EMPLOYMENT AGREEMENT
This
Employment Agreement (this “Agreement”),
is dated as of July 15, 2021 (the “Effective
Date”), by and among HQ LTS Corporation, a Delaware
corporation (the “Company”),
HireQuest, Inc., a Delaware
corporation (the “Parent”) and
Xxxx Xxxxx, an individual
(“Executive”).
WHEREAS, the Company is wholly-owned by
the Parent; and
WHEREAS, the Executive desires to be
employed by the Company on the terms and conditions set forth
herein; and
WHEREAS, in connection therewith, the
Company, the Parent, and Executive desire to enter into this
Agreement.
NOW, THEREFORE, in consideration of the
mutual covenants and agreements of the parties contained herein,
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
PART ONE – DEFINITIONS
Definitions. For purposes of this
Agreement, the following definitions will be in
effect:
“Affiliates”
means all persons and entities directly or indirectly controlling,
controlled by or under common control with the entity specified,
where control may be by management authority, contract or equity
interest.
“Board” means
the Board of Directors of the Parent or the Compensation Committee
thereof (or any other committee subsequently granted authority by
the Board), subject to Section 15 below.
“Change of
Control” means a change in the ownership or control of
the Parent effected through any of the following transactions: (i)
a merger, consolidation or reorganization approved by the
Parent’s stockholders, unless securities representing more
than fifty percent (50%) of the total combined voting power of the
voting securities of the successor corporation are immediately
thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially
owned the Parent’s outstanding voting securities immediately
prior to such transaction, (ii) any stockholder-approved sale,
transfer or other disposition of all or substantially all of the
Parent’s assets, or (iii) the acquisition, directly or
indirectly, by any person or related group of persons (other than
the Parent or a person that directly or indirectly controls, is
controlled by or is under common control with, the Parent) of
beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the
“Exchange
Act”)) of securities possessing more than fifty
percent (50%) of the total combined voting power of the
Parent’s outstanding securities pursuant to a tender or
exchange offer made directly to the Parent’s stockholders.
Notwithstanding the foregoing, however, in any circumstance or
transaction in which compensation payable pursuant to this
Agreement would be subject to the tax under Section 409A of the
Code if the foregoing definition of “Change of Control”
were to apply, but would not be so subject if the term
“Change of Control” were defined herein to mean a
“change in control event” within the meaning of
Treasury Regulation § 1.409A-3(i)(5), then “Change of
Control” means, but only to the extent necessary to prevent
such compensation from becoming subject to the tax under Section
409A of the Code, a transaction or circumstance that satisfies the
requirements of both (1) a Change of Control under the applicable
clauses (i) through (iv) above, and (2) a “change in control
event” within the meaning of Treasury Regulation Section
§ 1.409A-3(i)(5).
“Code” means
the Internal Revenue Code of 1986, as amended from time to time,
and the Treasury regulations and administrative guidance
promulgated thereunder.
“Company”
means, unless the context otherwise requires, HQ LTS Corporation, a
Delaware corporation.
“Compensation
Committee” means the Compensation Committee of the
Board.
“Employment
Period” means the Term and all subsequent
Terms.
“Good Reason”
shall mean the occurrence of any of the following without
Executive’s consent: (i) a reduction of more than ten percent
(10%) in Executive’s Base Salary as in effect immediately
prior to such reduction; (ii) a reduction of more than ten percent
(10%) by the Company in the kind or level of employee benefits,
including bonuses, for which Executive was eligible (although
amounts actually earned will vary) immediately prior to such
reduction, with the result that Executive’s overall benefits
package is materially reduced; (iii) the relocation of Executive to
a facility or a location more than twenty-five (25) miles from his
current office in Goose Creek, South Carolina; provided, however,
that a reduction or relocation that is generally applicable to all
executives of the Company shall not constitute “Good
Reason” under clauses (i), (ii), and (iii) hereof. For
purposes of clarity, a change of title and/or job duties and
responsibilities shall not be deemed Good Reason. A termination of
employment by Executive shall not be deemed to be for Good Reason
unless (A) Executive gives the Company written notice describing
the event or events which are the basis for such termination within
60 days after the event or events occur, (B) such grounds for
termination (if susceptible to correction) are not corrected by the
Company within 30 days of the Company’s receipt of such
notice (the “Correction
Period”), and (C) Executive terminates
Executive’s employment no later than 30 days following the
Correction Period.
“Termination for
Cause” shall mean the Company’s termination of
Executive’s employment for any of the following reasons: (i)
Executive’s commission of any act of fraud, embezzlement or
dishonesty, (ii) the arrest or conviction of Executive, or the
entry of a plea of nolo contendere by Executive, for a felony;
(iii) Executive’s unauthorized use or disclosure of any
confidential information or trade secrets of the Company, (iv) the
disclosing or using of any material Confidential Information (as
hereinafter defined) of Company at any time by Executive, except as
required in connection with his duties to Company, (v)
Executive’s violation of a published Company policy which
stipulates the Executive may be terminated by the Company for
cause; or (vi) Executive’s continued failure, in the
reasonable good faith determination of the Board, to perform the
major duties, functions and responsibilities of Executive’s
position after written notice from the Company identifying the
deficiencies in Executive’s performance and a reasonable cure
period of not less than thirty (30) days.
