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EXHIBIT 10.2
TEAM AMERICA CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made in
Columbus, Ohio effective as of December ___, 1996, by and between TEAM AMERICA
CORPORATION, an Ohio corporation (the "Company"), and XXXXXXX X. XXXXXX, an
individual residing in Columbus, Ohio (the "Executive"), who hereby agree as
hereinafter provided.
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the meanings set forth below.
"Agreement" shall have the meaning set forth in the introductory
paragraph hereof.
"Base Compensation" shall have the meaning set forth in Section 5(a).
"Benefit Plans" shall have the meaning set forth in Section 7(a).
"Board of Directors" means the incumbent directors of the Company as of
the point in time reference thereto is made in this Agreement.
"Cause" shall have the meaning set forth in Section 11(b).
"Common Shares" means the common shares, without par value, of the
Company.
"Company" shall have the meaning set forth in the introductory
paragraph of this Agreement, and shall include Subsidiaries where
appropriate.
"Competitive Business" shall have the meaning set forth in
Section 10(a).
"Confidential Information" shall have the meaning set forth in
Section 10(c).
"Disability" of the Executive means that, as a result of the
Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from his duties on a full-time basis for six (6)
consecutive months, or for an aggregate of nine (9) months in any
consecutive 12-month period, and a physician selected by the Executive
is of the opinion that (a) he is suffering from "total disability" as
defined in the Company's disability insurance program or policy and (b)
he will qualify for Social Security Disability Payments and (c) within
30 days after written notice thereof is given by the Company to the
Executive (which notice may be given at any time after the end of such
six (6) or 12-month periods) the Executive shall not have returned to
the performance of his duties on a full-time basis. (If the Executive
is prevented from performing his duties because of
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Disability, upon request by the Company the Executive shall submit to
an examination by a physician selected by the Company, at the Company's
expense, and the Executive shall also authorize his personal physician
to disclose to the selected physician all of the Executive's medical
records.)
"Employment Commencement Date" means the date on which the IPO is
consummated.
"Employment Period" means the period commencing on the Employment
Commencement Date and ending on the Employment Termination Date.
"Employment Termination Date" means the date the Employment Period
terminates as provided in Section 11.
"Executive" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" shall have the meaning set forth in Section 11(e).
"Incentive Bonus Compensation" shall have the meaning set forth in
Section 5(b).
"IPO" means the initial public offering of the Company's Common Shares.
"Notice of Termination" shall have the meaning set forth in
Section 11(a)(1).
"Restricted Period" shall have the meaning set forth in Section 10(a).
"Sales Commissions" shall have the meaning set forth in Section 5(c).
"Scheduled Employment Period" shall have the meaning set forth in
Section 2.
"Scheduled Employment Termination Date" means the last day of the
Scheduled Employment Period.
"Subsidiaries" means wholly-owned subsidiaries of the Company.
SECTION 2. EMPLOYMENT AND TERM. The Company hereby employs the
Executive, and the Executive hereby accepts such employment by the Company, for
the purposes and upon the terms and conditions contained in this Agreement. The
term of such employment shall be for a period (the "Scheduled Employment
Period") of three (3) years commencing on the Employment Commencement Date and,
unless terminated in accordance with the provisions of this Agreement, on the
first day of each month during the term hereof, the remaining term of this
Agreement shall be automatically extended for one additional month.
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SECTION 3. EMPLOYMENT CAPACITY AND DUTIES. The Executive shall be
employed throughout the Employment Period as the Chairman of the Board of
Directors, President and Chief Executive Officer of the Company. The Executive
shall have the duties and responsibilities incumbent with the positions of
Chairman of the Board of Directors, President and Chief Executive Officer of the
Company. Accordingly, and not by way of limitation, as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company, the Executive
shall preside over all meetings of the shareholders of the Company and of the
Board of Directors, superintend and manage the business of the Company and
coordinate and supervise the work of its other officers and employ, direct, fix
the compensation of, discipline and discharge its personnel, employ agents,
professional advisors and consultants and perform all functions of a general
manager of the Company's business. The Company agrees that it will not, without
the Executive's written consent, relocate its principal executive offices to a
location outside the greater Columbus, Ohio area or require the Executive to be
based anywhere other than the Company's principal executive offices, except for
required travel on the Company's business to an extent substantially consistent
with present travel obligations.
