EMPLOYMENT AGREEMENT
This AGREEMENT is entered into as of July 7, 2000, by and between
Xxxxx XxXxx ("Executive") and BRG Acquisition Corporation, a Delaware
corporation (together with any successor by merger or otherwise the "Company").
1. Duties and Scope of Employment.
(a) Position. For the term of his employment under this
Agreement, the Company agrees to employ Executive in the position of Executive
Vice President of Sales ("EVP of Sales"). Executive shall report to the Chief
Executive Officer of the Company.
(b) Obligations to the Company. During the term of his
employment, Executive shall devote his full business efforts and time to the
Company. Executive shall comply with the Company's policies and rules, as they
may be in effect from time to time during the term of his employment.
(c) No Conflicting Obligations. Executive represents and
warrants to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. Executive represents and warrants that he will not use or disclose,
in connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other
person has any right, title or interest and that his employment by the Company
as contemplated by this Agreement will not infringe or violate the rights of any
other person or entity. Executive represents and warrants to the Company that he
has returned all property and confidential information belonging to any prior
employers.
(d) Commencement Date. Executive shall commence his position
as ("EVP of Sales") under this Agreement subject to the consummation of the
merger of the Company with and into Business Resources Group, Inc. ("BRG") as
contemplated by the Plan and Agreement of Merger dated July 7, 2000, between BRG
and the Company (the "Merger Agreement"), upon the "Effective Time" of such
merger (as such term is defined in the Merger Agreement) (the "Commencement
Date").
2. Term of Employment.
(a) Basic Rule. The Company agrees to continue Executive's
employment, and Executive agrees to remain in employment with the Company, from
the Commencement Date set forth in Section 1(d) until the date when Executive's
employment terminates pursuant to Section 2(b) below (the "Employment Period").
Executive's employment with the Company shall be "at will," which means that
either Executive or the Company may terminate Executive's employment at any time
for any reason, with or without Cause. This Agreement shall constitute the full
and complete agreement between Executive and the Company
on the "at will" nature of Executive's employment, which may only be changed in
an express written agreement signed by Executive and the Chief Executive
Officer.
(b) Termination. The Company or Executive may terminate
Executive's employment at any time for any reason (or no reason) by one party
giving the other party thirty (30) days' notice in writing. Executive's
employment shall terminate automatically in the event of his death.
3. Cash and Incentive Compensation.
(a) Salary. The Company shall pay Executive as compensation
for his services an annual base salary of $525,000.00, payable in accordance
with the Company's standard payroll schedule for U.S. employees. (The
compensation specified in Section 3(a), together with any increases in such
compensation that the Company may grant from time to time, are referred to in
this Agreement as "Base Salary.")
(b) Earnings Bonus. Executive will earn an annual bonus (the
"Bonus"). The Bonus for fiscal year 2000 will be based on the current BRG Fiscal
Year 2000 Executive Bonus Program adopted by the Board of Directors of BRG. The
fiscal year 2000 Bonus, however, will be based on achieving earnings targets
before taxes and management bonuses (encompassing approximately ten (10)
executives) above $6,248,200 and as follows:
Operating Earnings Executive Bonus Amount
------------------ ----------------------
$6,248,200 $60,000
$7,019,100 $120,000
$7,507,500 $130,000
$8,010,900 $140,000
$8,514,300 $150,000 etc.
Executive's annual bonus for future years shall be based on a pool (the "Bonus
Pool"). The Bonus Pool for fiscal years after fiscal year 2000 will equal twenty
percent (20%) of Excess Earnings; provided that the Compensation Committee of
the Company's Board of Directors shall have the right to limit the aggregate
Bonus Pool available to be divided among all participants to $1,360,000. Subject
to the provisions of Section 3(e) of this Agreement, the Bonus Pool will be
divided equally among Executive and the three (3) individuals serving as Chief
Executive Officer, Executive Vice President of Marketing and the Chief
Financial/Operating Officer of the Company as of the Commencement Date. If any
portion of the Bonus Pool for any year is not paid as a result of the
termination or resignation of any such individual, the unpaid amount may, in the
discretion of the Compensation Committee of the Company's Board of Directors, be
reallocated and paid, in whole or in part, to Executive. The Bonus will be paid
no later than the second business day following the later of completion of the
audit of the Company's annual financial statement or sixty-five (65) days after
the end of the Company's fiscal year.
