EXHIBIT 10.14
EXECUTION COPY
Employment Agreement
Between
Xxxxx Xxxxxx Associates, Inc.
and
Xxxxxx X. Xxxxxx
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of July 10, 1998, between Xxxxx Xxxxxx Associates,
Inc., a New York corporation (the "Company"), and Xxxxxx X. Xxxxxx, a resident
of New Canaan, Connecticut (the "Executive"),
W I T N E S S E T H:
WHEREAS, on the date of this Agreement, the Company, Work International
Corporation, a Texas corporation ("WORK"), SHA Acquisition, Inc., a New York
corporation and a wholly owned subsidiary of WORK (the "Merger Subsidiary"), and
the stockholders of the Company, including the Executive, are entering into an
Agreement and Plan of Reorganization (the "Acquisition Agreement"), under which
the Company will merge with the Merger Subsidiary in a merger (the "Merger") of
which the Company will be the surviving corporation and as a result of which the
Company will become a wholly owned subsidiary of WORK; and
WHEREAS, the Executive has served as an officer and director of the
Company, and has contributed substantially to the Company's growth and success;
and
WHEREAS, WORK wishes to insure that the Company will have the continued
benefit of the Executive's knowledge and experience concerning the affairs of
the Company and the staffing industry generally, and to keep them from being
availed of by third parties, and has therefore required as a condition to its
execution of the Acquisition Agreement that the Executive enter into this
Agreement to become effective upon consummation of the Merger; and
WHEREAS, the Executive is willing to accept employment by the Company on
the terms and conditions of this Agreement;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment by the Company. The Company agrees to employ the Executive
as President of the Company for the duration of the Employment Term (as defined
in Section 2 below), to render such services and to perform such duties as are
normally associated with and inherent in the executive capacity in which the
Executive will be serving, as well as such other duties, which are not
inconsistent with the Executive's position as an executive of the Company, as
shall from time to time reasonably be assigned to him by the Board of Directors
of the Company (the "Board of Directors") or the officers of the Company senior
to the Executive.
1.2 Acceptance of Employment by the Executive. The Executive accepts such
employment for the Employment Term and agrees to render the services required of
him under
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Section 1.1. During the Employment Term, the Executive shall devote his full
business time, attention and energy to the business of the Company and the
performance of his duties under this Agreement. The foregoing shall not,
however, prohibit the Executive from making and managing personal investments,
or from engaging in civic or charitable activities, that do not materially
impair the performance of his duties under this Agreement. If appointed or
elected, as applicable, the Executive also shall serve during all or any part of
the Employment Term as any other officer and/or as a director of the Company or
any of its subsidiaries or affiliates, without any additional compensation other
than that specified in this Agreement.
1.3 Place of Performance. The Executive shall be based in the Greater New
York, New York Metropolitan Area, and nothing in this Agreement shall require
the Executive to relocate his base of employment or principal place of residence
from the Greater New York, New York Metropolitan Area.
1.4 Termination of Existing Contracts. The Executive agrees that all
other agreements and contracts, whether written or oral, relating to the
employment of the Executive by the Company shall be terminated effective as of
the commencement of the Employment Term. However, nothing in this Section 1.4
shall (i) affect accrued vacation, holiday or sick pay accruals (but only to
the extent such accruals were reflected in the Company's financial statements
delivered to WORK pursuant to the Acquisition Agreement or in the Disclosure
Statement delivered to WORK pursuant to the Acquisition Agreement), (ii) require
the Company to cease to make available to the Executive, and, subject to his
meeting all applicable eligibility requirements, the Executive shall be entitled
to continue to be covered under, all group health, medical and dental insurance
policies, plans and programs maintained by the Company for its employees
generally, in each case until replacement coverage is provided by the Company,
or (iii) impair or adversely affect any indemnification rights that Executive
may have under statutes empowering corporations in the Company's state of
incorporation to indemnify their officers and directors, or under the Company's
bylaws or any written indemnification agreement between the Executive and the
Company implementing such statutory indemnification rights, but only with
respect to third-party claims or proceedings that relate to actions taken by the
Executive as an officer or director of the Company prior to the date hereof and
that are disclosed to WORK in the Disclosure Statement delivered to WORK
pursuant to the Acquisition Agreement or, if asserted or brought for the first
time after the date hereof, would not constitute a breach of the representations
or warranties of the Company or its stockholders under the Acquisition
Agreement.
