Document:

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of  April 8, 2008, is entered into by and between THE MANAGEMENT NETWORK GROUP, INC., a Delaware corporation (the “Company”), with offices at 7300 College Boulevard – Suite 302, Overland Park, Kansas  66210, and DONALD KLUMB, an individual (“Employee”), residing at  4145 W. 124th Terrace, Leawood, Kansas 66209.

 

RECITALS

 

The Company wishes to obtain the services of Employee and Employee wishes to perform such services on the terms and conditions contained herein.

 

Therefore, the parties hereby agree as follows:

 

1.       EMPLOYMENT.  Subject to the terms and conditions of this Agreement, effective as of April 8, 2008 (the “Effective Date”), the Company hereby continues to employ Employee as Chief Financial Officer of the Company to perform the duties described in Section 4 hereof.

 

2.         TERM.  The term of this Agreement shall be two years from the date first noted above, unless such term is terminated earlier pursuant to Section 7 hereof  (the “Initial term”). The Agreement shall automatically renew for successive one-year renewal terms unless either party gives the other party sixty (60) days advance notice of their intent not to renew.  Such Initial Term and any such renewal terms may be collectively referred to as the “Term”.

 

	
             
 	
            3.
 	
            COMPENSATION.
 

 

3.1       Salary.  Subject to the adjustment provisions herein, Employee shall be paid biweekly installments based upon an annual base salary of $275,000.  The Company may adjust Employee’s base salary at any time in its sole discretion to reflect Employee’s performance; provided, however, that Employee’s base salary shall at no time be less than the minimum base salary set forth in the first sentence of this paragraph.  Amounts paid pursuant to this Section 3.1 are hereinafter referred to as “Base Salary.”

 

3.2       Bonus.  In addition to Employee’s Base Salary, Employee shall be eligible to participate  in the Company’s bonus pool for executive officers (“Bonus”) as duly approved by the compensation committee of the Company’s  Board of Directors (“Board”). 

 

3.3       Other Compensation.  The Chief Executive Officer of the Company shall periodically (and in any event, annually) review Employee’s compensation and recommend to the Compensation Committee of the Board of Directors for its consideration such modifications, if any, to such compensation as the Chief Executive Officer determines in his or her discretion may be appropriate for the Chief Financial Officer of the Company. In connection with such process, the Chief Executive Officer may recommend that the 

 

Compensation Committee consider extraordinary bonuses and other forms of compensation for Employee.

 

4.         DUTIES.  Employee shall, during the term hereof, be an officer of the Company and have the title of Chief Financial Officer of the Company, and shall perform such duties as and have such authority as are customary and usual for such position and as may be directed by the Chief Executive Officer of the Company unless Employee believes such duties require him to do something unlawful, in which case Employee agrees to bring the matter to the attention of the Company as soon as is reasonably practicable. Without limiting the generality of the foregoing:

 

4.1       Full Time.  Employee shall devote Employee’s full working time, ability and attention to the business of the Company and shall, in accordance with the highest ethical and professional standards, seek to maximize the financial success of the Company’s business and to optimize the goodwill and reputation of the Company within its industry and with its customers. During the term of this Agreement, Employee agrees that he will not become involved in the active ownership or management of any business enterprise that will interfere with the performance of his duties hereunder. Employee further warrants that he will not engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that
might place him in a conflicting position to, that of the Company. So that the Company may be aware of the extent of any other demands upon Employee’s time and attention, Employee shall disclose in confidence to the Company the nature and scope of any other business activity in which he is or becomes engaged during his employment with the Company. Employee has disclosed to Company his involvement in the management of certain family-owned businesses, Ultra Rev, Inc., F. P. Furlong Company, Inc. and Furlong Investments LLC, and Company hereby consents to Employee’s continued involvement in such businesses, so long as such involvement does not materially affect the ability of Employee to discharge his responsibilities to Company under this Agreement.  Employee also warrants that he is not a party to any valid or binding agreement or legal relationship whose performance or execution would interfere with the performance of his duties under this Agreement. Employee may serve as a
director of other corporations or entities with the prior approval of the Chief Executive Officer, which approval will not be unreasonably withheld.

 

4.2       Reporting.  Employee shall report to the Chief Executive Officer of the Company.

 

5.         EXPENSES.  Subject to such rules and procedures as the Company from time to time specifies, the Company shall reimburse Employee on a bi-weekly basis for reasonable business expenses necessarily incurred in the performance of Duties under this Agreement.  

 

6.         BENEFITS.   Except as otherwise set forth herein, Employee shall be entitled to fringe benefits and paid time off as set forth below.

 

6.1       Participation in Employee Benefit Plans.  Employee shall be eligible to participate in any health, disability, and group term life insurance plans or other perquisites 

 

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and fringe benefits that the Company extends generally from time to time to the executive officers of the Company.  These benefits described in this Section 6.1 are collectively referred to herein as “Fringe Benefits”.

 

6.2       Paid Time Off. Employee shall be eligible for Personal Time Off in accordance with the Company’s Personal Time Off policy then in effect and applicable to executive officers of the Company.  

 

	
             
 	
            7.
 	
            TERMINATION .
 

