EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of May 30, 1997, between IT PARTNERS, INC. , a
Delaware corporation ("ITPI") and DANIEL J. KLEIN ("Klein").
WHEREAS, ITPI desires to employ Klein and Klein desires to accept such
employment on the terms and conditions hereinafter set forth; and
WHEREAS, the parties hereby acknowledge that the goodwill, continued
patronage, names, addresses and specific business requirements of ITPI's
clients and customers, and the designs, procedures, systems, strategies,
business methods and know-how of ITPI, having been acquired through ITPI's
efforts and the expenditure of considerable time and money, are among the
principal assets of ITPI; and
WHEREAS, the parties hereby acknowledge that as a result of the
position(s) in which Klein will be employed, Klein will develop special skills
and knowledge peculiar to ITPI's business, whereby he will become, through his
employment with ITPI, acquainted with the identities of the clients and
customers of ITPI, and will acquire access to the techniques of ITPI in
carrying on its business as well as other confidential and proprietary
information; and
WHEREAS, the parties hereto acknowledge that the Covenants set forth in
Section 8 of this Agreement are necessary for the reasonable and proper
protection of ITPI's confidential and proprietary information (as defined
herein), customer relationships, and the goodwill of ITPI's business, and that
such Covenants constitute a material portion of the consideration for Klein's
employment hereunder.
NOW, THEREFORE, in consideration of the premises and mutual promises and
covenants contained herein, and for other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged, the parties
agree as follows:
1. Term. ITPI agrees to employ Klein, and Klein agrees to be
employed, as Chief Executive Officer and/or Chairman as determined by ITPI's
Board of Directors (the "Board") from time to time for an initial term of five
(5) years commencing June 1, 1997 and ending May 30, 2002 (the "Initial
Term"), unless such employment is sooner terminated as provided herein. In
such capacity, Klein shall perform such duties and have such responsibilities
as are incident and customary to such offices, and shall have such powers and
perform such other duties and responsibilities as may be assigned to him by
the Board. During term hereof, Klein shall devote his full time, attention,
skill and energy to the performance of his duties under this Agreement, and he
shall comply with all reasonable professional requests of the Company.
2. Compensation.
2.1 Base Salary. In consideration of Klein's services
hereunder, ITPI shall, beginning with the pay period commencing 6/1/1997, pay
Klein a minimum base salary of One Hundred Twenty Thousand and 00/100 Dollars
($120,000) per annum, payable in equal monthly installments in accordance with
ITPI's normal payroll practices. Such base salary will be reviewed annually,
and may be increased (but not decreased) by ITPI's Board, or its Executive
Committee in its sole discretion.
2.2. Bonus Compensation. In addition, Klein shall be eligible
for an annual performance bonus of up to one hundred percent (100%) of Klein's
base salary, based upon the achievement of certain defined annual performance
goals consistent with the Company's 5-year operating plan established by the
Board (including, without limitation, "threshold" goals, "plan" goals and
"override" goals), in consultation with ITPI management, during the term
hereof.
a. Achievement by the Company of its "threshold"
performance goal for a given year shall make Klein eligible to receive a bonus
payment equal to twenty percent (20%) of his annual base salary.
b. Achievement by the Company of its "plan" performance
goal for a given year shall make Klein eligible to receive a bonus payment
equal to sixty percent (60%) of his annual base salary.
c. Achievement by the Company of its "override"
performance goal for a given year shall make Klein eligible to receive a bonus
payment equal to one hundred percent (100%) of his annual base salary.
d. ITPI may, in its sole discretion, pay a bonus to Klein
over and above any bonuses determined and paid to Klein in accordance with
this Section.
3. Fringe Benefits.
3.1. During the term of this Agreement, Klein shall be entitled
to participate in any and all fringe benefit plans, programs and practices
which shall from time to time be sponsored by ITPI for the benefit of its
executive employees, and shall be furnished with other services and
perquisites appropriate to his position.
3.2. Without limiting the generality of the foregoing, Klein
shall be entitled to the following benefits (regardless of whether such
benefits are provided to other executives):
a. Comprehensive medical insurance for Klein, his spouse,
and his dependent children with no deductibles or co-insurance.
b. Dental and vision insurance for Klein, his spouse, and
his dependent children with no deductibles or co-nsurance.
c. Group term life insurance with death benefits of not
less than $1,000,000.00.
d. Long-term disability insurance paying disability
benefits of at least 70% of Klein's salary upon the termination of Klein's
employment by reason of disability.
e. Accidental death and dismemberment insurance benefits
of not less than $1,000,000.00.
f. Annual physical examinations.
g. Financial planning services with a value of up to
$2,500.00 per year during the term hereof.
