EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") is made this 16th day of
April, 1998 by and between EMPLOYEE SOLUTIONS, INC., an Arizona corporation (the
"Company"), and XXXX X. XXXXXXX ("Employee").
RECITALS
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A. The Company wishes to employ Employee, and Employee wishes to be
employed by the Company.
B. The parties wish to set forth in this Agreement the terms and
conditions of such employment.
AGREEMENTS
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In consideration of the mutual promises and covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Employment. Subject to the terms and conditions of this Agreement,
the Company employs Employee to serve in an executive capacity and Employee
accepts such employment and agrees to dedicate all of his business time and
effort to Company business and perform such reasonable responsibilities and
duties as may be assigned to him from time to time by the Company's Chief
Executive Officer, President and/or Board of Directors (the "Board"). Employee's
title shall be Senior Vice President - Sales & Marketing, with responsibility
for the Company's sales and marketing and related functions and such executive
responsibilities as may be assigned from time to time by, and subject to the
direction of, the Board, the Chief Executive Officer and/or the President.
Employee shall report directly to the Chief Executive Officer or President.
Subject to Sections 7.f and 8, such title and duties may be changed from time to
time by the Board, so long as Employee is maintained in an executive capacity
throughout the term of his employment.
2. Term. The employment of Employee by the Company pursuant to this
Agreement shall commence on the date hereof and continue until terminated as
provided elsewhere herein.
3. Compensation.
a. Salary. The initial annual base salary payable to Employee
shall be
$160,000. The base salary shall be reviewed in 1998 (subject to the timing of a
current compensation study), and at least annually thereafter on approximately
Employee's anniversary date of hire, and may be increased from time to time in
accordance with the Company's policies and practices regarding periodic review
and adjustment of executive compensation.
b. Incentive Plan. The Company may establish and implement an
incentive compensation system which will provide additional incentive payments
to Employee based upon his performance and the performance of the Company.
4. Fringe Benefits. In addition to the options for shares of the
Company's Common Stock available to Employee under the same terms as those
available to Company employees, and any other employee benefit plans generally
available to Company employees, the Company shall include Employee (and
Employee's dependents) in any group medical insurance plan maintained for the
employees of the Company at the Company's expense. The manner of implementation
of such benefits with respect to such items as procedures and amounts is
discretionary with the Company but shall be commensurate with Employee's
executive status and shall include medical, dental and hospital coverage for
Employee and Employee's dependents who are eligible under the applicable plans.
The Company shall also pay Employee $5,000 per year (starting with execution of
this Agreement and payable throughout the year in accordance with the Company's
normal payroll practices) for individual purchase by Employee of supplemental
insurance products or for use in such other manner as Employee sees fit.
5. Vacation. Employee shall be entitled to vacation with pay in keeping
with Employee's established vacation practices, but in no event less than four
weeks per calendar year. In addition, Employee shall be entitled to such
holidays as the Company may approve for its executive personnel.
6. Expense Reimbursement. In addition to the compensation and benefits
provided above, the Company shall pay all reasonable expenses of Employee
incurred in connection with the performance of Employee's duties and
responsibilities to the Company pursuant to this Agreement, upon submission of
appropriate vouchers and supporting documentation in accordance with the
Company's usual and ordinary practices, provided that such expenses are
reasonable and necessary business expenses of the Company. The Company shall pay
Employee's reasonable cellular telephone expenses that are related to Company
business. The Company further shall pay Employee a $500 per month allowance for
automobile expense (provided that such amount may be used by Employee in such
manner as Employee sees fit).
