EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of October 11, 1999,
is by and among AccuFacts Pre-Employment Screening, Inc., a Delaware corporation
("AccuFacts"), Xxxxxx- AccuFacts Pre-Employment Screening, Inc., a Delaware
corporation ("Employer"), and Xxxxxxx X. Xxxxxx ("Executive").
In consideration of the mutual covenants and promises herein contained, the
parties hereto agree as follows:
1. Employment.
Employer agrees to employ Executive as the Vice-President of Operations of
Employer and Executive accepts such employment, under and subject to the terms
and conditions hereinafter set forth.
2. Term.
Subject to earlier termination as hereafter provided, this Agreement shall
have a term of three (3) years commencing on the date first appearing above (the
"Effective Date") and ending on the third anniversary of the Effective Date (the
"Term").
3. Duties.
During the Term, Executive shall be responsible for the operations of
Employer, the transition and integration of Xxxxxx, Inc. into the Employer and
such other duties consistent with his status as Vice President of Operations as
are given to him from time to time by the Board of Directors. Executive shall
devote his best efforts, skills, and abilities to the discharge of his duties
hereunder and in promoting the interests of the Employer. In the performance of
his duties, he shall cooperate with agents and other employees of the Employer
and its affiliates. Executive shall not be engaged in, or be concerned with, any
other commercial duties or pursuits which detract from performing his duties
provided for herein.
4. Compensation: Salary, Equity Participation and Other Benefits.
4.1 Salary. During the Term, Employer shall pay Executive a base salary in
the amount of seventy-five thousand dollars ($75,000) per annum (the "Base
Salary"), which shall be payable bi-weekly in arrears, or in such other manner
as may be reasonably determined by the Board, but in no event less frequently
than monthly, and which shall be subject to all applicable federal and state
withholding, payroll and other taxes. Beginning on the first anniversary of the
Effective Date, the Base Salary shall be increased by a minimum of 4% of the
Base Salary (the "First Anniversary Base Salary"). Beginning on the second
anniversary of the Effective Date, the First Anniversary Base Salary shall be
increased by a minimum of 4% of the First Anniversary Base Salary (the "Second
Anniversary Base Salary"). The Base Salary, the First Anniversary Base Salary,
the Second Anniversary Base Salary and fringe benefits shall be reviewed
annually by the Board
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following the close of each full year end of Employer or at such other times as
the Board may consider appropriate, and an upward adjustment to the Base Salary,
the First Anniversary Base Salary, the Second Anniversary Base Salary and/or the
awarding of a bonus or other form of compensation may be made in the sole
discretion of the Board.
4.2 Bonus of Profit Participation. Employer shall pay Executive 2% of any
profit EBITA of AccuFacts (including AccuFact's subsidiaries) in excess of
$500,000.00 as determined by AccuFact's accountants at the end of each fiscal
year during the Term. Such amounts, if any, shall be paid as bonuses to
Executive no later than April 15 of the following fiscal year.
4.3 Grant of Stock Options. In partial consideration of Executive's
covenants hereunder, AccuFacts shall issue to Executive stock options granting
the option to purchase fifty thousand (50,000) shares (the "Options") of the
common stock, $.01 par value, of AccuFacts. The Options shall be vested and
exercisable upon the first anniversary of the Effective Date at a strike price
of $2.50 per share and shall expire on the third anniversary of the Effective
Date.
4.4 Automobile Lease. During the Term, Executive shall be entitled to the
use of an automobile leased or owned by Employer and Employer shall pay or
reimburse Executive the direct expenses associated with such automobile
(insurance, maintenance and the like). The monthly lease or purchase payments
for such automobile shall not exceed $521.
4.5 Fringe Benefits. Executive shall be entitled to participation in such
medical plans, insurance (including without limitation, disability insurance)
and other benefits as are accorded other employees of Employer generally;
provided, however, that in the event that Employer institutes company policies
to provide any members of senior management more extensive insurance and other
similar plans and benefits than it provides its employees generally, Executive
shall be entitled to participate in such plans and benefits.
