EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of the 10th day of
April, 1996, by and between People Tech Consulting Inc., federal Canadian
corporation ("Employer"), and Xxxxx Xxxx ("Executive"). As used herein,
"Employer" shall mean Employer and all direct and indirect subsidiaries of
Employer.
BACKGROUND
Pursuant to a Stock Purchase Agreement dated April 10, 1996, between
PTR Right Acquisition Co. Inc. ("PTR"), a federal Canadian corporation and a
wholly-owned subsidiary of Right Management Consultants, Inc., a Pennsylvania
corporation ("RMC"), as buyer, and the shareholders of Employer, as sellers (the
"Stock Purchase Agreement"), PTR is purchasing all of the capital stock of
Employer for the purpose of operating Employer's business on the closing date
thereof (the "Closing Date"). Simultaneous with the execution of this Employment
Agreement, Executive is selling shares of Employer to PTR pursuant to the Stock
Purchase Agreement.
In connection with the sale of the stock of Employer, Employer desires
to employ Executive as Executive Vice President-Management Consulting, and
Executive desires to be so employed by Employer.
In consideration of the mutual promises and covenants contained herein
and intending to be legally bound hereby, Employer and Executive agree as
follows:
1. Employment and Duties.
(a) Employer hereby employs Executive and Executive hereby
accepts employment by Employer as Executive Vice President-Management
Consulting, for a period of three (3) years (the "Term"), effective as of March
1, 1996 (the "Effective Date"), and upon the terms and conditions contained in
this Agreement. From and after the expiration of the Term, Executive will be
retained as an employee of Employer, with either party having the right to
terminate employment upon notice to the other party. Any such termination of
employment after the expiration of the Term is in accordance with the provisions
of this Agreement.
(b) As Executive Vice President, Executive shall have senior
management responsibility for the business of Employer in connection with the
types of business conducted as of the date hereof by Employer, and perform such
other duties as Employer
-1-
shall from time to time reasonably direct. From and after the date hereof and up
to and including the date that Executive's employment hereunder is terminated,
Executive shall devote Executive's full working time, skill and best efforts to
the performance of Executive's duties hereunder. Notwithstanding anything in
this paragraph to the contrary, Executive is free to engage in lecturing,
speaking, writing, and teaching activities on a scale similar to those she has
historically engaged in. All fees and royalties generates by such activities
shall be the property of Employer.
(c) Employer shall not, without the consent of Executive,
require Executive to change the location of her residence.
2. Compensation.
(a) Base Salary. As compensation for services rendered by
Executive hereunder Executive shall receive, effective as of the Effective Date,
an annual base salary of Three Hundred Twenty-Eight Thousand Five Hundred
Canadian Dollars (C$328,500), payable on a semi-monthly basis. In addition, for
the period from the Effective Date to February 28, 1999, Executive shall be
entitled to receive the Special Bonus provided in subparagraph 2.(b) below.
(b) Special Bonus. In addition to the base salary provided for
in subparagraph 2.(a) above, Employer shall pay a special bonus ("Special
Bonus") to Executive based on the Net Earnings of Employer for the three fiscal
years in the period beginning March 1, 1996 and ending on February 28, 1999
(each a "Fiscal Year"), according to the following schedule:
Percentage of Net Earnings for
each level of Net Earnings on an
incremental (not cumulative) basis
Net Earnings Fiscal Fiscal Fiscal
(Canadian Dollars) Year 1 Year 2 Year 3
Up to $500,000 - - -
$500,001-$1,500,000 19.44% 15.56% 11.66%
$1,500,001-$2,000,000 31.12% 27.22% 23.34%
$2,000,001-$2,500,000 35.00% 31.12% 27.22%
$2,500,001 and above 38.90% 35.00% 31.12%
In addition, and as an additional Special Bonus, if the Net Earnings,
as calculated for the purposes of this Agreement, for any Fiscal Year exceed
C$2,500,000, Executive shall be paid the sum of C$156,000 with respect to each
such Fiscal Year; provided, however, that once the total amount of Special Bonus
payments to Executive, including additional Special Bonus payments, has reached
C$777,800, (i) Special Bonus payments to Executive shall
-2-
be made at the rate of 95% of the percentages shown above and (ii) additional
Special Bonus payments to Executive shall be in the amount of C$148,200. Any
Special Bonus payments due under this Agreement shall be paid within 60 days of
the end of the Fiscal Year for which the Special Bonus payment is due.
