EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made effective as of
this 11th day of May, 1998 by and between EMPLOYEE SOLUTIONS, INC., an Arizona
corporation (the "Company"), and XXXXX X. XXXXXX ("Employee").
RECITALS
A. The Company wishes to employ Employee, and Employee wishes to be
employed by the Company.
B. The parties wish to set forth in this Agreement the terms and
conditions of such employment.
AGREEMENTS
In consideration of the mutual promises and covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this
Agreement, the Company employs Employee to serve in an executive capacity and
Employee accepts such employment and agrees to dedicate all of his business time
and effort to Company business and perform such reasonable responsibilities and
duties as may be assigned to him from time to time by the Company's Board of
Directors (the "Board"). Employee's title shall be Chief Executive Officer and
President, with responsibility for the overall operations of the Company and its
subsidiaries and such other executive responsibilities as may be assigned from
time to time by, and subject to the direction of, the Board or the Chairman of
the Board.
2. TERM. The employment of Employee by the Company pursuant to
this Agreement shall commence on the date hereof and continue through May 10,
2001 or until terminated as provided elsewhere herein.
3. COMPENSATION.
a. SALARY. The initial monthly base salary payable to
Employee shall be $20,834, which base salary shall be reviewed at least annually
in accordance with the Company's policies and practices regarding periodic
review and adjustment of executive compensation. Employee's base salary shall
not be reduced during the term hereof without Employee's written consent.
b. INCENTIVE PLAN. The Company may establish and
implement an incentive compensation system which will provide additional
incentive payments to Employee based upon his performance and the performance of
the Company. Employee shall be guaranteed an incentive payment of $100,000 for
the first year of employment, subject to continued employment in good standing
on the date of payment.
4. FRINGE BENEFITS. In addition to the options for shares of
the Company's Common Stock available to Employee under the same terms as those
available to Company employees, and any other employee benefit plans generally
available to Company employees, the Company shall include Employee (and
Employee's dependents) in any group medical insurance plan maintained for the
employees of the Company at the Company's expense. The manner of implementation
of such benefits with respect to such items as procedures and amounts is
discretionary with the Company but shall be commensurate with Employee's
executive status and shall include medical, dental and hospital coverage for
Employee and Employee's dependents who are eligible under the applicable plans.
The Company shall also pay Employee $5,000 per year (payable at the beginning of
each year of employment) for individual purchase by Employee of supplemental
insurance products or for use in such other manner as Employee sees fit.
5. VACATION. Employee shall be entitled to vacation with pay
in keeping with Employee's established vacation practices, but in no event less
than four weeks per calendar year. In addition, Employee shall be entitled to
such holidays as the Company may approve for its executive personnel.
6. EXPENSE REIMBURSEMENT. In addition to the compensation and
benefits provided above, the Company shall pay all reasonable expenses of
Employee incurred in connection with the performance of Employee's duties and
responsibilities to the Company pursuant to this Agreement, upon submission of
appropriate vouchers and supporting documentation in accordance with the
Company's usual and ordinary practices, provided that such expenses are
reasonable and necessary business expenses of the Company. The Company shall pay
Employee's reasonable cellular telephone expenses that are related to Company
business. The Company further shall pay Employee a $500 per month allowance for
automobile expense (provided that such amount may be used by Employee in such
manner as Employee sees fit).
7. TERMINATION. This Agreement may be terminated in the manner
provided below:
a. FOR CAUSE. The Company may terminate Employee's
employment by the Company, for cause, upon written notice to the Employee
stating the facts constituting such cause, provided that Employee shall have 20
days following such notice to cure any conduct or act, if curable, alleged to
provide grounds for termination for cause hereunder. In the event of termination
for cause, the Company shall be obligated to pay the Employee only the base
salary due him through the date of termination. Cause shall include willful and
persistent failure to abide by instructions or policies from or set by the Board
of Directors, wilful and persistent failure to attend to material duties or
obligations imposed under this Agreement, or commission of a felony or serious
misdemeanor offense or pleading guilty or NOLO CONTENDERE to same.