4.6 Vacation. Executive shall be entitled to three (3) weeks' paid vacation
during each calendar year, and a pro-rata portion thereof for any partial
calendar year in which Executive's employment hereunder commences or terminates.
If the employment of Executive is terminated for any reason, he shall be paid
for all accrued and unused vacation time.
4.7 Business Expenses. It is understood that Executive will from time to
time incur reasonable expenses in conjunction with his employment. Employer will
reimburse him for any such reasonable expenses if he shall present an itemized
written account in accordance with Employer's policies.
5. Guaranty. AccuFacts hereby acknowledges and agrees that it will guaranty all
obligations of Subsidiary to be performed hereunder.
6. Nondisclosure and Developments. In consideration of his employment by
Employer, Executive shall, contemporaneously with his signing of this Agreement,
execute a Nondisclosure and Developments Agreement in the form annexed hereto as
Exhibit A (the "Nondisclosure Agreement"), the terms and conditions of which are
incorporated herein by reference. In the event that Executive has previously
executed the Nondisclosure Agreement, then such agreement shall
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remain in full force and effect in accordance with its terms and all references
herein to the Nondisclosure Agreement shall refer to such previously executed
agreement.
7. Covenant Not to Compete.
(a) In consideration of the Non-Competition Consideration as set forth in
the Supplemental Agreement (the "Supplemental Agreement") dated as of even date
herewith by and among AccuFacts, Employer, Executive and Xxxxxx, Inc., and for
other good and valuable consideration the receipt and sufficiency of which
Executive hereby acknowledges, Executive hereby agrees that for the period
commencing on the Effective Date and ending on the later of (i) three (3) years
following the Effective Date or (ii) two (2) years from the date of termination
of the Term hereof (the "Non-Compete Period"), Executive shall not, without the
prior written consent of Employer:
(i) directly or indirectly, engage, whether as an individual
proprietor, partner, stockholder, officer, executive, director, employee,
author, consultant, contractor, joint venturer, lender, investor,
representative or in any other capacity whatsoever (other than as a holder
of not more than one percent (1%) of the total outstanding stock of a
publicly held company), with or without pay, or assist any other Person (as
such term is defined in the Supplemental Agreement) in engaging in any
activity or line of business which is similar to, or competitive with, the
Business (as such term is defined in the Supplemental Agreement) as
conducted by Employer at any time during the Non-Compete Period (the
"Proscribed Business Activities");
(ii) directly or indirectly (1) enter into any kind of arrangement
with any person then employed by AccuFacts or Employer with a view to
terminating the employment of such person or (2) solicit, engage, or hire
any individual who is then employed or was employed by AccuFacts or
Employer during the previous six (6) month period;
(iii) directly or indirectly, either on its own behalf or on behalf of
any other Person:
A. attempt in any manner to persuade any customer, client,
distributor or supplier of AccuFacts or Employer to cease to do
business, or to reduce the amount of business which such customer,
client, distributor or supplier has customarily done or contemplates
doing, with AccuFacts or Employer; or
B. solicit business of any customer, client, distributor or
supplier of Employer or render any services of the type usually
rendered by AccuFacts or Employer for any such customer, client,
distributor or supplier of AccuFacts or Employer.
(b) Notwithstanding anything herein to the contrary, for purposes of
clarification, the parties hereby acknowledge that the Proscribed Business
Activities do not include general business consulting within the field of human
resources and executive/professional recruitment or placement, including, as a
part of such recruiting or placement, background checks; provided, however, that
such background checks not included in the Proscribed Business Activities may
not be conducted by Executive with a view towards re-sale and/or separate
charging.
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(c) The provisions of this Section 7 shall be void and of no effect in the
event that (i) Executive's employment with Employer is terminated without cause
as set forth herein and Executive has not received the Severance Payment in
connection with such termination as set forth herein or (ii) Employer has failed
to pay Executive the consideration payable to him pursuant to the terms hereof
and Executive subsequently terminates this Agreement by reason of such failure.
