EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") dated as of the 19th day of July, 2002
(the "Effective Date") is made and entered into by and between The A Consulting
Team, Inc. (the "Company"), a New York corporation, having its principal place
of business at 200 Park Avenue South, New York, New York 10003 and Ilan Nachmany
("Employee"), an individual residing at 32 King Place, Closter, New Jersey
07624.
1. The Company hereby employs Employee as Director - Sales and Marketing. The
Employee shall have such responsibilities and duties as are typical and
customary for a Director - Sales and Marketing. Employee shall be based in
the metropolitan New York area, and the Company shall provide Employee with
an office and appropriate computer and communications at both of its
offices in that area. Employee hereby accepts employment in such capacity
upon the terms and conditions hereinafter set forth.
2. The term of this Agreement is for three (3) years, commencing on the
Effective Date reflected above (the "Term"). The entire period this
Agreement remains in effect is hereinafter referred to as the "Employment
Period."
It is expressly understood and agreed that any changes in Employee's
compensation, duties, location or title shall not invalidate this
Agreement. At the option of the parties, such changes may be incorporated
into an "Addendum" to this Agreement. Failure to so incorporate such
changes shall not affect the validity of, or the enforceability of, the
other terms herein.
3. The Company shall pay to Employee the following compensation for all the
services to be rendered by Employee in any capacity:
An initial gross salary at the rate of one hundred and sixty thousand
dollars ($160,000) per year (the "Annual Base Salary"), which reflects a
temporary reduction from one hundred and seventy five thousand dollars
($175,000) per year, payable twice a month, less all applicable and
required federal, state, local and authorized deductions. The Compensation
Committee of the Board of Directors of the Company shall review Employee's
Annual Base Salary in accordance with its existing procedures.
Upon approval by the Board of Directors of the Company, the Company shall
grant to Employee options to purchase 30,000 shares of Company Common Stock
in accordance with the terms of Company's Stock Option and Award Plan. The
options shall vest pursuant to the schedule set forth in Exhibit A attached
hereto. Notwithstanding the foregoing, in the event a "Change-in-Control"
(as defined in the Stock Option Agreement to be entered into between the
Company and the Employee) or a termination of the Employee's employment by
the Company without Cause (as defined herein) occurs, such grant shall
become immediately vested and exercisable.
1
EXECUTION COPY
The Employee and the Company will jointly develop an annual bonus plan for
such Employee. The Compensation Committee of the Board of Directors of the
Company shall administer such bonus plan and determine the amount of the
Employee's bonus.
Employee shall be entitled to employee benefits, sick days and personal
days in accordance with the Company's then current benefits and PTO policy
for a level seven (7) employee, as it may be amended or modified from time
to time.
4. Employee shall perform such work as may be required of Employee by the
Company in accordance with the instructions, directions and control of the
Company and at such reasonable time and places as the Company may
determine. At all times during the Employment Period, Employee shall adhere
to all the rules and regulations that have been or that may hereafter be
established by the Company for the conduct of its employees and further,
Employee shall adhere to all the provisions of the Company's handbook(s).
5. Employee hereby consents to a background check by the Company and/or the
Company's broker(s), customer(s) and/or client(s) to the full extent
permitted by law. Such a background check may include, but shall not be
limited to, a judgment and public criminal record check, fingerprinting,
and drug and/or alcohol screening. The Company shall maintain strict
confidentiality with regard to the results of any such background check and
shall not release the results to any other person or entity outside of the
Company other than to (i) agents or independent contractors bound to
confidentiality by written agreement or (ii) the Company's legal counsel
and independent auditors who shall have received prior notice of the
Company's obligations under this Agreement. The obligations of the Company
hereunder shall not apply to information or material which (i) has become
generally available to the public other than as a result of unauthorized
disclosure by the Company or one of its affiliates or (ii) is disclosed
pursuant to an order or requirement of a court, government administrative
agency or other governmental body, a self regulatory body (including the
Securities Exchange Commission, the NASD and Nasdaq) or applicable law.