7. Termination. This Agreement may be terminated in the manner provided
below:
a. For Cause. The Company may terminate Employee's employment
by the Company, for cause, upon written notice to the Employee stating the facts
constituting such cause, provided that Employee shall have 20 days following
such notice to cure any conduct or act, if curable, alleged to provide grounds
for termination for cause hereunder. In the event of termination for cause, the
Company shall be obligated to pay the Employee only the base salary due him
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through the date of termination. Cause shall include willful and persistent
failure to abide by instructions or policies from or set by the Board of
Directors, wilful and persistent failure to attend to material duties or
obligations imposed under this Agreement, or commission of a felony or serious
misdemeanor offense or pleading guilty or nolo contendere to same.
b. Without Cause. The Chairman or the Company may terminate
Employee's employment by the Company at any time, without cause, by giving 90
days written notice to the Employee. If the Company terminates under this
Section 7.b, it shall pay to Employee an amount equal to 12 months base salary,
payable monthly, less applicable withholdings; and shall continue coverage of
Employee and Employee's dependents under its medical plans and other benefit
arrangements for 12 months or until Employee secures other employment (unless
continuation of coverage under such plans is unfeasible, in which event the
Company will provide substantially similar benefits). The two 12-month periods
mentioned above each shall be extended to 24 months in the event termination
pursuant to this Section 7.b occurs prior to March 20, 1999.
c. Disability. If Employee experiences a permanent disability
(as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended), the Company shall have the right to terminate this Agreement without
further obligation hereunder except for any bonus amount payable in accordance
with the next sentence and any amounts payable pursuant to disability plans
generally applicable to executive employees. Within 90 days after the end of the
fiscal year in which termination pursuant to this Section 7.c occurs, so long as
Employee is in full compliance with this Agreement, Employee shall be entitled
to receive an incentive compensation payment (calculated and payable in the
manner referred to in Section 3.b), if any, based upon the Company's financial
performance for such fiscal year, which shall be prorated to the extent that
Employees employment during such fiscal year was for a period of less than the
full year.
d. Death. If Employee dies, this Agreement shall terminate
immediately, and Employee's legal representative shall be entitled to receive
the base salary due to Employee through the 60th day from the date on which his
death shall have occurred and any other death benefits generally applicable to
executive employees. In addition, Employee's legal representative shall be
entitled to receive, at the end of the first quarter of the year following the
fiscal year in which such death shall have occurred, an incentive compensation
payment (calculated and payable in the manner referred to in Section 3.b), if
any, based upon the Company's financial performance for such fiscal year, which
shall be prorated to the extent that Employee's employment during such fiscal
year was for a period of less than the full year.
e. Resignation Without Good Reason. Employee may resign at any
time by giving 90 days written notice to the Company, in which event Employee
shall be entitled to receive only the base salary due him through the date of
termination plus any other vested rights under employee stock options (pursuant
to the terms of such options) or other employee benefit plans.
f. Resignation for Good Reason. Employee may resign at any
time for Good Reason (as defined in Section 8.c), in which event Employee shall
be entitled to payments and
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benefits to the same extent and payable in the same manner as if Employee was
terminated without cause as described in Section 7.b above.
8. Change in Control.
x. Xxxxxxxxx Benefits. Notwithstanding Section 7.b. or 7.f
above, if Employee's employment with the Company terminates within 12 months
after a Change in Control (as defined in Section 8.b below), Employee shall be
entitled to the severance benefits provided in Section 8.e unless such
termination is in accordance with Section 7.a, 7.c, 7.d or 7.e above, in which
case such other section shall apply. Any amount paid pursuant to Section 8 shall
be in lieu of any payment otherwise due under Section 7.b or 7.f.
b. "Change in Control" shall be deemed to have occurred if (I)
any "person" (as such term is used in Paragraphs 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended [the "Exchange Act"]), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented by the Company's
then outstanding Voting Securities, or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of transactions)
all or substantially all the Company's assets.
c. "Good Reason" shall mean, for purposes of this Agreement,
(I) without Employee's express written consent, a reduction of Employee's
compensation or the assignment to Employee of duties inconsistent with
Employee's positions, duties, responsibilities and status with the Company
immediately prior to the Change in Control, or a demotion or a change in titles
or offices as in effect immediately prior to a Change in Control (except in
connection with termination of Employee's employment in compliance with Section
7.a, 7.c, 7.d or 7.e above); (ii) a material breach by the Company of any of its
obligations hereunder which (if curable) is not cured by the Company within 20
days after written notice thereof; or (iii) without Employee's express
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written consent, relocation of the site of Employee's duties to a location
outside the Phoenix, Arizona metropolitan area, or a requirement that Employee
average more than 10 business days outside of the Phoenix, Arizona metropolitan
area per month.
