EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is made this 19th day of
March, 1997 by and between EMPLOYEE SOLUTIONS, INC., an Arizona corporation (the
"Company"), and XXXXXX X. XXXXX ("Employee").
RECITALS
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A. The Company wishes to employ Employee, and Employee wishes to be
employed by the Company.
B. The parties wish to set forth in this Agreement the terms and
conditions of such employment.
C. The Compensation Committee of the Company's Board of Directors has
considered (and requested certain changes to previous drafts of) the form of
this Agreement prior to and at meetings held on February 18, 1997 and March 18,
1997, and has unanimously approved this form of the Agreement following
completion of such review and revision process.
AGREEMENTS
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In consideration of the mutual promises and covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, the Company employs Employee to serve in an executive capacity and
Employee accepts such employment and agrees to dedicate all of his business time
and effort to Company business and perform such reasonable responsibilities and
duties as may be assigned to him from time to time by the Company's Chief
Executive Officer, President and/or Board of Directors (the "Board"). Employee's
title shall be Chief Financial Officer, with responsibility for the Company's
financial reporting and related functions and such executive responsibilities as
may be assigned from time to time by, and subject to the direction of, the
Board, the Chief Executive Officer and/or the President. Employee shall report
directly to the Chief Executive Officer. Subject to Sections 7.f and 8, such
title and duties may be changed from time to time by the Board, so long as
Employee is maintained in an executive capacity throughout the term of his
employment.
2. Term. The employment of Employee by the Company pursuant to
this Agreement shall commence on the date hereof and continue until terminated
as provided elsewhere herein.
3. Compensation.
a. Salary. The initial annual base salary payable to
Employee shall be $150,000, retroactive to January 29, 1997 (Employee's
anniversary date of employment). The base salary shall be reviewed at least
annually and may be increased from time to time in accordance with the Company's
policies and practices regarding periodic review and adjustment of executive
compensation.
b. Incentive Plan. The Company may establish and
implement an incentive compensation system which will provide additional
incentive payments to Employee based upon his performance and the performance of
the Company.
4. Fringe Benefits. In addition to the options for shares of
the Company's Common Stock available to Employee under the same terms as those
available to Company employees, and any other employee benefit plans generally
available to Company employees, the Company shall include Employee (and
Employee's dependents) in any group medical insurance plan maintained for the
employees of the Company at the Company's expense. The manner of implementation
of such benefits with respect to such items as procedures and amounts is
discretionary with the Company but shall be commensurate with Employee's
executive status and shall include medical, dental and hospital coverage for
Employee and Employee's dependents who are eligible under the applicable plans.
The Company shall also pay Employee $5,000 per year (payable at the beginning of
each year of employment) for individual purchase by Employee of supplemental
insurance products or for use in such other manner as Employee sees fit.
5. Vacation. Employee shall be entitled to vacation with pay
in keeping with Employee's established vacation practices, but in no event less
than four weeks per calendar year. In addition, Employee shall be entitled to
such holidays as the Company may approve for its executive personnel.
6. Expense Reimbursement. In addition to the compensation and
benefits provided above, the Company shall pay all reasonable expenses of
Employee incurred in connection with the performance of Employee's duties and
responsibilities to the Company pursuant to this Agreement, upon submission of
appropriate vouchers and supporting documentation in accordance with the
Company's usual and ordinary practices, provided that such expenses are
reasonable and necessary business expenses of the Company. The Company shall pay
Employee's reasonable cellular telephone expenses that are related to Company
business. The Company further shall pay Employee a $500 per month allowance for
automobile expense (provided that such amount may be used by Employee in such
manner as Employee sees fit).
7. Termination. This Agreement may be terminated in the manner
provided below:
a. For Cause. The Company may terminate Employee's
employment by the Company, for cause, upon written notice to the Employee
stating the facts constituting such cause, provided that Employee shall have 20
days following such notice to cure any conduct or act, if curable, alleged to
provide grounds for termination for cause hereunder. In the event of termination
for cause, the Company shall be obligated to pay the Employee only the base
salary
due him through the date of termination. Cause shall include willful and
persistent failure to abide by instructions or policies from or set by the Board
of Directors, wilful and persistent failure to attend to material duties or
obligations imposed under this Agreement, or commission of a felony or serious
misdemeanor offense or pleading guilty or nolo contendere to same.