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(i) Definitions For Bonus:
The following definitions apply to the Bonus Sections
of this Agreement and not for any other purpose.
(a) "Net Assets": The Company's total assets minus
non-interest bearing debt.
(b) "Operating Earnings": Earnings before interest,
taxes, and amortization of goodwill and, for purposes of Section 3(b), before
the payment of the Bonus (if any) paid or payable under Section 3(b).
(c) "Excess Earnings": Operating Earnings above a
fifteen percent (15%) return on average Net Assets during each of the twelve
months in the fiscal year of the Company.
(c) Stock Incentive Plan. Executive will be allowed to
purchase 1.75% of the issued and outstanding shares of the Company's Common
Stock as of the Commencement Date (but not less than 350,000) ("Incentive
Stock") at $.05 per share, which will be the fair market value of the Incentive
Stock. As soon as possible after the Commencement Date, Executive may purchase
such Incentive Stock by check made payable BRG. BRG and the Company represent
and warrant that immediately following the completion of the tender offer and
the merger and the changes in the capitalization of BRG contemplated by the
Merger Agreement, the Common Stock of BRG will consist of 25,000,000 shares of
Common Stock (of which 20,000,000 shares will be outstanding or issueable). The
number of shares of Incentive Stock shall be adjusted to reflect proportionately
and equitably the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into the BRG
Common Stock), reorganization, recapitalization, reclassification or other like
change in the capitalization of the BRG occurring on or after the date hereof
and prior to the Commencement Date. Upon termination of Executive's employment,
the BRG may repurchase the Incentive Stock or other shares not vested before or
simultaneously with termination. Unvested shares may be repurchased by BRG at
the price paid by the Executive if his employment terminates before the shares
vest. The shares of Incentive Stock will vest as follows: Thirty percent (30%)
of the shares of Incentive Stock will vest on the Commencement Date. The
remaining shares of Incentive Stock will vest in equal monthly amounts on the
last day of each month during the forty-eight (48) months immediately following
the Commencement Date.
(d) Effect of Termination of Employment. If the Company
terminates Executive's employment "Without Cause" (other than within one year
following a "Change of Control") or Executive quits for "Good Reason", then
Executive shall receive: (A) payment of his Base Salary and any accrued but
unused vacation earned through Executive's last date of employment; (B) a
severance payment equal to his annual Base Salary, to be paid out in accordance
with Company policy; (C) his full Bonus for the year in which termination
occurs, to
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be paid no later than the second business day following the later of completion
of the audit of the Company's annual financial statement or sixty-five (65) days
after the end of the Company's fiscal year; (D) continuation of medical
insurance benefits at Company expense for the twelve (12) months following
Executive's last day of employment; and (E) accelerated vesting of all shares
Incentive Stock issued to Executive pursuant to Section 3(c) above and also of
any of Executive's outstanding stock options.
(e) Termination for Cause: If the Company terminates
Executive's employment for "Cause" or Executive resigns without "Good Reason,"
he will receive his Base Salary and earned and unused vacation through the last
day worked but no severance unless terminated under Section 3(f)(i)(b)(iv) or
3(f))(i)(b)(v)below, in which case he will receive a severance payment equal to
his annual Base Salary, proportional and equitable share of the Bonus and
nothing else. Such severance will be paid out in accordance with Company policy,
and the Bonus will be paid no later than the second business day following the
later of completion of the audit of the Company's annual financial statement or
sixty-five (65) days after the end of the Company's fiscal year. Upon
termination for "Cause", Executive's unvested Incentive Stock will not
accelerate in vesting.
