EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS AGREEMENT is made on the 9th day of February, 2010 by and between Xxxxxxx Xxxxxx (the
“Employee”) and TEAMSTAFF, INC., a New Jersey corporation (the “Company”).
W I T N E S S E T H:
WHEREAS, the Company and its subsidiaries are engaged in the business of providing business
outsourcing services; and
WHEREAS, the Company desires to employ the Employee and secure for the Company the experience,
ability and services of the Employee; and
WHEREAS, the Employee desires to accept employment with the Company, pursuant to the terms and
conditions herein set forth, superseding all prior oral and written agreements, term sheets and
letters between the Company, its subsidiaries and/or predecessors and Employee;
NOW, THEREFORE, it is mutually agreed by and between the parties hereto as follows:
ARTICLE I
DEFINITIONS
1.1 Accrued Compensation. Accrued Compensation shall mean an amount which
shall include all amounts earned or accrued through the “Termination Date” (as defined below) but
not paid as of the Termination Date, including (i) Base Salary, (ii) reimbursement for business
expenses incurred by the Employee on behalf of the Company, pursuant to the Company’s expense
reimbursement policy in effect at such time, (iii) vacation pay, and (iv) unpaid bonuses and
incentive compensation earned and awarded prior to the Termination Date.
1.2 Cause. Cause shall mean: (i) willful disobedience by the Employee of a material and lawful
instruction of the Board of Directors of the Company; (ii) formal charge, indictment or conviction
of the Employee of any misdemeanor involving fraud or embezzlement or similar crime, or any felony;
(iii) conduct amounting to fraud, dishonesty, gross negligence, willful misconduct or
recurring insubordination; or (iv) excessive absences from work, other than for illness or
Disability; provided that the Company shall not have the right to terminate the employment of
Employee pursuant to the foregoing clauses (i), (iii), and (iv) above unless written notice
specifying such breach shall have been given to the Employee and, in the case of breach which is
capable of being cured, the Employee shall have failed to cure such breach within thirty (30) days
after his receipt of such notice.
1.3 Change in Control. “Change in Control” shall mean any of the following events:
a. (i) An acquisition (other than directly from the Company) of any voting securities of the
Company (the “Voting Securities”) by any “Person” (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”))
immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3
promulgated under the 0000 Xxx) of twenty percent (20%) or more of the combined voting power of the
Company’s then outstanding Voting Securities (27% if such Person is Wynnnefield Capital Inc. and
its affiliates); provided, however, that in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a “Non-Control Acquisition” (as defined below) shall not
constitute an acquisition which would cause a Change in Control. A “Non-Control Acquisition” shall
mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained
by (x) the Company or (y) any corporation or other Person of which a majority of its voting power
or its equity securities or equity interest is owned directly or indirectly by the Company (a
“Subsidiary”), or (2) the Company or any Subsidiary.
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(ii) Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely
because a Person (the “Subject Person”) gained Beneficial Ownership of more than
the permitted amount of the outstanding Voting Securities as a result of the acquisition of
Voting Securities by the Company which, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned by the Subject Person, provided that
if a Change in Control would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such share acquisition by the Company,
the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases
the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
b. The individuals who, as of the date this Agreement is approved by the Board, are members of
the Board (the “Incumbent Board”), cease for any reason to constitute at least two-thirds of the
Board; provided, however, that if the election, or nomination for election by the Company’s
stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement, be considered and defined as a
member of the Incumbent Board; and provided, further, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed office as a result of either an
actual “Election Contest” (as described in Rule 14a-11 promulgated under the 0000 Xxx) or other
solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy
Contest”); or
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c. Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving the Company, unless: (1) the
stockholders of the Company, immediately before such merger, consolidation or reorganization, own,
directly or indirectly immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such merger or consolidation or reorganization
(the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation or reorganization, (2) the individuals who
were members of the Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least two-thirds of the members of
the board of directors of the Surviving Corporation, and (3) no Person (other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the
Company, the Surviving Corporation or any Subsidiary) becomes Beneficial Owner of twenty percent
(20%) or more of the combined voting power of the Surviving Corporation’s then outstanding voting
securities as a result of such merger (27% if such Person is Wynnnefield Capital Inc. and its
affiliates), consolidation or reorganization, a transaction described in clauses (1) through (3)
shall herein be referred to as a “Non-Control Transaction”; or
(ii) An agreement for the sale or other disposition of all or substantially all of the assets
of the Company, to any Person, other than a transfer to a Subsidiary, in one transaction or a
series of related transactions;
(iii) The stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.
