EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective as
of December 6, 1997, between Work International Corporation, a Texas
corporation (the "Company"), and Xxxx Xxxx, an individual residing in Houston,
Texas (the "Executive").
RECITALS
WHEREAS, the Company has been formed to acquire companies engaged in the
business of temporary staffing and outsourcing services, human resource
management and technology project management; and
WHEREAS, the Company wishes to employ the Executive, and the Executive is
willing to accept employment, on the terms and conditions of this Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the Company employing the Executive and
the mutual promises and covenants set forth herein, and for other good and
valuable consideration, the receipt, adequacy and legal sufficiency of which are
hereby acknowledged, 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 a full-time executive employee of the Company in the position of
Vice President and Chief Financial Officer for the Employment Term (as
hereinafter defined) to render such services and to perform such duties as are
customarily attendant to such position as well as such other duties, which are
not inconsistent with the Executive's status as an executive employee of the
Company, as shall from time to time reasonably be requested 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 hereby
accepts such employment and shall render the services required of him under
Section 1.1. The Executive shall devote the substantial majority of his
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
Houston, Texas area, and nothing in this Agreement shall require the Executive
to relocate his base of employment or principal place of residence from this
area.
1.4 Termination of Existing Contracts. The Executive agrees that all
agreements and contracts, whether written or oral, relating to the employment of
the Executive by any other entity or person, are terminated as of the
commencement of the Employment Term.
2. Term of Employment. The term of the Executive's employment under this
Agreement (the "Employment Term") shall commence on the date this Agreement (the
"Commencement Date") and shall continue (unless earlier terminated as herein
provided) through and expire on the first anniversary of the Commencement Date;
provided, that upon completion of the Company's initial public offering ("IPO")
during the Employment Term, this Agreement shall continue thereafter and expire
on the third anniversary of the IPO (the "Expiration Date").
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"), subject to such increases as the Board of Directors may, in its
discretion, approve, at a rate of $120,000 per annum; provided, that until the
completion of the IPO, the executive shall receive such compensation as shall be
allocated to him by the Board of Directors from funds available to compensate
executive officers of the Company. The Executive shall also be eligible, during
the Employment Term, 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,
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, to choose, on a quarterly basis, either:
(i) if and to the extent eligible, 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 senior executives of the Company generally on the same
terms as such other executives; or (ii) to receive the sum of $500.00 per month
for reimbursement of expenses that would generally be covered by such benefit
plans.
3.3 Executive Support. The Company shall provide to the Executive
office facilities, furniture, fixtures and equipment, secretarial and support
personnel and other executive support services as the Executive shall reasonably
require in connection with his performance of his obligations 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 obligations under
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this Agreement, including expenses for travel, food and entertainment. The
Company shall reimburse the Executive for all such business expenses if (i) such
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 (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.
3.5 Stock Options. At such time as the Company issues its initial
shares of common stock to the founders (the "Effective Date"), the Company will
(i) grant the Executive non-qualified stock options (the "Options") to purchase
100,000 shares of the common stock of the Company as presently constituted, at
the price per share at which shares of Common Stock are sold in the IPO pursuant
to an option agreement to be entered into (the "Option Agreement"), and (ii)
sell to the Executive 160,000 shares of common stock at the same purchase price
paid by the other founders of the Company ("Founders' Shares"). The Founders'
Shares will be subject to a restriction such that the Executive will vest as to
all of such shares on the completion of the IPO. The Options will vest as to 33%
of such shares upon the completion of the IPO and as to the remaining 67% of
such shares upon the first anniversary of the completion of the IPO. The Options
shall have a term of ten (10) years from the date of grant, and may be exercised
in whole or in part, from time to time, at any time after vesting by the payment
of cash or the tender of shares of the Company's common stock having a value
equal to the exercise price of the Options being exercised, all as set forth in
the Option Agreement. Upon the issuance of shares of Common Stock in connection
with the exercise of the Options and as a condition precedent to receiving
certificates representing such Common Stock, and upon the issuance of the
Founders' Shares, Executive shall become a party to any Shareholders Agreement
entered into by the founding shareholders of the Company (the "Shareholders'
Agreement"), by executing and delivering (and by causing his spouse to execute
and deliver) a counterpart of the Shareholders Agreement provided same is then
in effect. Commencing with the IPO and for each partial or full calendar year
thereafter during the term hereof, provided Executive is then serving as an
employee of the Company, the Company shall grant to Employee options to purchase
such number of additional shares as the Board of Directors of the Company may
determine, on such terms and conditions as shall be established at such time.