(f) Termination Following Change of Control. If, within one
year following a "Change of Control," the Company terminates Executive's
employment "Without Cause" or Executive quits for "Good Reason," then Executive
shall receive compensation and benefits as if terminated "Without Cause" under
Section 3(d) of this Agreement.
(i) Definitions.
(a) "Change of Control." For all purposes under this
Agreement, "Change of Control" shall mean (i) a sale or transfer of securities
possessing at least fifty percent (50%) of the total combined voting power of
the Company's outstanding securities to a person or persons different from the
persons holding those securities immediately prior to such transaction, (ii) a
merger, consolidation, recapitalization, reorganization, share exchange, or
other business combination or transaction in which securities possessing at
least fifty percent (50%) of the total combined voting power of the resulting,
surviving or acquiring entity are held by a person or persons or its or their
controlled affiliates different from the person, persons or affiliates who held
such securities immediately before such combination or transaction, (iii) the
sale, transfer or other disposition of all or substantially all of the Company's
assets, or (iv) liquidation or dissolution of the Company.
(b) Termination for "Cause." For all purposes under this
Agreement, a termination for "Cause" shall mean a good faith determination by
the Company's Board of Directors that Executive's employment be terminated for
any of the following reasons: (i) willful misconduct that is materially
injurious to the Company; (ii) misappropriation of assets of the Company; (iii)
indictment (if not dismissed within 90 days), conviction, or a plea of "guilty"
or "no contest" to a felony under the laws of the United States or any state
thereof; (iv) Executive's continued material neglect of his duties with
demonstrable adverse effect on the Company following written notice and a sixty
(60)-day opportunity to cure; or (v) continued unsatisfactory performance after
receipt of a written warning and at least sixty (60) days to improve However,
Section 3(f))(i)(b)(v) will be inapplicable and will
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not constitute "Cause" after the occurrence of any event constituting a "Change
of Control" as defined above. A termination of Executive's employment by the
Company in any other circumstance or for any other reason, other than death or
Disability, will be a termination "Without Cause."
(c) "Good Reason": For purposes of Sections
3(d) and (e) above, "Good Reason" includes: Executive terminates his employment
within sixty (60) days of the occurrence of (i) material diminution of the
duties or responsibilities of Executive, or (ii) moving the current location
where Executive performs his principal duties twenty-five (25) or more miles,
without Executive's advance, written and personal consent.
(ii) Termination Due to Death or Disability. If
Executive's employment terminates due to death or Disability, Executive or his
estate shall receive payment for Executive's Base Salary and any accrued but
unused vacation earned through Executive's last date of employment, and a
proportional and equitable share of the annual Bonus, but nothing else. Such
Bonus will be paid no later than the second business day following the later of
completion of the audit of the Company's annual financial statement or
sixty-five (65) days after the end of the Company's fiscal year. For purposes of
this Agreement, Disability shall mean Executive's inability to work due to a
disability for four (4) consecutive months or more and the Board terminates
Executive's employment for that reason.
(g) Accelerated Vesting Upon a "Change of Control". Upon a
"Change of Control" as defined in Section 3(f)(i)(a) above, Executive's unvested
shares of Incentive Stock will be accelerated as if he had worked for the
Company until the end of the vesting period specified in Section 3(c) above.
4. Vacation and Executive Benefits. During the term of his
employment, Executive shall be eligible for paid vacation in accordance with the
Company's standard policy for officers of the Company, as it may be amended from
time to time. During the term of his employment, Executive shall receive the
standard automobile allowances currently in effect for his position, and be
eligible to participate in any employee benefit plans maintained by the Company
for similarly situated U.S. employees, subject in each case to the generally
applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan.
5. Business Expenses. During the term of his employment, Executive
shall be authorized to incur necessary and reasonable travel, entertainment and
other business expenses in connection with his duties hereunder. The Company
shall reimburse Executive for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with the
Company's generally applicable policies.