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d. Notwithstanding anything contained in this Agreement to the contrary, if the Employee’s
employment is terminated prior to a Change in Control and the Employee reasonably demonstrates that
such termination (i) was at the request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change in Control (a “Third Party”) or
(ii) otherwise occurred in connection with, or in anticipation of, a Change in Control, then
for all purposes of this Agreement, the date of a Change in Control with respect to the Employee
shall mean the date immediately prior to the date of such termination of the Employee’s employment.
1.4 Continuation Benefits. Continuation Benefits shall be the continuation of the Benefits,
as defined in Section 5.1, for the period commencing on the Termination Date and terminating 12
months thereafter, or such other period as specifically stated by this agreement (the “Continuation
Period”) at the Company’s expense on behalf of the Employee and his dependents; provided, however,
that (i) in no event shall the Continuation Period exceed 18 months from the Termination Date; and
(ii) the level and availability of benefits provided during the Continuation Period shall at all
times be subject to the post-employment conversion or portability provisions of the benefit plans.
The Company’s obligation hereunder with respect to the foregoing benefits shall also be limited to
the extent that if the Employee obtains any such benefits pursuant to a subsequent employer’s
benefit plans, the Company may reduce the coverage of any benefits it is required to provide the
Employee hereunder as long as the aggregate coverage and benefits of the combined benefit plans is
no less favorable to the Employee than the coverage and benefits required to be provided hereunder.
This definition of Continuation Benefits shall not be interpreted so as to limit any benefits to
which the Employee, his dependents or beneficiaries may be entitled under any of the Company’s
employee benefit plans, programs or practices following the Employee’s termination of employment,
including, without limitation, retiree medical and life insurance benefits.
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1.5 Disability. Disability shall mean a physical or mental infirmity which impairs the
Employee’s ability to substantially perform his duties with the Company for a period of sixty (60)
consecutive days and the Employee has not returned to his full time employment prior to the
Termination Date as stated in the “Notice of Termination” (as defined below).
1.6 Good Reason. “Good Reason” shall mean without the written consent of the Employee: (A) a
material breach of any provision of this Agreement by the Company; (B) failure by the Company to
pay when due any compensation to the Employee; (C) a reduction in the Employee’s Base Salary; (D)
failure by the Company to maintain the Employee in the positions referred to in Section 2.1 of this
Agreement; (E) assignment to the Employee of any duties materially and adversely inconsistent with
the Employee’s positions, authority, duties, responsibilities, powers, functions, reporting
relationship or title or any other action by the Company that results in a material diminution of
such positions, authority, duties, responsibilities, powers, functions, reporting relationship or
title; or (F) a Change in Control, provided the event on which the Change of Control is predicated
occurs within 90 days of the service of the Notice of Termination by the Employee, it being
understood that Employee shall have the right to terminate his employment under this Section 1.6
(F) for any reason or no reason within such 90 day period; and provided further, however, that the
Employee agrees not to terminate his employment for Good Reason pursuant to clauses (A) through (E)
unless (a) the Employee has given the Company at least 30 days’ prior written notice of his intent
to terminate his employment for Good Reason, which notice shall specify the facts and circumstances
constituting Good Reason; and (b) the Company has not remedied such facts and circumstances
constituting Good Reason to the reasonable and good faith satisfaction of the Employee within a
30-day period after receipt of such notice.
