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EXHIBIT 10.13
EXECUTIVE EMPLOYMENT, NONCOMPETE AND CONFIDENTIALITY
AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") entered into this 12th day of
May 1998 by and between Louis E. Chappuie (the "Executive") and Maximus
Acquisition Corp., a Delaware corporation with a usual place of business in
McLean, Virginia, (such corporation, or its successors and assigns, including
but not limited to David M. Griffith & Associates, Ltd., the "Corporation").
WHEREAS, the Corporation desires to employ Executive as its President of
David M. Griffith & Associates, Ltd. ("Griffith"); and
WHEREAS, Executive desires to be so employed by the Corporation at the
salary and benefits provided for herein; and
WHEREAS, Executive acknowledges and understands that during the course of
his employment, Executive will become familiar with certain confidential
information of the Corporation and Griffith which is exceptionally valuable to
the Corporation and Griffith and vital to the success of the business of the
Corporation and Griffith; and
WHEREAS, the Corporation and Executive desire to protect such confidential
information from disclosure to third parties or its use to the detriment of the
Corporation or Griffith; and
WHEREAS, Executive acknowledges that the likelihood of disclosure of such
confidential information would be substantially reduced, and that legitimate
business interests of the Corporation and Griffith would be protected, if
Executive refrains from competing with the Corporation or Griffith and from
soliciting customers and employees during and following the term of this
Agreement, and Executive is willing to covenant that he is willing to refrain
from such actions.
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements set forth hereinafter, the parties hereto hereby agree
as follows:
1. SUPERSEDED AGREEMENT. This Agreement supersedes the Employment and Share
Purchase Agreement between Griffith and Executive dated April 26, 1997 and any
amendments thereto (collectively, the "1997 Agreements"), subject, however, to
the provisions of Section 2.2 (iii) hereof.
2. EMPLOYMENT.
2.1. DUTIES. The Corporation hereby employs Executive, and Executive hereby
accepts such employment, to serve as the President and Director of Griffith.
Executive will
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perform such services and duties as are appropriate to such office or delegated
to Executive by Raymond Ruddy as President of the Consulting Group of MAXIMUS,
Inc., the parent company of the Corporation or by the Board of Directors of
MAXIMUS, Inc. During the term of this Agreement, Executive will be a full time
employee of the Corporation and will devote such time and attention to the
diligent and satisfactory performance of his duties as may be necessary and
appropriate to accomplish and complete such duties. Executive will not engage in
any activities which would have an adverse effect on the Corporation's
reputation, goodwill or business relationships or which would result in economic
harm to the Corporation.
2.2. COMPENSATION.
(i) SALARY. During the term of Executive's employment hereunder, the
Corporation will pay to Executive an annual base salary ("Base Salary") of Three
Hundred Thousand Dollars ($300,000.00), payable in equal bimonthly installments
as are customary under the Corporation's payroll practices from time to time.
Base Salary expressly includes an allowance for automobile lease expenses and
for the fringe benefit adjustment that other Griffith employees received to
their base salaries as a result of the merger of the Corporation and Griffith on
May 7, 1998, which fringe benefit adjustment Executive hereby expressly waives.
(ii) BONUS. During the term of Executive's employment, the Corporation
will pay to Executive a bonus in the amount of One Hundred Twenty Five Thousand
Dollars ($125,000.00) payable in equal installments on March 31 and on September
30 of each year; provided, however, that Executive's bonus will be pro rated for
the period commencing on the date hereof and ending on September 30, 1998.
(iii) ADDITIONAL BONUS. It is contemplated by the parties hereto that
Performance Compensation provided for in the 1997 Agreement shall be paid by
Griffith prior to the date hereof, evidenced by a receipt therefor signed by
both parties. In the event that such Performance Compensation is not so paid,
the Corporation will pay to Executive an additional bonus in the amount of Two
Hundred Thousand Dollars ($200,000.00) on the date that is one year from the
date hereof.