PART TWO - TERMS AND CONDITIONS OF EMPLOYMENT
The
following terms and conditions will govern Executive’s
employment with the Company throughout the Employment Period and
will also, to the extent expressly indicated below, remain in
effect following Executive’s cessation of employment with the
Company.
1. Employment
and Duties. During the Employment Period, Executive will
serve as the Chief Financial Officer of HireQuest, Inc. and of HQ
LTS Corporation, or in such other role as assigned by the Company.
Executive will have such duties and responsibilities as are
commensurate with such positions and such other duties and
responsibilities commensurate with such positions (including with
the Parent’s subsidiaries) as are from time to time assigned
to Executive by the Chief Executive Officer. During the Employment
Period, Executive will devote his full business time, energy and
skill to the performance of his duties and responsibilities
hereunder, provided the foregoing will not prevent Executive from
(a) serving as a non-executive director on the board of directors
of non-profit organizations and other companies, (b) participating
in charitable, civic, educational, professional, community or
industry affairs, (c) managing his and his family’s personal
investments, including in an advisory capacity related to current
or potential investments or (d) such other activities approved by
the Board from time to time; provided, that such activities
individually or in the aggregate do not interfere or conflict with
Executive’s duties and responsibilities hereunder, violate
applicable law, or create a potential business or fiduciary
conflict.
2. Term.
The term of this Agreement shall run for a period from the
Effective Date through July 15, 2023 (such period, the
“Term”), and
may be terminated earlier as contemplated by Section 7.A.
Termination of this Agreement due to its non-renewal shall not
constitute a Termination for Cause or a resignation by Executive
for Good Reason.
3. Compensation;
Additional Incentives.
A. Base Salary. Executive’s
base salary (the “Base Salary”)
will be paid at the rate of $7,307.69 bi-weekly (or $190,000.00
annually) during the Term. Executive’s Base Salary may be
increased by the Compensation Committee and/or Board in their sole
discretion, but shall not be decreased without Executive’s
consent. Executive’s Base Salary will be paid at periodic
intervals in accordance with the Company’s normal payroll
practices for salaried employees. Executive will be eligible to
participate in a non-qualified retirement plan set up by the
Company with an employee match at least equivalent to that provided
by the Company to any Company employees entitled to participate in
any Company 401(k) plan.
B. Bonus
Opportunities.
(i) Discretionary Bonus. With respect to
each fiscal year beginning with the fiscal year ending December 31,
2021, the Compensation Committee shall have sole discretion to
award a discretionary bonus to the Executive.
(ii) Performance
Bonus. Beginning with the fiscal year
ending December 31, 2021, Company shall pay to Executive a bonus
according to the Company Senior Executive Bonus Plan (the
“Performance
Bonus”). Subject to final approval by the Compensation
Committee, Executive shall receive the Performance Bonus between 0%
and 50% of his Base Salary upon achieving the various tiered goals
set forth in the Company Senior Executive Bonus Plan.
(iii) Short-Term
Deferral. Any bonus payable pursuant to Sections 3.B.(i)
– 3.(B).(ii) shall be paid to the Employee within a
reasonable time, but in no event later than 60 calendar days, after
the last day of the applicable fiscal year to which the bonus
relates.
C. The Company may
deduct and withhold, from the compensation payable and benefits
provided to Executive hereunder, any and all applicable federal,
state, local and other taxes and any other amounts required to be
deducted or withheld by the Company under applicable statute or
regulation.
D. To the extent that
any compensation paid or payable pursuant to this Agreement is
considered “incentive-based compensation” within the
meaning and subject to the requirements of Section 10D of the
Exchange Act, such compensation shall be subject to potential
forfeiture or recovery by the Company in accordance with any
compensation recovery policy adopted by the Board or any committee
thereof in response to the requirements of Section 10D of the
Exchange Act and any implementing rules and regulations thereunder
adopted by the Securities and Exchange Commission or any national
securities exchange on which the Company’s common stock is
then listed. This Agreement may be unilaterally amended by the
Company to comply with any such compensation recovery
policy.
4. Equity
Compensation.
A. Executive shall be
granted and issued 10,000 restricted shares of Parent common stock
pursuant to the HireQuest, Inc. 2019 Equity Incentive Plan (the
“Equity
Incentive Plan”), or any successor plan, subject to
the terms and conditions of the plan, which shall vest and become
unrestricted according to the following schedule: 50% on the second
anniversary of the execution of this Agreement, and 6.25% per
fiscal quarter for each of the first eight fiscal quarters
occurring thereafter provided,
however, that this vesting schedule is subject to vesting
upon termination of Executive’s employment as set forth in
Section 7.
