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EXHIBIT 10.32
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of October, 1999 by and between
Xxxxxx X. Xxxxxxx, residing at1044 Xxxxx Xxxx Xxxx, Xxxxxxxxxxx, Xxx Xxxxxx
00000 (hereinafter referred to as the "Employee") and TEAMSTAFF, INC., a New
Jersey corporation with principal offices located at 000 Xxxxxx Xxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as 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 Human Resource Administrative Services; and
WHEREAS, the Company desires to employ the Employee for the purpose of
securing for the Company the experience, ability and services of the Employee;
and
WHEREAS, the Employee desires to be employed with the Company,
pursuant to the terms and conditions herein set forth, superseding all prior
agreements 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
EMPLOYMENT
1.1 Subject to and upon the terms and conditions of this Agreement,
the Company hereby employs and agrees to continue the employment of the
Employee, and the Employee hereby accepts such continued employment in his
capacity as President, Chief Executive Officer and Corporate Secretary.
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ARTICLE II
DUTIES
2.1 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.
2.2 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.
2.3 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 with the Company
for which he is hired;
(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's relations;
(vi) Ensure that all Company activities and operations are
carried out in 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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2.4 Employee shall be based in the New Jersey area, and shall
undertake such occasional travel, within or without the United States as is or
may be reasonably necessary in the interests of the Company. The Company will
not base Employee in any other office without Employee's express written
consent.
ARTICLE III
COMPENSATION
3.1 Commencing the date hereof and during the term hereof, Employee
shall be compensated initially at the rate of $225,000 per annum, subject to
such increases to be determined on each 12-month anniversary during the term of
this Agreement (the "Base Salary"), which shall be paid to Employee as in
accordance with the Company's regular payroll periods.
3.2 Employee shall be entitled to receive a bonus (the "Bonus") in
accordance with the Company's Executive Officer Bonus Program to be determined
at the commencement of each fiscal year; provided, however, for the fiscal year
ended September 30, 2000, Employee shall be entitled to be paid as a Bonus
provided that in Schedule A annexed hereto.
3.3 The Company shall deduct from Employee's compensation all federal,
state, and local taxes which it may now or may hereafter be required to deduct.
3.4 Employee may receive such other additional compensation as may be
determined from time to time by the Board of Directors including bonuses and
nonqualified executive benefit plans such as a split dollar life insurance
arrangement, supplemental executive retirement plan ("SERP") and other long
term compensation plans. Nothing herein shall be deemed or construed to require
the Board to award any bonus or additional compensation except a split dollar
life insurance arrangement, the terms of which will be subject to the
reasonable agreement of the Employee and the Board.
ARTICLE IV
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BENEFITS
4.1 During the term hereof, the Company shall provide Employee with
group health care and insurance benefits as generally made available to the
Company's senior management; provide such other insurance benefits obtained by
the Company and made generally available to the Company's senior management;
reimburse the Employee, upon presentation of appropriate vouchers, for all
reasonable business expenses incurred by the Employee on behalf of the Company
upon presentation of suitable documentation; and pay to Employee the sum of
$1,000 per month as and for an automobile allowance.
4.2 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.
4.3 For each year of the term hereof, Employee shall be entitled
to six (6) weeks paid vacation.
ARTICLE V
NON-DISCLOSURE
5.1 The Employee shall not, at any time during or after the
termination of his 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, computerized payroll, accounting and information business, personnel
and/or employee leasing business of the Company and its subsidiaries, including
information relating to any customer of the Company or pool of temporary
employees, 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
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"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 his 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.
ARTICLE VI
RESTRICTIVE COVENANT
6.1 In the event of the voluntary termination of employment with the
Company prior to the expiration of the term hereof, or Employee's discharge in
accordance with Article VIII, or the expiration of the term hereof without
renewal, Employee agrees that he will not, for a period of one (1) year
following such termination (or expiration, as the case may be) 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 business is located in the States of Florida, New Jersey, New
York, and Texas or any other state the Company is operating in and is involved
in the professional employer organization business, or is otherwise engaged in
the same or similar business as the Company shall be engaged and is in direct
competition with the Company, or which the Company is 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 5 percent
of the shares of any publicly held corporation shall not violate the provisions
of this Article VI.
6.2 In furtherance of the foregoing, Employee shall not during the
aforesaid period of non-competition, directly or indirectly, in connection with
any computerized payroll, employee leasing, or permanent or temporary personnel
business, or any business similar to the business in
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which the Company was engaged, or in the process of developing during
Employee's tenure with the Company, solicit any customer or employee of the
Company who was a customer or employee of the Company during the tenure of his
employment.
6.3 If any court shall hold that the duration of non-competition or
any other restriction contained in this Article 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 VII
TERM
7.1 This Agreement shall be for a term of two (2) years commencing
October 1, 1999 and terminating on September 30, 2001 unless sooner terminated
as provided for herein (the "Expiration Date").
