EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THE EMPLOYMENT
AGREEMENT (this
"Agreement"), dated as
of January 5, 2004,
is entered into by and between THE
MANAGEMENT NETWORK
GROUP, INC., a Delaware
corporation (the "Company"), with offices at 7300 College
Boulevard,
Overland
Park, Kansas 66210, and RICHARD P. NESPOLA, an individual ("Employee"),
principally employed at 7300 College
Boulevard, Suite 302, Overland Park, Kansas
66210.
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 January 5, 2004 (the
"Effective
Date"), the Company hereby
continues to employ Employee as Chairman,
President and Chief
Executive Officer
of the Company to perform the duties
described in Section 4 hereof.
2. TERM. The
term of this Agreement
shall begin on the
Effective Date and
will continue until the first anniversary
thereof. On the first anniversary of
the Effective Date and each anniversary
thereafter,
the term of this
Agreement
shall be automatically extended for an additional twelve (12) months unless
either party otherwise elects by notice in
writing delivered to
the other by at
least ninety (90) days prior thereto. The term of this Agreement shall be
subject to earlier termination pursuant to the provisions of Section 7 or 8
hereof. The period from the Effective Date until the date of
termination
of
employment pursuant to this Agreement is
herein referred to as the "Term."
3.
COMPENSATION.
3.1 SALARY. Subject to
the adjustment
provisions
herein, Employee
shall be paid
$21,826.92 in biweekly installments based upon an annual base
salary of
$567,000. For each fiscal year of the Term commencing on or
after
January 1, 2005,
Employee's annual base
salary for such fiscal year may be
increased
or decreased by such amounts as determined by the Board of
Directors of the
Company, provided, however, that in no event shall the
Board of
Directors decrease
Employee's annual base
salary below $567,000.
Amounts
paid pursuant to this Section 3 are hereinafter referred to as
"Base
Salary."
3.2 BONUS. In addition
to Employee's Base
Salary and subject to such
deductions as
are required by law,
Employee shall be entitled to receive a
bonus ("Bonus")
to be paid as provided in this Section 3.2. With respect to
each
fiscal year
during the Term
commencing
with the fiscal year
ending
December 31,
2004, the Compensation
Committee of the Board of Directors of
the Company
(the "Compensation Committee") shall establish reasonable
performance
criteria to be
achieved as a
condition to Employee
becoming
entitled to the
Bonus. The relevant
performance criteria shall be based on
overall Company
performance and shall
be determined in the sole discretion
of the
Compensation Committee after consultation with Employee.
Employee's
annual
target Bonus
during the Term shall
be not less than fifty
percent
(50%) of his
Base Salary.
3.3 OTHER COMPENSATION. As a part of Employee's
compensation package,
the Board of
Directors of the Company shall periodically (and in any event,
annually) review
Employee's compensation and consider such modifications as
may be
appropriate for the Chairman, President and Chief Executive
Officer
of the
Company.
4. DUTIES.
Employee shall, during the term hereof,
be an officer of
the
Company and have the title of Chairman,
President and Chief Executive 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 Board of
Directors of the Company. The Company shall take such action
as is necessary to
nominate Employee to the Board of
Directors of the Company at each relevant
election during the Term. Without limiting
the generality of the foregoing:
4.1 FULL TIME.
Employee shall devote
Employee's full working time to
the business of the Company and shall, in accordance with the highest
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 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 Board of Directors, which approval will not be
unreasonably
withheld. Employee may participate in civic and charitable
events and
manage his personal
affairs, provided that
such activities do
not unreasonably
interfere with his Company-related duties.
4.2 REPORTING.
Employee shall report to the Board of Directors of the
Company.
5. EXPENSES.
Employee will be
authorized to incur reasonable and necessary
expenses in connection with the discharge
of Employee's duties
and in promoting
the business of the Company. The Company will reimburse Employee for all such
reasonable and necessary expenses in accordance with its
expense
reimbursement
policy and upon presentation of a properly itemized account of such
expenditures, setting forth the business
reasons for such expenditures.
6. OTHER
BENEFITS; VACATION. Except as otherwise set forth herein,
Employee
shall be entitled to paid vacation and the other
fringe benefits as set forth
below.
6.1 ANNUAL ACCRUAL OF VACATION. Employee shall be entitled to six
(6)
weeks paid
vacation for each year of service under this Agreement, during
which time
Employee's
compensation shall be paid in full. On the first day
of the term of
this Agreement, and on each anniversary date during the term
of this
Agreement,
Employee shall earn
the six (6) weeks of paid vacation
time.