5. Expense
Reimbursement; Fringe Benefits; Paid Time Off (PTO).
A. Executive will be
entitled to reimbursement from the Company for customary, ordinary
and necessary business expenses incurred by Executive in the
performance of Executive’s duties hereunder, provided that
Executive’s entitlement to such reimbursements shall be
conditioned upon Executive’s provision to the Company of
vouchers, receipts and other substantiation of such expenses in
accordance with Company policies.
B. Company will pay
for dues and fees required for any professional licenses maintained
by Executive, membership in professional or industry associations,
continuing education requirements associated with any professional
license and conferences and seminars commonly attended by
executives in similar companies.
C. During the
Employment Period, Executive will be eligible to participate in any
group life insurance plan, group medical and/or dental insurance
plan, accidental death and dismemberment plan, short-term
disability program and other employee benefit plans, including
profit sharing plans, cafeteria benefit programs and stock purchase
and option plans, which are made available to executives of the
Company and for which Executive qualifies under the terms of such
plan or plans.
D. Executive shall be
entitled to paid vacation pursuant to the Company’s policies
in the same amount as is available to other employees of the
Company with equivalent tenure giving credit to Executive for years
of employment by Hire Quest, LLC, and their affiliated
entities.
6. Executive
Covenants.
A. Covenants. During the 30 days
following the termination of the Employment Period, Executive will
take all actions the Parent or Company may reasonably request to
maintain the Parent’s or Company’s business, goodwill
and business relationships and to assist with transition matters,
all at Company expense. In addition, upon the receipt of notice
from the Parent or Company (including outside counsel), during the
Employment Period and thereafter, Executive will respond and
provide information with regard to matters in which he has
knowledge as a result of his employment with the Company, and will
provide assistance to the Parent or Company and its representatives
in the defense or prosecution of any claims that may be made by or
against the Parent or Company, to the extent that such claims may
relate to the period of Executive’s employment with the
Company, all at Company expense. During the Employment Period and
thereafter, Executive shall promptly inform the Parent and Company
if he becomes aware of any lawsuits involving such claims that may
be filed or threatened against the Parent or Company. During the
Employment Period and thereafter, Executive shall also promptly
inform the Parent and Company (to the extent he is legally
permitted to do so) if he is asked to assist in any investigation
of the Parent or Company (or its actions), regardless of whether a
lawsuit or other proceeding has then been filed against the Parent
or Company with respect to such investigation, and will not do so
unless legally required. The Company will pay Executive at a rate
of $350.00 per hour, plus reasonable expenses, in connection with
any actions requested by the Parent or Company under this paragraph
following any termination of Executive’s employment, with
such amounts being paid to Executive at periodic intervals in
accordance with the Company’s normal payroll practices for
salaried employees. Executive’s obligations under this
paragraph shall be subject to the Parent’s and
Company’s reasonable cooperation in scheduling in light of
Executive’s other obligations. Executive will seek and obtain
Board approval prior to committing Company, Parent, or any of their
Affiliates to any material transaction involving any party which is
an Affiliate or related party (as that term is defined by the SEC
and relevant securities laws) of Executive.
B. Survival of Provisions. The
obligations contained in this Section 7 will survive the
termination of Executive’s employment with the Company and
will be fully enforceable thereafter.
7. Termination
of Employment.
A. General. Subject to Sections
7.D and 7.F, Executive’s employment with the Company is
“at-will” and may be terminated at any time by either
Executive or the Company for any reason (or no reason) in
accordance with this Agreement, which will also result in the Term
ending, by the party seeking to terminate Executive’s
employment providing 60-days written notice of such termination to
the other party. The 60-day notice shall not be required in the
final 60 days of the Term. If the Company intends to renew
Executive’s agreement, the Company shall employ reasonable
best efforts to engage the Executive in negotiations 90 days prior
the final day of the Term.