 

7.1       Termination By The Company Due to Death or Disability.  In the event of Employee’s death during the Term, this Agreement and the employment of Employee hereunder shall terminate automatically as of the date of death, except that Sections 9, 10, 11, 12, and 13 shall survive such termination. In the event of Employee’s Disability (as hereinafter defined) for ninety (90) consecutive calendar days or one hundred and twenty (120) calendar days in the aggregate during any twelve (12) months of the Term, the Company shall have the right, by written notice to Employee, to terminate this Agreement and the employment of Employee hereunder as of the date of such notice, except that Sections 9, 10, 11, 12, and 13 shall survive such termination.   “Disability” for the purposes of this Agreement shall (A) be determined by an independent physician selected by the Company and (B) mean Employee’s physical or mental disability so as to render Employee substantially incapable, despite reasonable accommodations, of carrying out Employee’s duties under this Agreement. In the event of termination pursuant to this Section 7.1, the Company shall not be under any further obligation to Employee hereunder except to promptly pay Employee (i) salary and benefits (and Bonuses, if any) accrued and payable up to the date of termination, (ii) reimbursement for expenses accrued and payable under Section 5 hereof, and (iii) if the termination is due to Disability, payment of Employee’s monthly Base Salary on the Company’s regularly scheduled payrolls during each of the 3 months immediately following termination and payment of the premium for any COBRA benefits Employee elects through Company for
a period of six months from the date of termination.

 

7.2       Termination By the Company Due to Cause.  The Company shall have the right to discharge Employee and terminate this Agreement for Cause (as hereinafter defined) during the Term by written notice to Employee and this Agreement shall be deemed terminated as of the date of such notice, except that Sections 9, 10, 11, 12, and 13 shall survive such termination. For the purpose of this Agreement, “Cause” shall mean, in the Company’s good faith belief: 

 

(i)       The committing of any criminal act under federal, state or local law, where such act would be a) a felony or b) a crime involving moral turpitude which, in the reasonable judgment of the Company, has materially interfered or will materially interfere with the ability of Employee to perform his duties hereunder, or has caused or will cause material harm to the Company or its business; provided that, for 

 

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purposes of this provision, a finding of guilt and/or plea of guilty/nolo contender (no contest) is sufficient but not necessary.

(ii)      The breach of any provision of this Agreement, including, but not limited to, by acting dishonestly or negligently regarding Employee’s performance hereunder, and Employee’s failure to cure such breach within ten (10) business days of written notice from Company.

(iii)    The failure to perform Employee’s duties under this Agreement (other than for reasons related to illness, injury or temporary disability).

(iv)     The material violation of any applicable local, state or federal law relating to discrimination or harassment.

(v)      The material violation of Company’s policies and/or practices applicable to those at Employee’s level, including, but not limited to, its employment policies and/or practices, including but not limited to non-discrimination, anti-harassment and non-retaliation policies and practices.

(vi)     The taking of any action, whether intentionally or not, or failure to act, where such action/inaction has the effect of materially undermining or harming the Company, its management, its business, its reputation or its customers/clients/employees. 

(vii)    The failure to comply with any oral or written report or directive of the Company, which failure is not remedied within ten (10) business days of written notice from Company regarding same.

In the event of a termination pursuant to this Section 7.2, the Company shall not be under any further obligation to Employee hereunder, except to promptly pay Employee (a) salary and benefits (and Bonuses, if any) accrued and payable up to the date of termination, (b) reimbursement for expenses accrued and payable under Section 5 hereof, and (c) any other benefits required by applicable law (e.g. COBRA), if eligible.

 

7.3       Termination By the Company Other Than Due to Death, Disability or Cause.  This Agreement and the employment of Employee hereunder may be terminated by the Company other than due to death, Disability or Cause by giving at least thirty (30) days prior written notice to the Employee at any time during the Term and such termination shall be effective as of the date of termination stated in such notice, except that Sections 9, 10, 11, 12, and 13 shall survive such termination. In the event of a termination pursuant to this Section 7.3, the Company shall not be under any further obligation to Employee hereunder, except to promptly pay Employee (i) salary and benefits (and Bonuses, if any) accrued and payable up to the date of termination, (ii) reimbursement for expenses accrued and
payable under Section 5 hereof, and (iii) Severance Benefits (as defined below) pursuant to Section 7.4.

 

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7.4       Severance Benefits.  For purposes of this Agreement, “Severance Benefits” shall mean (i) nine (9) months of Employee’s Base Salary payable  in one lump sum, and (ii) payment of the premium for any COBRA benefits Employee elects through Company for a period of nine months from the date of termination.

 

7.5       Termination by Employee.  The Employee shall have the right to terminate Employee’s employment under this Agreement by giving thirty (30) days prior written notice to the Company at any time, and such termination shall be effective as of the date of termination stated in such notice, except that Sections 9, 10, 11, 12, and 13 shall survive such termination.

 

(a)       Termination By Employee Other Than for Constructive Termination.  In the event Employee terminates employment under this Section 7.5 for other than Constructive Termination (as defined below), the Company shall not be under any further obligation to Employee hereunder, except to promptly pay Employee (i) salary and benefits (and Bonuses, if any) accrued and payable up to the date of termination, and (ii) reimbursement for expenses accrued and payable under Section 5 hereof.

 

(b)       Termination by Employee for Constructive Termination.  Notwithstanding anything in this Agreement to the contrary, a “Constructive Termination” will be deemed to have occurred pursuant to this Section 7.5 if there should occur the following:

 

(i)        a material adverse change in Employee’s position causing it to be of materially less stature or responsibility without Employee’s written consent, and such a materially adverse change shall in all events be deemed to occur if Employee no longer serves as Chief Financial Officer of the Company or any parent company of Company, unless Employee consents in writing to such change; 

 

 (ii)      a relocation of Employee’s principal place of employment by more than 50 miles without Employee’s consent;

 

	
             
 	
            (iii)
 	
            a breach of any provision of this Agreement by Company.
 

 

Notwithstanding the above, in no event shall a Constructive Termination exist unless (1) Employee provides a written notification to the Company sufficiently describing the event or condition alleged to give rise to the Constructive Termination within 90 days of the initial existence of such event or condition, (2) the Company is provided at least 10 days to remedy the event or condition, and (3) the Company fails to reasonably cure the event or condition.