Net Earnings or Loss means, with respect to any Fiscal Year, the Net
Earnings or Loss of People Tech before income taxes and bonuses (other than any
Special Bonus) to principals for such year determined in a fashion consistent
with the determination of such earnings for the year ended March 31, 1995, as
determined by Xxxxx, Xxxxx & Co., Chartered Accountants, in its report dated
July 14, 1995, as adjusted to make the fiscal period herein correspond as if it
were a regular fiscal year (meaning the application of appropriate year end
adjustments), and with the following further adjustments: For purposes of the
foregoing calculation, only direct costs of providing services outside Employer
shall be deducted, including costs associated with the severance of current
employees of Employer, but not any outplacement costs or allocations of overhead
from offices (other than Employer's offices), or from the corporate headquarters
of RMC. In the event that operations of People Tech are changed after the
Effective Date so that such operations are not conducted in Employer, or RMC
fails to meet its commitments under the Operating Plan (as such term is used in
the Stock Purchase Agreement), the parties will adjust the method of calculation
for purposes of the Special Bonus compensation to equitably reflect such
circumstances.
(c) All compensation payable to Executive hereunder shall be
subject to any tax withholding obligations under applicable laws.
3. Executive Benefits.
In addition to the compensation set forth in Section 2 of this
Agreement, Executive shall be entitled to the following:
(a) Four weeks paid vacation annually; including without
limitation the pro rata portion thereof for the remainder of calendar year 1996
and for the period from January 1, 1999 through the end of the Term.
(b) All medical, life, retirement and other benefits that are
currently available to other senior management of Employer.
(c) Executive shall participate in all other benefit, annual
bonus, incentive and expense reimbursement programs offered by Employer from
time to time to its senior management on the general terms of such programs,
reasonably comparable to RMC corporate-wide policies regarding such programs
from time to
-3-
time, provided, however, that Executive understands and agrees that Employer
reserves the right to unilaterally revise the terms of the benefits and expense
reimbursement programs or to eliminate any benefits thereunder altogether.
Executive agrees that benefits will be provided in accordance with the formal
plan documents or policies and issues with respect to entitlement or payment of
benefits under any of the benefit and expense reimbursement programs will be
governed by the terms of such documents or policies establishing the benefit in
issue. Commencing 1997, Executive shall be eligible for stock options consistent
with RMC Corporate Executive Vice Presidents.
For purposes of the vesting and eligibility requirements, if any, for
the benefits which are available under this Section 3, Executive shall be deemed
to have been hired on January 1, 1978.
4. Termination.
(a) Employer reserves the right to terminate Executive's
employment at any time, for Cause, as hereinafter set forth, effective
immediately upon written notice of such termination. In the event that Employer
terminates Executive for Cause or in the event Executive voluntarily terminates
her employment, Executive will receive only all salary and all accrued but
unused vacation and other benefits during the period up through the date of
termination.
(b) For purposes of this Agreement, "for Cause" shall be
defined as (i) any material act of fraud or dishonesty by the Executive; (ii)
any action by Executive which materially and adversely affects the ability of
Executive to perform her professional duties as described herein; or (iii) any
failure by Executive to cure any material breach of any term of (A) any contract
between Executive and Employer or RMC, or (B) any written, generally
disseminated policy of Employer or RMC regarding employee conduct, within thirty
(30) days of the effective date of the written notice of such breach by Employer
or RMC to the Executive.