B. Death and Permanent Disability.
Upon the death or permanent disability of the Executive during the
Term, the employment relationship created pursuant to this
Agreement will immediately terminate, the Term will end, and
amounts will only be payable under this Agreement as specified in
this Section 7.B. Should Executive’s employment with the
Company terminate by reason of Executive’s death or permanent
disability during the Employment Period, Executive, or
Executive’s estate, shall be entitled to
receive:
(i) the
unpaid Base Salary earned by Executive pursuant to Section 3.A for
services rendered through the date of Executive’s death or
permanent disability, as applicable, payable in accordance with the
Company’s normal payroll practices for terminated salaried
employees plus all of Executive’s accrued paid time off or
vacation;
(ii) an
amount equal to the Base Salary the Executive would have earned in
the 60 day period following Executive’s death or permanent
disability, assuming said death or disability had not
occurred;
(iii) reimbursement
of all expenses for which Executive is entitled to be reimbursed
pursuant to Section 6, payable in accordance with the
Company’s normal reimbursement practices;
(iv) the
right to continue health care benefits under the Consolidated
Omnibus Budget Reconciliation Act of 1986, as amended, at
Executive’s cost, to the extent required and available by law
and subject to the Company continuing to maintain a group health
plan;
(v) any
accrued but unpaid Bonus pursuant to Section 3.B, payable at such
time as provided in Section 3.B;
(vi) pro-rata
vesting of the restricted stock award set forth in Section 4.A
calculated as if the restricted stock had vested and become
unrestricted on a monthly basis. By way of example, if Executive
becomes permanently disabled one year after the execution of this
Agreement, 25% of his restricted stock shall immediately vest and
become unrestricted. By way of further example, if Executive
becomes permanently disabled two years and two months after the
execution of this Agreement, 54.17% of his restricted stock shall
immediately vest and become unrestricted (2.083% vesting per month
x 26 months).
(vii) the
limited death, disability, and/or income continuation benefits
provided under Section 5.C, if any, will be payable in accordance
with the terms of the plans pursuant to which such limited death or
disability benefits are provided.
Compensation and
benefits provided pursuant to Section 7.B.(i) through 7.B.(vi) are
collectively referred to as the “Accrued
Obligations.”
If
Executive’s death occurs before payment of any earned Bonus
set forth in section 3.B.(ii) of this Agreement, the applicable
payments will be made to the Executive’s estate. For purposes
of this Agreement, Executive will be deemed “permanently
disabled” if Executive is so characterized pursuant to the
terms of the Company’s disability policies or programs
applicable to Executive from time to time, or if no such policy is
applicable, if the Compensation Committee determines, in its
reasonable discretion, that Executive is unable to perform the
essential functions of Executive’s duties for physical or
mental reasons for ninety (90) days in any twelve-month
period.
C. Termination for Cause; Resignation
without Good Reason. The Company may at any time during the
Employment Period, upon written notice summarizing with reasonable
specificity the basis for the Termination for Cause, terminate
Executive’s employment hereunder for any act qualifying as a
Termination for Cause. Such termination will be effective
immediately upon such notice. Upon any Termination for Cause (or
employee’s resignation other than for Good Reason), Executive
shall be solely entitled to receive:
(i) the
unpaid Base Salary and Bonuses earned by Executive pursuant to
Section 3 for services rendered through the date of termination,
payable in accordance with the Company’s normal payroll
practices for terminated salaried employees plus all of
Executive’s accrued paid time off or vacation;
(ii) reimbursement
of all expenses for which Executive is entitled to be reimbursed
pursuant to Section 5, payable in accordance with the
Company’s normal reimbursement practices; and
(iii) the
right to continue health care benefits under the Consolidated
Omnibus Budget Reconciliation Act of 1986, as amended, at
Executive’s cost, to the extent required and available by law
and subject to the Company continuing to maintain a group health
plan.
D. Involuntary Termination Without Cause
by the Company; Resignation by Executive for Good Reason.
The Company shall be entitled to terminate Executive with
60-days’ notice, other than a Termination for Cause, and
Executive shall be entitled to resign with or without Good Reason,
in each case at any time. The 60-day notice shall not be required
in the final 60 days of the Term. If the Company intends to renew
Executive’s agreement, the Company shall employ reasonable
best efforts to engage the Executive in negotiations 90 days prior
the final day of the Term. If Executive (1) is terminated by the
Company other than in circumstances constituting a Termination for
Cause, or (2) resigns for Good Reason, then Executive shall be
solely entitled to receive:
(i) The
Accrued Obligations through the date of termination, payable in a
lump sum within 15 days;
(ii) An
amount equal to Executive’s Base Salary for a period equal to
one month for every year of total employment by the Company or any
affiliate, including without limitation, Hire Quest LTS, LLC, Hire
Quest, LLC, and Command Center, Inc. up to a maximum of six (6)
months. By way of example, if Executive has worked for the Company
or an affiliate for five years at the time of involuntary
termination, he would be entitled to five-months’
pay;
(iii) Pro-rated
payment of the Performance Bonus in Section 3.B(ii) to the last day
of employment.
(iv) Pro-rata
vesting of the restricted stock award set forth in Section 4.A
calculated as if the restricted stock had vested and become
unrestricted on a monthly basis. By way of example, if Executive is
terminated without Good Cause or resigns for Good Reason one year
after the execution of this Agreement, 25% of his restricted stock
shall immediately vest and become unrestricted. By way of further
example, if Executive is terminated without Good Cause or resigns
for Good Reason two years and two months after the execution of
this Agreement, 54.17% of his restricted stock award pursuant to
Section 4.A shall immediately vest and become unrestricted (2.083%
vesting per month x 26 months).