SECTION 4. EXECUTIVE PERFORMANCE COVENANTS. The Executive accepts the
employment described in Section 3 and agrees to devote his full working time and
efforts (except for absences due to illness and appropriate vacations) to the
business and affairs of the Company and the performance of the aforesaid duties
and responsibilities. However, nothing in this Agreement shall preclude the
Executive from devoting a reasonable amount of his time and efforts to civic,
community, charitable, professional and trade association affairs and matters.
SECTION 5. COMPENSATION. The Company shall pay to the Executive, for
his services hereunder, the compensation hereinafter provided in this Section 5.
Such compensation shall be paid to the Executive at the times and in the manner
as provided below.
(a) Base Compensation. The Executive shall be paid "Base
Compensation" for each Fiscal Year at an annual rate of $195,000 in
weekly equal installments. The Base Compensation may be increased (but
may not be decreased) at any time or from time to time by action of the
Board of Directors or any committee thereof. The Base Compensation
shall be pro-rated for any Fiscal Year hereunder which is less than a
full Fiscal Year. Any increase in the Base Compensation shall not serve
to limit or reduce any other obligation of the Company hereunder.
(b) Incentive Bonus Compensation. The Executive shall be
paid "Incentive Bonus Compensation" for each Fiscal Year in an amount
to be determined by the Company's Compensation Committee based upon
such factors as the Compensation Committee in its discretion shall deem
appropriate, including, without limitation, the Company's results of
operations and financial condition and the Executive's performance
during the Fiscal Year.
(c) Sales Commissions. The Executive shall be paid "Sales
Commissions" for each Fiscal Year pursuant to terms and conditions to
be determined by the Company's Compensation Committee.
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SECTION 6. REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for his reasonable expenses incurred in providing services to the
Company, including expenses for travel, entertainment and similar items, in
accordance with the Company's reimbursement policies as determined from time to
time by the Board of Directors. If there is a dispute as to the eligibility of
an expense for reimbursement in accordance with the Company's reimbursement
policies, then such expense shall be determined to be reimbursable if approved
by a majority of the Board of Directors.
SECTION 7. EMPLOYEE BENEFITS; VACATIONS; RETIREMENT. During the
Employment Period, the Executive shall receive the benefits and enjoy the
perquisites described below:
(a) Benefit Plans. The Company shall continue in effect any
perquisite, benefit or compensation plan (in addition to the
compensation provided for in Section 5) including its 401(k) plan,
medical insurance plan, life insurance plan, health and accident plan
and disability plan in which the Executive is currently participating,
or to maintain plans providing substantially similar benefits
(collectively referred to as the "Benefit Plans"); provided, however,
that the Company may make modifications in the Benefit Plans so long as
such modifications (i) are generally applicable to all salaried
employees of the Company and (ii) do not discriminate against the
Executive or other highly-compensated employees of the Company.
(b) Vacations. The Executive shall be entitled in each
Fiscal Year to a vacation of four weeks (20 working days), during which
time his compensation shall be paid in full, and such holidays and
other nonworking days as are consistent with the policies of the
Company for executives generally.
(c) Retirement. The Company agrees to maintain one or more
life insurance policies on the life of the Executive in an aggregate
amount sufficient to pay the Executive's widow at least $48,000 per
year for 15 years in the event that the Executive dies prior to his
retirement. No such benefit will be paid in the event that the
Executive dies after his retirement. In addition, upon the Executive's
retirement on or after his sixty-fifth birthday, the Company shall pay
the Executive an amount calculated to be equal to the maximum loan
available from such insurance policy which will not cause such
insurance policy to lapse prior to the Executive's life expectancy.
Thereafter, such amount shall be recalculated on an annual basis and
the Company will pay the Executive any increase in such amount.
SECTION 8. STOCK OPTIONS.