(c) This Agreement shall terminate automatically in the event
of Executive's death or permanent disability which prevents Executive from
performing Executive's essential duties under this Agreement. In either event,
base salary shall be paid to the last day of the month in which the event
occurs, and bonus will be pro rated to such later date. For purposes of this
subparagraph, "permanent disability" shall have the same meaning as in
Employer's Long Term Disability benefit policy as in effect from time to time.
(d) Notwithstanding any other provision of this Agreement,
Executive shall be entitled to receive the Special Bonus hereunder without
regard to Executive's death, disability
-4-
or continued employment by Employer, unless Executive voluntarily terminates her
employment or is terminated for Cause in which event Executive shall not be
entitled to receive any Special Bonus payable after the date of termination of
Executive's employment.
(e) In the event that Employment Standards legislation
provides for a greater benefit to Executive on termination than contained in
this Agreement, Executive is entitled to receive the benefit provided in such
legislation in place of the termination benefit provided for in this Agreement;
provided, however, that this subparagraph 4(e) shall not in any way restrict or
limit the payment of any Special Bonus provided under subparagraph 2(b) hereof.
5. Restrictive Covenants.
(a) In order to induce Employer to execute this Agreement,
Executive hereby covenants and agrees that during Executive's Employment by
Employer and for a period of one year after Executive's employment with Employer
is terminated for any reason whatsoever (the "Restricted Period"), Executive
shall not, directly or indirectly, either for Executive's own account or as a
partner or joint venturer, or as an agent for any person or entity other than
Employer, or as a shareholder, owner, or otherwise (other than as the holder of
five percent (5%) or less of an exchange listed entity), anywhere within the
Territory (hereinafter defined): (i) engage in the business of selling or
providing corporate change management consulting services; (ii) contact or
solicit any entity which is or has been a client or customer of Employer's
consulting division(s) at any time throughout Executive's employment with
Employer or any entity which has been actively solicited by Employer within six
months prior to termination of Executive's employment with Employer on behalf of
any competitor of Employer for the purpose of providing change management or
organizational consulting services to such clients or customers on an in-house
basis, to the extent that so doing would compete with the change management or
organizational consulting services provided by Employer; (iii) enter into any
agreement or arrangement with or perform any change management or organizational
management consulting services for any client or customer of Employer for whom
Executive has performed services at any time during Executive's employment with
Employer; or (iv) solicit or induce any employee of Employer to terminate such
employee's employment with Employer. Notwithstanding anything herein to the
contrary, Executive shall be permitted to engage in lecturing, speaking, writing
and teaching activities on a scale similar to those she has historically engaged
in during the term of Executive's employment by Employer. For the purposes of
this Agreement, Territory shall mean the Provinces of Canada and the states of
the United States which together constitute the continent of North America.
-5-
(b) Executive hereby covenants and agrees that, except to the
extent required by law, at all times after the date of this Agreement, Executive
shall not use for Executive's benefit, or disclose, communicate or divulge to,
or use for the direct or indirect benefit of any person, firm, association or
company other than Employer, any confidential information regarding the business
methods, business policies, procedures, techniques, research or development
projects or results not in the public domain; trade secrets, or other knowledge
or processes used or developed by Employer in or for Employer's business; or any
names or the addresses of any customers or clients of Employer; or any
non-public data on or relating to past, present or prospective customers or
clients of Employer; or any other confidential information relating to or
dealing with the business operations or activities of Employer (collectively,
"Confidential Information"). Provided, however, that Confidential Information
does not include information that (x) is, was, or becomes available to Executive
on a nonconfidential basis; (y) has been or is made available on a unrestricted
basis to a third party by Employer, by an individual authorized to do so; or (z)
is known by Executive prior to its disclosure to Executive by Employer.