(v) For
purposes of clarity, a termination of Executive’s employment
due to Executive’s death or to Executive’s permanent
disability shall not be considered either a termination by the
Company without cause or a resignation by Executive for Good
Reason, and such termination shall not entitle Executive (or his
heirs or representatives) to any compensation or benefits pursuant
to this Section 7.D.
E. Termination by Non-Renewal. In
the event the company fails to renew Executive’s employment
before the expiration of this Agreement (“Non-Renewal”),
Executive shall be entitled to receive:
(i) The
Accrued Obligations through the date of termination, payable in a
lump sum within 15 days.
(ii) Pro-rated
payment of the Performance Bonus in Sections 4.B(iii).
(iii) 50%
of the restricted stock awarded in Section 4.A shall immediately
vest and become non-restricted.
F.
Compensation following a Change of
Control.
(i) Notwithstanding
any other provision of this Agreement, if a Change of Control
occurs prior to the end of the Term, this Agreement shall be
extended automatically for a one-year renewal period beginning on
the date of the Change of Control (a “Post-Change of Control
Renewal Period”). Following a Change of Control, the
Executive’s annual base salary shall not be decreased and,
during the Post-Change of Control Renewal Period, the
Executive’s base salary shall be increased on an annual basis
by an amount at least equal to the average base salary increase,
expressed as a percentage, provided to executives of the Company or
the Parent of comparable status and position to the Executive. On
and after a Change of Control, the Executive shall be included:
(a) to the extent eligible thereunder (which eligibility shall
not be conditioned on Executive’s salary grade or on any
other requirement which excludes persons of comparable status to
Executive unless such exclusion was in effect for such plan or an
equivalent plan immediately prior to the Change of Control), in any
and all plans providing benefits for the Company’s or the
Parent’s salaried Executives in general (including but not
limited to group life insurance, hospitalization, medical, dental,
and long-term disability plans) and (b) in plans provided to
executives of the Company or the Parent of comparable status and
position to Executive (including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement,
stock option, stock appreciation, stock bonus, cash bonus and
similar or comparable plans); provided that in no event shall the
aggregate level of benefits under the plans described in clause
(a) and the plans described in clause (b), respectively, in
which Executive is included be less than the aggregate level of
benefits under plans of the Company or the Parent of the type
referred to in such clause, respectively, in which Executive was
participating immediately prior to the Change of
Control.
(ii) If
Executive’s employment is terminated during the Post-Change
of Control Renewal Period, the Company shall pay the Executive a
one-time, lump-sum severance payment equal to one hundred fifty
percent (150%) of the Executive’s Base Salary in effect at
the time of such termination (“Change of Control Severance
Payment”). The Change of Control Severance Payment
shall be paid to the Executive in cash equivalent on the date that
is sixty (60) days after the date of termination of the
Executive’s employment; provided that, to the extent required
to comply with Section 409A of the Code, all or a portion of
the Change of Control Severance Payment shall be delayed until the
first day of the seventh (7th) month following the month in which
the termination of the Executive’s employment occurs, without
interest thereon.
(iii) In
addition, should the Company terminate Executive’s employment
during the Post-Change of Control Renewal Period, all restrictions
on any restricted stock or restricted stock unit awards made to the
Executive by the Company, the Parent or its affiliates shall lapse
such that Executive is fully and immediately vested in such awards
upon such termination of employment; any stock options or
stock appreciation rights granted to Executive pursuant to the
Company’s, the Parent’s or its affiliate’s
equity-based incentive plan(s) shall become fully and immediately
vested upon such termination of employment; and any
performance shares, performance units or similar performance-based
equity awards granted to Executive pursuant to the Company’s,
the Parent’s or its affiliate’s equity-based incentive
plan(s) shall be deemed earned on a pro rated basis according to
the portion of the performance period that has elapsed through the
date of the termination of employment as if all performance
requirements had been satisfied at the target level (or such higher
level as would have been achieved if performance through the date
of the termination of employment had continued through the end of
the performance period).
G. Resignations
from Other Positions. Upon any termination of
Executive’s employment, and as a condition to Executive
receiving any benefits under 7.C, 7.D, 7.E, or 7.F(ii) and (iii)
(the “Severance
Benefits”) under this Agreement, if so requested by a
majority of the Board, Executive will immediately resign (1) as a
director of the Parent and any of its subsidiaries, (2) from all
officer or other positions of the Parent and Company, and (3) from
all fiduciary positions (including as trustee) Executive then holds
with respect to any employee benefit plans or trusts established,
maintained or sponsored by the Parent, the Company, or by any of
their Affiliates. Failure by Executive to resign immediately from
all positions described in the immediately preceding sentence shall
result in automatic forfeiture of any and all rights to the
Severance Benefits.