Provided that the Company complies with the foregoing provisions of this
paragraph, the Employee agrees to hold the Company harmless from any claims
in connection with such checking or testing or the reporting of the results
thereof to the Company.
6. Employee shall devote full and complete attention and energies to the
business of the Company, and shall not during the term of this Agreement be
engaged in any other business activity, whether such business activity is
pursued for gain, profit or other pecuniary advantage and whether said
other business activity is directly or indirectly related to the business
activity of the Company, without the express written consent of the
Company, except as set forth on Exhibit B hereto. However, this shall not
be construed as preventing Employee from utilizing his free time for the
advancement of any business not competitive, either directly or indirectly,
with the Company, or investing Employee's assets in such form or manner as
shall not require any services on Employee's part in the operation or the
affairs of the company or companies in which such investments are made;
provided, however, that any investments made in any non-public company
shall not be made in any company that has allied, related or competing
business activities to the Company.
2
EXECUTION COPY
7. The Company shall reimburse Employee for expenses incurred by Employee in
the course of his employment provided that such expenses are reimbursable
by the Company under its then current reimbursement policy, and further,
such expenses are authorized by the Company and an accounting is made to
the Company therefore, in accordance with the procedures of the Company
pertaining thereto.
8. The Company shall reimburse Employee for a car and related expenses in the
amount of $640.00 per month.
9. The Employment Period shall be terminated at the time of the death of
Employee or may be terminated by the Company if Employee shall fail to
render the services provided for hereunder for a continuous period of sixty
(60) days because of Employee's physical or mental disability.
Notwithstanding anything to the contrary herein, either party may terminate
the Employment Period, with or without Cause (as defined herein) and for
any reason whatsoever, by giving ten (10) business days prior notice to the
other party. In the event the Company terminates Employee without Cause,
Employee shall be entitled to receive as severance an amount equal to (i)
the Annual Base Salary multiplied by one and one half (1.5), less (ii)
one-twelfth (1/12) the Annual Base Salary (the "Monthly Salary Amount"),
multiplied by the number of months that Employee has been employed by the
Company after the Effective Date. Notwithstanding the foregoing, upon the
fifteen (15) month anniversary of the Effective Date, Employee shall be
entitled to receive as severance an amount equal to the lesser of (i) the
Monthly Salary Amount multiplied by three (3), and (ii) the Monthly Salary
Amount multiplied by the number of full months remaining in the Term. For
purposes of this Section 9, "Cause" shall mean: (a) Employee's
embezzlement, willful breach of fiduciary duty or fraud with regard to the
Company or any of the Company's assets or businesses, (b) Employee's
conviction of, or pleading of nolo contendere with regard to a felony
(other than a traffic violation) or any other crime involving moral
turpitude and involving activity related to the affairs of the Company, or
(c) any other breach by Employee of a material provision of this Agreement
that remains uncured for thirty (30) days after written notice thereof is
given to Employee. In the event the Company terminates the employment of
Employee for Cause, the Company's sole obligation is to pay Employee for
that period actually worked by Employee (plus any commissions due for that
period, if applicable). In the event of a termination of the Employment
Period with Cause, Employee shall not be entitled to any payment in excess
of the amount of his bi-monthly salary due at the date of termination and
any unreimbursed expenses properly accrued and accounted for pursuant to
Section 7 of this Agreement.
10. Employee recognizes and acknowledges that the Company's and its
subsidiaries' (including International Object Technology, Inc.) trade
secrets, customer, broker and client lists, private processes, prospective
customer, broker and client lists, and staff and prospective staff lists
are deemed to be the private and proprietary information of the Company and
are special, unique and significant proprietary assets of the Company's
business. Employee shall not, either during or subsequent to the Employment
Period, in whole or in part, disclose such trade secrets, customer, broker,
or client lists, staff or prospective staff lists, prospective customer,
broker or client lists or private processes to any person, firm,
corporation, association or other entity for any reason or purpose
3
EXECUTION COPY
whatsoever. In addition, Employee shall not make use of any of the above
for Employee's own purposes or for the benefit of any person, firm,
corporation, or other entity other than the Company under any circumstances
during the Employment Period or subsequent to employment.