(d) The covenants contained in the preceding paragraphs shall be construed
as a series of separate covenants, one for each county, city and state of any
geographic area where any business is carried on by AccuFacts or Employer.
Except for geographic coverage, each such separate covenant shall be deemed
identical in terms to the covenant contained in the preceding paragraphs. If, in
any judicial proceeding, a court refuses to enforce any of such separate
covenants (or any part thereof), then such unenforceable covenant (or such part)
shall be eliminated from this Agreement to the extent necessary to permit the
remaining separate covenants (or portions thereof) to be enforced. In the event
that the provisions of this Section 7 are deemed to exceed the time, geographic
or scope limitations permitted by applicable law, then such provisions shall be
reformed to the maximum time, geographic or scope limitations, as the case may
be, permitted by applicable laws.
8. Termination.
8.1 Death. Executive's employment hereunder shall terminate forthwith upon
the death of Executive.
8.2 Disability. Executive's employment hereunder shall terminate, at the
option of Employer, upon 30 days prior written notice delivered to Executive
after the 90 Day Period, in the event that the Board makes a good faith
determination that Executive suffers from Disability (as hereinafter defined) so
as to be unable to substantially perform his duties hereunder for an aggregate
of ninety (90) calendar days during any period of twelve (12) consecutive months
(the "90 Day Period"). As used in this Agreement, the term "Disability" shall
mean the material inability, in the opinion of a majority of the Board of
Directors, set forth in a resolution giving the particulars thereof, of
Executive to perform his duties in accordance with the terms of Section 3 hereof
due to physical and/or mental infirmity, which opinion is concurred by a
physician or psychiatrist reasonably satisfactory to Employer and Executive or
his duly appointed representative or guardian.
8.3 Without Cause. Employer may terminate this Agreement at any time during
the term without cause, subject to the provisions of Section 9.4 hereof.
8.4 For Cause. At any time during the term of this Agreement, Employer (by
vote of a disinterested majority of the Board of Directors) may terminate
Executive's employment hereunder for "Cause" upon a good faith finding of the
Board of Directors of Cause and notice to Executive setting forth in reasonable
detail the nature of such "Cause". The following actions of Executive shall
constitute "Cause" for purposes of this Agreement:
(i) Executive's embezzlement or substantial and material misuse of
Employer's funds for unauthorized purposes;
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(ii) Executive's conviction by a court of competent jurisdiction of,
or plea of guilty or nolo contendere to, any felony involving the
possession of controlled substances, homicide, moral turpitude, theft or
larceny, including, but not limited to, the theft of Employer's property;
(iii) Executive's breach of his covenants set forth in Articles 6 and
7 of this Agreement in a material manner; or
(iv) Substantial non-performance by Executive of his duties in
accordance with the terms of Section 3 hereof, which non-performance is not
the result of illness, disability, death or accident.
Termination under clauses (i) through (iii) hereunder may be made forthwith upon
the events recited therein. Termination under clause (iv) may be made upon 45
days prior written notice, with Executive having an opportunity to cure his
default during such period.
9. Limited Compensation Upon Termination.
9.1 Death. If the Executive's employment shall be terminated by reason of
his death, the Employer shall pay to such person as Executive shall designate in
a notice filed with Employer, or if no such person shall be designated, to his
estate as a lump sum benefit, Executive's Salary earned to the date of his death
and, except as otherwise provided in this Agreement, any payments the
Executive's spouse, beneficiaries or estate may be entitled to receive pursuant
to any pension or employee benefit plan or life insurance policy or similar plan
or policy then maintained by the Employer for such purpose, and such payment
shall, assuming the Employer is in compliance with the provision of this
Agreement, fully discharge the Employer's obligations with respect to Section 4
of this Agreement.
9.2 Disability. During any period that the Executive fails to perform his
duties hereunder as a result of incapacity due to Disability, the Executive
shall continue to receive his Base Salary until either of (i) the Executive's
employment is terminated pursuant to Section 7.2 of this Agreement or (ii) the
payments of disability benefits under any disability policy for which Employer
has paid the premiums shall become generally available to the Executive.
