EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 1, 1999, between GP Strategies Corporation, a
Delaware corporation with principal executive offices at 0 Xxxx 00xx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and Xxxxxx X. Xxxxxxx,
residing at 000 Xxxx Xxxxxx Xxxx, Xxxxxxx Xxxxx, Xxx Xxxx 00000 ("Employee").
W I T N E S S E T H
WHEREAS, the Company desires to employ Employee upon the terms and subject
to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants, and conditions herein contained and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto intending to be legally bound hereby agree as follows:
Section 1. Employment.
The Company hereby agrees to continue to employ Employee, and Employee
hereby agrees to continue to serve the Company, all upon the terms and subject
to the conditions set forth in this Agreement.
Section 2. Capacity and Duties.
Employee is and shall be employed in the capacity of President and Chief
Executive Officer of the Company and shall have the duties, responsibilities,
and authorities normally performed by the president and chief executive officer
of a company and such other duties, responsibilities, and authorities as are
assigned to him by the Board of Directors of the Company (the "Board") so long
as such additional duties, responsibilities, and authorities are consistent with
Employee's position and level of authority as President and Chief Executive
Officer of the Company. Employee shall devote substantially all of his business
time and attention to promote and advance the business of the Company.
Section 3. Term of Employment.
The term of employment of Employee by the Company pursuant to this
Agreement shall be for the period (the "Employment Period") commencing on the
date hereof and ending on May 31, 2004, unless sooner terminated in accordance
with the provisions of this Agreement.
Section 4. Place of Employment.
Employee's principal place of work shall be located at the principal
offices of the Company, currently located in New York, New York. The Company's
principal offices shall not be relocated outside of the New York/New Jersey
Metropolitan Area without Employee's consent.
Section 5. Compensation.
During the Employment Period, subject to all the terms and conditions of
this Agreement and as compensation for all services to be rendered by Employee
under this Agreement, the Company shall pay to or provide Employee with the
following:
(a) Base Salary. Commencing June 1, 1999, the Company shall pay to
Employee a base annual salary at the rate of $400,000. Each June 1 during the
Employment Period, commencing June 1, 2000, the base annual salary shall be
increased by $25,000. The base salary will be payable at such intervals (at
least monthly) as salaries are paid generally to other executive officers of the
Company.
(b) Incentive Compensation. The Company and Employee will negotiate
in good faith to formulate an annual incentive based compensation arrangement
based on the Company achieving certain financial milestones which will be fair
and equitable to Employee and the Company and its stockholders.
(c) Bonus. Each December during the Employment Period, the Board
shall determine Employee's bonus for the year then ending, based upon the
Company's revenues, profits or losses, financing activities, and such other
factors deemed relevant by the Board. Any bonus shall be payable to Employee on
or after January 2 of the following year.
(d) Options. On or before August 31, 1999, the Company shall grant
to Employee under the Company's option plan options to purchase 100,000 shares
of the Company's common stock at an exercise price equal to the market price on
the date of grant. Such options shall vest 20% on the date hereof and 20% on
each June 1 commencing June 1, 2000 and shall terminate on May 31, 2004.
(e) Vacation. Employee shall be entitled to vacation in accordance
with the Company's policy for its senior executives. Vacation may be carried
into the subsequent year if not used in the year earned.
(f) Automobile. The Company shall provide Employee with an
automobile of his choice (comparable to the automobile currently provided by the
Company to Employee) at the Company's expense and shall pay the maintenance,
gas, and insurance expenses in connection with such automobile.
Such automobile shall be equipped with a car phone.
(g) Club Dues. The Company shall pay for initiation and monthly dues
of one country club as shall be specified by Employee. Employee shall use such
country club primarily to further the Company's business.
(h) Life and Disability Insurance. The Company shall maintain the
existing life and disability insurance policies covering Employee.
(i) Employee Benefit Plans. Employee shall be entitled to
participate in all employee benefit plans maintained by the Company for its
senior executives or employees, including without limitation the Company's
medical and 401(k) plans.
(j) Loans. The maturity date of the Company's presently outstanding
loans to Employee shall be extended to May 31, 2004.