Employee may
accumulate vacation
time to a maximum of six (6) weeks
and may carry
such accumulated
(earned and unused)
vacation time from one
year of service
to another of service,
subject to such maximum. At the end
of each year of
service during the term of this Agreement, Employee shall
have the option
to require the Company to pay to Employee an amount for any
part
or all of the
Employee's
earned and unused vacation time. Upon
termination of
employment, the Company shall purchase any earned and unused
vacation time up
to the maximum carry-over vacation time of six (6) weeks.
6.2 FRINGE
BENEFITS. Employee shall be entitled to use of an
automobile
of his choice provided by the Company with all operating
expenses
paid by the
Company, and shall receive such pension, profit
sharing and
fringe benefits
such as hospitalization, medical, life and
other insurance
benefits, vacation,
sick pay and
short-term disability as
the Board of
Directors of the Company may, from time to time, determine to
provide for the
key executives of the Company. Employee shall be provided a
health club
membership (and dues), including initiation fees, for a club of
his choice.
Employee shall be entitled to (i) executive
health benefits
providing
for annual physicals and supplementary medical coverage
consistent
with his status as Chairman, President and Chief Executive
Officer,
including an annual executive physical at the Mayo Clinic (or
similar
type physical) and may submit to the Board of
Directors other
executive plans,
and (ii) reimbursement
for estate and financial planning
services
in an amount not to
exceed $10,000 per
year. The Company
shall
also
reimburse Employee's home business expenses consistent with past
Company
practice. The benefits described in this Section 6.2 are
collectively
referred to herein as "Fringe Benefits."
7. TERMINATION
BY THE COMPANY DUE TO DEATH, DISABILITY OR CAUSE.
7.1 DEATH. 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 10, 11, 12, 13,
14 and 15 shall
survive such termination. 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 (a) promptly
pay Employee's
estate (i) Base
Salary accrued and
payable up to the date of termination;
(ii) any unpaid
Bonus earned with respect to any calendar quarter ending on
or preceding the
date of termination;
(iii) accrued but
unpaid vacation;
(iv)
reimbursement for expenses accrued and payable under Section 5
hereof;
(v) all other
vested accrued
benefits to which
Employee is entitled under
applicable
Company plans, programs, policies and arrangements
(subsections
(i) through (v),
collectively, "Accrued Obligations"); (vi) $283,500 or, if
higher,
the target
Bonus in effect for
the fiscal
year in which
occurs
Employee's
termination
of employment, multiplied by a fraction, the
numerator
being the number of days in the current fiscal year in which
Employee was
employed by the Company through the date of termination and
the denominator being 365; and (vii) death benefits payable under any
Company-sponsored life
insurance or other plans, if any, and (b) continue
Fringe Benefits
for the benefit of Employee's surviving spouse and eligible
dependents for a
period of six (6) months from the date of termination.
7.2 DISABILITY. In the
event of Employee's Disability (as hereinafter
defined) for six
(6) consecutive
calendar 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 10, 11, 12,
13, 14 and 15 shall survive such
termination.
"Disability"
for the purposes of
this Agreement
shall mean
Employee's
physical
or mental disability so as to render Employee
substantially
incapable of carrying out Employee's duties under this
Agreement as
determined by an independent doctor jointly selected by the
Company and
Employee. In the event
of termination pursuant to this Section
7.2,
the Company shall not be under any further
obligation
to Employee
hereunder except
to (a) promptly pay Employee (i) his Accrued Obligations;
(ii) $283,500
or, if higher, the target Bonus in effect for the fiscal year
in which occurs
Employee's
termination
of employment, multiplied by a
fraction, the
numerator being the number of days in the current fiscal year
in which Employee was employed by the Company through the date of
termination and
the denominator being
365; and (iii)
disability
benefits
under any
Company-sponsored
disability
plan, if any, and (b) continue
Fringe Benefits
for the benefit of Employee, Employee's spouse and eligible
dependents for a
period of six (6) months from the date of termination.
7.3 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 10, 11, 12, 13, 14 and
15 shall
survive such termination. For the purpose of this Agreement,
"Cause" shall
mean (a) conviction
of, or a plea of nolo
contendere to, a
felony,
(b) gross neglect, gross misconduct or gross failure in the
carrying out of
Employee's duties in accordance with Section 4 hereof, (c)
the engaging by
Employee in a material act or acts of dishonesty affecting
the Company, any
affiliate or any client of the Company, or (d) drunkenness
or the
illegal use of drugs by Employee materially interfering with
performance of
Employee's obligations under this Agreement. Notwithstanding
the foregoing, Employee shall not be deemed to have been
terminated for
"Cause"
hereunder unless and until there shall have been delivered to
Employee a copy
of a resolution duly adopted by the Board of Directors then
in office at a
meeting of the Board of Directors called and held for such
purpose
(after reasonable notice to Employee and an opportunity for
Employee,
together with his counsel, to be heard before the Board of
Directors),
finding that, in the good faith opinion of