(a) Participation in 1996 Incentive Stock Plan. The
Executive shall be granted the right to purchase 50,000 Common Shares
at the public offering price for such Common Shares in the IPO, subject
to vesting 20% per year over five (5) years, such options to expire ten
(10) years after the date of grant. The options shall be granted under
and shall be subject to the terms and conditions of the Company's 1996
Incentive Stock Plan and the provisions of such plan shall control in
the event of the termination of Executive's employment.
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(b) Registration of Option Shares on Form S-8. The Company
shall as soon as reasonably practicable following the closing of the
IPO file a registration statement on Form S-8 with the Securities and
Exchange Commission for the purpose of registering the Common Shares
underlying the Company's 1996 Incentive Stock Plan.
SECTION 9. COMPANY LIFE INSURANCE; MEDICAL EXAMINATIONS. At any time
during the Employment Period, the Company may, in its discretion, apply for and
procure as owner and for its own benefit, insurance on the life of the
Executive, in such amounts and in such form or forms as the Company may
determine. The Executive shall have no right to any interest in any such policy
or policies, but he shall, at the request of the Company, submit to such medical
examinations, supply such information and execute such applications, instruments
and other documents as reasonably may be required by the insurance company or
companies to whom the Company has applied for such insurance.
If requested by the Company, the Executive shall submit to at least one
medical examination during each Fiscal Year at such reasonable time and place
and by a physician or physicians determined and selected by the Company. All the
costs and expenses of said medical examination, including transportation of the
Executive to the place of examination and return, shall be paid by the Company.
The Executive shall be entitled to a copy of all reports and other
information provided to the Company in connection with any examination referred
to in this Section 9. Any failure to pass any such medical examination or to
meet any health criteria or medical standard shall not of itself be cause for
termination of the Employment Period by the Company.
SECTION 10. CERTAIN COMPANY PROTECTION PROVISIONS. The below provisions
apply for the protection of the Company.
(a) Noncompetition. During the Restricted Period (as
hereinafter defined), the Executive shall not directly or indirectly compete
with the Company by owning, managing, controlling or participating in the
ownership, management or control of, or be employed or engaged by or otherwise
affiliated or associated with, any Competitive Business in any state from which
the Company derives more than 5% or more of its total gross revenue at any time
during the Employment Period. Ownership of not more than five percent (5%) of
the stock of any publicly traded company shall not be deemed a violation of this
provision. As used herein, the term "Restricted Period" means the Employment
Period and a period of one (1) year thereafter. As used herein, a "Competitive
Business" is any other corporation, partnership, proprietorship, firm,
association or other business entity which is engaged in the business of
arranging with one or more client employers, under written contract, to employ
all or part of the work force for any such client employer and to place those
workers on a permanent basis with the client employer.
(b) Non-Interference. During the Restricted Period, the
Executive shall not induce or solicit any employee of the Company or any person
doing business with the Company to terminate his or her employment or business
relationship with the Company or otherwise interfere with any such relationship.
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(c) Confidentiality. The Executive agrees and acknowledges
that, by reason of the nature of his duties as an officer and employee, he will
have or may have access to and become informed of confidential and secret
information which is a competitive asset of the Company ("Confidential
Information"), including without limitation any lists of client organizations or
worksite employees, financial statistics, research data or any other statistics
and plans contained in profit plans, capital plans, critical issue plans,
strategic plans or marketing or operation plans or other trade secrets of the
Company and any of the foregoing which belong to any person or company but to
which the Executive has had access by reason of his employment relationship with
the Company. The Executive agrees faithfully to keep in strict confidence, and
not, either directly or indirectly, to make known, divulge, reveal, furnish,
make available or use (except for use in the regular course of his employment
duties) any such Confidential Information. The Executive acknowledges that all
manuals, instruction books, price lists, information and records and other
information and aids relating to the Company's business, and any and all other
documents containing Confidential Information furnished to the Executive by the
Company or otherwise acquired or developed by the Executive, shall at all times
be the property of the Company. Upon termination of the Employment Period, the
Executive shall return to the Company any such property or documents which are
in his possession, custody or control, but his obligation of confidentiality
shall survive such termination of the Employment Period until and unless any
such Confidential Information shall have become, through no fault of the
Executive, generally known to the trade. The obligations of the Executive under
this subsection are in addition to, and not in limitation or preemption of, all
other obligations of confidentiality which the Executive may have to the Company
under general legal or equitable principles.