b. Without Cause. The Chairman or the Company may
terminate Employee's employment by the Company at any time, without cause, by
giving 90 days written notice to the Employee. If the Company terminates under
this Section 7.b, it shall pay to Employee an amount equal to 12 months base
salary, payable monthly, less applicable withholdings; and shall continue
coverage of Employee and Employee's dependents under its medical plans and other
benefit arrangements for 12 months or until Employee secures other employment
(unless continuation of coverage under such plans is unfeasible, in which event
the Company will provide substantially similar benefits). The two 12-month
periods mentioned above each shall be extended to 24 months in the event
termination pursuant to this Section 7.b occurs within two years of the date of
this Agreement.
c. Disability. If Employee experiences a permanent
disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended), the Company shall have the right to terminate this Agreement
without further obligation hereunder except for any bonus amount payable in
accordance with the next sentence and any amounts payable pursuant to disability
plans generally applicable to executive employees. Within 90 days after the end
of the fiscal year in which termination pursuant to this Section 7.c occurs, so
long as Employee is in full compliance with this Agreement, Employee shall be
entitled to receive an incentive compensation payment (calculated and payable in
the manner referred to in Section 3.b), if any, based upon the Company's
financial performance for such fiscal year, which shall be prorated to the
extent that Employees employment during such fiscal year was for a period of
less than the full year.
d. Death. If Employee dies, this Agreement shall
terminate immediately, and Employee's legal representative shall be entitled to
receive the base salary due to Employee through the 60th day from the date on
which his death shall have occurred and any other death benefits generally
applicable to executive employees. In addition, Employee's legal representative
shall be entitled to receive, at the end of the first quarter of the year
following the fiscal year in which such death shall have occurred, an incentive
compensation payment (calculated and payable in the manner referred to in
Section 3.b), if any, based upon the Company's financial performance for such
fiscal year, which shall be prorated to the extent that Employee's employment
during such fiscal year was for a period of less than the full year.
e. Resignation Without Good Reason. Employee may
resign at any time by giving 90 days written notice to the Company, in which
event Employee shall be entitled to receive only the base salary due him through
the date of termination plus any other vested rights under employee stock
options (pursuant to the terms of such options) or other employee benefit plans.
f. Resignation for Good Reason. Employee may resign
at any time for Good Reason (as defined in Section 8.c), in which event Employee
shall be entitled to payments and benefits to the same extent and payable in the
same manner as if Employee was terminated
without cause as described in Section 7.b above.
8. Change in Control.
x. Xxxxxxxxx Benefits. Notwithstanding Section 7.b.
or 7.f above, if Employee's employment with the Company terminates within 12
months after a Change in Control (as defined in Section 8.b below), Employee
shall be entitled to the severance benefits provided in Section 8.e unless such
termination is in accordance with Section 7.a, 7.c, 7.d or 7.e above, in which
case such other section shall apply. Any amount paid pursuant to Section 8 shall
be in lieu of any payment otherwise due under Section 7.b or 7.f.
b. "Change in Control" shall be deemed to have
occurred if (i) any "person" (as such term is used in Paragraphs 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended [the "Exchange Act"]), other
than a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 20% or more of the total voting power represented by
the Company's then outstanding Voting Securities, or (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, or (iii) the stockholders
of the Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% the total voting
power represented by the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of transactions) all or substantially all the Company's
assets.
c. "Good Reason" shall mean, for purposes of this
Agreement, (i) without Employee's express written consent, a reduction of
Employee's compensation or the assignment to Employee of duties inconsistent
with Employee's positions, duties, responsibilities and status with the Company
immediately prior to the Change in Control, or a demotion or a change in titles
or offices as in effect immediately prior to a Change in Control (except in
connection with termination of Employee's employment in compliance with Section
7.a, 7.c, 7.d or 7.e above); (ii) a material breach by the Company of any of its
obligations hereunder which (if curable) is not cured by the Company within 20
days after written notice thereof; or (iii) without Employee's express written
consent, relocation of the site of Employee's duties to a location outside the
Phoenix, Arizona metropolitan area, or a requirement that Employee average more
than 10 business days outside of the Phoenix, Arizona metropolitan area per
month.
d. "Voting Securities" shall mean any securities of
the Company which vote generally in the election of directors.
e. Amount of Benefit. If Employee is entitled to
severance benefits under Section 8.a, the amount of such benefit shall equal (i)
a lump-sum payment equal to 2.99 times the "Base Amount" (as such term is
defined in Section 280G of the Internal Revenue Code of 1986) applicable to
Employee, whether or not the provisions of Section 280G actually apply to the
payment; (ii) a continuation of medical coverage and other benefits in the
manner contemplated in Section 7.b above; and (iii) such other benefits to which
the Employee is entitled under the Company's benefits plans and policies as in
effect immediately prior to the Change in Control with respect to terminated
Employees.