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1.7 Notice of Termination. Notice of Termination shall mean a written notice from the
Company, or the Employee, of termination of the Employee’s employment which indicates the provision
in this Agreement relied upon, if any and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee’s employment under
the provision so indicated. A Notice of Termination served by the Company shall specify the
effective date of termination.
1.8 Pro Rata Bonus. “Pro Rata Bonus” shall mean an amount equal to the maximum bonus Employee
had an opportunity to earn pursuant to section 4.2 multiplied by a fraction, the numerator of which
shall be the number of days from the commencement of the fiscal year to the Termination Date, and
the denominator of which shall be the number of days in the fiscal year in which Employee was
terminated.
1.1 Severance Payment. “Severance Payment” shall mean an amount equal to the sum of 12 months
of Employee’s Base Salary in effect on the Termination Date. The Severance Payment shall be
payable in equal installments on each of the Company’s regular pay dates for executives during the
twelve months commencing on the first regular executive pay date following the Termination Date.
The Severance Payment is conditioned on the Employee executing a termination agreement and release
in a form reasonably acceptable to the Employee and the Company.
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1.2 Termination Date. Termination Date shall mean (i) in the case of the Employee’s death, his
date of death; (ii) in the case of Good Reason, 30 days from the date the Notice of Termination is
given to the Company, provided the Company has not remedied such facts and circumstances
constituting Good Reason to the reasonable and good faith satisfaction of the Employee; (iii) in
the case of termination of employment on or after the Expiration Date, the last day of employment;
and (iv) in all other cases, the date specified in the Notice of Termination; provided, however, if
the Employee’s employment is terminated by the Company for any reason except Cause, the date
specified in the Notice of Termination shall be at least 30 days from the date the Notice of
Termination is given
to the Employee, and provided further that in the case of Disability, the Employee shall not
have returned to the full-time performance of his duties during such period of at least 30 days.
ARTICLE II
EMPLOYMENT
2.1 Subject to and upon the terms and conditions of this Agreement, the Company hereby agrees
to employ the Employee, and the Employee hereby accepts such employment, as President and Chief
Executive Officer of the Company, which positions he shall assume on February 22, 2010. The
Employee’s position includes acting as an officer and/or director of any of the Company’s
subsidiaries as determined by the Board of Directors. The Company shall nominate Employee, and use
its best efforts to have Employee elected to the Board of Directors of the Company (the “Board”)
commencing on February 22, 2010 and continuing throughout the term of this Agreement. The Employee
agrees to resign from the Board upon the termination of employment for any reason.
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ARTICLE III
DUTIES
3.1 The Employee shall, during the term of his employment with the Company, and subject to the
direction and control of the Company’s Board of Directors, perform such duties and functions as he
may be called upon to perform by the Company’s Board of Directors during the term of this
Agreement, consistent with his position as President and Chief Executive Officer.
3.2 The Employee shall perform, in conjunction with the Company’s Executive Management, to the
best of his ability the following services and duties for the Company and its subsidiary
corporations (by way of example, and not by way of limitation):
(i) Those duties attendant to the position of Chief Executive Officer;
(ii) Establish and implement current and long range objectives, plans, and policies, subject
to the approval of the Board of Directors;
(iii) Financial planning including the development of, liaison with, financing sources and
investment bankers;
(iv) Managerial oversight of the Company’s business;
(v) Shareholder relations;
(vi) Compliance with local, state and federal regulations and laws governing business
operations;
(vii) Business expansion of the Company including acquisitions, joint ventures, and other
opportunities; and
(viii) Promotion of the relationships of the Company and its subsidiaries with their
respective employees, customers, suppliers and others in the business community.
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3.3 The Employee agrees to devote full business time and his best efforts in the performance
of his duties for the Company and any subsidiary corporation of the Company.
3.4 Employee shall undertake regular travel to the Company’s executive and operational
offices, and such other occasional travel within or outside the United States as is or may be
reasonably necessary in the interests of the Company. All such travel shall be at the sole cost
and expense of the Company and shall include reasonable lodging and food costs incurred by Employee
while traveling.