6. Non-Solicitation and Non-Disclosure.
(a) Non-Solicitation. Following the Commencement Date and
continuing until the third anniversary of the date when Executive's employment
terminates for any reason, Executive shall not directly or indirectly,
personally or through others, solicit or
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attempt to solicit (on Executive's own behalf or on behalf of any other person
or entity) for hire or hire any employee of the Company or any of the Company's
affiliates.
(b) Non-Disclosure. As a condition of employment, Executive
will execute the Company's standard Proprietary Information Agreement, a copy of
which is attached.
(c) Enforcement. Because Executive's services are unique and
because Executive has access to confidential information, the parties hereto
agree that money damages would be an inadequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violations of, the provisions hereof.
7. Change in Control Benefit Limit.
(a) Benefit Limit. The aggregate Present Value (measured as of
the Change of Control) of the benefits to which Executive becomes entitled under
this Agreement either at the time of a Change of Control or at the time of his
subsequent termination of employment following a Change of Control and which
constitute "parachute payments" under federal tax law shall be limited to the
greater of the following dollar amounts (the "Benefit Limit"):
(i) 2.99 times Executive's Average Compensation, less
the Present Value (measured as of the Change of Control) of any Other Parachute
Payments to which Executive is entitled other than pursuant to the provisions
this Agreement, or
(ii) the amount which yields Executive the greatest
after-tax amount payable to him under this Agreement after taking into account
the excise tax (if any) imposed under Code Section 4999) on the Vesting
Parachute Payment and any Other Parachute Payments which are provided Executive
under this Agreement or otherwise.
(b) Definitions. For purposes of applying Code Sections 280(G)
and 4999 and the Treasury Regulations thereunder to determine the Benefit Limit
in effect under Section 7(a), the following definitions shall be in effect:
Average Compensation means the average of Executive's W-2 wages or
other compensation from the Company (or any predecessor corporation) for
the five (5) calendar years (or such fewer number of calendar years of
employment with the Company or such predecessor corporation) completed
immediately prior to the calendar year in which the Change of Control is
effected. Any W-2 wages or other compensation for a partial year of
employment will be annualized, in accordance with the frequency which such
wages or compensation is paid during such partial year, before inclusion
in Average Compensation.
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Code means the Internal Revenue Code of 1984, as amended from time
to time.
Vesting Parachute Payment means, with respect to any of Executive's
Incentive Stock or outstanding stock options accelerated pursuant to the
provisions of this Agreement, the portion of that acceleration benefit
deemed to be a parachute payment under Code Section 280G and the Treasury
Regulations issued thereunder. The portion of the acceleration benefit
which is categorized as a Vesting Parachute Payment shall be calculated in
accordance with the valuation provisions established under Code Section
280G and the applicable Treasury Regulations and shall include an
appropriate dollar adjustment to reflect the lapse of Executive's
obligation to remain in the Company's employ as a condition to the vesting
of the accelerated Incentive Stock or stock options. In no event, however,
will the Vesting Parachute Payment attributable to the accelerated vesting
of any Incentive Stock or stock option exceed the spread (the excess of
the fair market value of the accelerated Incentive Stock or option shares
over the purchase price paid for the Incentive Stock or the option
exercise price payable for the accelerated option shares) existing at the
time of the vesting acceleration.
Other Parachute Payment means any payments in the nature of
compensation (other than the Vesting Parachute Payment) which are made to
Executive, whether under this Agreement or any other arrangement, in
connection with the Change of Control and which accordingly qualify as
parachute payments within the meaning of Code Section 280G(b)(2) and the
Treasury Regulations issued thereunder.
Present Value means the value, determined as of the date of the
Change of Control, of any payment in the nature of compensation to which
Executive becomes entitled in connection with the Change of Control or the
subsequent termination of his employment, including (without limitation)
the Vesting Parachute Payment attributable to the accelerated vesting of
his Incentive Stock and outstanding stock options and any Other Parachute
Payments to which Executive becomes entitled. The Present Value of each
such payment shall be determined in accordance with the provisions of Code
Section 280G(d)(4), utilizing a discount rate equal to one hundred twenty
percent (120%) of the applicable Federal rate in effect at the time of
such determination, compounded semi-annually to the effective date of the
Change of Control.