H. Options
Upon Termination. Except as otherwise provided in Section 7,
upon termination of Executive’s employment for any reason and
subject to the terms of the Company’s Stock Plan, as it may
be amended from time to time, including by reason of
Executive’s death or permanent disability, any portion of any
options held by the Executive that are not then vested will
immediately be forfeited and expire for no consideration and the
remainder of such options will remain exercisable pursuant to the
terms of the Company’s Stock Plan (with the understanding
that any options that are intended to be “incentive stock
options” under the Code shall thereupon be disqualified from
such treatment); provided, that any portion of the options held by
Executive immediately prior to Executive’s death, to the
extent then exercisable, will remain exercisable pursuant to the
terms of the Company’s following Executive’s death; and
provided, further, that in no event shall any portion of the
options be exercisable after the Final Exercise Date.
I. Release.
Notwithstanding anything contained herein, Executive’s right
to receive (or retain) the Severance Benefits other than the
Accrued Obligations through the date of termination, is conditioned
on and subject to Executive’s execution within twenty-one
(21) days (or, to the extent required by applicable law, forty-five
(45) days) following the termination date and non-revocation within
seven (7) days thereafter of a general release of claims and
potential claims against Parent and all of its subsidiaries, and
their respective officers, directors, shareholders, insurers,
employees, and agents in a form provided by the
Company.
8. Section
409A of the Code.
A. General. This Agreement shall
be interpreted and applied in all circumstances in a manner that is
consistent with the intent of the parties that, to the extent
applicable, amounts earned and payable pursuant to this Agreement
shall constitute short-term deferrals exempt from the application
of Section 409A of the Code and, if not exempt, that amounts earned
and payable pursuant to this Agreement shall not be subject to the
premature income recognition or adverse tax provisions of Section
409A of the Code.
B. Separation from Service.
References in this Agreement to “termination” of
Executive’s employment, “resignation” by
Executive from employment and similar terms shall, with respect to
such events that will result in payments of compensation or
benefits, mean for such purposes a “separation from
service” as defined under Section 409A of the
Code.
C. Specified Executive. In the
event any one or more amounts payable under this Agreement
constitute a “deferral of compensation” and become
payable on account of the “separation from service” (as
determined pursuant to Section 409A of the Code) of Executive and
if as such date Executive is a “specified employee” (as
determined pursuant to Section 409A of the Code), such amounts
shall not be paid to Executive before the earlier of (i) the first
day of the seventh calendar month beginning after the date of
Executive’s “separation from service” or (ii) the
date of Executive’s death following such “separation
from service.” Where there is more than one such amount, each
shall be considered a separate payment and all such amounts that
would otherwise be payable prior to the date specified in the
preceding sentence shall be accumulated (without interest) and paid
together on the date specified in the preceding
sentence.
D. Separate Payments. For purposes
of Section 409A of the Code, each payment or amount due under this
Agreement shall be considered a separate payment, and
Executive’s entitlement to a series of payments under this
Agreement is to be treated as an entitlement to a series of
separate payments.
E. Reimbursements. Any
reimbursement to which Executive is entitled pursuant to this
Agreement that would constitute nonqualified deferred compensation
subject to Section 409A of the Code shall be subject to the
following additional rules: (i) no reimbursement of any such
expense shall affect Executive’s right to reimbursement of
any other such expense in any other taxable year; (ii)
reimbursement of the expense shall be made, if at all, not later
than the end of the calendar year following the calendar year in
which the expense was incurred; (iii) the right to reimbursement
shall not be subject to liquidation or exchange for any other
benefit; and (iv) the right to reimbursement of expenses incurred
kind shall terminate one year after the end of the Employment
Period.
9. Section
280G of the Code. Notwithstanding anything to the contrary contained
herein (or any other agreement entered into by and between
Executive and the Company or any incentive arrangement or plan
offered by the Parent or Company), in the event that any amount or
benefit paid or distributed to Executive pursuant to this
Agreement, taken together with any amounts or benefits otherwise
paid to Executive by the Parent or Company (collectively, the
“Covered
Payments”), would
constitute an “excess parachute payment” as defined in
Section 280G of the Code, and would thereby subject Executive
to an excise tax under Section 4999 of the Code (an
“Excise
Tax”), the provisions of
this Section 10 shall apply. If the aggregate present value
(as determined for purposes of Section 280G of the Code) of
the Covered Payments exceeds the amount which can be paid to
Executive without Executive incurring an Excise Tax, then the
amounts payable to Executive under this Agreement (or any other
agreement by and between Executive, the Parent, and/or the Company
or pursuant to any incentive arrangement or plan offered by the
Parent or Company) shall be reduced (but not below zero) to the
maximum amount which may be paid hereunder without Executive
becoming subject to the Excise Tax (such reduced payments to be
referred to as the “Payment
Cap”). In the event
Executive receives reduced payments and benefits as a result of
application of this Section 10, Executive shall have the right
to designate which of the payments and benefits otherwise set forth
herein (or any other agreement between the Parent, the Company
and/or Executive or any incentive arrangement or plan offered by
the Parent or Company) shall be received in connection with the
application of the Payment Cap, subject to the following sentence.