(k) Termination of Restrictions on Disposition of Stock. All
contractual restrictions imposed by the Company on the disposition by Employee
of shares of Class B Capital Stock shall terminate as of the date hereof. The
Company shall remove the legend relating to such restrictions from the
certificates representing such shares.
Section 6. Expenses.
The Company shall reimburse Employee for all reasonable expenses
(including, but not limited to, business travel and customer entertainment
expenses) incurred by him in connection with his employment hereunder in
accordance with the written policy and guidelines established by the Company for
executive officers.
Section 7. Non-Competition.
Employee agrees that he will not during the period he is employed by
the Company under this Agreement or otherwise and for a period of one year
thereafter, directly or indirectly compete with or be engaged in the same
business as the Company, or be employed by, or act as consultant or lender to,
or be a director, officer, employee, owner, or partner of, any business or
organization which, during the period Employee is employed by the Company under
this Agreement or otherwise, directly or indirectly competes with or is engaged
in the same business as the Company, except that in each case the provisions of
this Section 7 will not be deemed breached merely because Employee owns not more
than 1% of the outstanding common stock of a corporation, if, at the time of its
acquisition by Employee, such stock is listed on a national securities exchange,
is reported on NASDAQ, or is regularly traded in the over-the-counter market by
a member of a national securities exchange; provided, however, that this Section
7 shall not apply if (a) in breach of this Agreement, the Company shall
terminate Employee's employment other than pursuant to Section 10(b) or 10(c)
(it being understood that a purported termination pursuant to Section 10(b) or
10(c) which is disputed and finally determined not to have been proper shall be
a termination by the Company in breach of this Agreement) or (b) Employee shall
terminate his employment for Good Reason (as hereinafter defined).
Section 8. Patents.
Any interest in patents, patent applications, inventions,
copyrights, developments, and processes ("Such Inventions") which Employee now
or hereafter during the period he is employed by the Company under this
Agreement or otherwise may own or develop relating to the fields in which the
Company may then be engaged shall belong to the Company; and forthwith upon
request of the Company Employee shall execute all such assignments and other
documents and take all such other action as the Company may reasonably request
in order to vest in the Company all his right, title, and interest in and to
Such Inventions free and clear of all liens, charges, and encumbrances.
Section 9. Confidential Information.
All confidential information which Employee may now possess, may
obtain during or after the Employment Period, or may create prior to the end of
the period he is employed by the Company under this Agreement or otherwise
relating to the business of the Company or of any its customers or suppliers
shall not be published, disclosed, or made accessible by him to any other
person, firm, or corporation either during or after the termination of his
employment or used by him except during the Employment Period in the business
and for the benefit of the Company, in each case without prior written
permission of the Company. Employee shall return all tangible evidence of such
confidential information to the Company prior to or at the termination of his
employment.
Section 10. Termination.
Employee's employment hereunder may be terminated without any breach of
this Agreement only under the following circumstances:
(a) Death. Employee's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of Employee's incapacity due to
physical or mental illness, Employee shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within 30 days after a Notice of Termination (as defined in Section 10(e))
is given shall not have returned to the performance of his duties hereunder on a
full-time basis, the Company may terminate Employee's employment hereunder.
(c) Cause. The Company may terminate Employee's employment hereunder
for Cause. For purposes of this Agreement, the Company shall have "Cause" to
terminate Employee's employment hereunder upon (i) the willful and continued
failure by Employee to substantially perform his duties or obligations hereunder
(other than any such failure resulting from Employee's incapacity due to
physical or mental illness), after demand for substantial performance is
delivered by the Company that specifically identifies the manner in which the
Company believes Employee has not substantially performed his duties or
obligations, or (ii) the willful engaging by Employee in misconduct which is
materially monetarily injurious to the Company. For purposes of this paragraph,
no act, or failure to act, on Employee's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause without (i) reasonable notice to Employee setting
forth the reasons for the Company's intention to terminate for Cause, (ii) an
opportunity for Employee, together with his counsel, to be heard before the
Board, and (iii) delivery to Employee of a Notice of Termination from the Board
finding that in the good faith opinion of the Board Employee was guilty of
conduct set forth above in clause (i) or (ii) of the preceding sentence, and
specifying the particulars thereof in detail.