2. Employment Term. The term of the Executive's employment under this
Agreement (the "Employment Term") shall commence on the date of consummation of
the Merger pursuant to the Acquisition Agreement (the "Commencement Date"), and
shall continue through and expire on the second anniversary of the Commencement
Date (the "Expiration Date"), unless earlier terminated as herein provided.
However, if the Acquisition Agreement is terminated under the terms of its
Article XII, then this Agreement shall also terminate, automatically and without
the requirement of any action on the part of either of its parties.
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3. Compensation and Other Benefits.
3.1 Annual Salary. As compensation for services to be rendered under this
Agreement, the Company shall pay the Executive a salary (the "Annual Salary") at
a rate of $120,000 per annum. After the first anniversary of the Commencement
Date, the Annual Salary will be subject to such increases as the Board of
Directors may, in its discretion, approve. The Executive shall also be
eligible, during the balance of the Employment Term after the first anniversary
of the Commencement Date, to receive such other compensation, whether in the
form of cash bonuses, incentive compensation, stock options, stock appreciation
rights, restricted stock awards or otherwise (collectively, the "Additional
Compensation"), as the Board of Directors (or any committee of the Board) may,
in its discretion, approve. The Annual Salary and the Additional Compensation
shall be payable in accordance with the applicable payroll and/or other
compensation policies and plans of the Company as in effect from time to time
during the Employment Term, less such deductions as shall be required to be
withheld by applicable law and regulations.
3.2 Participation in Employee Benefit Plans. The Executive shall be
permitted, during the Employment Term, if and to the extent he is and continues
to meet all applicable eligibility requirements, to participate in any group
life, hospitalization or disability insurance plan, health program, pension
plan, similar benefit plan or other "fringe benefits" of the Company, which may
be available to all other members of the Company's management on generally the
same terms.
3.3 Executive Support. The Company shall provide to the Executive office
facilities, furniture, and equipment, secretarial and support personnel and
other management level support services as the Executive shall reasonably
require in connection with his performance of his duties under this Agreement.
3.4 Reimbursement of Business Expenses. The Executive may incur
reasonable, ordinary and necessary business expenses in the course of his
performance of his duties under this Agreement, including expenses for travel,
food and entertainment. The Company shall reimburse the Executive for all such
business expenses if (i) the expenses are incurred by the Executive in
accordance with the Company's business expense reimbursement policy, if any, as
may be established and modified by the Company from time to time, and (ii) the
Executive provides to the Company a record of and appropriate receipts for (A)
the amount of the expense, (B) the date, place and nature of the expense, (C)
the business reason for the expense and (D) the names, occupations and other
data concerning individuals entertained sufficient to establish their business
relationship to the Company. The Company shall have no obligation to reimburse
the Executive for expenses that are not incurred and substantiated as required
by this Section 3.4.
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3.5 Indemnification. The Company shall indemnify the Executive for
actions taken in the course and scope of his duties to the Company to the
fullest extent permitted under New York law.