ARTICLE IV
COMPENSATION
4.1 During the term of this Agreement, Employee shall be compensated initially at the rate of
$288,000 per annum, subject to such increases, if any, as determined by the Board of Directors, or
if the Board so designates, the Management Resources and Compensation Committee (the “Committee”),
in its discretion, at the commencement of each of the Company’s fiscal years during the term of
this Agreement (the “Base Salary”). The Base Salary shall be paid to the Employee in accordance
with the Company’s regular executive payroll periods.
4.2 Employee may receive a bonus (the “Bonus”) in the sole discretion of the Committee.
(i) Employee will have an opportunity to earn a cash Bonus of up to 70% of Employee’s Base
Salary for each fiscal year of employment. The Bonus will be based on performance targets and
other key objectives established by the Committee at the commencement of each fiscal year, and the
determination of whether the performance criteria shall have been attained shall be solely in the
discretion of the Committee.
(ii) Targeted bonus will be reduced or increased by 2% of Base Salary for every 1% of variance
between the actual results and the targets.
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(iii) No bonus will be awarded if results are less than 90% of target and no bonus will exceed
90% of salary.
(iv) For the period commencing on the effective date of this Agreement and September 30,
2010, Employee shall be guaranteed a bonus of $45,000 payable $25,000 on June 30, 2010 and $20,000
on September 30, 2010, provided Employee has not voluntarily resigned, or been terminated for
cause prior to such dates. The Committee will establish performance targets for the
balance of Fiscal 2010 in consultation with Employee within thirty (30) days of the
Commencement Date to enable Employee to earn additional cash bonus for Fiscal 2010, not to exceed
in the aggregate 70% of the portion of the Base Salary actually paid in Fiscal 2010.
4.3 The Company shall deduct from Employee’s compensation all federal, state, and local taxes
which it may now or hereafter be required to deduct.
4.4 Employee may receive such other additional compensation as may be determined from time to
time by the Board of Directors including bonuses and other long term compensation plans. Nothing
herein shall be deemed or construed to require the Board to award any bonus or additional
compensation.
ARTICLE V
BENEFITS
5.1 During the term hereof, the Company shall provide Employee with the following benefits
(the “Benefits”): (i) group health care and insurance benefits as generally made available to the
Company’s senior management; and (ii) such other insurance benefits obtained by the Company and
made generally available to the Company’s senior management. The Company shall reimburse Employee,
upon presentation of appropriate vouchers, for all reasonable business expenses incurred by
Employee on behalf of the Company upon presentation of suitable documentation.
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5.2 In the event the Company wishes to obtain Key Man life insurance on the life of Employee,
Employee agrees to cooperate with the Company in completing any applications necessary to obtain
such insurance and promptly submit to such physical examinations and furnish such information as
any proposed insurance carrier may request.
5.3 Employee shall be entitled to paid vacation at the rate of four (4) weeks per annum; three
(3) weeks for the balance of Fiscal 2010.
ARTICLE VI
NON-DISCLOSURE
6.1 The Employee shall not, at any time during or after the termination of her employment
hereunder, except when acting on behalf of and with the authorization of the Company, make use of
or disclose to any person, corporation, or other entity, for any purpose whatsoever, any trade
secret or other confidential information concerning the Company’s business, finances, marketing,
accounting, personnel and/or staffing business of the Company and its subsidiaries, including
information relating to any customer of the Company or pool of temporary or permanent employees,
governmental customer or any other nonpublic business information of the Company and/or its
subsidiaries learned as a consequence of Employee’s employment with the Company (collectively
referred to as the “Proprietary Information”). For the purposes of this Agreement, trade secrets
and confidential information shall mean information disclosed to the Employee or known by him as a
consequence of her employment by the Company, whether or not pursuant to this Agreement, and not
generally known in the industry. The Employee acknowledges that trade secrets and other items of
confidential information, as they may exist from time to time, are valuable and unique assets of
the Company, and that disclosure of any such information would cause substantial injury to the
Company. Trade secrets and confidential information shall cease to be trade secrets or
confidential information, as applicable, at such time as such information becomes public other than
through disclosure, directly or indirectly, by Employee in violation of this Agreement.