(c) Resolution Procedure. In the event there is any
disagreement between Executive and the Company as to whether one or more
payments to which Executive becomes entitled in connection with either the
Change of Control or his subsequent termination of employment constitute Vesting
Parachute Payments or Other Parachute Payments or as to the determination of the
Present Value thereof, such dispute will be resolved as follows:
(i) In the event temporary, proposed or final
Treasury Regulations in effect at the time under Code Section 280G (or
applicable judicial decisions) specifically address the status of any such
payment or the method of valuation therefor, the
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characterization afforded to such payment by the Regulations (or such decisions)
will, together with the applicable valuation methodology, be controlling.
(ii) In the event Treasury Regulations (or
applicable judicial decisions) do not address the status of any payment in
dispute, the matter will be submitted for resolution to independent tax counsel
("Independent Counsel") mutually acceptable to the Company and Executive. The
resolution reached by such Independent Counsel shall will be final and
controlling. and all expenses incurred in connection with the retention of
Independent Counsel to resolve the dispute shall be shared equally by the
Company and Executive.
(iii) In the event Treasury Regulations (or
applicable judicial decisions) do not address the appropriate valuation
methodology for any payment in dispute, the Present Value thereof will be
submitted to the Company's independent auditors for determination, and the
expenses incurred in obtaining such valuation shall be paid by the Company.
(iv) A portion of the benefits provided under this
Agreement to Executive at the time of his termination of employment following a
Change of Control shall be allocated as compensation for his non-compete
covenant appearing in the Share Exchange Agreement between Executive and the
Company dated July 7, 2000, and to the extent the allocated benefits do not
exceed the value of the non-compete covenant to the Company, those benefits
shall not be considered to be parachute payments under Code Section 280G. The
value of the non-compete covenant shall be determined by independent appraisal
obtained at the sole cost of the Company.
8. Successors
(a) Company's Successors. This Agreement shall be binding upon
any successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.
(b) Executive's Successors. This Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
9. Miscellaneous Provisions
(a) Notice. Notices and all other communications contemplated
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally
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delivered or when deposited with a nationally recognized overnight courier for
next-day delivery or mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid. Mailed notices shall be addressed to Executive at
the home address which he most recently communicated to the Company in writing.
In the case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Secretary.
(b) Modifications and Waivers. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by Executive and the Chief
Executive Officer. No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter of this Agreement. This Agreement, the Proprietary
Information Agreement, and applicable stock option agreements and stock plans,
contain the entire understanding of the parties with respect to the subject
matter hereof.
(d) Taxes. All payments made under this Agreement shall be
subject to reduction to reflect taxes or other charges required to be withheld
by law.
(e) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California (except provisions governing the choice of law).
(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(g) No Assignment. This Agreement and all rights and
obligations of Executive hereunder are personal to Executive and may not be
transferred or assigned by Executive at any time. The Company may assign its
rights under this Agreement to any entity that assumes the Company's obligations
hereunder in connection with any sale or transfer of all or a substantial
portion of the Company's assets to such entity.
(h) Forum. Any dispute or claim arising out of or in
connection with this Agreement shall be resolved by a court of competent
jurisdiction in Santa Xxxxx County, California.
(i) Headings. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.
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(j) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
EXECUTIVE
/s/ XXXXX XXXXX
-----------------------------------------
Xxxxx XxXxx
BRG Acquisition Corporation
By: /s/ XXXXXX XXXXXX, II
-------------------------------------
Xxxxxx Xxxxxx, II
President
And solely with respect to the obligations under Section 3 of the Agreement, BRG
has executed this Agreement as of the day and year first above written.
Business Resources Group, Inc.
By: /s/ XXXXXX XXXXXX, II
-------------------------------------
Xxxxxx Xxxxxx, II
President
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