4. Non-Competition.
4.1 Covenants Against Competition. The Executive acknowledges that (i)
the Company, which for purposes of this Section 4 includes WORK and all of its
present and future subsidiaries and affiliates, including subsidiaries and
affiliates that may be formed or incorporated during the Restricted Period (as
defined in Section 4.1.1), is engaged in the business of providing temporary
personnel staffing, personnel placement, staff leasing, professional employer
organization and training or business solutions (the "Business"); (ii) the
Executive is one of a limited number of persons who has performed a significant
role in developing the Business; (iii) the Business is conducted throughout the
United States and internationally; (iv) his work for the Company has given him,
and will continue to give him, possession of and access to trade secrets of, and
confidential information concerning, the Company; (v) the agreements and
covenants contained in this Section 4 (collectively, the "Restrictive
Covenants") are essential to protect the Business and the goodwill of the
Company; (vi) he has means to support himself and his dependents other than by
engaging in the Business in violation of the Restrictive Covenants, and (vii)
the Restrictive Covenants will not impair his ability to do so. Accordingly,
the Executive agrees as follows:
4.1.1 Non-Compete. During the Restricted Period, the Executive
shall not (A) engage, anywhere within the Territory (as hereinafter
defined), as an officer, director or in any other managerial capacity or as
an owner, co-owner or other investor or creditor in or of, whether as an
employee, independent contractor, consultant or advisor, in any business
selling or providing any services which are sold or offered by the Company,
within a 50-mile radius surrounding each office (each a "facility" and the
area within a 50-mile radius of each such facility, the "Territory") at
which the Executive was employed by the Company within the three-year
period immediately preceding the date of the Executive's termination of
employment, or (B) call on any person or entity that at the time is, or at
any time within one year prior to the date of termination of the
Executive's employment was, a customer of the Company, for the purpose of
soliciting or selling any product or service which is then sold or offered
within the Territory by the Company if the Executive has knowledge of that
customer relationship; provided, however, that nothing in this Section
4.1.1 shall prohibit the Executive from owning, directly or indirectly,
solely as an investment, securities of any entity traded on any national
securities exchange or over-the-counter market if the Executive is not a
controlling person of, or a member of a group which controls, such entity
and does not, directly or indirectly, own one percent or more of any class
of securities of such entity. As used in this Section 4, the term
"Restricted Period" means the period beginning on the Commencement Date and
ending on the date which is the later of two years after the Commencement
Date or one year after the Executive's employment with the Company
terminates for any reason.
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4.1.2 Confidential Information; Personal Relationships. During
the Restricted Period and two years thereafter, the Executive shall keep
secret and retain in strict confidence, and shall not use for the benefit
of himself or others, all confidential matters of the Company, including,
without limitation, "know-how," trade secrets, customer lists, details of
client or consultant contracts, pricing policies, bidding practices and
procedures, operational methods, marketing plans or strategies, project
development techniques or plans, business acquisition plans, new personnel
acquisition plans, inventions and research projects of the Company learned
by the Executive heretofore or during the Restricted Period; nor shall the
Executive, during the Restricted Period, exploit for his own benefit, or
the benefit of others, personal relationships with customers, suppliers or
agents of the Company in connection with or adversely affecting the
Business formed previously during the course of his association with the
Company or formed during the Restricted Period.
4.1.3 Property of the Company. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof), including
such items stored in computer memories, on microfiche or by any other
means, made or compiled by or on behalf of the Executive, or made available
to the Executive relating to the Company, other than purely personal
matters, are and shall be the Company's property and shall be delivered to
the Company promptly upon the termination of the Executive's employment
(whether such termination is for Cause, as hereinafter defined, or
otherwise) or at any other time on request of the Company.
4.1.4 Employees of the Company. During the Restricted Period
and thereafter for as long as the Executive shall remain an employee of or
consultant to the Company, the Executive shall not, directly or indirectly,
hire or solicit any employee or agent of the Company away from the Company
or encourage any such employee or agent to leave such employment.
4.1.5 Consultants of the Company. During the Restricted Period
and thereafter for as long as the Executive shall remain an employee of or
consultant to the Company, the Executive shall not, directly or indirectly,
hire or solicit any consultant then under contract with the Company or
encourage any such consultant to terminate such relationship.