7.2 Unless this Agreement is earlier terminated pursuant to the terms
hereof, the Company agrees to notify Employee in writing whether it intends to
negotiate a renewal of this Agreement by notice six (6) months prior to the
Expiration Date. In the event the Company fails to so notify the Employee, the
term of this Agreement shall be extended for an additional one (1) year.
7.3 If the Company elects not to seek to renegotiate a renewal as
provided in paragraph 7.2 above, or if the Company fails to reach agreement
with Employee as to the terms of renewal, upon the termination of Employee's
employment with the Company for any reason after the Expiration Date, the
Company shall pay to Employee, in addition to any other payments due hereunder,
a severance payment equal to twelve months of Employee's Base Salary
("Severance Payments") payable in twelve equal monthly installments commencing
on the first day of the first month following the date of such termination;
provided, however, if Employee secures alternate
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employment within such twelve month period, the Company will be responsible
only for the negative difference between the severance payments and the amount
derived from such alternative employment.
7.4 In the event this Agreement expires without renewal, or is
terminated for any reason except for cause, the Company shall pay for executive
outplacement services.
ARTICLE VIII
DISABILITY DURING TERM
8.1 In the event Employee becomes totally disabled so that he is
unable or prevented from performing any one or all of his usual duties
hereunder for a period of four (4) consecutive months, and the Company elects
to terminate this agreement in accordance with Article IX, paragraph (B) then,
and in that event, Employee shall receive his Base Salary as provided under
Article III of this Agreement for a period of twelve (12) months commencing
from the date of such total disability or the balance of the original term of
this agreement, whichever is greater. The obligation of the Company to make the
aforesaid payments shall be modified and reduced and the Company shall receive
a credit for all disability insurance payments which Employee may receive from
insurance policies provided by the Company.
ARTICLE IX
TERMINATION
9.1 The Company may terminate this Agreement:
a. Upon the death of Employee during the term hereof, except that
the Employee's legal representatives, successors, assigns, and heirs shall have
those rights and interests as otherwise provided in this Agreement, including
the right to receive accrued but unpaid incentive compensation and special
bonus compensation on a pro rata basis.
b. Subject to the terms of Article VIII, upon written notice from
the Company to the Employee, if Employee becomes totally disabled and as a
result of such total disability, has
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been prevented from and unable to perform all of his duties hereunder for a
consecutive period of four (4) months.
c. Upon written notice from the Company to the Employee, at
any time for "Cause." For purposes of this Agreement, "Cause" shall be defined
as: (i) willful disobedience by the Employee of a material and lawful
instruction of the Board of Directors of the Company; (ii) conviction of the
Employee of any misdemeanor involving fraud or embezzlement or similar crime,
or any felony; (iii) breach by the Employee of any material provision of this
Agreement; (iv) conduct amounting to fraud, dishonesty, negligence, willful
misconduct or recurring insubordination; (v) inattention to or unsatisfactory
performance of duties which adversely affects operations of the Company; or
(vi) excessive absences from work, provided that the Company shall not have the
right to terminate the employment of Employee pursuant to the foregoing clauses
(iii) and (v) 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.
9.2 In the event the Company demotes, substantially reduces the duties
of or reduces the salary or benefits of the employee, the employee may elect to
treat this Agreement as terminated for "good reason" upon ten (10) days prior
written notice to the Company. In the event of termination of this Agreement
for good reason, the employee shall be entitled to payment of the greater of
all salary, benefits and stock grants or options due for the remaining term of
the Agreement or the severance payments as defined in Article VII herein, in
addition to any rights or remedies available to the employee at law or in
equity.
9.3 In the event of the termination of this Agreement and the
discharge of Employee by the Company in breach and violation of this Agreement,
Employee shall not be obligated to mitigate damages by seeking or obtaining
alternate employment.
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ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
10.1 This Agreement sets forth the entire agreement between the
parties and supersedes all prior agreements between the parties, whether oral
or written prior to the effective date of this Agreement.
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 shares of the Company's
Common Stock, $.001 par value, as follows:
Subject to the terms and conditions of the Company's Senior
Management Incentive Plan (the "Plan"), and the terms and conditions set forth
in the Stock Option Certificate which are incorporated herein by reference, the
Employee is hereby granted options to purchase 200,000 shares of the Company's
Common Stock, of which options to purchase 100,000 shares shall vest
immediately, 50,000 shall vest on the first anniversary hereof, and the balance
shall vest on the second anniversary hereof. The exercise price of the option
shall be $1.0625 per share and shall contain such other terms and conditions as
set forth in the stock option agreement. The foregoing options shall be
qualified as incentive stock options to the maximum as allowed by law. 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 Option shall terminate as provided in 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. A "Change
in Control" of the Company shall be deemed to have occurred if there shall be
consummated (i)(x) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (ii) the stockholders of
the Company approved any plan or proposal for the liquidation or dissolution of
the Company, or (iii) any person (as such term is used in Sections 13(d) and
l3(d)(2) of the Securities Exchange Act of l934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of Rule l3d-3
under the Exchange Act) of 20% or more of the Company's outstanding Common
Stock, except in connection with a transaction approved by the Board of
Directors; or (iv) during any period of two consecutive years, individuals who
at the beginning of such period constituted the entire Board of Directors shall
cease for any reason to constitute a majority thereof unless the election, or
the nomination for election by the Company's stockholders, of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.
