recurring revenue [*] (10%) - Paid at year end based on an
assessment of your success at achieving new, incremental sources of
recurring revenue that average [*] per month [*].
[*]. Ensure the success, [*], of small product lines (10%) - Paid at
year end based on an assessment of your success at either
developing and implementing strategies that ensure high growth and
accceptable margins for small product lines [*].
* Portions of this exhibit have been omitted and filed separately with the
Commission pursuant to a request for confidential treatment under Rule 406.
C. Ensure company congruance with QRS values, mission, and management
process (10%) - Paid at year end based on an assessment of your
success at ensuring effective associate, management, executive, and
Board congruance with, commitment to, and appropriate growth of these
components of the QRS culture and process, including the effective
integration of QRS values, mission, and management process of any
acquired companies, organizations, or personnel.
D. Ensure the timely development and implementation of long term
strategic initiatives (10%) - Paid at year end based on an assessment
of your success at managing the planning and activities related to
Long Term strategic initiatives presented to and approved by the
Board, including but not limited to extending the retail industry
solutions of QRS, electronic commerce and E-retailing solutions, and
strategic mergers and acquisitions.
Your incentive plan will be part of the overall 1999 QRS incentive compensation
plan. As Chief Executive Officer you will be expected to participate as an
Executive Host at portions of the 1999 Presidents Club for high performance
associates.
LONG TERM INCENTIVES
--------------------
Non-qualified options to purchase an additional 40,000 shares of common stock in
QRS at a price of $26.13 have been granted to you as of October 16, 1998 by the
Board of Directors. These options vest over four years and are subject to the
terms of the Company's 1993 Stock Option/Stock Issuance Plan, a copy of which is
available for your review.
In addition, the Compensation Committee of the Board recognizes that, under the
exercise schedule of your December 24, 1997 performance stock option grant of
50,000 shares, 1998 performance fufilled the first year requirement for
accelerated full vesting of these options and, should 1999 performance fulfill
the second year requirement as well, these options shall accelerate and become
immediately exercisable for all shares.
BENEFITS
--------
In addition to the benefits available to all QRS associates as defined in the
Employee Handbook, as President and COO you are provided with additional
benefits as follows:
- Life Insurance - The company shall purchase and maintain in effect
additional term life insurance for you with a death benefit of
$1,000,000.00 with beneficiary to be designated by yourself. You will have
the option of continuing this additional term life insurance coverage at
your own expense in the event of the termination of your employment. This
additional insurance benefit is taxable and will be reported for tax
purposes as additional income to you.
- Disability Insurance - The company shall purchase and maintain in effect
additional disability insurance sufficient to provide you with an income
equal to 66% of your targeted annual compensation while you are disabled
and unable to perform the duties of your current employment with QRS. You
will have the option of continuing this additional disability insurance
coverage at your own expense in the event of the termination of your
employment. This additional insurance benefit is taxable and will be
reported for tax purposes as additional income to you.
- Liability Insurance - The company shall purchase and maintain in effect
sufficient Officer's liability insurance to provide you with reasonable
coverage, including the provision of legal counsel and/or reimbursement of
appropriate legal fees you pay personally, against all liability claims and
judgements arising from your legal exercise of your duties as an Officer of
QRS, including any actions filed after you cease your duties as an Officer
or in the event of the termination of your employment. The Company shall
also provide in its bylaws full indemnification for the QRS officers to the
maximum extent permissible under Delaware law.
TERMINATION AND SEVERENCE
-------------------------
This position is for no set period or term and just as you have the right to
resign your position, at any time, for any reason, QRS reserves the right to
terminate your employment, at any time, with or without cause, with or without
notice.
In the event your employment is terminated without cause, you will become
entitled to twelve (12) months of severance pay equal in the aggregate to your
targeted total annual compensation and benefits at the level in effect at the
time of your termination. Your severance payments will be made in accordance
with the Company's standard payroll practices for current employees and will be
subject to the Company's collection of all applicable withholding taxes.
For purposes of this agreement, termination "for cause" shall mean a termination
of your employment for any of the following reasons: (1) your failure to
substantially perform the material duties of your position with the Company
after a written demand for substantial performance is delivered to you by the
Company which specifically identifies the manner in which you have not
substantially performed those duties and which provides a reasonable period for
you to cure those deficiencies; (2) a material breach by you of your obligations
under any confidential or proprietary information agreements with the Company or
of any of your fiduciary obligations as an officer of the Company, (3) your
failure to follow in a material respect the reasonable policies or directives
established on an employee-wide basis by the Company, after written notice to
you indicating the policies or directives with which you are not in material
compliance, (4) any willful misconduct on your part having a material
detrimental effect on the Company or (5) any unauthorized activity on your part
which creates a material conflict of interest between you and the Company after
you have been provided with a reasonable opportunity to refrain from that
activity.