 

In the event Employee terminates his employment due to a Constructive Termination, the Company shall not be under any further obligation to Employee hereunder, except to pay Employee within thirty (30) days of such termination (i) salary and benefits 

 

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(and Bonuses, if any) accrued and payable up to the date of termination, (ii) reimbursement for expenses accrued and payable under Section 5 hereof, and (iii) Severance Benefits pursuant to Section 7.4.

 

Upon termination due to a Change of Control (as defined below) or Constructive Termination, for ninety (90) days following termination, Employee agrees to provide reasonable cooperation to the Company at the Company’s expense in winding up Employee’s work for the Company and transferring that work to other individuals as designated by the Company.  Upon termination for any reason other than Death, Disability, Change of Control or Constructive Termination, for thirty (30) days following termination, Employee agrees to provide reasonable cooperation to the Company at the Company’s expense in winding up Employee’s work for the Company and transferring that work to other individuals as designated by the Company.  Employee also agrees reasonably to cooperate with the Company at Company’s expenses in litigation as requested by the Company; provided that, such cooperation does not harm or
conflict with Employee’s interests in such litigation, if any, and Employee is provided reasonable notice so as not to interfere with Employee’s other work or employment obligations.  

 

To be eligible for any Severance Benefits payments under this Section 7, Employee must (i) execute and deliver to the Company a final and complete release in a form that is acceptable and approved by the Company after good faith negotiation with Employee, and (ii) in the Company’s good faith belief, be in full compliance with the provisions of Sections 9 and 11 hereof at the time of any such payment.

 

8.         CHANGE IN CONTROL BENEFITS.  Should there occur a Change in Control (as defined below), the following provisions shall become applicable:

 

8.1       During the period (if any) following a Change in Control that Employee shall continue to provide services under this Agreement, then the terms and provisions of this Agreement shall continue in full force and effect. 

 

8.2       Notwithstanding any other provision of Section 7, in the event of (a) a termination by the Company pursuant to Section 7.3 at any time within twelve (12) months after a Change in Control, or (b) a Constructive Termination pursuant to Section 7.5 at any time within twelve (12) months after a Change in Control, the Company shall pay Employee within thirty (30) days of such event (i) salary and benefits (and Bonuses, if any) accrued and payable up to the date of such event, (ii) reimbursement for expenses accrued and payable under Section 5 hereof, and (iii) Severance Benefits pursuant to Section 7.4.

 

8.3       For purposes of this Section 8, a “Change of Control” shall be deemed to occur upon the earlier to occur of an event described below, the Company entering a definitive agreement to accomplish a transaction or event as described below, or a vote of the directors of the Company approving a definitive agreement for such a transaction or event as described below:

 

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(a)       the sale, lease, conveyance or other disposition of at least fifty percent (50%) of the Company’s assets as an entirety or substantially as an entirety to any person, entity or group of persons acting in concert other than in the ordinary course of business;

 

(b)       any transaction or series of related transactions (as a result of a tender offer, merger, consolidation or otherwise) that results in any Person (as defined in Section 13(h)(8)(E) under the Securities Exchange Act of 1934) becoming the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of more than 50% of the aggregate voting power of all classes of common equity of the Company, except if such Person is (i) a subsidiary of the Company, (ii) an employee stock ownership plan for employees of the Company or (iii) a company formed to hold the Company’s common equity securities, provided that, at the time such company became such holding company, substantially all the stockholders of the Company comprise such holding company’s stockholders and hold at least a
majority of the voting power of such holding company;

 

(c)       a merger (in which the Company is not the surviving operating entity), consolidation, liquidation or dissolution of Company or winding up of the business of the Company.

 

	
             
 	
            9.
 	
            RESTRICTIONS.
 

 

9.1       Non-Disclosure.  During and after the Term, Employee agrees to use best efforts and exercise utmost diligence to protect and to safeguard the trade secrets and/or any confidential or proprietary information concerning the Company or its business or any Affiliates of the Company (including, without limitation, trade secrets, plans, processes, customer lists, contracts and compilations of information, records and specifications) which comes to Employee in the course of Employee’s employment and which is not (independent of disclosure by Employee) public knowledge or general knowledge in the trade.  Employee agrees not to disclose any of the Company’s or any Affiliate’s trade secrets and/or confidential information and/or proprietary information except as required in the
course of Employee’s employment with the Company or by legal process, in which case, Employee agrees to provide the Company with as much notice as is reasonably practicable in the event the Company wishes to intervene to protect its rights. Employee agrees not to use Company’s or any Affiliate’s trade secrets and/or confidential information and /or proprietary information, directly or indirectly, for Employee’s own benefit or for the benefit of another.  All files, records, documents, drawings, specifications, memoranda, notes, or other documents relating to the business of the Company or any Affiliate, whether prepared by Employee or otherwise coming into Employee’s possession, shall be the exclusive property of the Company and shall be delivered to the Company and not reproduced and/or retained by Employee upon termination of Employee’s employment for any reason whatsoever or at any other time upon request of the Company.  

 

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9.2       Non-solicitation.  During the period of Employee's employment, and for a period of one (1) year following the date of termination of Employee’s employment, the Employee shall not directly or indirectly, for himself or for any third party, except as otherwise agreed to in writing by the Company:

 

(a)       Contact, solicit, advise, consult or do business with any Customer (as hereinafter defined) with which Employee has had direct contact during, and arising from, his employment by the Company, for the purpose of causing such Customer to purchase, or otherwise obtain products or services which are similar to or in any way compete with the products or services sold or provided by the Company or an Affiliate, or

 

(b)       Induce, or attempt to induce, any Customer with which Employee has had direct contact during the term of, and arising from, his employment by the Company, to cancel, diminish, decrease or curtail any business relationship, contractual or otherwise, with the Company or an Affiliate, or

 

(c)       Contact, solicit, induce or attempt to induce or influence any employee, independent contractor or agent of any Customer or Company or Affiliate to terminate his or her employment, engagement or contractual relationship with such Customer or Company or Affiliate, or

 

(d)       Employ or hire any person who is employed by the Company or Affiliate (whether as an employee or an independent contractor) with any business or other entity that is engaged in the industry in which Company or Affiliate is involved.