4.1.6 Acquisition Candidates. During the Restricted Period and
thereafter for as long as the Executive shall remain an employee of or
consultant to the Company, the Executive shall not call on any Acquisition
Candidate (as defined below in this Section 4.1.6), with the knowledge of
such Acquisition Candidate's status as such, for the purpose of acquiring,
or arranging the acquisition of, that Acquisition Candidate by any person
or entity other than the Company. In this Section 4.1.6 "Acquisition
Candidate" means any person or entity engaged in any of the businesses of
providing temporary personnel staffing, personnel placement, staff leasing,
professional employer organization, training or business solutions or other
consulting services, and (i) which was called on by
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WORK, the Company or any subsidiary of WORK or the Company in connection
with the possible acquisition by WORK, the Company or any such subsidiary
of that person or entity, or (ii) with respect to which WORK, the Company
or any subsidiary of WORK or the Company has made an acquisition analysis.
4.2 Rights and Remedies upon Breach. If the Executive breaches or
threatens to commit a breach of the Restrictive Covenants, the Company shall
have the following rights and remedies, each of which shall be independent of
the others and severally enforceable, and each of which is in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity:
4.2.1 Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company.
4.2.2 Accounting. The right and remedy to require the Executive
to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Executive as the result of any transaction constituting a breach of the
Restrictive Covenants.
4.3 Severability of Covenants. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.
4.4 Reformation. If any court determines that any Restrictive
Covenant, or any part thereof, is unenforceable because of the duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or scope of such provision, as the case may be, and, in its reduced
form, such provision shall then be enforceable.
4.5 Enforceability in Jurisdictions. The Company and the Executive
intend to and hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of the
Restrictive Covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company and the Executive that
such determination not bar or in any way affect the Company's right to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of the Restrictive Covenants, as to breaches of such
covenants in such other respective jurisdictions, such covenants as they relate
to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
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4.6 Enforceability of Covenants Under Acquisition Agreement.
Notwithstanding anything to the contrary set forth in this Agreement, nothing
herein shall limit or impair in any way the separate and independent
enforceability of the non-competition covenants set forth in Article X of the
Acquisition Agreement, which covenants shall be and remain separate and
independent covenants enforceable in accordance with their term.
5. Termination.
5.1 Termination upon Death. If the Executive dies during the
Employment Term, this Agreement shall terminate, except that the Executive's
legal representatives, successors, heirs or assigns shall be entitled to receive
the Annual Salary, the Additional Compensation and other accrued benefits, if
any, earned up to the date of the Executive's death; provided, however, if any
Additional Compensation or other benefits are governed by the provisions of any
written employee benefit plan or policy of the Company, any written agreement
contemplated thereunder or any other separate written agreement entered into
between the Executive and the Company, the terms and conditions of such plan,
policy or agreement shall control in the event of any discrepancy or conflict
with the provisions of this Agreement regarding such Additional Compensation or
other benefit upon the death, termination or disability of the Executive.
5.2 Termination for Cause. At any time during the Employment Term,
the Company shall have the right, exercisable by serving notice effective in
accordance with its terms, to terminate the Executive's employment under this
Agreement and discharge the Executive for Cause. If such right is exercised,
the Company's obligation to the Executive shall be limited to the payment of any
unpaid Annual Salary, Additional Compensation and other benefits, if any,
accrued up to the effective date specified in the Company's notice of
termination (which date shall not be retroactive). As used in this Section 5.2
and elsewhere in this Agreement, the term "Cause" shall mean that a majority of
the Board of Directors shall have determined, and a majority of the Board of
Directors of WORK shall have concurred, that (i) there has been a material
breach by the Executive of the terms of this Agreement or the Executive has
neglected his duties, and such breach or neglect of duty continues for ten days
after notice from the Company, (ii) the Executive has willfully and persistently
failed or refused to follow the reasonable policies and directives established
by the Board of Directors or executive officers of the Company senior to the
Executive and such failure or refusal continues for ten days after notice from
the Company, (iii) the Executive has wrongfully misappropriated money or other
assets or properties of the Company or any subsidiary or affiliate of the
Company, (iv) the Executive has been convicted of any felony or other serious
crime, (v) the Executive's employment performance has been substantially
impaired by chronic absenteeism, alcoholism or drug addiction, or (vi) the
Executive has exhibited gross moral turpitude relevant to his office or
employment with the Company or any subsidiary or affiliate of the Company.