(d) Termination by Employee. Employee may terminate his employment
hereunder (i) for Good Reason or (ii) if his health should become impaired to an
extent that makes his continued performance of his duties hereunder hazardous to
his physical or mental health or his life, provided that Employee shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request, Employee shall
submit to an examination by a doctor selected by the Company and such doctor
shall have concurred in the conclusion of Employee's doctor. For purposes of
this Agreement, "Good Reason" shall mean (i) a change in control of the Company
(as defined below), (ii) a failure by the Company to comply with any material
provision of this Agreement which has not been cured within ten days after
notice of such noncompliance has been given by Employee to the Company, or (iii)
any purported termination of Employee's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 10(e)
(and for purposes of this Agreement no such purported termination shall be
effective). For purposes of this Agreement, a "change in control" of the Company
shall mean (i) a change in control of a nature that would be required to be
reported in response to Item 1(a) of Current Report on Form 8-K pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"),
other than a change of control resulting in control by Employee or a group
including Employee, (ii) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than Employee or a group including
Employee, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities, or (iii) at any time individuals who were either
nominated for election by the Board or were elected by the Board cease for any
reason to constitute at least a majority of the Board.
(e) Notice of Termination. Any termination of Employee's employment
by the Company or by Employee (other than termination pursuant to Section 10(a))
shall be communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee's employment under the
provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if
Employee's employment is terminated by his death, the date of his death, (ii) if
Employee's employment is terminated pursuant to Section 10(b), 30 days after
Notice of Termination is given (provided that Employee shall not have returned
to the performance of his duties on a full-time basis during such 30 day
period), and (iii) if Employee's employment is terminated for any other reason,
the date specified in the Notice of Termination, which shall not be earlier than
the date on which the Notice of Termination is given; provided that if within 30
days after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
resolved, either by mutual written agreement of the parties or by a judgment,
order, or decree of a court of competent jurisdiction.
Section 11. Compensation Upon Termination or During Disability.
(a) During any period that Employee fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), Employee shall continue to receive his full salary at the
rate then in effect for such period until his employment is terminated pursuant
to Section 10(b), provided that payments so made to Employee during the
disability period shall be reduced by the sum of the amounts, if any, payable to
Employee at or prior to the time of any such payment under disability benefit
plans of the Company and which were not previously applied to reduce any such
payment.
(b) If Employee's employment is terminated by his death, the Company
shall pay to Employee's heirs, in a lump sum, an amount equal to his full salary
for the period ending May 31, 2004.
(c) If Employee's employment shall be terminated for Cause, the
Company shall pay Employee his full salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given.
(d) If (i) in breach of this Agreement, the Company shall terminate
Employee's employment other than pursuant to Section 10(b) or 10(c) (it being
understood that a purported termination pursuant to Section 10(b) or 10(c) which
is disputed and finally determined not to have been proper shall be a
termination by the Company in breach of this Agreement) or (ii) Employee shall
terminate his employment for Good Reason, then
(A) the Company shall pay Employee his full salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given;
(B) in lieu of any further salary, bonus, or incentive
compensation payments to Employee for periods subsequent to
the Date of Termination, the Company shall pay as severance
pay to Employee an amount equal to (1) Employee's average
annual cash compensation received from the Company during the
three full calendar years immediately preceding the Date of
Termination, multiplied by (2) the greater of (w) the number
of years (including partial years) that would have been
remaining in the Employment Period if Employee's employment by
the Company had not so terminated and (x) three, such payment
to be made (y) if Employee's termination is based on a change
of control of the Company, in a lump sum on or before the
fifth day following the Date of Termination, or (z) if
Employee's termination results from any other cause, in
substantially equal semimonthly installments on the fifteenth
and last days of each month commencing with the month in which
the Date of Termination occurs and continuing for the number
of consecutive semimonthly payment dates (including the first
such date as aforesaid) equal to the product obtained by
multiplying the number of years (including partial years)
applicable under clause (w) above by 24;
(C) all options to purchase the Company's common stock
granted to Employee under the Company's option plan or
otherwise shall immediately become fully vested and shall
terminate on such date as they would have terminated if
Employee's employment by the Company had not terminated and,
if Employee's termination is based on a change of control of
the Company and Employee elects, not more than 30 days after
the Date of Termination, to surrender any or all of such
options to the Company, the Company shall pay Employee on or