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6.2 If Employee is requested or required (by oral questions, interrogatories, requests for
information or document subpoenas, civil investigative demands, or similar process) to
disclose any Proprietary Information, Employee shall, unless prohibited by law, promptly notify
the Company of such request(s) so that the Company may seek an appropriate protective order.
ARTICLE VII
RESTRICTIVE COVENANT
7.1 During the term of Employment with the Company, and for a period of one (1) year following
termination of employment for any reason, Employee agrees that he will not, directly or indirectly,
enter into or become associated with or engage in any other business (whether as a partner,
officer, director, shareholder, employee, consultant, or otherwise), which is involved in the
business of providing (i) temporary and/or permanent staffing of governmental employees, and (ii)
medical and office administration/technical professionals through Federal Supply Schedule (“FSS”)
contracts with both the United States General Services Administration (“GSA”), United States
Department of Veterans Affairs (“DVA”), United States Department of Defense (“DOD”) or other
federal, state and local entities, or (iii) is otherwise engaged in the same or similar business as
the Company in direct competition with the Company, or which the Company was in the process of
developing, during the tenure of Employee’s employment by the Company. Notwithstanding the
foregoing, the ownership by Employee of less than five percent of the shares of any publicly held
corporation shall not violate the provisions of this Article VII. In furtherance of, and in
addition to, the foregoing, Employee shall not during the aforesaid period of non-competition,
directly or indirectly, in connection with any temporary or permanent employee placement,
governmental staffing or any other business of the Company and its subsidiaries, or any business
similar to the business in which the Company was engaged, or in the process of developing during
Employee’s tenure with the Company, solicit any
customer of the Company who was a customer of the Company during the tenure of his employment.
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7.2 In addition, Employee will not for a period of one year after the termination of
employment for any reason, either directly or indirectly, (a) solicit any person who is employed by
the Company (or who was employed by the Company within 90 days of the Termination Date to: (i)
terminate his employment with the Company; (ii) accept employment with anyone other than the
Company, or (iii) in any manner interfere with the business of the Company.
7.3 If any court shall hold that the duration of non-competition or any other restriction
contained in this Article VII is unenforceable, it is our intention that same shall not thereby be
terminated but shall be deemed amended to delete therefrom such provision or portion adjudicated to
be invalid or unenforceable or, in the alternative, such judicially substituted term may be
substituted therefor.
ARTICLE VIII
TERM
8.1 This Agreement shall be for a term (the “Initial Term”) commencing on the effective date
as set forth above (the “Commencement Date”) and terminating on September 30, 2013 (the “Expiration
Date”), unless sooner terminated upon the death of the Employee, or as otherwise provided herein.
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8.2 Unless this Agreement is earlier terminated pursuant to the terms hereof, the Company
agrees to use its best efforts to notify Employee in writing whether it intends to negotiate a
renewal of this Agreement by notice ninety (90) days prior to the Expiration Date. In the event
(i) the Company shall have failed to notify the Employee of its intention to renew as provided by
this Section 8.2, or (ii) the Company fails to reach agreement with Employee as to the terms of a
new employment agreement
after providing such notice, in addition to any other payments due hereunder, upon termination
of the Employee’s employment on or after the Expiration Date for any reason except Cause, the
Company shall pay Employee the Severance Payment.
ARTICLE IX
TERMINATION
9.1 The Company may terminate this Agreement by giving a Notice of Termination to the Employee
in accordance with this Agreement:
(i) for Cause;
(ii) without Cause;
(iii) for Disability.
9.2 Employee may terminate this Agreement by giving a Notice of Termination to the Company in
accordance with this Agreement, at any time, with or without good reason.