(iv) ADDITIONAL BENEFITS. The Corporation will provide Executive such
benefits as are generally provided by the Corporation to its other employees,
including but not limited to, health and dental insurance, disability and life
insurance, sick days and other employee benefits (collectively, "Other
Benefits"), all in accordance with the terms and conditions of the Other
Benefits plans, as the same will be amended from time to time.
(v) WITHHOLDING. All salary, bonus, and other payments described in
this Agreement will be subject to withholding for federal, state or local taxes,
amounts withheld under applicable benefit policies or programs, and any other
amounts that may be required to be withheld by law, judicial order or otherwise.
2.3. TERM; TERMINATION. Executive's employment pursuant to this Agreement
shall commence on the date hereof and shall continue for two (2) years
thereafter, provided that this Agreement will terminate:
(a) by mutual written consent of the parties; or
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(b) upon Executive's death or inability, by reason of physical or
mental impairment, to perform substantially all of Executive's duties as
contemplated herein for a continuous period of four (4) months or more; or
(c) by the Corporation for cause, which will mean in the event of
Executive's breach of any material duty or obligation hereunder, or intentional
or grossly negligent conduct that is materially injurious to the Corporation, as
reasonably determined by the Corporation's Board of Directors, or willful
failure to follow the reasonable directions of the Corporation's President of
the Consulting Group or Board of Directors.
Upon any termination of employment under this Section 2.3, neither party
will have any obligation to the other pursuant to this Section 2, except as set
forth in Section 2.2 (iii), but such termination will have no effect on the
obligations of the parties under other provisions of this Agreement.
2.4. EARLY TERMINATION OF EXECUTIVE'S EMPLOYMENT BY THE CORPORATION. If the
Corporation terminates this Agreement for any reason other than an event
described under Section 2.3, the Corporation shall have post-termination
obligations to executive. The post termination obligations shall commence with
the date the Corporation terminates Executive's employment and shall run to the
date this Agreement would have otherwise terminated by lapse of time or an
earlier event described in Section 2.3. The Corporation's post-termination
obligations are as follows:
(i) to pay $425,000.00 per year and a pro rata portion thereof for
any partial year;
(ii) where permitted by the terms of the Other Benefits plans, statute
and other pertinent authority, to continue the Executive as a participant in any
existing Other Benefit plan on the date of termination and, if such continuation
is not permitted, to pay the dollar equivalent benefit under the Other Benefit
plan, provided that such payment does not violate pertinent statute or other
authority; and
(iii) to pay to Executive the additional bonus if not earlier paid.
3. NON-COMPETITION.
3.1. DEFINITIONS FOR APPLICATION OF THE COVENANT NOT TO COMPETE.
(a) Restricted Services. The term "Restricted Services" means
services rendered by Griffith or the Corporation, including without limitation,
all of the following:
* "A-87" cost allocation plans (or such cost allocation plans as
may later replace or supplement such "A-87" cost allocation
plans),
* user fee and charge studies,
* full cost plans,
* child support enforcement services,
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* environmental consulting,
* fleet studies,
* state mandated cost claiming,
* disaster claiming,
* human resource consulting,
* productivity studies,
* privatization analyses,
* university A-21 studies,
* management studies,
* franchise fee studies,
* government studies,
* executive search,
* revenue maximization studies, and
* housing authority consulting.
(b) Properties. The term "Properties" means tangible and intangible
properties of Griffith and the Corporation, including but not limited to,
goodwill, trade secrets (including but not limited to each item listed and
defined as a trade secret under the Illinois Trade Secrets Act," 765 ILCS 1065/1
ET SEQ.), marketing strategies and confidential information such as client
lists, proposal letters, contract forms, and manuals. "Properties" also include,
without limitation, all computer software, input forms, source codes, and report
formats used, developed, sold or licensed in connection with the rendition of
Restricted Services or otherwise sold or used in the business of Griffith or the
Corporation.