(d) Remedies. It is expressly agreed by the Executive and the
Company that these provisions are reasonable for purposes of preserving for the
Company its business, goodwill and proprietary information. It is also agreed
that if any provision is found by a court having jurisdiction to be unreasonable
because of scope, area or time, then that provision shall be amended to
correspond in scope, area and time to that considered reasonable by a court and
as amended shall be enforced and the remaining provisions shall remain
effective. In the event of any breach of these provisions by the Executive, the
parties recognize and acknowledge that a remedy at law will be inadequate and
the Company may suffer irreparable injury. The Executive acknowledges that the
services to be rendered by him are of a character giving them peculiar value,
the loss of which cannot be adequately compensated for in damages; accordingly,
the Executive consents to injunctive and other appropriate equitable relief upon
the institution of proceedings therefor by the Company in order to protect the
Company's rights. Such relief shall be in addition to any other relief to which
the Company may be entitled at law or in equity.
SECTION 11. TERMINATION OF EMPLOYMENT.
(a) Notice of Termination; Employment Termination Date.
(1) Any termination of the Executive's employment by the
Company or the Executive shall be communicated by written Notice of Termination
to the other party thereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination under
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the provision so indicated. Furthermore, either the Executive or the Company may
give a Notice of Termination to the other party for the purpose of terminating
this Agreement, as such, without terminating the Executive's employment with the
Company, which Notice of Termination shall have the effect of terminating this
Agreement on the Scheduled Employment Termination Date as in effect on the date
of giving such Notice of Termination. From and after the giving of a Notice of
Termination pursuant to this Section 11(a)(1) through the Scheduled Termination
Date, all of the terms and provisions of this Agreement shall remain in full
force and effect.
(2) "Employment Termination Date" shall mean the date on which
the Employment Period and the Executive's right and obligation to perform
employment services for the Company shall terminate effective upon the first to
occur of the following, it being understood that in no event may the Employment
Period be terminated other than as the result of one of the following events:
(A) If the Executive's employment is terminated for Disability,
the date which is thirty (30) days after Notice of
Termination is given (provided that the Executive shall not
have returned to the performance of his duties on a
full-time basis during such thirty (30) day period);
(B) If the Executive's employment is terminated by the
Executive for Good Reason or otherwise by voluntary action
of the Executive (see Section 11(e)), THE date specified in
the Notice of Termination, which date (except with the
written consent of the Company to the contrary) shall be
not more than sixty (60) days after the date that the
Notice of Termination is given;
(C) The death of the Executive;
(D) If the Executive's employment is terminated by the Company
for Cause (see Section 11(b)(1)), the date on which a
Notice of Termination is given; provided that if within
thirty (30) days after any Notice of Termination is given
the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the
termination, the Employment Termination Date shall be the
date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected); and
(E) If the Executive's employment is terminated by the Company
other than for Cause, Disability or death of the Executive,
the date specified in the Notice of Termination which date
(except with the written consent of the Executive to the
contrary) shall be at least three (3) years after the date
that the Notice of Termination is given.
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(b) Termination for Cause.