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9.3 If the Employee’s employment with the Company shall be terminated, the Company shall pay
and/or provide to the Employee the following compensation and benefits in lieu of any other
compensation or benefits arising under this Agreement or otherwise:
(i) if the Employee was terminated by the Company for Cause, or the Employee terminates
without Good Reason, the Accrued Compensation;
(ii) if the Employee was terminated by the Company for Disability, the Continuation Benefits;
the Accrued Compensation; and the Severance Payment; or
(iii) if termination was due to the Employee’s death, the Accrued Compensation; the
Continuation Benefits; and the Pro Rata Bonus; or
(iv) if the Employee was terminated by the Company without cause, or the
Employee terminates this Agreement for Good Reason, the Accrued Compensation; the Severance
Payment; and the Continuation Benefits.
9.4 The amounts payable under this Section 9, shall be paid as follows:
(i) Accrued Compensation shall be paid within five (5) business days after the Employee’s
Termination Date (or earlier, if required by applicable law).
(ii) If the Continuation Benefits are paid in cash, the payments shall be made on the first
day of each month during the Continuation Period (or earlier, if required by applicable law).
(iii) The Base Salary through the Expiration Date shall be paid in accordance with the
Company’s regular pay periods (or earlier, if required by applicable law).
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9.5 Notwithstanding the foregoing, in the event Employee is a member of the Board of Directors
on the Termination Date, the payment of any and all compensation due hereunder, except Accrued
Compensation, and Employee’s right to exercise any Employee Stock Option after the Termination
Date, is expressly conditioned on Employee’s resignation from the Board of Directors within five
(5) business days of notice by the Company requesting such resignation.
9.6 The Employee shall not be required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided to the Employee in any subsequent
employment except as provided in Sections 1.4.
ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
10.1 This Agreement sets forth the entire agreement between the parties and supersedes all
prior agreements, letters and understandings between the parties, whether oral or written
prior to the effective date of this Agreement except for the terms of employee stock option plans,
restricted stock grants and option certificates.
ARTICLE XI
STOCK OPTIONS
11.1 As an inducement to Employee to enter into this Agreement, the Company hereby grants to
Employee options to purchase 500,000 shares of the Company’s Common Stock, $.001 par value (the
“Options”), subject to the terms and conditions of the Company’s 2006 Long Term Incentive Plan (the
“Plan”), and the terms and conditions set forth in the Stock Option Agreement which are
incorporated herein by reference. Provided Employee is an employee of the Company on the vesting
date, and unless otherwise provided by this Agreement, the options shall vest as follows:
(i) 50,000 options on the Commencement Date;
(ii) 150,000 options if the closing price of the Company’s Common Stock equals or exceeds
$3.00 per share for ten consecutive trading days;
(iii) 50,000 options if the closing price of the Company’s Common Stock equals or exceeds
$4.00 per share for ten consecutive trading days;
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(iv) 50,000 options if the closing price of the Company’s Common Stock equals or exceeds $5.00
per share for ten consecutive trading days;
(v) 50,000 options if the closing price of the Company’s Common Stock equals or exceeds $6.00
per share for ten consecutive trading days;
(vi) 50,000 options if the closing price of the Company’s Common Stock equals or exceeds $7.00
per share for ten consecutive trading days; and
(vii) 100,000 options if the closing price of the Company’s Common Stock equals or exceeds
$9.00 per share for ten consecutive trading days.
11.2 The Options, to the extent vested, shall be exercisable for a period of ten years from
the date of this Agreement (the “Exercise Period”).
