Exhibit 10.1
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EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), is made and entered into
as of this 1st day of February, 2004 and effective as of January 1, 2004 (the
"Effective Date"), by and between Xxxxx Consulting, Inc. and/or its successors
("CC or the "Company and assigns"), a Delaware corporation, and Xxxxxx X. Xxxx,
a resident of Illinois (the "Employee").
W I T N E S S E T H:
WHEREAS, CC is engaged in business in the State of Illinois and
throughout the United States; and
WHEREAS, CC desires to continue to employ the Employee in the capacity
of Executive Vice President and Chief Operating Officer of the Company, upon the
terms and conditions hereinafter set forth.
WHEREAS, the Employee serves as the Chief Operating Officer of Xxxxx,
Inc., the parent of CC, in addition to his responsibilities as an employee of
CC; and
WHEREAS, the Employee is willing to enter into this Agreement with
respect to his continued employment and services upon the terms and conditions
hereinafter set forth,
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, CC hereby continues to employ the Employee and the
Employee hereby accepts such continued employment upon the terms and conditions
hereinafter set forth:
1. Term of Employment. The term of employment under this Agreement
shall commence on the Effective Date and shall extend through January 31, 2007.
Absent notice of termination (described below), commencing on February 1, 2007
and continuing on each subsequent February 1, the term of the Employee's
employment shall automatically be extended for an additional 12 months. To cause
the Employee's employment to terminate at the end of the original or an extended
term, either party, at least 90 days prior to such date, shall give written
notice to the other party that the Agreement will terminate.
2. Duties of the Employee. The Employee agrees that during the term of
this Agreement, he will devote substantially all his full professional and
business-related time, skills and best efforts to the businesses of CC. The
Employee shall report to the Chief Executive Officer of CC. The Employee may
engage in personal investment activities provided such activities do not
interfere with the performance of his duties hereunder or violate the
noncompetition and confidential information provisions set forth herein. Nothing
herein, however, will prevent the Employee, (i) upon approval of the CEO of the
Company, from service as a director or trustee of other corporations or
businesses which are not in competition with the business of the Company or in
competition with any present or future affiliate of the Company, (ii) from
service on civic or charitable boards or committees, or (iii) from engaging in
personal, investment activities or advisory board activities; provided such
activities do not interfere with the performance of his duties hereunder or
violate the noncompetition and confidential
information provisions set forth herein. Employee shall be indemnified to the
same extent as other directors and officers of CC.
3. Compensation.
(a) Base Salary. CC shall pay the Employee an annual base salary
of Five Hundred Thousand Dollars ($500,000) per annum (or
fraction for portions of a year) ("Base Salary"). Such Base
Salary may be increased annually during the Employee's
employment with CC in accordance with the then current
standard salary administration guidelines of the Company. The
Employee's Base Salary shall be subject to all appropriate
federal and state withholding taxes and shall be payable in
accordance with the normal payroll procedures of CC.
(b) Annual Bonus. In addition to the Base Salary set forth in
Section 3(a) hereof, the Employee shall receive a target bonus
opportunity ("TBO") each year during his employment of up to
150% of Base Salary. The Annual Bonus shall be paid based upon
criteria set annually for the Company. The Annual Bonus shall
be subject to all appropriate federal and state withholding
taxes and shall be payable annually on or before March 15th of
the year following the year to which such bonus relates.
4. Fringe Benefits. CC will provide the Executive such perquisites and
fringe benefits of employment as are commonly provided to other senior
executives of the Company and/or the Divisions. In addition to the foregoing, CC
will
(a) pay the Employee's annual membership dues for the athletic
club of his choice; and
(b) provide the Employee with the use of an automobile via an
automobile allowance in the amount of $2,000 per month which
will be adjusted annually by the change in the Consumer Price
Index.
(c) provide the Employee with personal financial planning and tax
preparation services currently provided by the Ayco Company.