(1) The Company may terminate the Executive's employment
and the Employment Period for Cause. For the purposes of this Agreement, the
Company shall have "Cause" to terminate employment hereunder only (A) if
termination shall have been the result of an act or acts of misconduct
materially injurious to the Company, monetarily or otherwise, or (B) upon the
wilful and continued failure by the Executive substantially to perform his
duties with the Company (other than any such failure resulting from incapacity
due to mental or physical illness) after a demand in writing for substantial
performance is delivered by the Board, which demand specifically identifies the
manner in which the Board believes that the Executive has not substantially
performed his duties, and such failure results in demonstrably material injury
to the Company. The Executive's employment shall in no event be considered to
have been terminated by the Company for Cause if such termination took place as
the result of (i) bad judgment or negligence, or (ii) any act or omission
without intent of gaining therefrom directly or indirectly a profit to which the
Executive was not legally entitled, or (iii) any act or omission believed in
good faith to have been in or not opposed to the interest of the Company, or
(iv) any act or omission in respect of which a determination is made that the
Executive met the applicable standard of conduct prescribed for indemnification
or reimbursement or payment of expenses under the Amended Code of Regulations of
the Company or the laws of the State of Ohio, in each case as in effect at the
time of such act or omission. The Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board of Directors at a meeting
of the Board of Directors called and held for the purpose (after not less than
30 days' written notice to the Executive and an opportunity for him, together
with his counsel, to be heard before the Board of Directors, such notice of
meeting to indicate the specific termination provision of this Agreement relied
upon and specify in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated), finding that
in the good faith opinion of the Board of Directors the Executive was guilty of
conduct set forth above in clauses (A) or (B) of the second sentence of this
paragraph and specifying the particulars thereof in detail.
(2) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive within ten (10) days of such
termination, his unpaid Sales Commissions and Base Compensation through the
Employment Termination Date at the rate in effect at the time Notice of
Termination is given.
(c) Termination for Disability. The Company may terminate the
Executive's employment because of the Disability of the Executive and thereafter
shall pay to the Executive (or his successors) his unpaid Sales Commissions and
Base Compensation through the sixth full month following the Employment
Termination Date at the then effective rate. In addition, the Executive shall be
entitled to the amounts and benefits specified in Paragraphs (2) and (3) of
Section 11(f) of this Agreement.
(d) Termination Upon Executive's Death. In the event of the Executive's
death, the Company shall pay to the Executive's estate any unpaid amount of
Sales Commissions and Base Compensation through the date of death at the then
effective rate.
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(e) Termination of Employment by the Executive.
(1) The Executive may terminate his employment for Good Reason and
receive the payments and benefits specified in Section 11(f) in the same manner
as if the Company had terminated his employment other than pursuant to
Section 11(b), (c) or (d). For purposes of this Agreement, "Good Reason" will
exist if any one or more of the following occur:
(A) Failure by the Company to honor any of its obligations under
this Agreement, including, without limitation, its obligations
under Section 3 (Employment Capacity and Duties), Section 4
(Executive Performance Covenants), Section 5 (Compensation),
Section 6 (Reimbursement of Expenses), Section 7 (Employee
Benefits, Vacations, Life Insurance), Section 8 (Stock
Options), Section 12 (Indemnification) and Section 13
(Successors and Assigns); or
(B) Any purported termination by the Company of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 11(a) above
and, for purposes of this Agreement, no such purported
termination shall be effective.
(2) The Executive shall have the right voluntarily to terminate his
employment other than for Good Reason prior to the Scheduled Employment
Termination Date, and if the Executive shall so terminate his employment, he
shall be entitled only to payment of the amounts which would be payable under
Section 11(b)(2) had he been terminated for Cause.
(f) Compensation Upon Certain Termination.
(1) If the Company shall terminate the Executive's employment
other than pursuant to Section 11(b), (c) or (d), or if the Executive shall
terminate his employment for Good Reason pursuant to Section 11(e)(1) (but not a
termination voluntarily by the Executive other than for Good Reason under
Section 11(e)(2)), then:
(A) The Company shall continue to pay the Executive his Sales
Commissions and Base Compensation through the Scheduled
Employment Termination Date at the then effective rate;
(B) The Company shall also pay all legal fees and expenses incurred
as a result of such termination (including all such fees and
expenses, if any, incurred in contesting or disputing any such
termination, in seeking to obtain or enforce any right or
benefit provided by this Agreement, or in interpreting this
Agreement). The Company agrees, in the event the Executive
desires to relocate within one (1) year after the Date of
Termination, to pay for (or reimburse) all reasonable moving
expenses incurred relating to a change of principal residence
in connection with such relocation and to indemnify the
Executive in connection with any loss he may sustain in the
sale of his primary residence; and
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(C) The Executive shall be under no obligation to seek other
employment and there shall be no offset against any amounts due
the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that the
Executive may obtain (any amounts due under this Section 11(f)
are in the nature of severance payments, or liquidated damages,
or both, and are not in the nature of a penalty).
