EXHIBIT 10.7
AMENDED EMPLOYMENT AND
STOCK GRANT AGREEMENT
THIS AMENDED EMPLOYMENT AND STOCK GRANT AGREEMENT (this "Agreement") is
executed as of August 24, 1998 to be effective as of May 15, 1998, between Work
International Corporation, a Texas corporation (the "Company"), and Xxxxxxx
Xxxxxx, an individual residing in Houston, Texas (the "Executive"). However, the
provisions of new Section 3.6 are effective as of August 24, 1998.
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
Chief Operating 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 his full 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 $175,000 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.
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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 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. Upon the Commencement Date, the Company will
grant the Executive non-qualified stock options (the "Options") to purchase
175,000 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"). 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. 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 Executive 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.
3.6 Stock Grant. Effective as of the date of this Agreement, the
Company grants to the Executive shares of the common stock of the Company
equivalent to 15,000 shares of the Company's common stock immediately after the
reverse split which will precede the Company's anticipated IPO (the "Grant
Shares"). There are no vesting conditions on such shares.
The Company shall loan to the Executive an amount equal to all required
income taxes payable on the income recognized by the Executive on the issuance
of the Grant Shares, said loan to be made pursuant to a promissory note which
requires repayment of the loan and all interest thereon on the first anniversary
of said loan, and which bears interest equal to the applicable federal short-
term rate, compounded semi-annually, as determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended.
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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 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
on the date the Executive's employment is terminated, within any territory
surrounding any regional office (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,
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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.
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.
4.1.7 Assignment of Rights. The Executive hereby specifically
sells, assigns, transfers and conveys to the Company all of his worldwide
right, title and interest in and to all such information, ideas, concepts,
improvements, discoveries or inventions, and any United States or foreign
applications for patents, inventor's certificates or other industrial
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rights which may be filed in respect thereof, including divisions,
continuations, continuations-in-part, reissues and/or extensions thereof,
and applications for registration of such names and service marks. The
Executive shall assist the Company and its nominee at all times, during the
Employment Period and thereafter, in the protection of such information,
ideas, concepts, improvements, discoveries or inventions, both in the
United States and all foreign countries, which assistance shall include,
but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection
with the preparation, prosecution, issuance or enforcement of any
applications for United States or foreign letters patent, including
divisions, continuations, continuations-in-part, reissues and/or extensions
thereof, and any application for the registration of such names and service
marks.
4.1.8 Work for Hire. In the event the Executive creates, during
the Employment Period, any original work of authorship fixed in any
tangible medium of expression which is the subject matter of copyright
(such as, videotapes, written presentations on acquisitions, computer
programs, drawings, maps, architectural renditions, models, manuals,
brochures or the like) relating to the Company's business, products or
services, whether such work is created solely by the Executive or jointly
with others, the Company shall be deemed the author of such work if the
work is prepared by the Executive in the scope of his employment; or, if
the work is not prepared by the Executive within the scope of his
employment but is specially ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work,
as a translation, as a supplementary work, as a compilation or as an
instructional text, then the work shall be considered to be work made for
hire, and the Company shall be the author of such work. If such work is
neither prepared by the Executive within the scope of his employment nor a
work specially ordered and deemed to be a work made for hire, then the
Executive hereby agrees to sell, transfer, assign and convey, and by these
presents, does sell, transfer, assign and convey, to the Company all of the
Executive's worldwide right, title and interest in and to such work and all
rights of copyright therein. The Executive agrees to assist the Company
and its Affiliates, at all times, during the Employment Period and
thereafter, in the protection of the Company's worldwide right, title and
interest in and to such work and all rights of copyright therein, which
assistance shall include, but shall not be limited to, the execution of all
documents requested by the Company or its nominee and the execution of all
lawful oaths and applications for registration of copyright in the United
States and foreign countries.
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.
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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 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 the 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
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Company's notice of termination. Any Options which have not fully vested, in
accordance with the schedule set forth herein, on or before the effective date
of Executives termination for Cause shall be immediately canceled. As used in
this Section 5.2 and in 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 Options shall continue to vest and become
exercisable in accordance with the schedule set forth herein.
5.4 Termination upon Disability. 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 Options shall continue to vest and become
exercisable in accordance with the schedule set forth herein.
5.5 Termination by Executive. 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:
000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier No.: 000-000-0000
(ii if to the Executive, to:
00000 Xxxxx Xxx
Xxxx, Xxxxx 00000
Telecopier No.: 000-000-0000
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 effective
as of the date first above written.
WORK INTERNATIONAL CORPORATION
By: /s/ Xxxx X. Xxxx
---------------------------------
Xxxx X. Xxxx, Vice President
and Chief Financial Officer
EXECUTIVE
/s/ Xxxxxxx Xxxxxx
------------------------------------
Xxxxxxx Xxxxxx
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