11. Employee agrees that during the Employment Period and for a period of one
(1) year thereafter, Employee shall not directly or indirectly, or in any
capacity, individually or in any corporation, firm, association or other
business entity, compete or attempt to compete with the Company, any
parent, subsidiary, or affiliate of the Company, or any corporation merged
into, or merged or consolidated with the Company (a) by soliciting business
from any customer, broker and/or client of the Company with which Employee
was involved (directly or indirectly) during the Employment Period, if such
solicited business competes with the business of the Company, or (b)
inducing any personnel of the Company to leave the service of the Company,
or by employing or contracting with any such personnel. The provisions of
this Section 11 shall be construed as an Agreement independent of any other
provision contained herein and shall be enforceable in both law and equity,
including by temporary or permanent restraining orders, notwithstanding the
existence of any claim or cause of action by Employee against the Company,
whether predicated on this Agreement or otherwise.
12. Employee hereby agrees to assign all rights, title, and interest in all
writings, products, inventions, discoveries, developments, improvements,
ideas, technical notes, programs, specifications, computer or other
apparatus programs and related documentation, and other works of
authorship, tangible and intangible property, whether or not patentable,
copyrightable or subject to other forms of protection, made, created,
developed, discovered, written or conceived by Employee, solely or jointly
with another, in whole or in part, for either the Company and/or the
Company's customer(s), broker(s) and/or client(s) during the Employment
Period, whether during or outside of regular working hours, and to promptly
deliver to the Company all such tangible properties and work products at
the request of the Company. Employee shall not be entitled to any
compensation in addition to the amounts set forth in Section 3 of this
Agreement by reason of said assignment. Employee further agrees to take all
actions reasonably required by the Company to secure the Company's right,
title and interest in such properties and products.
13. Employee shall, upon termination of employment with the Company,
immediately return to the Company all equipment and supplies of the Company
and its subsidiaries (including International Object Technology, Inc.) and
all books, records, lists and other written, typed, printed or
electronically stored materials, whether furnished by the Company or its
subsidiaries (including International Object Technology, Inc.) or prepared
by Employee, which contain any information relating to the Company's or its
subsidiaries' (including International Object Technology, Inc.) business or
any of its customers, brokers and/or clients, and Employee agrees that
Employee shall neither make nor retain copies of such materials after
termination of employment.
14. Employee hereby authorizes the Company to offset and deduct against salary
due to Employee by the Company, any undisputed monies owed by Employee to
the Company
4
EXECUTION COPY
for correction of payroll errors, the repayment of monetary advances, the
reimbursement of tuition or training costs, and the recoupment of auto
allowances, relocation expenses, expenses, and/or advanced vacation time.
15. The failure of either party to insist upon the performance of any of the
provisions of this agreement, or the waiver of any breach thereof, shall
not be construed as or constitute a waiver of the rights granted herein
with respect to any subsequent forbearance or breach.
16. Both parties hereto do hereby consent to jurisdiction in the State of New
Jersey with regard to all controversies which may arise with respect to the
execution, interpretation of and compliance with the terms and provisions
of this Agreement; and both parties hereto agree that the law of the State
of New Jersey shall apply hereto (without regard to the principles of
conflicts of law) and, in addition, waive any other venue or forum which
they might otherwise be entitled by virtue or domicile or otherwise.
17. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and any successor to the business of the Company, but
neither the Agreement nor any rights hereunder may be assigned, pledged or
encumbered by Employee without the written consent of the Company. This
Agreement may not be changed, modified or terminated orally. This Agreement
supersedes any prior agreements made between the parties, whether oral or
written, and constitutes the final and entire agreement and understanding
of the parties, all prior representations and agreements having been merged
into this Agreement, and this Agreement shall serve to terminate, amend,
restate and replace all prior employment agreements entered into between
the Company or its subsidiaries (including International Object Technology,
Inc.) and Employee, whether written or oral. No waiver or modification of
this Agreement or of any covenant, condition, or limitation herein
contained shall be valid unless in writing and duly executed by the party
to be charged therewith and no evidence of any waiver or modification shall
be offered or received in evidence in any proceeding, arbitration or
litigation between the parties hereto arising out of or affecting this
Agreement, or the rights or obligations of the parties hereunder, unless
such waiver or modification is in writing, duly executed as aforesaid, and
the parties agree that the provisions of this Section 17 may not be waived
except as herein set forth.
18. All agreements and covenants contained herein are severable, and in the
event any of them shall be held to be invalid by any competent court, this
Agreement shall be interpreted as if such invalid agreements or covenants
were not contained herein.
19. Employee hereby represents and warrants that the execution of this
Agreement by Employee and the performance of Employee's duties and
obligations hereunder shall not breach or be in conflict with any other
agreement to which Employee is a party or by which Employee is bound, and
that Employee is not now subject to any covenant against competition or
similar covenant which would affect the performance of Employee's duties
hereunder. Employee hereby agrees to indemnify the Company for all claims
arising out or related to Employee's breach of this Section 19.
5
EXECUTION COPY
20. All disputes, controversies, or differences arising in connection with the
validity, execution, performance, breach, non-renewal or termination of
this Agreement shall be finally settled in an arbitration proceeding under
the Rules of the American Arbitration Association by three arbitrators with
expertise in employment and labor law in accordance with the Commercial
Arbitration Rules then in effect of the American Arbitration Association.
Selection of the arbitrators shall be as follows: each party shall appoint
one arbitrator within twenty (20) days after service of a party's claim,
and those two arbitrators shall appoint a third arbitrator who shall act as
chairman, within a twenty (20) day period thereafter. If a chairman is not
appointed within said period, the parties shall apply to the American
Arbitration Association for appointment of the third arbitrator. The
parties agree to be bound by the findings of the arbitration.
Notwithstanding the foregoing, the courts shall have jurisdiction over
injunctive or provisional relief pending arbitration. The arbitrators shall
only be empowered to award direct damages. In no event shall the
arbitrators be permitted to award special, consequential, indirect,
incidental or punitive damages or lost profits. The non-prevailing party to
the arbitration shall pay all the prevailing party's expenses of the
arbitration, including reasonable attorneys' fees and other costs and
expenses incurred in connection with the prosecution or defense of such
arbitration.
21. Any offer, notice, or request or other communication hereunder shall be in
writing and shall be deemed to have been duly delivered when (a) delivered
by hand (with written confirmation of receipt), (b) one business day after
mailed to the addressee, if sent by a nationally recognized overnight
delivery service, to the appropriate addresses set forth below or as
subsequently modified by written notice.
If to the Company: The A Consulting Team, Inc.
200 Park Avenue South
New York, New York 10003
Attention: Shmuel BenTov, Chief Executive Officer
If to the Employee: Ilan Nachmany
32 King Place
Closter, New Jersey 07624
[Remainder of Page Intentionally Left Blank]
6
EXECUTION COPY
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Effective Date.
THE A CONSULTING TEAM, INC. ILAN NACHMANY
By: /s/ Shmuel BenTov /s/ Ilan Nachmany
-------------------------------- ----------------------------------------
Name: Shmuel BenTov
Title: Chief Executive Officer
7
EXECUTION COPY
EXHIBIT A
OPTIONS VESTING SCHEDULE
Number of Shares Vesting Time
- ------------------------ ----
10,000 One year anniversary of the date hereof
10,000 Two year anniversary of the date hereof
10,000 Three year anniversary of the date hereof
8
EXECUTION COPY
EXHIBIT B
None
9