(2) Unless the Executive is terminated for Cause, the Company shall
maintain in full force and effect, for the Executive's continued benefit through
the Scheduled Employment Termination Date, all active and retired Benefit Plans
and other benefit programs or arrangements in which he was entitled to
participate immediately prior to the Scheduled Employment Terminate Date (except
as specified in Section 7(a) of this Agreement), provided that continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that participation in any such plan or program is
barred, the Company shall arrange to provide him with benefits substantially
similar to those which he is entitled to receive under such plans and programs.
(3) Unless the Executive is terminated for Cause, the Company shall
allow the Executive, at the Company's expense, to continue to utilize the
services of Xxxxxx Xxxxxxxx LLP and/or another accountant or attorney of his
choice for assistance in enforcing this Agreement and preparation of his tax
returns for the year following termination of employment.
(g) Compensation Upon Disability. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to physical
or mental illness, he shall continue to receive his full Sales Commissions and
Base Compensation at the rate then in effect all until this Agreement is
terminated pursuant to Section 11(c) hereof. Thereafter, his benefits shall be
determined in accordance with the Company's Benefit Plans.
SECTION 12. CERTAIN TAX MATTERS
(a) Optional Right of Partial Disclaimer
It is recognized that under certain circumstances:
(1) Payments or benefits provided to the Executive under this
Agreement and/or under the Company's 1996 Incentive Stock Plan might give rise
to an "excess parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, or any successor provision thereof.
(2) It might be beneficial to the Executive to disclaim some
portion of the payment or benefit in order to avoid such "excess parachute
payment" and thereby avoid the imposition of an excise tax resulting therefrom.
(3) Under such circumstances it would not be to the disadvantage of
the Company to permit the Executive to disclaim any such payment or benefit in
order to avoid the "excess parachute payment" and the excise tax resulting
therefrom.
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Accordingly, the Executive may, at the Executive's option,
exercisable at any time or from time to time, disclaim any entitlement to any
portion of the payment or benefits arising under this Agreement and/or under the
Company's 1996 Incentive Stock Plan which would constitute "excess parachute
payments," and it shall be the Executive's choice as to which payments or
benefits shall be so surrendered, if and to the extent that the Executive
exercises such option, so as to avoid "excess parachute payments."
(b) Additional Payments
(1) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined (as hereafter provided) that any payment or
distribution to or for the Executive's benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement (including without limitation the 1996 Incentive Stock Plan or
other similar agreement), or similar right (a "Payment"), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986 (or
any successor provision thereto), or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment or payments (a "Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(2) Subject to the provisions of Section 12(b) (5), all
determinations required to be made under this Section 12(b), including
whether an Excise Tax is payable by the Executive, the amount of such Excise
Tax, whether a Gross-Up Payment is required, and the amount of such Gross-Up
Payment, shall be made by Xxxxxx Xxxxxxxx LLP or another nationally-recognized
accounting firm or law firm selected by the Executive in the Executive's sole
discretion (the "Firm"). The Executive agrees to direct the Firm to submit its
determination and detailed supporting calculations to both the Executive and the
Company as promptly as practicable. If the Firm determines that any Excise Tax
is payable by the Executive and that a Gross-Up Payment is required, then the
Company shall pay the Executive the required Gross-Up Payment within ten (10)
business days after receipt of such determination and calculations. If the Firm
determines that no Excise Tax is payable by the Executive, then it shall, at the
same time as it makes such determination, furnish the Executive with an opinion
that the Executive has substantial authority not to report any Excise Tax on the
Executive's federal income tax return. Any determination by the Firm as to the
amount of the Gross-Up Payment shall be binding upon the Executive and the
Company. As a result of the uncertainty in the application of Section 4999 of
the Internal Revenue Code of 1986 (or any successor provision thereto) at the
time of the initial determination by the Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (an "Underpayment"). In the event that the Company exhausts its remedies
pursuant to Section 12(b)(5) hereof and the Executive thereafter is required to
make a payment of any Excise Tax, the Executive may direct the Firm to determine
the amount of the Underpayment (if any) that has occurred and to submit its
determination and detailed supporting calculations to both the Executive and the
Company
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as promptly as possible. Any such Underpayment shall be promptly paid by the
Company to the Executive, or for the Executive's benefit, within ten (10)
business days after receipt of such determination and calculations.
