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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
October 1, 1996, among StaffMark, Inc., a Delaware corporation (hereinafter
referred to as "StaffMark"), Xxxxxx Personnel Services, Inc., an Arkansas
corporation (hereinafter referred to as the "Company"), and Xxxxx X. Xxxxxx
(hereinafter referred to as "Employee").
W I T N E S S E T H
WHEREAS, Employee has been a shareholder of, and has been employed as an
executive officer by, the Company; and
WHEREAS, the Company and its shareholders have entered into an Agreement
and Plan of Reorganization dated as of June 17, 1996 (the "Reorganization
Agreement") with StaffMark, Inc., a Delaware corporation, whereby the Company
has agreed to merge with a subsidiary of StaffMark, Inc.; and
WHEREAS, the Company is desirous of the continuation of Employee's
employment with the Company; and
WHEREAS, in the course of building the business of the Company, and in
his capacity as an executive officer thereof, Employee has gained knowledge of
the business, affairs, customers and methods of the Company, and Employee will
gain similar knowledge with respect to StaffMark, Inc. and each of StaffMark,
Inc.'s direct and indirect subsidiaries during his employment with the Company,
has had and will have access to lists of the Company, StaffMark, Inc. and their
affiliates' customers and their needs, and had and will become personally known
to and acquainted with the Company, StaffMark, Inc. and their affiliates'
customers thereby establishing a personal relationship with such customers for
the benefit of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. TERM OF AGREEMENT. The term of this Agreement shall commence on
the date hereof and terminate on September 30, 2001. During the term of this
Agreement, each twelve month period commencing on October 1 and ending on the
following September 30 shall be referred to herein as a "Compensation Year."
2. DUTIES AND PERFORMANCE.
(a) During the term of this Agreement, Employee shall be
employed by the Company on a full-time basis as its Employee and shall
have such authority and shall
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perform such duties consistent with his position as may be reasonably
assigned to him by, and shall report to, the Board of Directors of the
Company or any other member of senior management designated by the Board
of Directors; provided, however, that without the approval of the Board
of Directors of the Company and StaffMark, Inc., Employee may not, on
behalf of the Company (A) enter into term employment arrangements for
the Company's employees of terms longer than those in place on the date
hereof, (B) borrow funds or make material capital expenditures or
commitments, (C) alter or adopt any employee benefit plans, or (D) adopt
or maintain any employee policy or program materially different from
those utilized by StaffMark, Inc. and its operating subsidiaries.
Employee shall use all reasonable efforts to further the interests of
the Company and shall devote substantially all of his business time and
attentions to his duties hereunder; provided, however, that Employee
shall not be required to locate outside the Fayetteville area without
Employee's consent.
(b) Employee shall be entitled to be reimbursed in accordance
with the policies of the Company, as adopted and amended from time to
time, for all reasonable and necessary expenses incurred by him in
connection with the performance of his duties of employment hereunder;
provided Employee shall, as a condition of such reimbursement, submit
verification of the nature and amount of such expenses in accordance
with the reimbursement policies from time to time adopted by the
Company.
3. BASE SALARY. The Company shall pay to Employee a base salary at
the rate of $75,000 per annum through the expiration of the term of the
Agreement, payable bi-weekly as per normal pay practices of the Company.
4. BENEFITS.
(a) When eligible under non-discriminatory standards, Employee
shall be entitled to participate in any employee benefit plan maintained
by the Company for its full time employees and shall be entitled to four
(4) weeks vacation per annum and such holidays as the Company may
establish as company policy.
(b) The Company shall pay to Employee on or about the first
(1st) day of each month an automobile allowance in the amount of $500
per month which shall be used to pay all automobile related expenses.
The Company may, at its discretion, provide equivalent automobile
arrangements as it deems appropriate with sixty (60) days' written
notice to Employee. Employee shall maintain with respect to any
automobile used for business purposes such insurance coverage as may be
reasonably required by the Company, the cost of which shall be paid by
Employee from such monthly allowance. Employee shall provide the
Company with a copy of such insurance policy, which policy shall name
the Company as an additional insured party.