Furthermore, Executive is specifically permitted to use and disclose
Confidential Information to the extent necessary to assert any right or defend
against any claim arising under this Agreement or pertaining to Confidential
Information or its use, to the extent necessary to comply with any applicable
statute, constitution, treaty, rule, regulation, ordinance, or order of the
Untied States, Canada, or any other jurisdiction applicable to Executive, or if
Executive receives a request to disclose any Confidential Information under the
terms of a subpoena, order, civil investigative demand, or similar process
issued by a Court of competent jurisdiction or by a governmental body or agency
of the United States or Canada or any subdivision thereof.
(c) Any and all writings, inventions, improvements, computer
programs, processes, procedures or techniques (hereinafter "Inventions") which
Executive may make, discover or develop either solely or jointly with any other
person or persons (hereinafter "Co-Inventor(s)") at any time during the term of
and as part of Executive's employment with Employer which relate to any business
being conducted or carried on by Employer at the time of invention shall be the
sole and exclusive property of Employer, subject to the rights of the
Co-Inventor(s) in the Inventions. Any and all Inventions which Executive may
make, discover or develop either solely or jointly with any Co-Inventor(s) other
than as part of Executive's employment with Employer which are useful in
connection with any business being conducted, carried on or definitely planned
by Employer at the time of invention shall be subject to a perpetual license to
Employer, subject to any rights of Co-Inventor(s). The amount of the royalty
shall be agreed upon by Employer and Executive. In
-6-
the event that they cannot agree, such royalty shall be determined by
arbitration by three arbitrators, one selected by Employer, one selected by
Executive and the third selected by the first two arbitrators. During the term
of this Agreement, Executive shall make full disclosure to Employer of all such
Inventions. It shall be presumed that any Inventions which Executive shall make,
discover or develop either solely or jointly with any Co-Inventor(s) during the
two-year period after termination of Executive's employment with Employer shall
have been developed in part during the term of employment, and Executive shall
have the burden of proof in demonstrating that no such development occurred
during such term of employment. With respect to those Inventions as to which
Employer is to acquire title hereunder, Executive shall do everything necessary
or desirable to vest such title in Employer, and Executive shall write and
prepare all specifications and procedures regarding such Inventions and
otherwise aid and assist Employer so that Employer can prepare and present
applications for copyrights or patents therefor and can secure such copyrights
or patents wherever possible, as well as reissues, renewals and extensions
thereof, and can obtain record title to such copyright or patents in all
countries in which it may desire to have copyright or patent protection.
Executive shall not be entitled to any additional or special compensation for
rights to Inventions which Employer acquires hereunder.
(d) Executive also agrees, during the term of this Agreement
and thereafter, not to disparage or deprecate, directly or indirectly, the
reputation, professionalism, character, competence, integrity or motives of
Employer, any subsidiary or any affiliate thereof, or any of their officers,
trustees, directors, employees, attorneys, agents or family members.
(e) Executive acknowledges that the restrictions contained in
this Section 5, in view of the nature of the business in which Employer is
engaged, are reasonable and necessary in order to protect the legitimate
interests of Employer, and that any violation thereof would result in
irreparable injuries to Employer. Executive therefore acknowledges that, in the
event of a violation of any of these restrictions, Employer shall be entitled to
obtain from any court of competent jurisdiction emergency, preliminary and
permanent injunctive relief, as well as damages and an accounting of all
earnings, profits and other benefits from Executive arising from such violation,
which rights will be cumulative and in addition to any other rights or remedies
to which Employer may be entitled from Executive.
(f) If for any reason any paragraph or portion of a paragraph
from this Section 5 shall be invalid or unenforceable, it is agreed that the
same shall not affect any other paragraph or portion hereof, but the remaining
covenants and restrictions
-7-
or portions hereof shall remain in full force and effect; and that if such
invalidity or enforceability is due to the unreasonableness of the time or
geographical area covered by the said covenants and restrictions, said covenants
and restrictions of this Agreement shall nevertheless be effective for such
period of time and for such area as may be determined to be reasonable by a
court of competent jurisdiction.