The fringe benefits shall be subject to all appropriate withholding taxes in
accordance with the normal payroll procedures of the Company. The terms of this
Agreement shall not preclude the Employee from participating with other
employees of the Company in such fringe benefits or incentive compensation plans
as may be authorized and adopted from time to time by the Company; however, the
Employee must meet any and all eligibility provisions required under said fringe
benefits or incentive compensation plans as may be authorized and adopted from
time to time by the Company. The Employee may be granted such other fringe
benefits or perquisites as the Employee and the Company may from time to time
agree upon.
5. Execu-flex. The Company has established the Xxxxx Consulting
Execu-Flex Benefit Plan for certain key executives of the Company. For so long
as the Company maintains this Plan during the Employee's employment with the
Company under the terms of this Agreement, the Company will make a $15,000
annual contribution to the Execu-Flex plan on
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behalf of the Employee. The terms and conditions of the benefits in the
Execu-Flex Benefit Plan will be governed by the terms of the Execu-Flex Benefit
Plan document.
6. Employee Benefits. The Employee and his eligible dependents shall be
eligible to participate in the employee benefit programs made available
generally to other employees of CC; as well as other executive benefit programs
that may be offered to officers of the Company, provided, however, that the
Employee and his eligible dependents must meet any and all eligibility
provisions required under such employee benefit programs. In addition, the
Employee will be eligible to participate in the Xxxxx Consulting Deferred
Compensation Plan, or such similar successor Plan, if any, that is maintained by
the Company.
7. Vacations. The Employee shall be entitled to the maximum level of
paid time off ("PTO") for employees under the Company's PTO Plan. The current
maximum is twenty-eight (28) days of paid time off ("PTO") during each full
calendar year of which the Employee may carry over up to thirty-three (33) days
of unused PTO to the next succeeding calendar year; provided, however, that at
no time may the Employee have accumulated more than thirty-three (33) days of
PTO. If the Company increases its maximum level of PTO under the terms of the
Company's PTO Plan during the term of this agreement, the Employee will be
entitled to receive the new maximum level, subject to the provisions of the PTO
Plan. PTO may be used by the Employee for vacation, personal time or for their
own illness or that of a family member who resides with him.
8. Reimbursement of Expenses. CC recognizes that the Employee will
incur legitimate business expenses in the course of rendering services to CC
hereunder. Accordingly, CB shall reimburse the Employee, upon presentation of
receipts or other adequate documentation, for all necessary and reasonable
business expenses incurred by the Employee in the course of rendering services
to CC under this Agreement.
9. Working Facilities. The Employee shall be furnished an office,
administrative assistance and such other facilities and services suitable to his
position and adequate for the performance of his duties ("Working Facilities"),
which shall be consistent with the reasonable policies of CC. The corporate
headquarters are located in North Barrington, Illinois.
10. Termination. The employment relationship between the Employee and
CC created hereunder shall terminate before the expiration of the then current
terms upon the occurrence of any one of the following events:
(a) Death or Permanent Disability. The death or permanent
disability of the Employee. For the purpose of this Agreement,
"permanent disability" of the Employee shall mean "disability"
as defined under CC's long-term disability plan.
(b) Termination for Cause. The following events, actions or
inactions by the Employee shall constitute "Cause" for
termination of this Agreement:
(i) Substantial failure of performance by the Employee
that is repeated or continued following thirty (30)
days' written notice to the Employee of such failure
to perform given by the CEO to the Employee;
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(ii) Employee's failure to rectify any material breach or
perform any reasonable obligation of Employee under
this Agreement within 30 days after written notice of
such breach for failure to perform given by the CEO
to the Employee;
(iii) any gross misconduct or gross negligence in the
performance of his duties that materially and
adversely affects CC;
(iv) a material breach of the Intellectual Property and
Confidentiality Agreement with CC;
(v) the intentional diversion of a financial opportunity
away from CC;
(vi) the commission of an act of dishonesty or fraud that
is of a material nature and involves a material
breach of trust;
(vii) the conviction of Employee for any felony or of a
crime involving moral turpitude.