4. Vacation and Sick Leave. Klein shall be entitled to a total of
four (4) weeks of vacation each year during the term hereof. Unused vacation
shall not accumulate from year to year. Klein may take his vacation at such
time or times as shall not unreasonably interfere with the performance of his
duties under this Agreement. Klein shall be entitled to paid sick leave and
holidays in accordance with ITPI's announced policy for executive employees as
in effect from time to time.
5. Reimbursement of Expenses. Klein is authorized to incur
reasonable expenses in connection with the business of ITPI including expenses
for travel and similar items. ITPI will reimburse Klein for all previously
approved reasonable expenses upon itemized account of expenditures.
6. Illness or Disability. Klein shall receive full compensation for
any period of illness or disability during the term of this Agreement until
such time as he receives benefits under the long term disability insurance
coverage referred to in Section 4, supra; provided, however, that such interim
period of compensation for illness or disability shall not exceed six (6)
months. Notwithstanding the foregoing, ITPI shall have the right to terminate
this Agreement without further obligation to Klein if such illness or
disability shall be of such a character as totally to disable Klein from
rendering any services to ITPI for a period of more than six (6) consecutive
months on giving at least thirty (30) days' written notice of intention to do
so.
7. Termination of Employment. Klein's employment hereunder is
employment at will, and either ITPI or Klein may terminate this Agreement and
Klein's employment at any time, with or without cause. If ITPI terminates the
Agreement other than (i) for Cause (defined below) or (ii) due to Klein's
Disability as described in Section 6 hereof, Klein shall be entitled to
receive, as his exclusive remedy for such termination, the payment of his
then-current base salary for the remainder of the Term hereof (the "Severance
Benefit"). Such Severance Benefit shall be payable to Klein in equal monthly
installments consistent with ITPI's standard payroll practices, the first of
such installments to be due within thirty (30) days after a qualifying
termination hereof. For purposes of this Agreement, "Cause" shall mean drug
or alcohol abuse, conviction of a felony or crime involving moral turpitude, a
material breach of this Agreement, or any willful or grossly negligent act or
omission by Klein having a material adverse effect on the business of ITPI.
8. Restrictive Covenants.
a. Noncompetition. Klein agrees that during his employment,
and for a period of two (2) years after the later of termination of this
Agreement and termination of his employment with ITPI (the "Protected
Period"), he will not: (a) engage in, manage, operate, control or supervise,
or participate in the management, operation, control or supervision of, any
business or entity that provides computer programming or consulting services,
or any other products or services competitive with those currently provided by
ITPI or those ITPI is providing as of the date of termination of Klein's
employment with ITPI ("Competitive Activity"); or (b) have any ownership or
financial interest, directly or indirectly, in any entity that engages in
Competitive Activity, including, without limitation, as an individual,
partner, shareholder (other than as a shareholder of a publicly owned
corporation in which Klein owns less than 2% of the outstanding shares of such
corporation), officer, director, employee, member, associate, principal,
agent, representative or consultant, and shall not in any other manner,
directly or indirectly, compete to any extent with such business of ITPI.
Notwithstanding the foregoing, if the Agreement is terminated by ITPI and such
termination is without Cause, as defined herein, Klein shall be bound by the
terms of this subsection 8a only for the shorter of (i) two (2) years
following such termination or (ii) the period of time following such
termination during which ITPI, at ITPI's sole discretion, continues to pay
Klein's then-current base salary.
b. Nonsolicitation. During Klein's employment with ITPI, and
during the Protected Period, Klein agrees not to solicit or conduct business,
without ITPI's consent, with any client or customer of ITPI (past or present),
whether or not ITPI is doing work for such client or customer as of the date
of termination of Klein's employment with ITPI, as well as any prospective
client or customer of ITPI, or to contact, solicit, interfere with or attempt
to entice in any form, fashion or manner any employee of ITPI for the purpose
of inducing that employee to terminate his/her employment with ITPI or act in
any way that would be contrary to the best interests of ITPI.
c. Nondisclosure. During and after Klein's employment with
ITPI, Klein agrees not to disclose, or to knowingly allow any other employee
to disclose, to any other person or business entity, or use for personal
profit or gain, any confidential or proprietary information of ITPI,
regardless of whether the same shall be or may have been originated,
discovered or invented by Klein or by Klein in conjunction with others. For
purposes of this Agreement, the term "confidential or proprietary information"
shall include, without limitation: the names, addresses and telephone numbers
of past, present and prospective clients or customers of ITPI, as well as
products, designs, business plans, proposed business development, marketing
strategies, customers requirements, contractual provisions, employee
capabilities, proposed marketing initiatives, pricing methods, company
earning, computer software and reporting systems, and the procedures, systems
and business methods of ITPI.
d. Geographic Scope of Restrictive Covenants. The geographic
area in which Klein shall not engage in any of the prohibited activities
listed in subsections 8a and 8b hereof shall be limited to the continental
United States.