 

9.3       Covenants Against Competition.  During the period of Employee's employment, and for a period of one (1) year following the date of Employee’s termination of employment, the Employee shall not within the Restricted Area (as hereinafter defined), directly or indirectly as an employee, employer, consultant, agent, principal, partner, shareholder, corporate officer, director or through any other kind of ownership (other than ownership of securities of publicly held corporations of which Employee owns less than five (5%) percent of any class of securities) or in any other representative or individual capacity: 

 

(a)       Assist or have an interest (whether or not such interest is active), in any person, firm, partnership, association, corporation or business organization, entity or enterprise that is or is about to become directly or indirectly engaged in, any business or activity (whether such enterprise is in operation or in the planning or development stage) that provides, sells, distributes or markets any products or services that compete in any manner with the business conducted by Company or an Affiliate.

 

(b)       Enter into the employment of or act as an independent contractor or agent for or advisor or consultant to, any person, firm, partnership, association, corporation or business organization, entity or enterprise that is or is about to become 

 

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directly or indirectly engaged in, any business or activity (whether such enterprise is in operation or in the planning or development stage) that provides, sells, distributes or markets any products or services that compete in any manner with the business conducted by Company or an Affiliate.

 

Notwithstanding any other provisions herein, in the event of a Constructive Termination pursuant to Section 7.5 at any time within twelve (12) months following a Change in Control, this Section 9.3 shall not apply.

 

	
             
 	
            9.4
 	
            Definitions.
 

 

“Affiliate” shall mean any corporation, partnership, limited liability company, joint venture, or other entity or organization directly or indirectly controlling or controlled by or under direct or indirect common control with such other entity through the ownership of all or part of such entity.

 

“Customer” shall mean any individual, corporation, partnership, joint venture or other entity, or successors thereof, which has either (i) purchased or contracted for services or products by or through the Company at any time within one (1) year prior to the termination of Employee’s employment with the Company, or (ii) has been directly solicited by the Company within six (6) months prior to the termination of Employee’s employment with the Company, regardless of whether the Employee shall have direct contact with such individual, corporation, partnership, joint venture or entity.

 

“Restricted Area” shall mean collectively the United States of America.

 

“Restrictions” shall mean the terms and covenants of Sections 9.1, 9.2 and 9.3, collectively.

 

	
             
 	
            9.5
 	
            Enforceability of Agreement.  
 

 

(a)       Reasonableness of Restrictions.  Employee has carefully read and considered the Restrictions and, having done so, agrees that the Restrictions (including, but not limited to, the time period of restriction and the geographical areas of restriction set forth herein) are fair and reasonable and are reasonably required for the protection of the interests of Company, its owners, officers, directors and other employees.  Employee has had the opportunity to consult with an attorney prior to the execution of this Agreement, and freely executes this Agreement either (i) following such consultation and with the advice of his attorney, or (ii) after freely waiving such right to consult with an attorney prior to the execution of this Agreement.

 

(b)       Severability.  In the event that, notwithstanding the foregoing, any part of the Restrictions shall be held to be invalid or unenforceable, the remaining parts thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein.  Notwithstanding the foregoing, 

 

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it is the intent and agreement of Company and Employee that the Restrictions shall be given the maximum force, effect and application permissible under law.

 

(c)       Time Period.  In the event that a Court of competent jurisdiction shall determine by final judgment that the scope or time period of any of the Restrictions is too broad to be capable of enforcement, such court is authorized to modify such covenants and to enforce them to the full scope and extent and for the full time period that the Court deems just and equitable.

 

(d)       Passive Interest.  The Restrictions shall not be construed to limit in any manner Employee's right to maintain a passive ownership interest of less than five (5%) percent of any class of outstanding securities in any entity, the securities of which are traded on a national exchange, which may compete with Company, so long as Employee shall not have the right or power to elect a member of the Board of Directors of such entity or to otherwise control the actions of such entity.  

 

	
             
 	
            10.
 	
            REMEDIES.
 

 

10.1   Remedies Cumulative.  Nothing herein contained is intended to waive or diminish any rights the Company, any Affiliate or Employee may have at law or in equity at any time to protect and defend its legitimate property interests including its business relationship with third parties, the foregoing provisions being intended to be in addition to and not in derogation or limitation of any other rights the Company, an Affiliate or Employee may have at law or in equity.

 

10.2     Injunctive Relief.  Employee hereby acknowledges and agrees that Company would be irreparably injured, the value of the business of Company would be irreparably damaged and Company could not adequately be compensated by monetary damages, if Employee were to violate the Restrictions.  Employee covenants and agrees that, if Employee shall violate any of the Restrictions, Company specifically shall be entitled to injunctive and other equitable relief to enjoin Employee's violations of such Restrictions.  The prevailing party in any such injunctive action shall be entitled to reimbursement from the other party for all actual attorney fees expended in such action.

 

10.3     Notice of Violation.  In the event Company believes that Employee is violating any of the Restrictions, Company shall so notify Employee in writing, which notice shall describe with as much specificity as possible, the nature of the alleged violation.  Provided that Employee is in violation of the Restrictions, if the Employee does not, within fourteen (14) days following receipt of said notice, cease the conduct, terminate the relationship or otherwise cure such violation, the Company shall have no further obligation to make payments to Employee pursuant to the terms of this Agreement following the date of receipt of such notice.