(c) Constructive Termination. In the event of:
(i) a material change or reduction in Employee's duties
or authority;
(ii) a downward change in Employee's title to which the
Employee does not consent;
(iii) a change to which Employee does not consent of the
principal location in which he is required to perform
his duties hereunder;
(iv) a material reduction in (or a failure to pay or
provide) Employee's Earned Base Salary, Annual Bonus,
Benefits, PTO or Working Facilities other than as
permitted by this Agreement;
(v) following a Change of Control (as defined in section
10(f) below), CC or its successor delivers to
Employee a notice of termination of the term of
employment or evergreen feature under Section 1; or
(vi) any other material breach by the Company of this
Agreement.
Employee shall have the right to terminate his employment and CC shall
treat such termination in all respects as if it had been a termination
of employment by CC with notice under Section 10(e).
(d) Termination by the Employee with Notice. The Employee may
terminate this Agreement at any time without liability to CC
arising from the resignation of the Employee upon ninety (90)
days' prior written notice to CC. CC retains the right after
proper notice of the Employee's voluntary termination to
require the Employee to cease his employment immediately;
provided, however, in such
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event, CC shall remain obligated to pay the Employee his
salary during the ninety (90) day notice period or the
remaining term of this Agreement, whichever is less. During
such ninety (90) day notice period, the Employee shall provide
such consulting services to CC as CC may reasonably request
and shall assist CC in training his successor and generally
preparing for an orderly transition.
(e) Termination by CC with Notice. CC may terminate this Agreement
at any time upon ninety (90) days' prior written notice to
Employee. CC retains the right after proper notice has been
given to the Employee to require the Employee to cease his
employment immediately; provided, however, in such event, CC
shall remain obligated to pay the Employee his salary during
the ninety (90) day notice period or the remaining term of
this Agreement, whichever is less. During such ninety (90) day
notice period, the Employee shall provide such consulting
services to CC as CC may reasonably request and shall assist
CC in training his successor and generally preparing for an
orderly transition.
(f) Termination due to Change in Control. If after a Change of
Control (as defined below), Employee terminates due to
Constructive Termination (as defined in Section 10(c) above)
or CC or its successor terminates the Employee for any reason
other than for Cause, Death or Disability, the Employee will
be entitled to Compensation Upon Termination as described in
11(f) below. CC will require any successor to all or
substantially all of its assets, to expressly assume and
perform this Agreement. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if:
(i) the Company becomes a subsidiary of another
corporation or entity or is merged or consolidated into
another corporation or entity or substantially all of the
assets of the Company are sold to another corporation or
entity; or
(ii) any person, corporation, partnership or other
entity, either alone or in conjunction with its "affiliates,"
as that term is defined in Rule 405 of the General Rules and
Regulations under the Securities Act of 1933, as amended, or
other group of persons, corporation, partnerships or other
entities who are not "affiliates" but who are acting in
concert, other than X.X. Xxxxxxx or his family members or any
person, organization or entity that is controlled by X.X.
Xxxxxxx or his family members, becomes the owner of record or
beneficially of securities of the Company that represent
thirty-three and one-third percent (33 1/3%) or more of the
combined voting power of the Company's then outstanding
securities entitled to elect Board of Directors of the
Company; or
(iii) the Board of Directors of the Company or a
committee thereof makes a determination in its reasonable
judgment that a "Change of Control" of the Company has taken
place.
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11. Compensation Upon Termination.
(a) General. Unless otherwise provided for herein, upon the
termination of the Employee's employment under this Agreement,
before the expiration of the current term, the Employee shall
be entitled to
(i) the salary earned by him before the effective date of
termination, as provided in Section 3(a) hereof,
prorated on the basis of the number of full days of
service rendered by the Employee during the year to
the effective date of termination;
(ii) any accrued, but unpaid, PTO (up to six (6) weeks);
(iii) any authorized but unreimbursed business expenses;
and
(iv) any benefits to which the Employee is entitled under
the employee benefit programs maintained by CC.
The sum of the amounts described in clauses (i) through (iv) will be
hereinafter referred to as the "Accrued Obligations." The Accrued
Obligations under clauses (i) through (iii) will be paid to the
Employee or his estate or beneficiary, as applicable, in a lump sum in
cash within thirty (30) days of the date of termination. The Accrued
Obligations under (iv) will be paid or provided pursuant to the terms
of the employee benefits programs maintained by CC.