9. Return of the Company's Materials. Upon the termination of
this Agreement, Employee shall promptly return to the Company all files, credit
cards, keys, instruments, equipment, and other materials owned or provided by
the Company.
10. Insurance. The Company shall use commercially reasonable
efforts to carry director's and officer's professional liability insurance
coverage for Employee while in the performance of Employee's duties hereunder in
an amount of at least $10,000,000.
11. Nondelegability of Employee's Rights and Company
Assignment Rights. The obligations, rights and benefits of Employee hereunder
are personal and may not be delegated, assigned, or transferred in any manner
whatsoever, nor are such obligations, rights or benefits subject to involuntary
alienation, assignment or transfer. The Company may transfer its obligations
hereunder to a subsidiary, affiliate or successor.
12. Notices. All notices, demands and communications required
by this Agreement shall be in writing and shall be deemed to have been given for
all purposes when sent to the respective addresses set forth below, (i) upon
personal delivery, (ii) one day after being sent, when sent by overnight courier
service to and from locations within the continental United States, (iii) three
days after posting when sent by registered, certified, or regular United States
mail, with postage prepaid and return receipt requested, or (iv) on the date of
transmission when sent by confirmed facsimile.
If to the Company: Employee Solutions, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Chief Executive Officer
If to Employee: Xxxxxx X. Xxxxx
c/o Employee Solutions, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
(Or when sent to such other address as any party shall specify by written notice
so given.)
13. Entire Agreement. This Agreement, together with the
Indemnification Agreement dated November 21, 1996 and agreements evidencing
stock options grants issued to Employee from time to time (the "Other
Agreements") constitutes the final written expression of all of the agreements
between the parties, and is a complete and exclusive statement of those terms.
It supersedes all understandings and negotiations concerning the matters
specified herein (including all prior written employment agreements and
arrangements, if any), except as provided in the Other Agreements. Any
representations, promises, warranties or statements made by either party that
differ in any way from the terms of this written Agreement or the Other
Agreements shall be given no force or effect. Except as provided in the Other
Agreements, the parties specifically represent, each to the other, that there
are no additional or supplemental agreements between them related in any way to
the matters herein contained unless specifically included or referred to herein.
No addition to or modification of any provision of this Agreement shall be
binding upon any party unless made in writing and signed by all parties.
14. Waiver. The waiver by either party of the breach of any
covenant or provision in this Agreement shall not operate or be construed as a
waiver of any subsequent breach by either party.
15. Invalidity of Any Provision. The provision of this
Agreement are severable, it being the intention of the parties hereto that
should any provisions hereof be invalid or unenforceable, such invalidity or
unenforceability of any provision shall not affect the remaining provisions
hereof, but the same shall remain in full force and effect as if such invalid or
unenforceable provisions were omitted.
16. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Arizona exclusive
of the conflict of law provisions thereof. The parties agree that in the event
of litigation, venue shall lie exclusively in Maricopa County, Arizona.
17. Headings; Construction. Headings in this Agreement are for
informational purposes only and shall not be used to construe the intent of this
Agreement. The language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning and not strictly for nor
against any party.
18. Counterparts; Facsimile Signatures. This Agreement may be
executed simultaneously in any number of counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
agreement. Delivery by any party of a facsimile signature to the other parties
to this Agreement shall constitute effective delivery by said party of an
original counterpart signature to this Agreement.
19. Binding Effect; Benefits. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors, executors, administrators and assigns. Notwithstanding
anything contained in this Agreement to the
contrary, nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
20. Binding Effect on Marital Community. Employee represents
and warrants to the Company that he has the power to bind his marital community
(if any) to all terms and provisions of this agreement by his execution hereof.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Employment Agreement and caused the same to be duly delivered on its behalf as
of the date first above written.
EMPLOYEE SOLUTIONS, INC.,
an Arizona corporation
By
Xxxxxx X. Xxxxx, Chief Executive
Officer
"COMPANY"
Xxxxxx X. Xxxxx
"EMPLOYEE"