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(c) The Company shall reimburse Employee up to $250 per month
for club dues actually incurred by Employee, provided that such club is
used at least 50 percent of the time for business purposes and such
usage is subject to audit by the Company or StaffMark, Inc..
(d) Employee shall be eligible to participate in the incentive
compensation plans of StaffMark, Inc. and its affiliates.
5. TERMINATION OF AGREEMENT.
(a) The Company, with the approval of a 75% vote of the Board
of Directors of StaffMark, shall be entitled to terminate Employee's
services, in any of the following circumstances:
(i) For "cause," which shall mean by reason of any of
the following: (A) Employee's conviction of, or plea of nolo
contendere to, any felony or to any crime or offense causing
substantial harm to StaffMark, Inc., the Company or any of their
affiliates (whether or not for personal gain) or involving acts
of theft, fraud, embezzlement, moral turpitude or similar
conduct, (B) Employee 's violation of the Company's substance
abuse policy, (C) malfeasance in the conduct of Employee's
duties, including but not limited to (i) willful and intentional
misuse or diversion of StaffMark, Inc., the Company, or any of
their affiliates' funds, (ii) embezzlement, and/or (iii)
fraudulent, willful or material misrepresentations or
concealments on any written reports submitted to StaffMark, Inc.,
the Company or their affiliates, (D) material failure to perform
the duties of such person's employment, (E) material failure to
follow or comply with the reasonable and lawful directives of the
Chief Executive Officer, any member of senior management
designated by the Board of Directors of StaffMark, Inc., or the
Board of Directors of StaffMark, Inc. or the Company, (F) a
material breach by Employee of the provisions of the
Reorganization Agreement or this Agreement (including without
limitation any breach of Section 6 of this Agreement), or (G) the
occurrence of an event or series of events which lead the Chief
Executive Officer of the Company to the reasonable conclusion
that Employee has materially breached or damaged their trust in
his character and integrity sufficiently to impair his standing
with StaffMark, Inc. and the Company; provided, however, that in
the case of the foregoing clauses (D) and (E), Employee shall
have been informed, in writing, of such material failure referred
to in the foregoing clauses (D) and (E), respectively;
(ii) If, for any reason, Employee is unable to perform
the essential functions of such person's duties, with or without
reasonable accommodation, for
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a consecutive period of sixty (60) days or a non-consecutive
period of one hundred twenty (120) days during any twelve month
period, or such other period as may be required by applicable
employment laws; or
(iii) The death of Employee.
(b) In the event of the termination of Employee's employment:
(i) For cause, except as provided in Section 5(b)(ii),
or in the event of the resignation of Employee, then as of the
date of such termination all of the Company's obligations
hereunder, including, without limitation, the Company's
obligations to pay Employee's base salary accruing after the date
of such termination, and any benefits (except as otherwise
required by applicable law), other than those obligations which
have accrued but remain unpaid as of the date of such termination
(such as accrued but unpaid salary, expense reimbursements,
health insurance premiums, retirement plan contributions, if any,
vacation pay, sick pay, etc.), shall cease and Employee shall not
be entitled to receive any incentive compensation for the
Compensation Year of such termination;
(ii) By reason of Employee's death or inability to
perform the essential functions of such person's position as
provided in Section 5(a)(ii) and (iii) hereof or for cause only
as provided in Section 5(a)(i)(D) and (E), then the Company shall
continue to pay Employee's base salary and to provide for the
continuation of any Company health insurance benefits for which
he would be eligible but for such termination, until the first to
occur of (A) September 30, 1998 or (B) Employee shall have sold
shares of StaffMark, Inc. in a public offering in which Employee
received cash in excess of $500,000 for such shares sold;
(iii) By the Company for any other reason other than for
the reasons set forth in clauses (i) and (ii) above, then in such
event the Company shall continue to pay Employee's base salary
(without offset for any compensation received by Employee from
any subsequent employment by any person other than by an
affiliate of the Company or in violation of Section 6 hereof) and
to provide for the continuation of any Company health insurance
benefits for which he would be eligible but for such termination,
for a period which is the greater of (A) sixty (60) days from the
date of such termination, or (B) the remaining term of this
Agreement.