(b) Termination Because of Death or Permanent Disability. If the
Employee's employment hereunder terminates because of the
death or permanent disability of the Employee, the Employee
shall be entitled to the Accrued Obligations set forth in
Section 11(a) above, plus one year's base salary and the
Annual Bonus at full TBO for the calendar year of the
Employee's death, which shall be paid in the year following
the Employee's death in accordance with CC's customary
practices.
(c) Termination For Cause. If the employment relationship
hereunder is terminated by CC for cause (as defined in Section
10(b) hereof), the Employee shall not be entitled to any
amounts other than the Accrued Obligations.
(d) Resignation by the Employee with Notice. If the employment
relationship is terminated by the Employee with notice
pursuant to the provisions of Section 10(d) hereof, the
Employee shall be entitled to receive his Base Salary during
the ninety day notice period, plus the Accrued Obligations,
all to be paid when they would otherwise be due the Employee.
(e) Constructive Termination or Termination by CC without Cause.
In connection with a resignation by Employee due to his
Constructive Termination as described in Section 10(c) above,
or in connection with a termination of the Employee with
notice under Section 10(e), Employee shall be entitled to
receive
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(i) his Base Salary during the ninety-day notice period
(which, in connection with a constructive termination
shall be measured from the date on which the event
causing constructive termination occurred); and
(ii) his Base Salary for a one-year period commencing on
the later of the date of termination or the end of
the ninety-day notice period; and
(iii) the Annual Bonus at full TBO for the calendar year of
the Employee's termination; and
(iv) any Accrued Obligations as set forth in Section 11(a)
above.
(f) Termination due to Change in Control. In connection with any
termination by CC or its successor of the Employee or
termination by the Employee due to Change in Control as
described in Section 10(f) above, Employee shall, in addition
to receiving his Accrued Obligations, be entitled to receive
for a two-year period from the date of termination the sum of:
(i) his then current Base Salary; plus
(ii) for each of the two years, an amount equal to the
Annual Bonus at full TBO, prior to the Change of
Control. Such payments shall be paid as customary but
in no event, less frequently than monthly beginning
within 20 business days after the date of
termination.
All amounts payable under this Section 11 will be reduced by any
standard withholding and other authorized deductions and paid in
accordance with the normal payroll practices of the Company.
12. Noncompetition. During the Employee's employment with CC, and for
the time period set forth in Section 12(d) below, the Employee will not:
(a) Accept employment with or render services for compensation
(including without limitation, consultation or research) to,
or acquire any kind of ownership in, any person or entity
which is engaged in the design, development, marketing, sale
or support of any competitive product or service sold in the
United States if that relationship includes any
responsibilities whatsoever with respect to developing,
promoting, marketing, soliciting or selling any product or
service (including without limitation, any life insurance or
other insurance product or policy) to any corporation in any
state in which CC operates.
(b) Promote, market, solicit, or sell any product or service,
including without any limitation, any life insurance or other
insurance product or policy, similar to or competitive with CC
or any of its Divisions ("CC Programs") to any existing client
of CC or any corporation, healthcare, insurance carrier or
financial institution which, during the 13-month period prior
to the termination of Employee's employment by CC, is listed
as either a client, a prospect, or a
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courtesy prospect on the prospect databases maintained by the
Company or its Divisions.
(c) Induce or attempt to induce:
(i) any purchaser of any CC Program to cancel, allow to
lapse, fail to renew or replace any CC Program;
(ii) within the 13 month period following termination of
Employee's employment, any other employee or any
representative of CC to terminate or alter his, her,
or its relationship with CC;
(iii) any insurance company to terminate or alter its
relationship with CC; or
(iv) any banking association or other trade organization
to terminate or alter its relationship with CC.
(d) The noncompetition provisions described in sections 12(a),
12(b), and 12(c) shall apply as follows:
(i) If CC terminates the Employee pursuant to Section
10(b) (for Cause) or the Employee terminates pursuant
to Section 10(d) (Termination by the Employee with
Notice), the noncompetition provisions in sections
12(a), 12(b) and 12(c) shall remain in effect for 12
months after the Employee's termination.