(3) The Executive and the Company shall each provide the Firm
access to and copies of any books, records and documents in the possession of
the Company or the Executive, as the case may be, reasonably requested by the
Firm, and otherwise cooperate with the Firm in connection with the preparation
and issuance of the determination contemplated by Section 12(b)(2) hereof.
(4) The fees and expenses of the Firm for its services in
connection with the determinations and calculations contemplated by
Section 12(b)(2) hereof shall be borne by the Company. If such fees and expenses
are initially paid by the Executive, then the Company shall reimburse the
Executive the full amount of such fees and expenses within ten (10) business
days after receipt from the Executive of a statement therefor and reasonable
evidence of the Executive's payment thereof.
(5) The Executive agrees to notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than ten (10) business days after the
Executive actually receives notice of such claim. The Executive agrees to
further apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid (in each case, to the extent known by the
Executive). The Executive agrees not to pay such claim prior to the earlier of
(a) the expiration of the 30-calendar-day period following the date on which
the Executive gives such notice to the Company and (b) the date that any payment
with respect to such claim is due. If the Company notifies the Executive in
writing at least five (5) business days prior to the expiration of such period
that it desires to contest such claim, then the Executive agrees to:
(a) provide the Company with any written records or documents
in the Executive's possession relating to such claim reasonably
requested by the Company;
(b) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to
time, including without limitation accepting legal representation
with respect to such claim by an attorney competent in respect of
the subject matter and reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim; and
(d) permit the Company to participate in any proceedings
relating to such claim;
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13
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, from and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 12(b)(5), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 12(b)(5) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Executive may participate therein at the
Executive's own cost and expense) and may, at its option, either direct the
Executive to pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
the tax claimed and xxx for a refund, the Company shall advance the amount of
such payment to the Executive on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any extension of
the statute of limitations relating to payment of taxes for the Executive's
taxable year with respect to which the contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
any such contested claim shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(6) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 12(b)(5) hereof, the Executive receives any refund
with respect to such claim, the Executive agrees (subject to the Company's
complying with the requirements of Section 12(b)(5) hereof) to promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the Executive's
receipt of an amount advanced by the Company pursuant to Section 12(b)(5)
hereof, a determination is made that the Executive is not entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) calendar days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid pursuant to this Section 12(b).
SECTION 13. INDEMNIFICATION. As an employee, officer and director of
the Company, the Executive shall be indemnified against all liabilities,
damages, fines, costs and expenses by the Company in accordance with the
indemnification provisions of the Company's Amended Code of Regulations as in
effect on the date hereof, and otherwise to the fullest extent to which
employees, officers and directors of a corporation organized under the laws of
Ohio may be indemnified pursuant to Section 1701.13(E) of the Ohio Revised Code,
as the same may be amended from time to time (or any subsequent statute of
similar tenor and effect), subject to the terms and conditions of such statute.
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14
SECTION 14. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Columbus, Ohio in accordance with the rules of the American Arbitration
Association then in effect; provided that all arbitration expenses shall be
borne by the Company. Notwithstanding the pendency of any dispute or controversy
concerning termination or the effects thereof, the Company will continue to pay
the Executive his full compensation in effect immediately before any Notice of
Termination giving rise to the dispute was given (including, but not limited to,
Base Salary, Sales Commissions and Incentive Bonus Compensation) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was then participating, until the dispute is finally resolved. Judgment may
be entered on the arbitrators' award in any court having jurisdiction; provided,
however, that the Executive shall be entitled to seek specific performance of
his right to be paid until the Employment Termination Date during the pendency
of any dispute or controversy arising under or in connection with this
Agreement.