before the fifth day following such surrender a lump sum cash
payment equal to the excess of (1) the fair market value on
the Date of Termination of the securities issuable upon
exercise of the options surrendered over (2) the aggregate
exercise price of the options surrendered;
(D) the Company shall maintain in full force and effect,
for the continued benefit of Employee, for a number of years
equal to the greater of (1) the number of years (including
partial years) that would have been remaining in the
Employment Period if Employee's employment by the Company had
not so terminated and (2) three, all employee benefit plans
and programs in which Employee was entitled to participate
immediately prior to the Date of Termination provided that
Employee's continued participation is possible under the
general terms and provisions of such plans and programs. In
the event that Employee's participation in any such plan or
program is barred, the Company shall arrange to provide
Employee with benefits substantially similar to those which
Employee would otherwise have been entitled to receive under
such plans and programs from which his continued participation
is barred; and
(E) if termination of Employee's employment arises out
of a breach by the Company of this Agreement, the Company
shall pay all other damages to which Employee may be entitled
as a result of such breach, including damages for any and all
loss of benefits to Employee under the Company's employee
benefit plans which Employee would have received if the
Company had not breached this Agreement and had Employee's
employment continued for the then remaining term of the
Employment Period, and including all reasonable legal fees and
expenses incurred by him as a result of such termination.
(e) If Employee shall terminate his employment under Section
10(d)(ii), the Company shall pay Employee his full salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given.
(f) Employee shall not be required to mitigate the amount of any
payment provided for in this Section 11 by seeking other employment or
otherwise.
(g) Notwithstanding anything in this Agreement to the contrary, the
Company shall not be obligated to pay any portion of any amount otherwise
payable to Employee pursuant to this Section 11 if the Company could not
reasonably deduct such portion solely by operation of Section 280G of the
Internal Revenue Code of 1986, as amended.
Section 12. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and reasonably substance satisfactory to Employee, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
12(a) or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) Employee's rights and obligations under this Agreement shall not
be transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrance, or the claims of Employee's creditors, and any attempt
to do any of the foregoing shall be void. The provisions of this Agreement shall
be binding upon and inure to the benefit of Employee and his personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees, and shall be binding upon and inure to the benefit of
the Company and its successors under Section 12(a). If Employee should die while
any amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Employee's devisee, legatee, or other
designee or, if there be no such designee, to Employee's estate.
Section 13. No Third Party Beneficiaries.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Sections 11(b) and 12).
Section 14. Fees and Expenses.
The Company shall pay all reasonable legal fees and related expenses
(including the costs of experts, evidence, and counsel) incurred by Employee as
a result of a contest or dispute over Employee's termination of employment if
such contest or dispute is resolved in whole or in part in Employee's favor.
Section 15. Representations and Warranties of Employee.
Employee represents and warrants to the Company that (a) Employee is under
no contractual or other restriction or obligation which is inconsistent with the
execution of this Agreement, the performance of his duties hereunder, or the
other rights of the Company hereunder and (b) Employee is under no physical or
mental disability that would hinder his performance of duties under this
Agreement.
Section 16. Life Insurance.
If requested by the Company, Employee shall submit to such physical
examinations and otherwise take such actions and execute and deliver such
documents as may be reasonably necessary to enable the Company, at its expense
and for its own benefit, to obtain life insurance on the life of Employee.
Employee has no reason to believe that his life is not insurable with a
reputable insurance company at rates now prevailing in the City of New York for
healthy men of his age.
Section 17. Modification.
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements between
them concerning such subject matter, and may be modified only by a written
instrument duly executed by each party.
Section 18. Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble to this Agreement
(or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 18). Notice to the estate of
Employee shall be sufficient if addressed to Employee as provided in this
Section 18. Any notice or other communication given by certified mail shall be
deemed given at the time of certification thereof, except for a notice changing
a party's address which shall be deemed given at the time of receipt thereof.
Section 19. Waiver.
Any waiver by either party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on one
or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing.
Section 20. Headings.
The headings in this Agreement are solely for the convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
Section 21. Counterparts; Governing Law.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. It shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to conflict of
laws.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
GP Strategies Corporation
By:
Xxxxxx X. Xxxxxxx