4. Non-Competition.
4.1 Covenants Against Competition. The Executive acknowledges that
(i) the Company, which for purposes of this Section 4 includes all of its
present and future subsidiaries and affiliates, including such subsidiaries and
affiliates as may be formed or incorporated during the Restricted Period (as
defined in Section 4.1.1), is engaged in the business described in the Recitals
set forth on the first page of this Agreement (the "Business"); (ii) the
Executive is one of a limited number of persons who will perform a significant
role in developing the Business; (iii) the Business is conducted throughout the
United States; (iv) his work for the Company will give him, 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
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other than by engaging in the Business in violation of the Restrictive Covenants
and the Restrictive Covenants will not impair such ability. Accordingly, the
Executive agrees as follows:
4.1.1 Non-Compete. For a period commencing on the Commencement
Date and ending (i) if this Agreement is terminated pursuant to its Section
5.3, on the effective date of the Executive's termination or (ii)
otherwise, on the third anniversary of the date this Agreement is otherwise
terminated (the "Restricted Period"), the Executive shall not (A) engage,
as an officer, director or in any other managerial capacity or as an owner,
co-owner or other investor of or in, whether as an employee, independent
contractor, consultant or advisor, or as a sales or manufacturer's
representative or distributor of any kind, in any business selling any
products or providing any services which are sold or offered by the
Company, or any of its then current vendors or suppliers, on the date the
Executive's employment is terminated, within any territory surrounding any
sales office or regional center (each a "facility") in which the Company
was engaged in business immediately prior to the date of the Executive's
termination of employment (for purposes of this Section 4.1, the territory
surrounding a facility shall be: (1) the city, town or village in which the
facility is located, (2) the county or parish in which the facility is
located, (3) the counties or parishes contiguous to the county or parish in
which the facility is located, (4) the area located within 100 miles of the
facility and (5) the area in which the facility regularly makes sales or
provides services, all of such locations being herein collectively called
the "Territory"), 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 within the Territory,
for the purpose of soliciting or selling any product or service which is
then sold or offered within the Territory by the Company or any of its then
current vendors or suppliers, 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 five percent or more of any class
of securities of such entity.
4.1.2 Confidential Information; Personal Relationships. During
the Restricted Period and 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, operational methods, marketing
plans or strategies, product development techniques or plans, business
acquisition plans, new personnel acquisition plans, methods of production
and distribution, technical processes, designs and design projects,
inventions and research projects of the Company learned by the Executive
during the Restricted Period, but excluding any information learned by the
Executive prior to the Restricted Period or any information which is or
becomes available publicly except through the Executive or any person who
is prohibited from making such disclosure; nor shall the Executive 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 or during the Restricted
Period.
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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 independent sales 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 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 the Business and (i) which
was called on by the Company, in connection with the possible acquisition
by the Company of that person or entity, or (ii) with respect to which 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
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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 Blue-Pencilling. 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.
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 Founders Shares and Options,
which shall vest according to the schedule set forth herein, 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 (as hereinafter defined). 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 (which shall not be
retroactive) specified in the Company's notice of termination. The Founders
Shares and the Options shall continue to vest and become exercisable in
accordance with the schedule set forth herein. As used in this Section 5.2 and
in
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Section 5.3 below, the term "Cause" shall mean that the Board of Directors shall
have determined that (i) there has been a material breach by the Executive of
the terms of this Agreement, (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, (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 chronic absenteeism, neglect of duties, 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.
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 limited to the payment of any unpaid Annual Salary,
Additional Compensation and other benefits, if any, accrued up to the effective
date (which shall not be retroactive) specified in the Company's notice of
termination, plus payment of any Annual Salary which otherwise would be payable
to the Executive until the date which is three months from the effective date of
the Executive's termination. The Founders Shares and the Options shall continue
to vest and become exercisable in accordance with the schedule set forth herein.
5.4 Termination upon Disability or by Executive. 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 twelve-month period, 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, 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 limited
to the payment of any unpaid Annual Salary, Additional Compensation and other
benefits, if any, accrued up to the effective date (which shall not be
retroactive) specified in the Company's notice of termination, plus payment of
any Annual Salary which otherwise would be payable to the Executive during the
six-month period following such effective date. The Founders Shares and the
Options shall continue to vest and become exercisable in accordance with the
schedule set forth herein. If Executive terminates his employment hereunder for
any reason, 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 of such termination.
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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.
7. Indemnification. The Executive shall be entitled to the benefit of
the indemnification obligations of the Company set forth in the Company's
Articles of Incorporation, as amended through the date of this Agreement and the
Company's bylaws as in effect at the date of this Agreement.
8. Other Provisions.
8.1 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:
(i) if to the Company, to:
0000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopier No.: 713/852-2585
(ii) if to the Executive, to:
__________________________________
__________________________________
__________________________________
Telecopier No.:___________________
Either party may change its address for notice hereunder by notice to the
other party.
8.2 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.
8.3 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
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compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder 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.
8.4 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 Texas, without reference to principles governing choice or
conflicts of law.
8.5 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, rights or
obligations hereunder.
8.6 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.
8.7 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 first above written.
WORK INTERNATIONAL CORPORATION
By: /s/ Xxxx Xxxxxx
-------------------------------
Xxxx Xxxxxx, President
and Chief Executive Officer
EXECUTIVE:
/s/ Xxxx Xxxx
--------------------------------
Xxxx Xxxx
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