9.3 For Cause. If the Executive's employment shall be terminated for Cause,
the Employer shall pay the Executive his full Salary through the Date of
Termination, at the rate in effect at the time Notice of Termination is given,
and, the Employer shall have no further obligations with respect to Section 4 of
this Agreement.
9.4 Without Cause. If the Executive's employment shall be terminated
without cause, the Employer shall pay the Executive his full salary through the
Date of Termination, at the rate in effect at the time notice of termination is
given, and, in addition, Executive will be entitled to continue to receive his
then current salary, including any increases thereto as contemplated by Section
4.1 of this Agreement (the "Severance Payment") for a period commencing on the
date of his termination and continuing through the end of the Term hereof (the
"Severance Period"). Executive shall receive no other bonuses or benefits, other
than COBRA and no other rights shall accrue during the Severance Period.
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10. Change in Control.
(a) Unless he elects to terminate this Agreement pursuant to subsection (c)
below, executive understands and acknowledges that the Employer may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Employer hereunder.
(b) In the event of a Change of Control (as defined herein), Executive may,
at his sole discretion, elect to terminate this Agreement by providing written
notice to the Employer at least five business days prior to the anticipated
closing of the transaction giving rise to the Change in Control. In such case,
the applicable provisions of Section 9.4 will apply as though the Employer had
terminated Executive's employment without cause; provided, however, that under
such circumstances, the amount of the Severance Payment due shall be paid in a
lump sum at the then present value thereof (at a 5% interest rate) and the
non-competition provisions of Section 7 shall apply for a period of three years
from the effective date of termination.
(c) For purposes of applying Section 9.4 under the circumstances described
in subsection (b) above, the effective date of termination will be the closing
date of the transaction giving rise to the Change of Control and all
compensation, severance, reimbursements and lump-sum payments due the Executive
must be paid in full by AccuFacts at or prior to such closing.
(d) a "Change of Control" shall be deemed to have occurred in the event
that, prior to the expiration of this Agreement, (i) there is a sale or
acquisition of AccuFacts or Employer, (ii) Xxxxxx Xxxxxx no longer has a
"controlling interest" (as such term is defined in the U.S. Securities Exchange
Act of 1934, as amended) in AccuFacts, or (iii) there is a sale of substantially
all of the assets of AccuFacts or its subsidiaries.
(e) Executive must be notified in writing by the Employer at any time that
the Employer or AccuFacts anticipates that a Change of Control may take place.
11. Miscellaneous.
11.1 Notices. All notices shall be in writing and given by personal
delivery, certified mail, return receipt requested, or by commercial overnight
courier, to the recipient's address set forth above or to such other address or
addresses as either party may specify in writing to the other. Notice shall be
deemed given the date of personal delivery, the fifth business day after
mailing, or the next business day after delivery to such courier (unless the
return receipt or the couriers records evidence a later delivery).
11.2 No Assignment. This Agreement shall not be assigned by either party
without the advance written consent of the other, provided that Employer may
assign this Agreement to a successor to all or a substantial portion of its
business. This Agreement shall be binding upon and inure to the benefit of the
parties, their successors and permitted assigns.
11.3 Entire Agreement. This Agreement (including the Nondisclosure
Agreement executed simultaneously) constitutes the entire agreement between the
parties with respect to its
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subject matter, except as provided herein, all other prior agreements,
representations, statements, negotiations and undertakings are terminated and
superseded hereby.
11.4 Survival. After expiration or termination of this Agreement, all
provisions relating to payment shall survive until completion of required
payments. In addition to those provisions which specifically provide for
survival beyond expiration or termination, all provisions regarding restrictions
on competition, assignment of Developments (as defined in the Nondisclosure
Agreement), post-termination solicitation of employees or customers of Employer,
confidentiality and/or protection of proprietary rights and trade secrets shall
survive without any time limits unless and until the expiration of any time
period specified elsewhere in this Agreement with respect to the provision in
question.
Notwithstanding the foregoing, in no event shall any of the Executive's
obligations, other than those relating to confidentiality and/or protection of
proprietary rights and trade secrets, survive beyond twenty-four (24) months
from Executive's termination.