(ii) If the Employee terminates employment pursuant to
Section 10(c) (for Constructive Termination), the
noncompetition provisions in Section 12(c) shall
remain in effect for 12 months after the Employee's
termination.
(iii) If the Employee terminates employment or CC or its
successor terminates the Employee pursuant to Section
10(f) (for Change of Control), the noncompetition
provisions in sections 12(a), 12(b) and 12(c) shall
remain in effect for 24 months after the Employee's
termination.
13. Confidential Information. Employee shall abide by the terms of CC's
standard Intellectual Property and Confidentiality Agreement, which is attached
hereto as Exhibit A.
14. Termination of Existing Contract. The Employee is currently party
to an agreement with the Company dated October 30, 2001 (the "Existing
Contract") which is attached hereto as Exhibit B. The Company and the Employee
agree that on the effective date of this Agreement that the Existing Contract
will be terminated and that the terms of this Agreement will govern all aspects
of the Employee's employment with the Company.
15. Property of CC. The Employee acknowledges that from time to time in
the course of providing services pursuant to this Agreement he shall have the
opportunity to inspect and use certain property, both tangible and intangible,
of CC and the Employee hereby agrees that such property shall remain the
exclusive property of CC, and the Employee shall have no
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right or proprietary interest in such property, whether tangible or intangible,
including, without limitation, the Employee's customer and supplier lists,
contract forms, books of account, computer programs and similar property.
16. Equitable Relief. The Employee acknowledges that the services to be
rendered by him are of a special, unique, unusual, extraordinary, and
intellectual character, which gives them a peculiar value, and the loss of which
cannot reasonably or adequately be compensated in damages in an action at law,
and that a breach by him of any of the provisions contained in this Agreement
will cause CC irreparable injury and damage. The Employee further acknowledges
that he possesses unique skills, knowledge and ability and that competition by
him in violation of this Agreement or any other breach of the provisions of this
Agreement would be extremely detrimental to CC. By reason thereof, the Employee
agrees that CC shall be entitled, in addition to any other remedies it may have
under this Agreement or otherwise, to injunctive and other equitable relief to
prevent or curtail any breach of this Agreement by him.
17. Successors Bound. This Agreement shall be binding upon CC and the
Employee, their respective heirs, executors, administrators or successors in
interest.
18. Severability and Reformation. The parties hereto intend all
provisions of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future law, such provision shall be
fully severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.
19. Integrated Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
and there are no agreements, understandings, specific restrictions, warranties
or representations relating to said subject matter between the parties other
than those set forth herein or herein provided for. Any prior agreements between
the parties (whether oral or written) are hereby superseded in their entirety.
20. Notices. All notices and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by certified mail (return receipt
requested) or sent by overnight delivery service or facsimile transmission to
the parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
If to CC:
Xxxxx Consulting, Inc.
000 Xxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. X. X. Xxxxxxx
Chief Executive Officer
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With a copy to:
Vedder, Price, Xxxxxxx and Kammholz, P.C.
000 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx, Esq.
If to Xxxxxx X. Xxxx:
00000 Xxx Xxxxx
Xxxx Xxxx, Xxxxxxxx 00000
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after posting, in the
case of notice so given by overnight delivery service, on the date of actual
delivery and, in the case of notice so given by facsimile transmission or
personal delivery, on the date of actual transmission or, as the case may be,
personal delivery.
21. Further Actions. Whether or not specifically required under the
terms of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order for such
party to perform all of his or its obligations specified herein or reasonably
implied from the terms hereof.
22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
ILLINOIS.
23. Assignment. This Agreement is personal to the Employee and may not
be assigned in any way by the Employee without the prior written consent of CC.
24. Counterparts. This Agreement may be executed in counterparts, each
of which will take effect as an original and all of which shall evidence one and
the same Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
XXXXX CONSULTING, INC.
By: /s/ Xxx Xxxxxxx
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X.X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
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