(c) Client. The term "Client" means a client of Griffith or the
Corporation who within the twenty-one (21) month period ending with the date of
a commission of a competitive act under Paragraph 3.2.3 had been invoiced by
Griffith or the Corporation or for whom the Corporation or Griffith had
performed, or for whom Griffith or the Corporation had an executed contract to
perform, or had solicited to perform, any Restricted Services.
3.2. COVENANTS BY AND RESTRICTIONS ON THE EXECUTIVE.
3.2.1. BEST EFFORTS TO GUARD CONFIDENTIALITY OF PROPERTIES. Executive
covenants and agrees to use the Executive's best efforts and utmost diligence in
carrying out Executive's duties and in guarding (through such reasonable
precautions required by the Board of Directors or otherwise) the confidentiality
of the Properties.
3.2.2. FORBIDDEN USE OF THE PROPERTIES. Executive further covenants
and agrees that he will not, directly or indirectly (as officer, director,
proprietor, manager, consultant, employee, partner or shareholder, or in any
other capacity), use for himself or others any of the Properties during or at
any time after he has completed his duties under this Agreement.
3.2.3. COVENANT NOT TO COMMIT COMPETITIVE ACTS. The Executive further
covenants that, for a period of two (2) years after termination of the
Executive's employment for any reason, the Executive will not, directly or
indirectly (as officer, director, proprietor, manager,
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consultant, employee, partner or shareholder, or in any other capacity), commit
any of the following acts, wherever the Corporation or Griffith renders
Restricted Services:
(i) solicit or perform any Restricted Services for any client, or
interfere with any contractual arrangements of any client, of Griffith or the
Corporation,
(ii) solicit or hire any other employee, or any individual who has
been an employee, of Griffith or the Corporation within the preceding six
calendar months prior to the solicitation or hiring of the employee,
(iii) develop, sell license or otherwise market computer software
which is competitive with any of Griffith or the Corporation's computer
software, including without limitation computer software which is developed,
sold, licensed or otherwise marketed by Griffith or the Corporation as of the
termination of Executive's employment for any reason,
except in each such case Executive has received the express written permission
of the Corporation.
3.2.4. RIGHT OF INSPECTION. Executive shall upon demand from the
Corporation, make available for inspection at such reasonable times and places
as the Corporation may request any of the confidential or other information used
directly or indirectly by Executive, solely for the purpose of determining
Executive's compliance with the restrictions of this Agreement. The Corporation
will not use, adopt or exploit for its own purposes any of the disclosed
information.
3.3. REMEDIES IN THE EVENT OF BREACH. Executive agrees that the remedy at
law for any breach by Executive of any of the restrictions of this Section 3 may
be inadequate and that the Corporation shall be entitled to injunctive relief.
Executive further understands and agrees that in addition to any other remedy
available to the Corporation, the Corporation may set off against any amounts
due Executive, an amount equal to the gross revenues which Executive, or any
entity with which Executive is employed, affiliated or associated, receives or
is entitled to receive, from any existing clients (or potential clients with
whom a proposal is pending) of Griffith or the Corporation (as the case might
be) during the two-year period provided in this Section 3.
3.4. DUTY TO INFORM. Executive shall notify any new employer, partner,
association or any other firm or corporation actually or potentially in
competition with Griffith or the Corporation with whom Executive shall become
associated in any capacity whatsoever of the provisions of this Section 3 and
Executive agrees that the Corporation may give such notice to such firm,
corporation or other person.
3.5. BUSINESS OPPORTUNITIES: CONFLICTS OF INTEREST; OTHER EMPLOYMENT AND
ACTIVITIES OF EXECUTIVE.
3.5.1. Executive agrees promptly to advise the Corporation of, and
provide the Corporation with all opportunity to seek, all business opportunities
that reasonably relate to the present business conducted by the Corporation.