 

10.4     Accounting For Profits.  Employee hereby covenants and agrees that, if Employee shall violate any of the Restrictions, Company shall be entitled to an accounting 

 

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and repayment of all profits, compensation, commissions, remunerations or benefits which Employee directly or indirectly has realized and/or may realize as a result of, growing out of or in connection with any such violation.  

 

11.       EMPLOYEE FOR HIRE.  In addition to Employee’s services, the Company shall own forever and throughout the world (exclusively during the current and renewed or extended term of copyright anywhere in the world and thereafter, non-exclusively) all rights of any kind or nature now or hereafter known in and to all of the products of Employee’s services performed while an employee in any capacity and any and all parts thereof, including, without limitation, copyright, patent and all other property or proprietary rights in or to any ideas, concepts, designs, drawings, plans, prototypes or any other similar creative works and to the product of any or all of such services under this Agreement (collectively, “Inventions”). Employee hereby
acknowledges and agrees that for copyright purposes, Employee is performing services as the Company’s employee-for-hire; provided, however, that for purposes of this Agreement, “Inventions” shall not include those that do not relate to the Company’s or an Affiliate’s current business or research and development and were developed without use of any Company or Affiliate trade secret information or Company or Affiliate’s facilities or equipment. Without limiting the generality of the previous two sentences, Employee acknowledges and agrees that all memoranda, notes, records and other documents made or compiled by Employee or made available to Employee while an employee concerning the Company or an Affiliate’s business shall be the Company’s property and shall be delivered by Employee to the Company upon termination of this Agreement or at any other time at the Company’s request. In addition, the Employee hereby agrees to assign to Company in
writing (and take any and all other actions as shall be reasonably requested by Company in order to carry out the intent of this Section) any and all rights, title or interest of Employee in any such copyrights, patents, property or proprietary rights relating to such Inventions.

 

12.       STOCK OPTIONS.  Employee has been granted the following non-qualified stock options (the “Option” or “Options”) and/or shares of restricted stock (the “Stock”):

 

	
            Grant Date
 	
            Type of Grant
 	
            Number of Options or Shares Granted
 	
            Grant Price
 
	
            July 26, 1999
 	
            Non-Qualified Stock Options
  	
            250,000
 	
            $2.00
 
	
            December 19, 2003
 	
            Restricted Stock
 	
            125,000
 	
            $0.00
 
	
            March 1, 2006
 	
            Non-Qualified Stock Options
 	
            100,000
 	
            $2.44
 

 

The terms of the option grants and the restricted stock award notwithstanding:

 

(a)       Any then remaining unvested Options shall immediately become vested and the sale and transfer restrictions on the Stock shall immediately lapse, in the event that (i) Richard Nespola is no longer the Chief Executive Officer of the Company and/or terminates employment with the Company for reasons other than death or disability; or (ii) Employee remains employed by the Company for the shorter of (A) six (6) months following the occurrence of a Change in Control, or (B) upon the closing or occurrence of an event described in Section 8.3(a), (b) or (c); or (iii) a Change in Control occurs entitling Employee to payment of Severance Benefits under Section 8.2; or (iv) Employee’s employment is 

 

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terminated by the Company other than due to death, Disability, or Cause as provided for in Section 7.3.

 

(b)       In the event Employee’s employment is terminated other than for Cause or other than as addressed in Section 12(a), any vested Options as of the date of such termination shall expire on the earlier of (i) expiration of the Options per the applicable option grant agreement, or (ii) 180 days following the date of termination of employment.

 

In the event that Employee enters into a subsequent employment agreement with the Company, the provisions of this Section 12 shall survive and be incorporated in such new employment agreement.

 

	
             
 	
            13.
 	
            MISCELLANEOUS.
 

 

13.1     Assignability.  This Agreement, including but not limited to paragraphs 9 and 11, shall be binding upon and inure to the benefit of the Company, its respective successors, heirs, and assigns.  Except as expressly set forth herein, this Agreement may not be assigned by Employee without the express written consent of the Company.

 

13.2     Invalid Provisions.  If any provision of this Agreement is held to be illegal, invalid, or unenforceable, then such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom.  Furthermore, in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and still be legal, valid, or enforceable.

 

13.3     Notices.  Any notices pertaining to this Agreement shall be addressed to the parties at their addresses stated on the first page hereof. All notices shall be in writing and shall be deemed duly given if personally delivered or sent by registered, certified, overnight or express mail. If sent by registered or certified mail, notice shall be deemed to have been received and effective three days after mailing; if by overnight or express mail, notice shall be deemed received the next business day after being sent. Any party may change its address for notice hereunder by giving notice of such change in the manner provided herein.

 

13.4     Construction of Agreement.  This Agreement contains the entire agreement of the parties respecting the subject matter contained herein. No terms, conditions or warranties other than those contained herein, and no amendments or modification of any provision hereof shall be effective except by a written agreement signed by all of the parties hereto.  This Agreement shall not be strictly construed against either party.

 

13.5     Waiver.  The waiver by either party hereto of a breach of any term or provision of this Agreement shall not operate or be construed as a waiver of a subsequent 

 

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breach of the same provision by any party or of the breach of any other term or provision of this Agreement.

 

13.6     Titles.  Titles of the paragraphs herein are used solely for convenience and shall not be used for interpretation or construing any work, clause, paragraph, or provision of this Agreement.

 

	
             
 	
            13.7
 	
            Arbitration.
 