11.3 The Closing Price of a share of Common Stock shall mean (i) if the Common Stock is traded
on a national securities exchange or on the Nasdaq Stock Market (“Nasdaq”), the per share closing
price of the Common Stock shall be the reported closing price the principal securities exchange on
which they are listed or on Nasdaq, as the case may be, on the date of determination (or if there
is no closing price for such date of determination, then the last preceding business day on which
there was a closing price); or (ii) if the Common Stock is traded in the over-the-counter market
but bid quotations are not published on Nasdaq, the closing bid price per share for the Common
Stock as furnished by a broker-dealer which regularly furnishes price quotations for the Common
Stock; provided, however, that in the event of a Change in Control, the closing price shall be the
“Change in Control Price” as defined in the Plan.
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11.4 The exercise price of the Options shall be equal to Fair Market Value of the Company’s
Common Stock on the date this Agreement is fully executed as determined under the Plan, and shall
contain such other terms and conditions as set forth in the stock option agreement.
11.5 The Options provided for herein are not transferable by Employee and shall be exercised
only by Employee, or by his legal representative or executor, as provided in the Plan. Such
Options shall terminate as provided in the Plan, except as otherwise modified by this Agreement or
the stock option agreement.
11.6 In the event of a termination of Employee’s employment with the Company pursuant to
Section 9.1(i), options granted and not exercised as of the Termination Date shall terminate
immediately and be null and void. In the event of a termination of Employee’s employment with the
Company due to the Employee’s death, or Disability, the Employee’s (or his estate’s or legal
representative’s) right to purchase shares of Common Stock of the Company pursuant to any stock
option or stock option plan to the extent vested as of the Termination Date shall remain
exercisable in accordance with the Plan. In the event of a termination of Employee’s employment
with the Company by the Employee other than for Good Reason, the Employee’s right to purchase
shares of Common Stock of the Company pursuant to any stock option or stock option plan to the
extent vested as of the Termination Date shall remain exercisable for a period of three months
following the Termination Date, but in no event after the expiration of the exercise period.
11.7 In the event of Employee’s termination by the Company without cause or by Employee for
Good Reason, vested options shall remain exercisable in accordance with the Plan.
11.8 In the event of a Change of Control, as defined in Section 1.3, vested options shall
remain exercisable in accordance with the Plan.
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ARTICLE XII
EXTRAORDINARY TRANSACTIONS
12.1 The Company’s Board of Directors has determined that it is appropriate to reinforce and
encourage the continued attention and dedication of members of the Company’s management, including
the Employee, to their assigned duties without distraction in potentially disturbing circumstances
arising from the possibility of a change in control of the Company.
12.2 In the event that within ninety days (90) days of a Change of Control as described in
Section 12.2, (i) Employee is terminated, or (ii) Employee’s status, title, position or
responsibilities are
materially reduced and Employee terminates his Employment, the Company shall pay and/or
provide to the Employee, the following compensation and benefits:
| a. | The Company shall pay the Employee, in lieu of any other
payments due hereunder, (i) the Accrued Compensation; (ii) the Continuation
Benefits; and (iii) a lump sum payment equal to 150% of the Employee’s Base
Salary in effect on the effective date of the Change of Control. |
12.3 Notwithstanding the foregoing, if the payment under this Article XII, either alone or
together with other payments which the Employee has the right to receive from the Company, would
constitute an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), the aggregate of such credits or payments under this Agreement and
other agreements shall be reduced to the largest amount as will result in no portion of such
aggregate payments being subject to the excise tax imposed by Section 4999 of the Code. The
priority of the reduction of excess parachute payments shall be in the discretion of the Employee.
The Company shall give notice to the Employee as soon as practicable after its determination that
Change of Control payments and benefits are subject to the excise tax, but no later than ten (10)
days in advance of the due date of such Change of Control payments and benefits, specifying the
proposed date of payment and the Change of Control benefits and payments subject to the excise tax.
Employee shall exercise his option under this paragraph 12.2 by written notice to the Company within
five (5) days in advance of the due date of the Change of Control payments and benefits specifying
the priority of reduction of the excess parachute payments.