Reduction shall first be made from payments and benefits which are
determined not to be nonqualified deferred compensation for
purposes of Section 409A of the Code, and then shall be made
(to the extent necessary) out of payments and benefits that are
subject to Section 409A of the Code and that are due at the
latest future date.
10. No
Guarantee of Tax Consequences. The Board, the Compensation
Committee, the Parent, the Company and their Affiliates, officers
and employees make no commitment or guarantee to Executive that any
federal, state, local or other tax treatment will apply or be
available to Executive or any other person eligible for
compensation or benefits under this Agreement and assume no
liability whatsoever for the tax consequences to Executive or to
any other person eligible for compensation or benefits under this
Agreement.
11.
Executive Stock Purchase Matching
Program. Parent shall match 20% of the purchases of common
stock of the Parent that the Executive makes during the time period
commencing on the Effective Date and ending upon the
Executive’s termination from employment (the
“Stock
Purchase Matching Period”). For purposes of this
section, a purchase shall include stock received by the Executive
in lieu of cash compensation but shall not include Equity
Compensation described in paragraph 4. This program shall be
subject to the following terms and conditions:
A.
The shares of
common stock issued by the Parent pursuant to this Section shall be
Restricted Shares granted under the Equity Incentive Plan (the
“Matching
Restricted Stock”) and shall not vest until the second
anniversary of the date on which the Executive purchased the common
stock that triggered the matching obligation (a “Triggering
Purchase”).
B.
If such anniversary
occurs during a Company blackout period under the Company’s
Xxxxxxx Xxxxxxx Policy, the Matching Restricted Stock shall vest on
the first day immediately following the end of the blackout
period.
C.
The Matching
Restricted Stock shall only vest if the Executive is employed by
the Company or a subsidiary on such vesting date and owns at least
the same number of shares of Parent common stock that were matched
at the time of the Triggering Purchase.
D.
The number of
shares of Matching Restricted Stock that the Company shall issue to
the Executive pursuant to this Section shall not exceed $25,000 in
value in the aggregate within any calendar year
period.
E.
The Board may
accommodate exceptions to these provisions in its discretion to
account for special or unforeseen circumstances.
12. Controlling
Law, Jurisdiction and Venue. This Agreement and all
questions related to its validity, interpretation, performance, and
enforcement shall be governed by the laws of the state of South
Carolina, notwithstanding any conflict-of-interest provisions to
the contrary. Executive agrees that any and all claims arising out
of or relating to this Agreement or Executive’s employment by
the Company shall be resolved by binding arbitration. Arbitration
shall occur in Charleston, South Carolina. Arbitration shall
proceed pursuant to the rules of the American Arbitration
Association except where this agreement conflicts with those rules.
In case of conflict, the terms of this agreement shall govern. A
mutually agreeable neutral arbitrator shall be selected by the
parties from a list provided by the local office of the American
Arbitration Association in the Charleston, South Carolina region.
The arbitration proceedings and opinion shall be confidential. The
arbitration hearing shall occur within 120 days of the date it is
filed. Notwithstanding anything in the rules of the American
Arbitration Association, the parties shall be allowed to engage in
discovery according to the following rules: each party shall serve
all interrogatories and requests for documents within 30 days of
filing the arbitration. Each party shall be limited to 20
interrogatories and 10 document requests. Discovery shall be fully
responded to within 30 days of receipt. The parties may each take 3
depositions including the deposition of an opposing party. No other
discovery shall be allowed except upon written motion to the
arbitrator. The arbitrator shall issue a written opinion including
findings of fact and conclusions of law within thirty days of the
conclusion of the arbitration hearing. The arbitrator may award any
relief, legal or equitable, to either party available under law or
which may be awarded by a court of competent jurisdiction where the
arbitration takes place provided,
however that the arbitrator shall not be empowered to award
punitive or consequential damages. The parties hereby expressly
waive their right to recover punitive and consequential damages in
such a proceeding. The parties shall have the rights to appeal or
seek confirmation or modification of such a decision that are set
forth in the Federal Arbitration Act. This arbitration agreement
and any arbitration shall be governed by the Federal Arbitration
Act to the exclusion of state law inconsistent therewith. The
parties shall share equally the administrative fees and
arbitrator’s fees and expenses unless a contrary provision of
law governs. All other costs and expenses associated with the
arbitration, including, without limitation, each party’s
respective attorney’s fees, shall be borne by the party
incurring the expense.