11.5 Governing Law. This Agreement shall be deemed to have been made in
State of Florida, and shall be governed by and construed in accordance with the
laws of the State of Florida, exclusive of its rules governing choice of law and
conflict of laws. Each party hereto irrevocably and unconditionally (i) agrees
that any suit, action or other legal proceeding arising out of this Agreement
may be brought in the United States District Court for the Middle District of
Florida, Orlando Division or, if such court does not have jurisdiction or will
not accept jurisdiction, in any court of general jurisdiction in the County of
Orange, Florida; (ii) consents to the jurisdiction or any such court in any such
suit, action or proceeding; and (iii) waives any objection which such party may
have to the laying of venue of any such suit, action or proceeding in any such
court.
11.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to constitute an original
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Employment Agreement on the date first above written.
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
ACCUFACTS PRE-EMPLOYMENT
SCREENING, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------
Name: Xxxxxx Xxxxxx
Title: President
XXXXXX-ACCUFACTS PRE-EMPLOYMENT
SCREENING, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------
Name: Xxxxxx Xxxxxx
Title: President
As Guarantor of all obligations hereunder of
Xxxxxx-AccuFacts Pre-Employment Screening, Inc.,
pursuant to Section 5 of this Agreement,
ACCUFACTS PRE-EMPLOYMENT
SCREENING, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------
Name: Xxxxxx Xxxxxx
Title: President
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Exhibit A
NONDISCLOSURE AND DEVELOPMENTS AGREEMENT
In consideration and as a condition of my employment by Xxxxxx-AccuFacts
Pre- Employment Screening, Inc. (the "Employer"), the undersigned hereby agrees
with the Employer as follows:
1. I will not at any time, during my employment or for a period of seven
years after the termination of my employment, reveal to any person or entity any
of the trade secrets or confidential information ("Confidential Information")
concerning the organization, business or finances of the Employer, including
without limitation any names or lists of names of customers, employees,
potential employees, independent contractors or any other business contacts
developed by me or by other employees or agents of the Employer, or of any third
party which the Employer is under an obligation to keep confidential, except as
may be required in the ordinary course of performing my duties as an employee of
the Employer, and I shall keep secret all matters entrusted to me and shall not
use or attempt to use any such information in any manner which may injure or
cause loss or may be calculated to injure or cause loss, whether directly or
indirectly, to the Employer.
Further, I agree that during the Term of my employment and for seven years
thereafter, I shall not make, use or indirectly cause to be used any
Confidential Information of any nature relating to any matter within the scope
of the business of the Employer or concerning any of its dealings or affairs
other than for the benefit of the Employer. I further agree that I shall not,
after the termination of my employment, use or directly cause to be used any
such Confidential Information of the Employer, it being agreed that all of the
foregoing shall be and remain the sole and exclusive property of the Employer
and that immediately upon the termination of my employment I shall deliver at
the Employer's request, all of the foregoing, and all copies thereof, to the
Employer, at its main office.
Notwithstanding the foregoing, I shall not be obligated to maintain the
confidentiality of any information contemplated under the terms of this
Agreement which:
a. is already known to me prior to disclosure by the Employer;
b. at the time of disclosure is generally available to the public or
which after such disclosure becomes generally available to the public
through no fault of mine; or
c. is acquired by me from a third party without restriction on
disclosure or use;
or
d. is approved for use or disclosure by written authorization of the
Employer.