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6. COVENANT NOT TO COMPETE; CONFIDENTIALITY.
(a) Employee acknowledges that in the course of his employment
by the Company he has and will become privy to various economic and
trade secrets and relationships of the Company, StaffMark, Inc. and its
affiliates. Therefore, in consideration of this Agreement and of the
merger by the Company and a subsidiary of StaffMark, Inc., Employee
hereby agrees that neither he nor his spouse nor any member of his
immediate family that resides with him will, directly or indirectly,
except for the benefit of the Company or its affiliates or subsidiaries,
or with the prior written consent of the Board of Directors of the
Company, which consent may be granted or withheld at the sole discretion
of the Company's Board of Directors:
(i) During the Noncompetition Period (as hereinafter
defined), become an officer, director, stockholder, partner,
member, manager, associate, employee, owner, agent, creditor,
independent contractor, co-venturer, consultant or otherwise, or
be interested in or associated with any other person,
corporation, firm or business engaged in providing temporary or
permanent staffing services, outsourcing or medical or clinical
staffing or recruiting (a "StaffMark, Inc. Services Business") in
the State of Arkansas and, outside the State of Arkansas, within
a radius of fifty (50) miles from any office operated during the
Noncompetition Period by the Company, StaffMark, Inc. or any of
their affiliates (collectively, the "Territory") or in any
StaffMark, Inc. Services Business directly competitive with that
of the Company, StaffMark, Inc. or any of their affiliates, or
itself engage in such business; provided, however, that
(A) Nothing herein shall be construed to
prohibit Employee from owning not more than five percent
(5%) of any class of securities issued by an entity which
is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, or which is traded over
the counter;
(B) The foregoing shall not restrict Employee
with respect to businesses, other than StaffMark, Inc.
Services Businesses, engaged in by the Company or its
affiliates during the Noncompetition Period unless
Employee either is or was substantially involved in such
other businesses of the Company or such affiliates or had
access to Confidential Information (as hereinafter
defined) with respect to such other businesses; or
(ii) During the Noncompetition Period, in the Territory,
solicit, cause or authorize, directly or indirectly, to be
solicited for or on behalf of himself or
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third parties, from parties who are or were customers of the
Company or its affiliates, any StaffMark, Inc. Services Business
transacted by or with such customer by the Company or its
affiliates; or
(iii) During the Noncompetition Period, in the
Territory, accept or cause or authorize, directly or indirectly,
to be accepted for or on behalf of himself or for third parties,
any such StaffMark, Inc. Services Business from any such
customers of the Company or its affiliates; or
(iv) During the Noncompetition Period, use, publish,
disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or used
by the Company or its or StaffMark, Inc.'s affiliates relating to
their business or the operations, employees or customers of the
Company or its or StaffMark, Inc.'s affiliates which constitutes
proprietary or confidential information of the Company or its or
StaffMark, Inc.'s affiliates ("Confidential Information"),
including without limitation any Confidential Information
contained in any customer lists, mailing lists and sources
thereof, statistical data and compilations, patents, copyrights,
trademarks, trade names, inventions, formulae, methods,
processes, agreements, contracts, manuals or any other documents;
and (B) from and after the date hereof, use, publish, disseminate
or otherwise disclose, directly or indirectly, any information
heretofore or hereafter acquired, developed or used by the
Company or its affiliates which constitutes Confidential
Information, but excluding any Confidential Information which has
become part of common knowledge or understanding in the
StaffMark, Inc. Services Business industry or otherwise in the
public domain (other than from disclosure by Employee in
violation of this Agreement); provided, however, this
subparagraph (iv) shall not be applicable to the extent Employee
is required to testify in a judicial or regulatory proceeding
pursuant to the order of a judge or administrative law judge
after Employee requests that such Confidential Information be
preserved; or
(v) During the Noncompetition Period, in the Territory,
(A) Solicit, entice, persuade or induce,
directly or indirectly, any employee (or person who within
the preceding ninety (90) days was an employee) of the
Company or its or StaffMark, Inc.'s affiliates or any
other person who is under contract with or rendering
services to the Company or its or StaffMark, Inc.'s
affiliates, to terminate his or her employment by, or
contractual relationship with, such person or to refrain
from extending or renewing the same (upon the same or new
terms) or to refrain from rendering services to or for
such person or to become
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employed by or to enter into contractual relations with
any persons other than such person or to enter into a
relationship with a competitor of the Company or its
affiliates;
(B) Approach any such employee for any of the
foregoing purposes; or
(C) Authorize or knowingly approve or assist in
the taking of any such actions by any person other than
the Company or its affiliates.