SECTION 15. SUCCESSORS AND ASSIGNS. Except as hereinafter expressly
provided, the agreements, covenants, terms and provisions of this Agreement
shall bind the respective heirs, executors, administrators, successors and
assigns of the parties. Specifically, and not by way of limitation of the
foregoing, the Executive shall be bound by the terms and conditions of this
Agreement to any successor assignee of the Company's rights and obligations
hereunder as a result of any merger, consolidation or sale or lease of all or
substantially all of the Company's business and assets. If any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company fails,
concurrently with the effectiveness of any such succession, to agree in writing
in form and substance reasonably satisfactory to the Executive expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place, then the Executive shall have the right, effected by notice to such
successor not later than ninety (90) days after the effectiveness of such
succession, to terminate the Employment Period under Section 11(e) as though
such failure was an uncured breach by the Company of a material covenant or
agreement of the Company contained in this Agreement.
If the Executive should die while any amounts are payable to him
hereunder, or if by reason of his death payments are to be made to him
hereunder, then this Agreement shall inure to the benefit of and be enforceable
by the Executive's executors, administrators, heirs, distributees, devisees and
legatees and all amounts payable hereunder shall then be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee or other
designee or, if there is no such designee, to his estate.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except as hereinbefore provided in this
Section 15. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or by the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph the Company shall have no
liability to pay to the purported assignee or transferee any amount so attempted
to be assigned or transferred.
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15
As used in this Agreement, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in the first
paragraph of this Section 15 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
SECTION 16. NOTICES. Any notice or other communication required or
desired to be given hereunder shall be in writing and shall be deemed
sufficiently given when personally delivered or when mailed by first class
certified mail, return receipt requested and postage prepaid, addressed to the
parties at their respective addresses set forth under their respective
signatures below or such other person or addresses as shall be given by notice
of any party.
SECTION 17. WAIVER; REMEDIES CUMULATIVE. No waiver of any right or
option hereunder by any party shall operate as a waiver of any other right or
option, or the same right or option as respects any subsequent occasion for its
exercise, or of any legal remedy. No waiver by any party of any breach of this
Agreement or of any agreement or covenant contained herein shall be held to
constitute a waiver of any other breach or a continuation of the same breach.
All remedies provided by this Agreement are in addition to all other remedies by
it or the law provided.
SECTION 18. GOVERNING LAW; SEVERABILITY. This Agreement is made and is
expected to be performed in Ohio, and the various terms, provisions, covenants
and agreements, and the performance thereof, shall be construed, interpreted and
enforced under and with reference to the laws of the State of Ohio. It is the
intention of the Company and the Executive to comply fully with all laws and
matters of public policy relating to employment agreements and restrictive
covenants, and this Agreement shall be construed consistently with such laws and
public policy to the extent possible. If and to the extent any one or more
covenants, agreements, terms and provisions of this Agreement or any portion or
portions thereof shall be held invalid or unenforceable by a court of competent
jurisdiction, then such covenants, agreements, terms and provisions (or portions
thereof) shall be deemed separable from the remaining covenants, agreements,
terms and provisions of this Agreement and such holding shall in no way affect
the validity or enforceability of any of the other covenants, agreements, terms
and provisions hereof.
SECTION 19. MISCELLANEOUS. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be modified, changed or amended except in a writing
signed by each of the parties hereto. This Agreement may be signed in multiple
counterparts, each of which shall be deemed an original hereof. The captions of
the several sections and subsections of this Agreement are not a part of the
context hereof, are inserted only for convenience in locating such sections and
subsections and shall be ignored in construing this Agreement.
SECTION 20. AGREEMENT VOID. This Agreement shall be void and of no
force and effect if, and only if, the Company does not close on the IPO on or
before December 31, 1996.
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16
IN WITNESS WHEREOF, the Company and the Executive have executed
multiple counterparts of this Agreement.
COMPANY: EXECUTIVE:
TEAM AMERICA CORPORATION
000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxx 00000
By:_____________________________________ ___________________________________
Xxxxxxx X. Xxxxxx, XXXXXXX X. XXXXXX, individually
Chairman of the Board Address: 0000 X. Xxxxxx Xxxx
of Directors, President Xxxxx Xxxxxx, Xxxx 00000
and Chief Executive Officer
and
By:_____________________________________
Xxxxxxx X. Xxxxxxxx,
Secretary
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