 

(a)       It is understood and agreed between the parties hereto that, except with respect to claims for workers’ compensation or unemployment compensation benefits, any and all claims, grievances, demands, controversies, causes of action or disputes of any nature whatsoever (including but not limited to tort and contract claims, and claims upon any law, statute, order, or regulation) (hereinafter “Claims”), arising out of, in connection with, or in relation to (i) this Agreement, (ii) questions of arbitrability under this Agreement, or (iii) any relationship between Employee and the Company before, at the time of entering, during the term of, upon or after expiration or termination of this Agreement, shall be resolved by final, binding,  non-judicial arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), which rules are incorporated herein by reference. Such dispute resolution process shall be confidential and shall be conducted in accordance with the Kansas Rules of Evidence.

 

(b)       Notwithstanding any contrary provision that may be contained in the applicable AAA rules, the parties hereby agree that discovery shall be permitted in connection with any arbitration pursuant to this Agreement, in accordance with the provisions of the Kansas Code of Civil Procedure. Neither party nor the arbitrator shall disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties. Except as provided herein, the Federal Arbitration Act shall govern the interpretation, enforcement and all proceedings pursuant to this Section 13.7. The Arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the State of Kansas, or federal law, or both, as applicable. The arbitrator is without jurisdiction to apply any different substantive law. The
arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under Kansas law. The arbitrator shall render an award and a written, reasoned opinion in support thereof. Such award may include attorneys’ fees and costs to the prevailing party. Judgment upon the award may be entered in any court having jurisdiction thereof.

 

(c)       Adherence to this dispute resolution process shall not limit the Company’s right to obtain any provisional remedy, including but without limitation, injunctive or similar relief, from any court of competent jurisdiction in the event of a breach of Section 9 of this Agreement. This dispute resolution process shall survive the termination of Employee’s employment.

 

13

 

 

(d)       By signing this Agreement, both Employee and the Company are giving up their respective right to a jury trial.

 

13.8     Personal Computer.  During the Term, the Company shall provide Employee, at Company expense, with a portable personal computer (the “Laptop”) with such capabilities and capacity, and including all necessary software, as shall be reasonably necessary to discharge Employee’s duties under this Agreement.  Upon termination of Employee’s employment, the Employee shall promptly deliver to the Company any and all tangible property of the Company, including without limitation the Laptop and any software related thereto and the contents of any files stored therein.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first set forth above.

 

 

	
             
 	
            THE COMPANY:
 
	
             
 	
             
 
	
             
 	
            THE MANAGEMENT NETWORK GROUP, INC., 
 
	
             
 	
            a Delaware corporation
 
	
             
 	
             
 
	
             
 	
             
 
	
             
  	
            By:
  	
            /s/ Richard P. Nespola
  
	
             
  	
            Richard P. Nespola – Chief Executive Officer
  
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            EMPLOYEE:
 
	
             
 	
             
 
	
             
 	
            /s/ Donald E. Klumb
 
	
             
  	
            DONALD E. KLUMB
  

 

 

 

14Exhibit 10.1

EMPLOYMENT AGREEMENT

          EMPLOYMENT
AGREEMENT, entered into on April 7, 2008, but
effective as of March 24, 2008, by and between Steven Madden, Ltd. (the
“Company”), and Edward Rosenfeld (the “Employee”). 

RECITALS

          WHEREAS,
the Employee has served as the Company’s Vice President of Strategic Planning
and Finance since 2005, Executive Vice President of Strategic Planning and
Finance since 2007, and a Director since February 2008; and

          WHEREAS,
the Company and the Employee desire to enter into an employment agreement which
will set forth the terms and conditions upon which the Employee shall continue
to be employed by the Company and upon which the Company shall compensate the
Employee. 

          NOW,
THEREFORE, in consideration of the foregoing and the
mutual covenants hereinafter set forth, the parties hereto have agreed, and do
hereby agree, as follows: 

	
 

	
 

	
 

	
 

	
1.

	
EMPLOYMENT; TERM

	
 

	
 

	
 

                    1.1  The Company will employ the Employee in its business, and the Employee will
  work for the Company therein, as its Interim Chief Executive Officer for a
  term commencing as of March 24, 2008 (the “Effective Date”) and terminating
  on December 31, 2009 (the “Expiration Date”), subject to earlier termination
  as hereinafter provided (the employment period, as earlier terminated, being
  referred to as the “Term”).

                    1.2  Upon the expiration of the Term or the termination of the Employee’s
  employment with the Company for any reason whatsoever, he shall be deemed to
  have resigned all of his positions as an officer and director of the Company
  and of each and every subsidiary thereof.

	
 

	
 

	
 

	
 

	
2.

	
DUTIES

                    During
  the Term, the Employee shall serve as the Company’s Chief Executive Officer and
  shall have such executive and managerial responsibilities on behalf of the
  Company of the type and nature generally associated with his position and
  such further duties as shall, from time to time, be delegated or assigned to
  him by the Board of Directors of the Company consistent with his
  position.  He shall also continue to
  serve as a Director of the Company.

	
 

	
 

	
 

	
 

	
3.

	
DEVOTION OF TIME

                    During
  the Term, the Employee shall expend all of his working time for the Company;
  shall devote his best efforts, energy and skill to the services of the
  Company and the promotion of its interests; and shall not take part in
  activities detrimental to the best interests of the Company. 

	
 

	
 

	
 

	
 

	
4.

	
COMPENSATION

                    4.1  For all services to be rendered by the Employee during the Term, and in
  consideration of the Employee’s representations and covenants set forth in
  this Agreement, the Employee shall be entitled to receive from the Company
  compensation as set forth in Paragraph 4.2. 

                    4.2  During
  the Term, the Employee shall be entitled to receive the following salary per
  annum:   $400,000.00.

           The
  Employee shall be entitled to such additional compensation and annual bonus
  as may be determined from time to time by the Board of Directors of the
  Company in its sole discretion.  All
  amounts due hereunder shall be payable in accordance with the Company’s
  standard payroll practices.  