b. DISABILITY. If Employee experiences a permanent
disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended), the Company shall have the
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right to terminate this Agreement without further obligation hereunder except
for any bonus amount payable in accordance with the next sentence and any
amounts payable pursuant to disability plans generally applicable to executive
employees. Within 90 days after the end of the fiscal year in which termination
pursuant to this Section 7.c occurs, so long as Employee is in full compliance
with this Agreement, Employee shall be entitled to receive an incentive
compensation payment (calculated and payable in the manner referred to in
Section 3.b), if any, based upon the Company's financial performance for such
fiscal year, which shall be prorated to the extent that Employee's employment
during such fiscal year was for a period of less than the full year.
c. DEATH. If Employee dies, this Agreement shall
terminate immediately, and Employee's legal representative shall be entitled to
receive the base salary due to Employee through the 60th day from the date on
which his death shall have occurred and any other death benefits generally
applicable to executive employees. In addition, Employee's legal representative
shall be entitled to receive, at the end of the first quarter of the year
following the fiscal year in which such death shall have occurred, an incentive
compensation payment (calculated and payable in the manner referred to in
Section 3.b), if any, based upon the Company's financial performance for such
fiscal year, which shall be prorated to the extent that Employee's employment
during such fiscal year was for a period of less than the full year.
8. CHANGE IN CONTROL.
x. XXXXXXXXX BENEFITS. If Employee's employment with
the Company terminates within 12 months after a Change in Control (as defined in
Section 8.b below), Employee shall be entitled to the severance benefits
provided in Section 8.d unless such termination is in accordance with Section
7.a, 7.b or 7.c above, in which case such other section shall apply.
b. "CHANGE IN CONTROL" shall be deemed to have
occurred if, within 12 months after the date of any "Hostile Proposal" (as such
term is defined in Section 8.e hereof),
(i) a "person" (as such term is used in Paragraphs 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended [the "Exchange Act"])
that has made a Hostile Proposal becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing more than 50% of the total voting power represented by the
Company's then outstanding Voting Securities;
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any person that has made a Hostile Proposal
(other than a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) 50% or more of the total voting power
represented by the Voting Securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation); or
(iii) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of (in one transaction or a
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series of transactions) all or substantially all the Company's assets to any
person that has made a Hostile Proposal.
c. "VOTING SECURITIES" shall mean any securities of
the Company which vote generally in the election of directors.
d. AMOUNT OF BENEFIT. If Employee is entitled to
severance benefits under Section 8.a, such benefit shall be a lump-sum payment
equal to the difference between $5 million and the "aggregate profit" on Company
stock options which have been exercised by Employee at any time prior to the
Change in Control or which are exercisable or become exercisable in connection
with the Change in Control. "Aggregate profit" for purposes of this paragraph
shall mean the difference between the exercise price of the options and the
market price of the Company's Common Stock on the date of the Change in Control
(determined by the closing price on the principal exchange on which the Common
Stock is then traded).
e. "HOSTILE PROPOSAL" shall mean any of the following
which occurs without the prior concurrence, approval or consent of the Board of
Directors or a duly designated committee thereof (with the terms "person" and
"beneficial owner" in this Section 8.e defined as in Section 8.b above):
(i) the public announcement (whether by press release, filing
with or notice to a government agency, or any other means) by a person of any
plan, proposal or specific intention to (A) become the beneficial owner of 15%
or more of the Voting Securities, (B) effect or cause to be effected a merger or
consolidation of the Company (other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) 50% or more of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation); or
(C) effect or cause to be effected a complete liquidation of the Company or the
sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all the Company's assets;
(ii) a person becomes the beneficial owner of 15% or more of
the Voting Securities; or
(iii) the receipt by the Company of a plan or proposal to
effect a transaction or series of transactions which would fall within subpart
8.e(i) above which, or which is accompanied by a communication which, states,
implies or threatens that material actions will be taken to pursue the
transaction or series of transactions without the cooperation or participation
of the Company if the proposal is not accepted in substantially the form
presented.