13. Noncompetition,
non-disclosure requirements. During the Restricted Period
(defined below), the Executive shall not, directly or indirectly
(whether by himself or through an affiliate, in partnership or
conjunction with, or as an employee, officer, director, manager,
member, owner, consultant or agent of, any other person) own,
manage, operate, control, consult with, be employed by, participate
in the ownership, management, operation or control of, or otherwise
render services to or engage in, any business within the United
States engaged in or competitive with (X) the businesses conducted
by the Company, the Parent, or their affiliates (including without
limitation providing workers compensation insurance to any
franchisee of the Company, the Parent, or an affiliated); provided,
that a Principal’s ownership of securities of 2% or less of
any publicly traded class of securities of a public company shall
not violate this Section. For purposes of this Agreement, the
Restricted Period shall be defined as the period of such
Executive’s employment with the Company, the Parent, or any
of its affiliates and ending on the later of (x) one year following
such Executive’s termination with the Company, the Parent, or
its affiliates and (y) the second anniversary of the Effective
Date.
14. Entire
Agreement; Severability. This Agreement and the agreements
referenced herein contain the entire agreement of the parties
relating to the subject matter hereof, and supersede in their
entirety any and all prior agreements, understandings or
representations relating to the subject matter hereof. No
agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement. The provisions of this Agreement shall be deemed
severable and, if any provision is found to be illegal, invalid or
unenforceable for any reason, (a) the provision will be amended
automatically to the minimum extent necessary to cure the
illegality or invalidity and permit enforcement and (b) the
illegality, invalidity or unenforceability will not affect the
legality, validity or enforceability of the other provisions
hereof.
15. Amendment;
Committee Authority. This Agreement may be amended,
supplemented, or modified only by a written instrument duly
executed by or on behalf of each party hereto. All determinations
and other actions required or permitted hereunder to be made by or
on behalf of the Parent, the Company, or the Board may be made by
either the Board (excluding Executive therefrom) or the
Compensation Committee (or any other committee subsequently granted
authority by the Board); provided that the actions of the
Compensation Committee (or any other committee subsequently granted
authority by the Board) shall be subject to the authority then
vested in such committee by the Board, it being understood and
agreed that as of the date of this Agreement the Compensation
Committee has full authority, concurrent with the Board, to
administer this Agreement; and provided, further, that a decision
or action by the Compensation Committee (or any other committee
subsequently granted authority by the Board) hereunder shall be
subject to review or modification by the Board if the Board so
chooses.
16. Waiver.
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay
by either party in exercising any right, power, or privilege under
this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of
such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement can be
discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party
giving such notice or demand to take further action without notice
or demand as provided in this Agreement.
17. No
Violation. Executive represents and warrants that the
execution and delivery of this Agreement and the performance of
Executive’s services contemplated hereby will not violate or
result in a breach by Executive of, or constitute a default under,
or conflict with: (i) any provision or restriction of any
employment, consulting, or other similar agreement; (ii) any
agreement by Executive with any third party not to compete with,
solicit from, or otherwise disparage such third party; (iii) any
provision or restriction of any agreement, contract, or instrument
to which Executive is a party or by which Executive is bound; or
(iv) any order, judgment, award, decree, law, rule, ordinance, or
regulation or any other restriction of any kind or character to
which Executive is subject or by which Executive is
bound.
18. Assignment.
Notwithstanding anything else herein, this Agreement is personal to
Executive and neither this Agreement nor any rights hereunder may
be assigned by Executive. The Company or Parent may assign this
Agreement to an affiliate or to any acquirer of all or
substantially all of the business and/or assets of the Company or
the Parent, in which case the term “Company” or
“Parent,” as the case may be, will mean such affiliate
or acquirer. This Agreement will inure to the benefit of and be
binding upon the personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, legatees
and permitted assignees of the parties.
19. Counterparts,
Facsimile. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy
of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement. To the maximum
extent permitted by applicable law, this Agreement may be executed
via facsimile.
20. Notices.
Any notice required to be given under this Agreement shall be
deemed sufficient, if in writing, and sent by certified mail,
return receipt requested, via overnight courier, or hand delivered
to the Company or the Parent at 000 Xxxxxxxxxx Xxxxx, Xxxxx Xxxxx,
XX 00000, Attn: Chairman of the Compensation Committee and General
Counsel, and to Executive at the most recent address reflected in
the Company’s employment records.
Signature page follows.
IN
WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the Effective Date.
PARENT:
HIREQUEST, INC., a Delaware
corporation
By:
_/s/ Xxxx X.
McAnnar__________________________
Name:
Xxxx X. XxXxxxx
Title:
Chief Legal
Officer
COMPANY:
HQ LTS CORPORATION, a Delaware
corporation
By:
_/s/ Xxxx X.
McAnnar________________________
Name:
Xxxx X. XxXxxxx
Title:
Chief Legal
Officer
EXECUTIVE:
XXXX XXXXX, an individual
By:
_/s/ Xxxx Xxxxx
____________________
Xxxx
Xxxxx, an individual
[Signature
Page to Employment Agreement]