           The Employee
  shall receive, as additional compensation, 40,000 Stock Options.  Such options shall have a term of seven
  years and shall vest 20% annually for five years.

	
 

	
 

	
 

	
 

	
5.

	
REIMBURSEMENT OF EXPENSES

                    5.1  The Company
shall pay directly, or reimburse the Employee for, all reasonable
  and necessary expenses and disbursements incurred by the Employee for and on
  behalf of the Company in the performance of his duties during the Term.  

                    5.2  The Employee
 shall submit to the Company, not less than once in each calendar
  month, reports of such expenses and disbursements in form normally used by
  the Company and receipts with respect thereto, and the Company’s obligations
  under Paragraph 5.1 hereof shall be subject to compliance therewith.

	
 

	
 

	
 

	
 

	
6.

	
VACATIONS, SICK DAYS, AND PERSONAL DAYS

                    The
  Employee shall be entitled to Vacation, Sick, and Personal Days in accordance
  with the Company’s usual policy as set forth in the employment manual of the
  Company.

	
 

	
 

	
 

	
 

	
7.

	
PARTICIPATION IN EMPLOYEE BENEFIT PLANS

                    The
  Employee shall be accorded the right to participate in and receive benefits
  under and in accordance with the provisions of any pension, profit sharing,
  life insurance, disability insurance, and dental insurance or reimbursement
  or other plan or program of the Company either in existence as of the
  Effective Date or hereafter adopted for the benefit generally of its
  employees.  

2

	
 

	
 

	
 

	
 

	
8.

	
SERVICE AS OFFICER AND DIRECTOR

                    During
  the Term, the Employee shall, if elected or appointed, serve as (a) an
  officer of any subsidiaries of the Company and/or entities affiliated with
  the Company in existence or hereafter created or acquired and (b) a director
  of any such subsidiaries of the Company and/or entities affiliated with the
  Company in existence or hereafter created or acquired, in each case without
  any additional compensation for such services. 

	
 

	
 

	
 

	
 

	
9.

	
EARLIER TERMINATION

                    9.1  The Employee’s employment hereunder shall automatically terminate upon his
  death and may terminate at the option of the Company in the event of “cause”
  (as hereinafter provided). 

                    9.2  The Employee’s employment may be terminated by the Company at any time during
  the Term upon written notice for “cause.”
  As used in this Agreement, “cause” shall include the Employee’s
  commission of any act in the performance of his duties constituting common
  law fraud, a felony or other gross malfeasance of duty, the Employee’s
  commission of any act involving moral turpitude, any material
  misrepresentation by the Employee, any breach of any material covenant on the
  Employee’s part herein set forth, or the Employee’s engagement in misconduct
  which is materially injurious to the Company or any of its subsidiaries or
  affiliated entities. 

                    9.3  Upon termination of the Employee’s employment with the Company for cause, the
  Company shall have no further obligations to the Employee and the Employee
  shall be entitled to no further compensation from the Company, except for any
  pro-rata amounts due to the Employee at such date of termination, as provided
  for in Paragraph 4.2.  In the event of
  the termination of the Employee’s employment with the Company for cause, the
  amount to be paid to the Employee pursuant to this Paragraph shall constitute
  the sole and exclusive remedy of the Employee, and the Employee shall not be
  entitled to any other or further compensation, rights or benefits hereunder
  or otherwise.  The foregoing shall not
  be construed to limit any rights or remedies available to the Company with
  regard to any acts or omissions of the Employee that gave rise to the
  termination for cause.

                    9.4  In the event of the termination of the Employee’s employment by the Company during
  the Term without “cause,” as liquidated damages, the Employee shall be
  entitled to receive the following:
  all compensation that would be due and owing Employee under this
  Agreement through its Expiration Date. 

                    9.5  If, during the period commencing 90 days prior to a Change of Control and
  ending 180 days after a Change of Control, Employee is terminated by the
  Company other than for cause, Employee is entitled to receive an amount equal
  to the lesser of (i) the average amount of total compensation actually
  received by Employee for the preceding three calendar years multiplied by 3,
  or (ii) the maximum amount which is tax deductible to the Company under
  Internal Revenue Code Section 280G.
  Change of Control shall mean when any person or group (excluding the
  Company or any of its affiliates) becomes the beneficial owner of securities
  representing 50% of more of the combined voting power of the Company’s then
  outstanding securities. 

3

	
 

	
 

	
 

	
 

	
10.

	
INJUNCTIVE RELIEF; REMEDIES 

                    10.1  The Employee acknowledges and agrees that, in the event he shall violate or
threaten to violate any of the restrictions of Paragraph 3 or 9 hereof, the
Company will be without an adequate remedy at law and will therefore be
entitled to enforce such restrictions by temporary or permanent injunctive or
mandatory relief in any court of competent jurisdiction without the necessity
of proving damages or posting any bond or other security. 

                    10.2  The Employee agrees further that the Company shall have the following
additional rights and remedies

                         (i)  
recover to the Company all monies and other consideration derived or received
by him as the result of any transactions constituting a breach of any of the
provisions of Paragraph 7.1, and the Employee hereby agrees to account for and
pay over such monies and other consideration to the Company; and

                         (ii)  
The right to recover attorneys’ fees incurred in any action or proceeding in
which it seeks to enforce its rights under Paragraph 7 hereof. 

                    10.3  
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforce­able, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.

	
 

	
 

	
 

	
 

	
11.