12.2 The Company agrees that, if during the term hereof, or during
such time as the
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Employee is otherwise employed by the Company, a Change in Control shall occur,
all additional compensation arrangements and plans provided Employee under
paragraph 3.3 shall be funded to the maximum allowable under their terms and
all options to purchase Common Stock of the Company held by Employee, either
pursuant to this Agreement or otherwise, shall immediately vest and become
exercisable on the first day following a Change in Control. Further, the
options shall be deemed amended to provide that in the event of termination
after an event enumerated in this Article XII, the options shall remain
exercisable for the duration of their term; and further, at the Employee's
option, an amount equal to three times the aggregate annual compensation paid
to the Employee during the calendar year preceding the Change in Control shall
be credited against the exercise price of any options held by Employee at the
time Employee elects to exercise such options; provided, however, that if the
lump sum severance 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 a "parachute payment" (as defined in Section 280G of
the Internal Revenue Code of l954, as amended (the "Code")), such credit shall
be reduced to the largest amount as will result in no portion of the credit
under this Article XII being subject to the excise tax imposed by Section 4999
of the Code.
ARTICLE XIII
ARBITRATION AND INDEMNIFICATION
13.1 Any dispute arising out of the interpretation, application,
and/or performance of this Agreement with the sole exception of any claim,
breach, or violation arising under Articles V or VI hereof shall be settled
through final and binding arbitration before a single arbitrator in the State
of New Jersey 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.
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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, and to the fullest
extent permitted by law. 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, provided such
insurance can be obtained without unreasonable effort and expense.
ARTICLE XIV
SEVERABILITY 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
All notices required to be given under the terms of this Agreement
shall be in writing and shall be deemed to have been duly given only if
delivered to the addressee in person, with written acknowledgment received, or
mailed by certified mail, return receipt requested, as follows:
IF TO THE COMPANY: TeamStaff, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
IF TO THE EMPLOYEE: Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxx Xxxx
Xxxxxxxxxxx, XX 00000
or to any such other address as the party to receive the notice shall advise by
due notice given in accordance with this paragraph. Notice shall be effective
three (3) days after delivery or mailing.
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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.
ARTICLE XVIII
GOVERNING LAW
This Agreement has been negotiated and executed in the State of New
Jersey 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 New Jersey, and Employee and the Company each hereby
consent to the jurisdiction of any local, state, or federal court located
within the State of New Jersey.
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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.
(Corporate Seal) TEAMSTAFF, INC.
/s/ XXXX X. XXXXXXXXX
-----------------------------------
[SEAL] Xxxx X. Xxxxxxxxx
Chairman of the Board
/s/ XXXXXX X. XXXXXXX
--------------------------
Xxxxxx X. Xxxxxxx
Employee
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Schedule A
(A) For the fiscal year ended September 30, 2000, Employee shall be
entitled to be paid as a Bonus a percentage of the net pre-tax profit of the
Company as determined by the Company's independent auditors no later than 75
days following the end of the Company's fiscal year without giving effect to
tax loss carry forwards or the payment of any bonus under the Company's
Executive Officer Bonus Program (the "EBT") as follows: (1) if EBT is at least
$3,115,380 but less than $3,894,225, a percentage of EBT determined as follows:
(a) the sum of 4% plus the percentage equal to the amount of EBT earned in
excess of $3,115,000 divided by 778,845 and multiplied by 2; (2) if EBT is at
least $3,894,225 but less than $5,062,500, a percentage EBT determined as
follows: (a) the sum of 6% plus the percentage equal to the amount of EBT
earned in excess of $3,894,225 divided by 1,168,275 and multiplied by 2; and
(3) if EBT is equal to or in excess of $5,062,500, 8% of EBT; provided that in
the event EBT is less than $3,115,380 no bonus shall be paid by the Company to
the Employee other than at the discretion of the Compensation Committee. Such
determination, for Bonus purposes only, shall be made in accordance with
generally accepted accounting principles, as modified by this Schedule A.
(B) In the event the Company consummates a divestiture (a
"Divestiture") of a subsidiary or business unit, the EBT required for each
percentage level of Bonus shall be proportionately adjusted downward based on
the Company's profit plan projections to reflect the loss of EBT for the
remainder of the fiscal year attributable to the divested business unit or
subsidiary. A Divestiture does not include a transaction involving the sale of
all or substantially all of the assets of the Company.