9. Remedies for Breach. Klein hereby acknowledges and agrees that a
violation of any of the covenants set forth in Section 8 hereof (the
"Covenants") would result in immediate and irreparable harm to ITPI, and that
ITPI's remedies at law, including, without limitation, the award of money
damages, would be inadequate relief to ITPI for any such violation.
Therefore, any violation or threatened violation by Klein of the Covenants
shall give ITPI the right to enforce such Covenants through specific
performance, temporary restraining order, preliminary or permanent injunction,
and other equitable relief. Such remedies shall be cumulative and in addition
to any other remedies ITPI may have, at law or in equity.
10. Notice of Subsequent Employment; Etc. Klein agrees that he
shall, during the two (2) year period following the termination of his
employment with ITPI, give written notice to ITPI of the names and addresses
of each person, firm, corporation or other entity by whom he is employed or
for whom he acts as director, agent, representative, member, associate or
consultant. Klein further agrees that if at any time during such two (2) year
period he conducts business on his own account, or through a proprietary
interest in any business, firm, partnership or other entity, or as contractor,
or owns any stock in a corporation, Klein shall give written notice to ITPI of
the name, address and nature of any such business.
11. Return of ITPI Property; Assignment of Inventions.
a. Return of Property. Upon the termination of Klein's
employment with ITPI for any reason, Klein shall leave with or return to ITPI
all personal property belonging to ITPI ("ITPI Property") that is in Klein's
possession or control as of the date of such termination of employment,
including, without limitation, all records, papers, drawings, notebooks,
specifications, marketing materials, software, reports, proposals, equipment,
or any other device, document or possession, however obtained, whether or not
such ITPI Property contains confidential or proprietary information of ITPI as
described in Section 8c hereof.
b. Assignment of Inventions. If at any time or times during
Klein's employment, Klein shall (either alone or with others) make, conceive,
discover or reduce to practice any invention, modification, discovery, design,
development, improvement, process, software program, work of authorship,
documentation, formula, data, technique, know-how, secret or intellectual
property right whatsoever or any interest therein (whether or not patentable
or registrable under copyright or similar statutes or subject to analogous
protection) (herein called "Developments") that (a) relates to the business of
ITPI or any of the products or services being developed, manufactured or sold
by ITPI or that may be used in relation therewith, (b) results from tasks
assigned him by ITPI or (c) results from the use of premises or personal
property (whether tangible or intangible) owned, leased or contracted for by
ITPI, such Developments and the benefits thereof shall immediately become the
sole and absolute property of ITPI and its assigns, and Klein shall promptly
disclose to ITPI (or any persons designated by it) each such Development and
hereby assigns any rights Klein may have or acquire in the Developments and
benefits and/or rights resulting therefrom to ITPI and its assigns without
further compensation and shall communicate, without cost or delay, and without
publishing the same, all available information relating thereto (with all
necessary plans and models) to ITPI.
Upon disclosure of each Development to ITPI, Klein will, during his
employment and at any time thereafter, at the request and expense of ITPI,
sign, execute, make and do all such deeds, documents, acts and things as ITPI
and its duly authorized agents may reasonably require:
(i) to apply for, obtain and vest in the name of ITPI
alone (unless ITPT otherwise directs) letters patent,
copyrights or other analogous protection in any
country throughout the world and when so obtained or
vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of
such applications and any opposition proceedings or
petitions or applications for revocation of such
letters patent, copyright or other analogous
protection.
In the event ITPI is unable, after reasonable effort, to secure
Klein's signature on any letters patent, copyright or other analogous
protection relating to a Development, whether because of Klein's physical or
mental incapacity or for any other reason, Klein hereby irrevocably designates
and appoints ITPI and its duly authorized officers and agents as Klein's
agents and attorneys-in-fact, to act for and in behalf of Klein and stead to
execute and file any such application or applications and to do all other
lawfully permitted acts to further the prosecution and issuance of letters
patent, copyright or other analogous protection thereon with the same legal
force and effect as if executed by Klein.
12. Survival. The provisions of Sections 8, 9, 10 and 11 hereof
shall survive the termination of this Agreement, regardless of the manner or
cause of such termination.
13. Effect of Agreement. This Agreement sets forth the final and
complete Agreement of the parties. It shall not be assigned by Klein and may
not be modified except by way of a writing executed by both parties. All the
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their successors and
assigns.
14. Governing Law. The provisions of this Agreement and any
disputes arising hereunder shall be governed by and construed in accordance
with the laws of the State of Delaware.
[The next page is the Signature Page.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their seals affixed hereto as of the day and year first
above written.
IT PARTNERS, INC.
By: /s/ Daniel J. Klein (SEAL)
---------------------
Name: Daniel J. Klein
Title: President