	
NO RESTRICTIONS

                    The
Employee hereby represents that neither the execution of this Agreement nor his
performance hereunder will (a) violate, conflict with or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under the terms, conditions
or provisions of any contract, agreement or other instrument or obligation to
which the Employee is a party, or by which he may be bound, or (b) violate any
order, judgment, writ, injunction or decree applicable to the Employee.  In the event of a breach hereof, in addition
to the Company’s right to terminate this Agreement, the Employee shall
indemnify the Company and hold it harmless from and against any and all claims,
losses, liabilities, costs and expenses (including reasonable attorneys’ fees) incurred
or suffered in connection with or as a result of the Company’s entering into
this Agreement or employing the Employee hereunder. 

4

	
 

	
 

	
 

	
 

	
12.

	
ARBITRATION

                    12.1  Except with regard to any other matters that are not a proper subject of
arbitration, all disputes between the parties hereto concerning the
performance, breach, construction or interpretation of this Agreement or any
portion thereof, or in any manner arising out of this Agreement or the
performance thereof, shall be submitted to binding arbitration, in accordance
with the rules of the American Arbitration Association.  The arbitration proceeding shall take place
at a mutually agreeable location in New York County, New York or such other
location as agreed to by the parties.

                    12.2  The award rendered by the arbitrator shall be final, binding and conclusive,
shall be specifically enforceable, and judgment may be entered upon it in
accordance with applicable law in the appropriate court in the State of New York,
with no right of appeal therefrom.

                    12.3  Each party shall pay its or his own expenses of arbitration, and the expenses
of the arbitrator and the arbitration proceeding shall be equally shared.

	
 

	
 

	
 

	
 

	
13.

	
ASSIGNMENT

                    This
Agreement, as it relates to the employment of the Employee, is a personal
contract and the rights and interests of the Employee hereunder may not be
sold, transferred, assigned, pledged or hypothecated. 

	
 

	
 

	
 

	
 

	
14.

	
NOTICES

                    Any
notice required or permitted to be given pursuant to this Agreement shall be
deemed to have been duly given when delivered by hand or sent by certified or
registered mail, return receipt requested and postage prepaid, overnight mail
or courier or telecopier as follows: 

	
 

	
 

	
 

	
If to the
  Employee:

	
 

	
 

	
 

	
Edward
  Rosenfeld

	
 

	
105 E. 15th
  Street, Apt. 83, New York, NY 10003

	
 

	
Telecopier
  Number: (212) 995-1148

	
 

	
 

	
 

	
If to the
  Company:

	
 

	
 

	
 

	
Alan Novich

	
 

	
Steven
  Madden, Ltd.

	
 

	
52-16
  Barnett Ave., Long Island City, NY 11104

or at such
other address as any party shall designate by notice to the other party given
in accordance with this Paragraph 14.

5

	
 

	
 

	
 

	
 

	
15.

	
GOVERNING LAW 

                    This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of New York applicable to agreements made and to be
performed entirely in New York. 

	
 

	
 

	
 

	
 

	
16.

	
WAIVER OF BREACH; PARTIAL INVALIDITY

                    The
waiver by either party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.  If any provision, or part thereof, of this
Agreement shall be held to be invalid or unen­forceable, such invalidity or
unenforceability shall attach only to such provision and not in any way affect
or render invalid or unenforceable any other provisions of this Agreement, and
this Agreement shall be carried out as if such invalid or unenforceable
provision, or part thereof, had been reformed, and any court of competent
jurisdiction or arbitrators, as the case may be, are authorized to so reform
such invalid or unenforceable provision, or part thereof, so that it would be
valid, legal and enforceable to the fullest extent permitted by applicable law.

	
 

	
 

	
 

	
 

	
17.

	
ENTIRE AGREEMENT

                    This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and there are no representations, warranties or
commitments except as set forth herein.
This Agreement supersedes all prior agreements, understandings,
negotiations and discussions, whether written or oral, of the parties hereto
relating to the subject matter hereof. This Agreement may be amended, and any
provision hereof waived, only by a writing executed by the party sought to be
charged. 

	
 

	
 

	
 

	
 

	
18.

	
COUNTERPARTS

                    This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and
the same instrument.

	
 

	
 

	
 

	
 

	
19.

	
FACSIMILE SIGNATURES

                    Signatures
hereon which are transmitted via facsimile shall be deemed original signatures.

	
 

	
 

	
 

	
 

	
20.

	
REPRESENTATION BY COUNSEL; INTERPRETATION

                    The
Employee acknowledges that he has been represented by counsel, or has been
afforded the opportunity to be represented by counsel, in connection with this
Agreement. Accordingly, any rule or law or any legal decision that would
require the interpretation of any claimed ambiguities in this Agreement against
the party that drafted it has no application and is expressly waived by the
Employee.  The provisions of this
Agreement shall be interpreted in a reasonable manner to give effect to the
intent of the parties hereto. 

6

	
 

	
 

	
 

	
 

	
21.

	
HEADINGS

                    The
headings and captions under sections and paragraphs of this Agreement are for
convenience of reference only and do not in any way modify, interpret or
construe the intent of the parties or affect any of the provisions of this
Agreement.

	
 

	
 

	
 

	
 

	
22.

	
CONSTRUCTION

                    Whenever
the word “including” or any variant thereof is used herein, it shall mean
“including without limitation.”

{Remainder of page
intentionally left blank; signature page follows.}

7

          
IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the day and year above written. 

	
 

	
 

	
 

	
 

	
STEVEN MADDEN, LTD.

	
 

	
 

	
 

	
 

	
By:

	
/s/ Arvind
  Dharia 

	
 

	
 

	

	
 

	
 

	
Arvind
  Dharia, Chief Financial Officer

	
 

	
 

	
 

	
 

	
/s/ Edward
  R. Rosenfeld

	
 

	

	
 

	
Edward R.
  Rosenfeld

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