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ARTICLE XIII
ARBITRATION AND INDEMNIFICATION
13.1 Any controversy, dispute or claim arising out of or relating to this Agreement or breach
thereof, with the sole exception of any claim, breach, or violation arising under Articles VI or
VII hereof, shall be shall first be settled through good faith negotiation. If the dispute cannot
be settled through negotiation, the parties agree to attempt in good faith to settle the dispute by
mediation administered by JAMS. If the parties are unsuccessful at resolving the dispute through
mediation, the parties agree to final and binding arbitration before a single arbitrator in the
State of Georgia in accordance with the Rules of the American Arbitration Association. The
arbitrator shall be selected by the Association and shall be an attorney-at-law experienced in the
field of corporate law. Any judgment upon any arbitration award may be entered in any court,
federal or state, having competent jurisdiction of the parties.
13.2 The Company hereby agrees to indemnify, defend, and hold harmless the Employee for any
and all claims arising from or related to his employment by the Company at any time asserted, at
any place asserted, to the fullest extent permitted by law, except for claims based on Employee’s
fraud, deceit or willfulness. The Company shall maintain such insurance as is necessary and
reasonable to protect the Employee from any and all claims arising from or in connection with his
employment by the Company during the term of Employee’s employment with the Company and for a
period of six (6) years after the date of termination of employment for any reason. The provisions
of this Section 13.2 are in addition to and not in lieu of any indemnification, defense or other
benefit to which Employee may be entitled by statute, regulation, common law or otherwise.
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ARTICLE XIV
SEVERABILITY
If any provision of this Agreement shall be held invalid and unenforceable, the remainder of
this Agreement shall remain in full force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall remain in full force and effect in
all other circumstances.
ARTICLE XV
NOTICE
For the purposes of this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given when (a) personally
delivered or (b) sent by (i) a nationally recognized overnight courier service or (ii) certified
mail, return receipt requested, postage prepaid and in each case addressed to the respective
addresses as set forth below or to any such other address as the party to receive the notice shall
advise by due notice given in accordance with this paragraph. All notices and communications shall
be deemed to have been received on (A) if delivered by personal service, the date of delivery
thereof; (B) if delivered by a nationally recognized overnight courier service, on the first
business day following deposit with such courier service; or (C) on the third business day after
the mailing thereof via certified mail. Notwithstanding the foregoing, any notice of change of
address shall be effective only upon receipt.
22
The current addresses of the parties are as follows:
IF TO THE COMPANY:
|
TeamStaff, Inc. | |
| 0 Xxxxxxxxx Xxxxx | ||
| Xxxxxxxx, XX 00000 | ||
WITH A COPY TO:
|
Xxxxxx X. XxXxxxx | |
| Xxxxxx & Poliakoff, LLP | ||
| 00 Xxxxxxxx | ||
| Xxx Xxxx, XX 00000 | ||
IF TO THE EMPLOYEE: |
ARTICLE XVI
BENEFIT
This Agreement shall inure to, and shall be binding upon, the parties hereto, the successors
and assigns of the Company, and the heirs and personal representatives of the Employee.
ARTICLE XVII
WAIVER
The waiver by either party of any breach or violation of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach of construction and validity.
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ARTICLE XVIII
GOVERNING LAW
This Agreement has been negotiated and executed in the State of Georgia which shall govern its
construction and validity.
ARTICLE XIX
JURISDICTION
Any or all actions or proceedings which may be brought by the Company or Employee under this
Agreement shall be brought in courts having a situs within the State of Georgia, and Employee and
the Company each hereby consent to the jurisdiction of any local, state, or federal court located
within the State of Georgia.
ARTICLE XX
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties hereto. No change, addition,
or amendment shall be made hereto, except by written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and affixed their hands
and seals the day and year first above written.
| TEAMSTAFF, INC. |
||||
| By: | /s/ Xxxxxxxxx X. Xxxxxxxxx | |||
| Xxxxxxxxx X. Xxxxxxxxx | ||||
| Chairman of the Board | ||||
| /s/ Xxxxxxx Xxxxxx
|
||||
| Xxxxxxx Xxxxxx | ||||
| Employee | ||||
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