2. If at any time or times during my employment, I shall (either alone or
with others) make, conceive, discovery or reduce to practice any invention,
modification, discovery, design, development, improvement, process, software
program, work of authorship, documentation, formula, data, technique, know-how,
secret or intellectual property right whatsoever or any interest therein
(whether or not patentable or registrable under copyright or similar statutes or
subject to analogous protection) (herein called "Developments") that relates to
the then current business of the
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Employer or any then planned new business as defined in the then current
business plan or then current corporate documents of the Employer, or any of the
products or services being developed, manufactured or sold by the Employer or
which may be used in relation therewith, then: (A) such Developments and the
benefits thereof shall immediately become the sole and absolute property of the
Employer and its assigns and I hereby assign any rights I may have or acquire in
the Developments and benefits and/or right resulting therefrom to the Employer
and its assigns without further compensation, (B) to the extent consistent with
the Copyright Act of 1976 (the "Copyright Act"), each such Development shall be
a "work made for hire" as that term is defined in Section 101 of the Copyright
Act, and shall be the sole property of the Employer and the Employer shall be
the sole author thereof within the meaning of the Copyright Act, and if any such
Development or any portion thereof is not deemed to be a "work made for hire,"
this Agreement shall operate as an irrevocable assignment of the copyright to
the Development throughout the world, (C) I shall promptly disclose to the
Employer (or any persons designated by it) each such Development, and (D) I
shall communicate, without cost or delay, and without publishing the same, all
available information relating thereto (with all necessary plans and models) to
the Employer.
Upon disclosure of each Development to the Employer, I will, during my
employment and at any time thereafter, at the request and cost of the Employer,
sign, execute, make and do all such deeds, documents, acts and things as the
Employer and its duly authorized agents may reasonably require:
(a) to apply for, obtain and vest in the name of the Employer alone
(unless the Employer otherwise directs) letters patent, copyrights or other
analogous protection in any country throughout the world and when so
obtained or vested to renew and restore the same; and
(b) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications
for revocation of such letters patent, copyright or other analogous
protection.
In the event the Employer is unable, after reasonable effort, to secure my
signature on any letter patent, copyright or other analogous protection relating
to a Development, whether because of my physical or mental incapacity or for any
other reason whatsoever, I hereby irrevocably designate and appoint the Employer
attorney-in-fact, to act for and in my behalf and stead to execute and file any
such application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent, copyright or other
analogous protection thereon with the same legal force and effect as if executed
by me.
3. I represent that my performance of all of the terms of this Agreement
and as an employee of the Employer does not and will not breach any agreement to
keep in confidence proprietary information acquired by me in confidence or in
trust prior to my employment by the Employer. I have not entered into, and I
agree I will not enter into, any agreement, either written or oral, in conflict
herewith.
4. I recognize that the Confidential Information constitutes "trade
secrets" under Section 688.002(4), Florida Statutes and that Section 812.081,
Florida Statutes, specifically prohibits, and makes a criminal offense,
unauthorized possession and use of such Confidential Information by me and/or by
any person acting in concert with me.
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5. Any waiver by the Employer of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of such provision or any other provision hereof.
6. I hereby agree that each provision herein shall be treated as a separate
and independent clause, and the unenforceability of any one clause shall in no
way impair the enforceability of any of the other clauses herein. Moreover, if
one or more of the provisions contained in this Agreement shall for any reason
be held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate judicial body by limiting and reducing it or them, so as to be
enforceable to the maximum extent compatible with the applicable law as it shall
then appear.
7. My obligations under this Agreement shall survive the termination of my
employment regardless of the manner of such termination and shall be binding
upon my heirs, executors, administrators and legal representatives.
Notwithstanding the foregoing, in no event shall any of my obligations under
this Agreement survive beyond one (1) year from my termination except the
covenants set forth in paragraph 1.
8. The term "Employer" shall include AccuFacts Pre-Employment Screening,
Inc., and any of its subsidiaries, subdivisions or affiliates. The Employer
shall have the right to assign this Agreement in its entirety to its successors
and assigns (and its rights in part to any purchaser of any of its products, to
the extent relevant to such products), and all covenants and agreements
hereunder shall inure to the benefit of and be enforceable by said successors,
assigns or purchasers.
9. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, exclusive of its conflict of laws rules.
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IN WITNESS WHEREOF, the undersigned has executed this
Agreement as of the 11th day of October 1999.
Xxxxxxx X. Xxxxxx
Name of Executive
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Signature
Address
Xxxxxx-AccuFacts Pre-Employment Screening, Inc.
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Name: Xxxxxx Xxxxxx
Title: President
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