CHANGE OF CONTROL BENEFITS
--------------------------
A. Should there occur a Corporate Transaction or a Change in Control (as
those terms are defined in the Company's 1993 Stock Option/Stock
Issuance Plan) and either (i) your employment is subsequently
terminated without cause or (ii) you subsequently resign by reason of
a material change in your base compensation, your targeted annual
incentive compensation, your annual total target compensation, or your
benefits (for this purpose, 15% will be deemed a material reduction),
a material reduction in your duties or responsibilities, or a change
in your principal place of employment by more than 50 miles, then you
will be entitled to twelve (12) months of severance pay equal in the
aggregate to your targeted total annual compensation and benefits at
the level in effect at the time of your termination or resignation or
(if greater) at the level in effect immediately prior to the Corporate
Transaction or Change in Control. Your severance payments will be made
in accordance with the Company's standard payroll practices for
current employees and will be subject to the Company's collection of
all applicable withholding taxes.
B. This Paragraph B incorporates the special acceleration provisions of
the Company's 1993 Stock Option/Stock Issuance Plan and accordingly
applies to any and all options which you hold under the 1993 Plan at
the time of a Corporate Transaction or Change in Control, including
all options you currently hold and any options subsequently granted to
you under the 1993 Plan. To extent any of those options are not to be
assumed by the successor entity (or parent company) in the Corporate
Transaction or otherwise continued in effect following the Change in
Control or are not replaced with a cash incentive program which
preserves the spread existing at the time of such Corporate
Transaction or Change in Control on any shares for which your options
are not otherwise at that time exercisable (the excess of the fair
market value of those shares over the exercise price), then those
options shall, immediately prior to the specified effective date for
the Corporate Transaction or Change in Control, become exercisable for
all the shares at the time subject to those options and may be
exercised for all or any portion of those shares as fully vested
shares. The acceleration of your options pursuant to this Paragraph B
will not be subject to the limitation of Paragraph C below, even if
the options which are not to be assumed or continued in effect or
otherwise replaced with a cash incentive program were granted on or
after December 24, 1997.
C. This Paragraph C applies only to options granted to you under the
Company's 1993 Stock Option/Stock Issuance Plan on or after December
24, 1997. In the event of a Corporate Transaction or Change in Control
during your period of employment with the Company, all of your post
December 23, 1997 options will, immediately prior to the specified
effective date for the Corporate Transaction or Change in Control,
become exercisable for all the shares at the time subject to those
options, whether or not those options are to be assumed or replaced
with a cash incentive program, and those accelerated options may be
exercised for all or any portion of the option shares as fully vested
shares. Such acceleration of your post December 23, 1997 options will,
however, be limited to the extent (and only to the extent) necessary
to assure that the option parachute payment attributable to the
accelerated vesting of those options would not constitute an excess
parachute payment under Internal Revenue Code Section 280G(b).
D. To the extent one or more of your options do not accelerate upon a
Corporate Transaction or Change in Control by reason of the provisions
of Paragraph B or the limitation of Paragraph C above, those options
will continue to become exercisable in accordance with the original
exercise schedule indicated in the respective grant notices for those
options. However, should either (i) your employment be subsequently
terminated without cause or (ii) you subsequently resign by reason of
a material change in your base compensation, your targeted annual
incentive compensation, your annual total target compensation, or your
benefits (for this purpose, 15% will be deemed a material reduction),
a material reduction in your duties or responsibilities, or a change
in your principal place of employment by more than 50 miles, within
twenty four (24) months following such Corporate Transaction or Change
in Control, then each of your post December 23, 1997 options, to the
extent outstanding at that time but not
otherwise fully exercisable, shall automatically accelerate and become
immediately exercisable for all the option shares and may be exercised
for any or all of those shares as fully vested shares at any time
prior to the expiration or sooner termination of the option term. Your
pre-December 24, 1997 options will not be subject to acceleration upon
such an involuntary termination or resignation.
E. Any of your options (whether granted before or after December 23,
1997) which are assumed by the successor entity (or parent company) in
the Corporate Transaction or are otherwise continue in effect
following the Change in Control transaction shall be appropriately
adjusted to apply and pertain to the number and class of securities
which would have been issued to you in the consummation of such
Corporate Transaction or Change in Control had the options been
exercised immediately prior to such event. Appropriate adjustments
shall also be made to the option prices payable per share, provided
the aggregate option prices payable shall remain the same.
Thank you for a great year in 1998. I look forward to continuing to work with
you in 1999.
Sincerely,
Xxxxx X. Xxxxxxx
Chairman of the Board
cc: Xxxxx Xxxxxxx, Chairman, Compensation Committee of the Board of Directors
To accept this sign and date below and return to me prior to February 19, 1999.