6. Stock Options.
It is the intention of management of Employer to recommend to
the Compensation and Stock Option Committee of RMC's Board of Directors
("Committee"), the issuance to Executive of options to purchase up to 6,000 of
RMC's common shares on terms set by the Committee, including an option price at
or above the fair market price of such shares on the date of grant.
7. Royalty Assignments.
Executive hereby assigns to Employer all of her right, title
and interest in and to any royalties and other payments ("Royalties") to which
Executive would otherwise be entitled to receive throughout the term of
Executive's employment by Employer with respect to the following completed or to
be completed books (collectively, the "Books"): You Don't Change A Company By
Memo, Corporate Abuse and Your Second Life (working title, subject to change).
Executive shall promptly notify the publishers of each of the Books in writing
of such assignment. Upon the termination of Executive's employment with
Employer, the right to receive the Royalties shall revert to Executive and
Employer shall promptly notify the publishers of each of the Books in writing of
such reversion.
8. Notices.
Any notice hereunder shall be in writing and shall be deemed to have
been duly given, if delivered personally, when delivered and, if mailed, when
mailed by certified mail, postage prepaid, return-receipt requested, addressed
to the following addresses:
If to Employer: People Tech Consulting Inc.
c/o Right Management Consultants,
Inc.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Chairman
If to Executive: Xxxxx Xxxx
People Tech Consulting Inc.
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
-8-
Canada
Either party may change the address to which notices shall be mailed or
delivered to it at any time by notice to the other party given in the manner
provided herein.
9. Amendments.
This Agreement cannot be changed or terminated orally and no waiver of
compliance with any provision or condition hereof and no consent provided for
herein shall be effective unless evidenced by an instrument in writing duly
executed by the proper party.
10. Indulgences.
Neither the failure nor any delay on the part of either party hereto to
exercise any right, remedy, power or privilege under this Agreement will operate
as a waiver thereof, nor will any single or potential exercise of any right,
remedy, power or privilege preclude any other or future exercise of the same or
of any other right, remedy, power or privilege. Any waiver of such item with
respect to any one occurrence will not be construed as a similar waiver with
respect to any other occurrence.
11. Paragraph Headings.
The paragraph headings in this Agreement are for convenience only. They
form no part of this Agreement and shall not affect its interpretation.
12. Miscellaneous and Governing Law.
This Agreement sets forth the entire understanding of the parties and
supersedes any and all prior agreements, arrangements and understandings
relating to the subject matter hereof. This Agreement and the relationship of
the parties in connection therewith shall be construed and governed in
accordance with the laws of the Commonwealth of Pennsylvania, including laws
with regard to any conflicts of law provisions.
13. Provisions Separable.
The provisions of this Agreement are independent of and separable from
each other, and no provision shall be affected or rendered invalid or
unenforceable by virtue of the fact that for any reason any other or others of
them may be invalid or unenforceable in whole or in part.
-9-
14. Successors and Assigns; Assignment.
This Agreement shall be binding upon and inure to the benefit of
Employer's successors and assigns. Employer shall not assign this Agreement
without Executive's prior written consent and Executive may not assign her
interest in this Agreement.
15. Representation of Executive.
Executive represents, warrants and acknowledges to Employer that she
has had the opportunity to obtain, and in fact has obtained, independent legal
advice with respect to this Agreement and all matters described herein or
relating hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
PEOPLE TECH CONSULTING INC.
By:/s/ Xxxxx Xxxx
-------------------
Xxxxx Xxxx
The undersigned hereby unconditionally guaranties all obligations of
Employer to Executive under this Employment Agreement.
RIGHT MANAGEMENT CONSULTANTS, INC.
By: /s/ G. Xxx Xxxx
-------------------
G. Xxx Xxxx, Executive Vice
President and Chief Financial
Officer
-10-