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5.3 Termination Without Cause. At any time during the period
beginning on the first anniversary of the Commencement Date and continuing
through the end of the Employment Term, the Company shall have the right,
exercisable by serving notice effective in accordance with its terms, to
terminate the Executive's employment under this Agreement and discharge the
Executive without Cause. If such right is exercised, the Company's obligation
to the Executive shall be as set forth in Section 5.5 below.
5.4 Termination upon Disability. If during the Employment Term the
Executive becomes physically or mentally disabled, whether totally or partially,
as evidenced by the written statement of a competent physician licensed to
practice medicine in the United States, so that the Executive is unable to
substantially perform his services hereunder for (i) a period of six consecutive
months, or (ii) for shorter periods aggregating six months during any period of
twelve consecutive months, the Company may at any time after the last day of the
six consecutive months of disability or the day on which the shorter periods of
disability equal an aggregate of six months within a period of twelve
consecutive months, by written notice to the Executive, terminate the
Executive's employment hereunder. If such right is exercised, the Company's
obligation to the Executive shall be as set forth in Section 5.5 below.
5.5 Severance Benefit. If at any time during or after the Employment
Term, the Executive's employment by the Company is terminated for any reason
other than (i) a termination for Cause under Section 5.2, (ii) his voluntary
resignation, or (iii) his death, then for a period of twelve months following
the date of termination of the Executive's employment (the "Severance Benefit
Period"), the Company shall continue to (a) pay to the Executive the amount of
Annual Salary in effect at the date of termination of his employment and (b) at
the Company's expense, continue to include the Executive and his eligible
dependents under the coverage of all group health, medical and dental insurance
policies, plans and programs maintained by the Company during Severance Benefit
Period for the Company's employees, or management employees, generally. The
Company's obligation to perform the obligations listed in subsections (a) and
(b) of this Section will not be reduced by the Executive's employment by another
employer during the Severance Benefit Period, and the Executive shall have no
obligation to mitigate damages by seeking such employment.
6. Insurance. The Company may, from time to time, apply for and take
out, in its own name and at its own expense, naming itself or others as the
designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon the Executive or his life,
in any amount or amounts that it may deem necessary or appropriate to protect
its interest. The Executive agrees to aid the Company in procuring such
insurance by submitting to reasonable medical examinations and by filling out,
executing and delivering such applications and other instruments in writing as
may reasonably be required by an insurance company or companies to which any
application or applications for insurance may be made by or for the Company.
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7. Other Provisions.
7.1 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, five days after the date of deposit in the United States mail, as
follows:
if to the Company, to:
Xxxxx Xxxxxx Associates, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Work International Corporation
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn.: Xxxxx X. Xxxxxxxx
Vice President and Chief Acquisitions Officer
Telecopy No.: (000) 000-0000
if to the Executive, to:
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxx Xxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
Telecopy: [None]
Either party may change its address for notice hereunder by notice to the
other party.
7.2 Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties with respect to its subject matter and
supersedes all prior agreements, written or oral, with respect thereto;
provided, however, that nothing herein shall in any way limit the obligation,
rights or liabilities of the parties under any written stock option agreement
separately entered into by the parties.
7.3 Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder
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shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right, power or privilege hereunder, nor any single or partial exercise
of any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
7.4 Governing Law; Venue. This Agreement, except as set forth in
Section 4.5 hereof, shall be governed by, and construed in accordance with, the
laws of the State of Connecticut without reference to principles governing
choice or conflicts of law.
7.5 Assignment. This Agreement, and any rights and obligations
hereunder, may not be assigned by any party hereto without the prior written
consent of the other party, except that the Company may assign this Agreement to
any of its subsidiaries or affiliates without the Executive's consent provided
such assignment does not diminish any of the Executive's benefits or rights, or
increase in any material respect any of the Executive's obligations, hereunder.
7.6 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.
7.7 Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
XXXXX XXXXXX ASSOCIATES, INC.
By: ______________________________
Xxxxxx X. Xxxxxx
President
______________________________
XXXXXX X. XXXXXX
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