9. RETURN OF THE COMPANY'S MATERIALS. Upon the termination of
this Agreement, Employee shall promptly return to the Company all files, credit
cards, keys, instruments, equipment, and other materials owned or provided by
the Company.
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10. INSURANCE. The Company shall use commercially reasonable
efforts to carry director's and officer's professional liability insurance
coverage for Employee while in the performance of Employee's duties hereunder in
an amount of at least $10,000,000.
11. NONDELEGABILITY OF EMPLOYEE'S RIGHTS AND COMPANY
ASSIGNMENT RIGHTS. The obligations, rights and benefits of Employee hereunder
are personal and may not be delegated, assigned, or transferred in any manner
whatsoever, nor are such obligations, rights or benefits subject to involuntary
alienation, assignment or transfer. The Company may transfer its obligations
hereunder to a subsidiary, affiliate or successor.
12. NOTICES. All notices, demands and communications required
by this Agreement shall be in writing and shall be deemed to have been given for
all purposes when sent to the respective addresses set forth below, (i) upon
personal delivery, (ii) one day after being sent, when sent by overnight courier
service to and from locations within the continental United States, (iii) three
days after posting when sent by registered, certified, or regular United States
mail, with postage prepaid and return receipt requested, or (iv) on the date of
transmission when sent by confirmed facsimile.
If to the Company: Employee Solutions, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Legal Department
If to Employee: Xxxxx X. Xxxxxx
c/o Employee Solutions, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
(Or when sent to such other address as any party shall specify by written notice
so given.)
13. ENTIRE AGREEMENT. This Agreement, together with the
Indemnification Agreement, the noncompete and confidentiality agreement, and the
stock option grant letter, each dated as of May 11, 1998 (the "Other
Agreements") constitutes the final written expression of all of the agreements
between the parties, and is a complete and exclusive statement of those terms.
It supersedes all understandings and negotiations concerning the matters
specified herein (including all prior written employment agreements and
arrangements, if any), except as provided in the Other Agreements. Any
representations, promises, warranties or statements made by either party that
differ in any way from the terms of this written Agreement or the Other
Agreements shall be given no force or effect. Except as provided in the Other
Agreements, the parties specifically represent, each to the other, that there
are no additional or supplemental agreements between them related in any way to
the matters herein contained unless specifically included or referred to herein.
No addition to or modification of any provision of this Agreement shall be
binding upon any party unless made in writing and signed by all parties.
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14. WAIVER. The waiver by either party of the breach of any
covenant or provision in this Agreement shall not operate or be construed as a
waiver of any subsequent breach by either party.
15. INVALIDITY OF ANY PROVISION. The provision of this
Agreement are severable, it being the intention of the parties hereto that
should any provisions hereof be invalid or unenforceable, such invalidity or
unenforceability of any provision shall not affect the remaining provisions
hereof, but the same shall remain in full force and effect as if such invalid or
unenforceable provisions were omitted.
16. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Arizona exclusive
of the conflict of law provisions thereof. The parties agree that in the event
of litigation, venue shall lie exclusively in Maricopa County, Arizona.
17. HEADINGS; CONSTRUCTION. Headings in this Agreement are for
informational purposes only and shall not be used to construe the intent of this
Agreement. The language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning and not strictly for nor
against any party.
18. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed simultaneously in any number of counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
agreement. Delivery by any party of a facsimile signature to the other parties
to this Agreement shall constitute effective delivery by said party of an
original counterpart signature to this Agreement.
19. BINDING EFFECT; BENEFITS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors, executors, administrators and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
20. BINDING EFFECT ON MARITAL COMMUNITY. Employee represents
and warrants to the Company that he has the power to bind his marital community
(if any) to all terms and provisions of this agreement by his execution hereof.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Employment Agreement and caused the same to be duly delivered on its behalf as
of the date first above written.
EMPLOYEE SOLUTIONS, INC.,
an Arizona corporation
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Its: Chairman of the Board
-------------------------
"COMPANY"
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
"EMPLOYEE"
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