(b) For purposes of this Agreement, the term "Noncompetition
Period" shall mean the period commencing on the date hereof and ending
twenty-four (24) months after the date Employee ceases to be an officer
or employee of, or consultant to, StaffMark, Inc., the Company, or any
of their affiliates; provided, however, that the Noncompetition Period
shall end immediately upon a termination of the employment of Employee
by the Company under this Agreement which is not for cause.
(c) The invalidity or non-enforceability of this Section 6 in
any respect shall not affect the validity or enforceability of this
Section 6 in any other respect or of any other provisions of this
Agreement. In the event that any provision of this Section 6 shall be
held invalid or unenforceable by a court of competent jurisdiction by
reason of the geographic or business scope or the duration thereof, such
invalidity or unenforceability shall attach only to the scope or
duration of such provision and shall not affect or render invalid or
unenforceable any other provision of this Agreement, and, to the fullest
extent permitted by law, this Agreement shall be construed as if the
geographic or business scope or the duration of such provision had been
more narrowly drafted so as not to be invalid or unenforceable and
further, to the extent permitted by law, such geographic or business
scope or the duration thereof may be re-written by a court of competent
jurisdiction to make such sufficiently limited to be enforceable.
(d) Employee acknowledges that the Company's remedy at law for
any breach of the provisions of this Section 6 is and will be
insufficient and inadequate and that the Company shall be entitled to
equitable relief, including by way of temporary and permanent
injunction, in addition to any remedies the Company may have at law.
(e) The provisions of this Section 6 shall survive termination
of this Agreement.
(f) In the event of any conflict between the terms and
provisions of this Section 6 and the provisions of Section 13 of the
Reorganization Agreement, then the terms and provisions of such Section
13 of the Reorganization Agreement shall govern;
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provided, however, that the invalidity or unenforceability of all or any
part of such section shall not have any effect upon the validity or
enforceability of this Section 6.
7. DIVISIBILITY OF AGREEMENT. In the event that any term, condition
or provision of this Agreement is for any reason rendered void, all remaining
terms, conditions and provisions shall remain and continue as valid and
enforceable obligations of the parties hereto.
8. NOTICES. Any notices or other communications required or
permitted to be sent hereunder shall be in writing and shall be duly given if
personally delivered or sent postage prepaid by certified or registered mail,
return receipt requested, or sent by prepaid overnight courier service,
delivery confirmed, as follows:
(a) If to Employee:
Xxxxx Xxxxxx
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
(b) If to the Company:
Xxxxx X. Xxxxxx
c/o StaffMark, Inc.
000 X. Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
Either party may change his or its address for the sending of notice to such
party by written notice to the other party sent in accordance with the
provisions hereof.
9. COMPLETE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the employment of Employee and
supersedes all prior arrangements or understandings with respect thereto. This
Agreement may not be altered or amended except by a writing, duly executed by
the party against whom such alteration or amendment is sought to be enforced.
10. ASSIGNMENT. This Agreement is personal and non-assignable by
Employee. It shall inure to the benefit of any corporation or other entity with
which the Company shall merge or consolidate or to which the Company shall
lease or sell all or substantially all of its assets and may be assigned by the
Company to any affiliate of the Company or to any corporation or entity with
which such affiliate shall merge or consolidate or which shall lease or acquire
all or substantially all of the assets of such affiliate.
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11. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original and all of which together shall constitute
one and the same instrument.
12. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Delaware.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement in multiple counterparts as of the day and year first above written.
EMPLOYEE
/s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
/s/ XXXXXXX XXXXXXXX
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Witness
STAFFMARK, INC.
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx, President
XXXXXX PERSONNEL SERVICES, INC.
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx, President
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