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3.5.2. Executive, in his capacity as an employee of the Corporation,
shall not engage in any business with any member of Executive's immediate family
or with any person or business entity in which Executive or any member of
Executive's immediate family has any ownership interest or financial interest,
unless and until Executive has first fully disclosed such interest to the Board
of Directors and received written consent from the Board of Directors, signed by
the Chairman of such board. As used herein, the term "immediate family" means
Executive's spouse, natural or adopted children, parents or siblings and the
term "financial interest" means any relationship with such person or business
entity that may monetarily benefit Executive or member of Executive's immediate
family, including any lending relationship or the guarantying of any obligations
of such person or business entity by Executive or member of his immediate
family.
3.5.3. The parties hereto acknowledge and agree that Executive may
engage in outside civic, political, social, educational and professional
activities and may serve on the boards of directors of other corporations;
provided, however, that such activities shall not have priority over or
adversely affect or conflict with the business of the Corporation or its
clients, or interfere with the mobility of Executive to fulfill Executive's
duties to the Corporation as a full-time employee and officer of the
Corporation, as conclusively determined by the Board of Directors of the
Corporation.
3.5.4. The parties hereto agree that Executive may, consistent with
this Section 3, receive and retain speaking fees, referral fees from business
opportunities not accepted by the Corporation, and fees from outside business
activities and opportunities of Executive consented to by the Board of Directors
of the Corporation.
4. STOCK RESTRICTIONS.
4.1. TRANSFERS. Executive may not offer, sell, assign, grant a
participation in, pledge or otherwise transfer ("Transfer") any of the
Executive's shares of Common Stock of the Corporation (including shares acquired
after ale date hereof) (the "Shares") except in compliance with the Securities
Act of 1933, as amended (the "Act"), and any applicable state securities laws.
4.2. IMPROPER TRANSFER.
4.2.1. Any attempt to Transfer any Shares not in compliance with this
Agreement shall be null and void and neither the Corporation nor any transfer
agent of the Corporation shall register, or otherwise recognize in the
Corporation's records, any such improper Transfer.
4.2.2. Executive shall not enter into any transaction or series of
transactions for the purpose or with the effect of, directly or indirectly,
denying or impairing the rights or obligations of the Corporation under this
Agreement, and any such transaction shall be null and void and, to the extent
that such transaction requires any action by the Corporation, it shall not be
registered or otherwise recognized in the Corporation's records or otherwise.
4.3. ACCESS TO RECORDS AND DOCUMENTS. At any time during which Executive is
a stockholder and/or a member of the Board of Directors of the Corporation,
Executive shall be
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entitled to inspect and copy such records and documents to the extent provided
by the Stock Corporation Act of the Commonwealth of Virginia and any other
applicable law.
5. MISCELLANEOUS.
5.1. NOTICES. All notices, requests, demands or other communications
provided for in this Agreement shall be in writing and shall be delivered by
hand, sent prepaid by Federal Express (or a comparable overnight delivery
service) or sent by the United States mail, certified, postage prepaid, return
receipt request, to the following
If to the Corporation,
MAXIMUS, Inc.
36 Washington Street, Suite 320
Wellesley Hills, MA 02181
Attention: Raymond Ruddy
If to Executive,
884 Gloucester Crossing
Lake Forest, IL 60045
Any notice, request, demand or other communication delivered or sent in the
foregoing manner shall be deemed given or made (as the case may be) upon the
earliest of (l) the date it is actually received, (ii) the business-day after
the day on which it is delivered by hand, (iii) the business day after the day
on which it is properly delivered to Federal Express (or a comparable overnight
delivery service) or (iv) the third business day after the date on which it is
deposited in the United States mail. Either party may change its address by
notifying the other party of the new address in any manner permitted by this
paragraph. Rejection or other refusal to accept or the inability to deliver
because of a changed address of which no notice was given shall not affect the
date of such notice, election or demand sent in accordance with the foregoing
provisions.
5.2. NO OBLIGATION OF CONTINUED EMPLOYMENT. Except as set forth in Section
2 hereof, Executive understands that this Agreement does not constitute a
contract of employment or create an obligation on the part of the Corporation to
continue Executive's employment with the Corporation.
5.3. BENEFIT; ASSIGNMENT. This Agreement shall bind and inure to the
benefit of the parties and their respective personal representatives, heirs,
successors and assigns, provided this Agreement may not be assigned by either
party without the consent of the other except that the Corporation may assign
this Agreement in connection with the merger, consolidation or sale of all or
substantially all of its business or assets.
5.4. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
written or oral, with respect to the subject matter of this Agreement.
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5.5. SEVERABILITY. In the event that any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and all other
provisions shall remain in full force and effect. If any of the provisions of
this Agreement is held to be excessively broad, it shall be reformed and
construed by limiting and reducing it so as to be enforceable to the maximum
extent permitted by law.
5.6. WAIVERS. No delay or omission by the Corporation in exercising any
right under this Agreement will operate as a waiver of that or any other right.
A waiver or consent given by the Corporation on any occasion is effective only
in that instance and will not be construed as a bar to or waiver of any right on
any other occasion.
5.7. CAPTIONS. The captions of the various sections and paragraphs of this
Agreement have been inserted only for the purpose of convenience; such captions
are not a part of this Agreement and shall not be deemed in any manner to
modify, explain, enlarge or restrict any of the provisions of this Agreement.
5.8. GOVERNING LAW. This Agreement shall be construed as a sealed
instrument and shall in all events and for all purposes be governed by, and
construed in accordance with, the laws of the State of Illinois without regard
to any choice of law principle that would dictate the application of the laws of
another jurisdiction. Any action, suit or other legal proceeding which either
party may commence or resolve any matter arising under or relating to any
provision of this Agreement shall be commenced only in a court of the State of
Illinois (or, if appropriate, a federal court located within Illinois), and
Executive hereby consent to the jurisdiction of such court with respect to any
action, suit or proceeding commenced in such court by the Corporation. The
Section headings are included solely for convenience and shall in no event
affect or be used in connection with, the interpretation of this Agreement.
EXECUTIVE HAS READ ALL OF THE PROVISIONS OF THIS AGREEMENT AND EXECUTIVE
UNDERSTANDS AND AGREES TO, EACH OF SUCH PROVISIONS. EXECUTIVE UNDERSTANDS THAT
THIS AGREEMENT MAY AFFECT EXECUTIVE'S RIGHT TO ACCEPT EMPLOYMENT WITH OTHER
COMPANIES SUBSEQUENT TO EXECUTIVE'S EMPLOYMENT WITH THE CORPORATION.
5.9. AMENDMENTS. No alterations or additions to this Agreement shall be
binding unless in writing and signed by both the parties.
5.10. GENDERS. Whenever reasonably necessary, pronouns of any gender shall
be deemed synonymous, as shall singular and plural pronouns.
5.11. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all such counterparts shall
constitute one instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
\s\ LOUIS E. CHAPPUIE
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Louis E. Chappuie
MAXIMUS ACQUISITION CORP.
\s\ DAVID V. MASTRAN
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David V. Mastran
President
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DAVID V. MASTRAN AND RAYMOND RUDDY EXECUTE THIS AGREEMENT FOR THE SOLE PURPOSE
OF AGREEING TO THE FOLLOWING PROVISION ONLY:
ELECTION OF THE EXECUTIVE AS DIRECTOR. David V. Mastran and Raymond Ruddy,
as shareholders of MAXIMUS, Inc., agree to vote their shares of the Common
Stock of MAXIMUS, Inc. (and any other shares of MAXIMUS, Inc. over which
they exercise control) and take whatever actions are necessary to elect the
Executive as a Director of MAXIMUS, Inc. and thereafter continue the
Executive in office as a Director for a period of two (2) years from the
date hereof.
ACKNOWLEDGED AND AGREED THIS 12th DAY OF MAY, 1998
\s\ DAVID V. MASTRAN \s\ RAYMOND RUDDY
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David V. Mastran Raymond Ruddy
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