d. "Voting Securities" shall mean any securities of the
Company which vote generally in the election of directors.
e. Amount of Benefit. If Employee is entitled to severance
benefits under Section 8.a, the amount of such benefit shall equal (I) a
lump-sum payment equal to 2.99 times the "Base Amount" (as such term is defined
in Section 280G of the Internal Revenue Code of 1986) applicable to Employee,
whether or not the provisions of Section 280G actually apply to the payment;
(ii) a continuation of medical coverage and other benefits in the manner
contemplated in Section 7.b above; and (iii) such other benefits to which the
Employee is entitled under the Company's benefits plans and policies as in
effect immediately prior to the Change in Control with respect to terminated
Employees.
9. Return of the Company's Materials. Upon the termination of this
Agreement, Employee shall promptly return to the Company all files, credit
cards, keys, instruments, equipment, and other materials owned or provided by
the Company.
10. Insurance. The Company shall use commercially reasonable efforts to
carry director's and officer's professional liability insurance coverage for
Employee while in the performance of Employee's duties hereunder in an amount of
at least $10,000,000.
11. Nondelegability of Employee's Rights and Company Assignment Rights.
The obligations, rights and benefits of Employee hereunder are personal and may
not be delegated, assigned, or transferred in any manner whatsoever, nor are
such obligations, rights or benefits subject to involuntary alienation,
assignment or transfer. The Company may transfer its obligations hereunder to a
subsidiary, affiliate or successor.
12. Notices. All notices, demands and communications required by this
Agreement shall be in writing and shall be deemed to have been given for all
purposes when sent to the respective addresses set forth below, (I) upon
personal delivery, (ii) one day after being sent, when sent by overnight courier
service to and from locations within the continental United States, (iii) three
days after posting when sent by registered, certified, or regular United States
mail, with postage prepaid and return receipt requested, or (iv) on the date of
transmission when sent by confirmed facsimile.
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If to the Company: Employee Solutions, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx Xxxxxxx 00000
Attn: Chief Executive Officer
If to Employee: Xxxx X. Xxxxxxx
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, XX 00000
(Or when sent to such other address as any party shall specify by written notice
so given.)
13. Entire Agreement. This Agreement, together with the Indemnification
Agreement and Confidential Information and Non-Compete Agreement, each dated the
same date as this Agreement, dated and an agreement evidencing a stock option
grant issued to Employee from time to time (the "Other Agreements") constitutes
the final written expression of all of the agreements between the parties, and
is a complete and exclusive statement of those terms. It supersedes all
understandings and negotiations concerning the matters specified herein
(including all prior written employment agreements and arrangements, if any),
except as provided in the Other Agreements. Any representations, promises,
warranties or statements made by either party that differ in any way from the
terms of this written Agreement or the Other Agreements shall be given no force
or effect. Except as provided in the Other Agreements, the parties specifically
represent, each to the other, that there are no additional or supplemental
agreements between them related in any way to the matters herein contained
unless specifically included or referred to herein. No addition to or
modification of any provision of this Agreement shall be binding upon any party
unless made in writing and signed by all parties.
14. Waiver. The waiver by either party of the breach of any covenant or
provision in this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.
15. Invalidity of Any Provision. The provision of this Agreement are
severable, it being the intention of the parties hereto that should any
provisions hereof be invalid or unenforceable, such invalidity or
unenforceability of any provision shall not affect the remaining provisions
hereof, but the same shall remain in full force and effect as if such invalid or
unenforceable provisions were omitted.
16. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Arizona exclusive of the
conflict of law provisions thereof. The parties agree that in the event of
litigation, venue shall lie exclusively in Maricopa County, Arizona.
17. Headings; Construction. Headings in this Agreement are for
informational purposes only and shall not be used to construe the intent of this
Agreement. The language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning and not strictly
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for nor against any party.
18. Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same agreement.
Delivery by any party of a facsimile signature to the other parties to this
Agreement shall constitute effective delivery by said party of an original
counterpart signature to this Agreement.
19. Binding Effect; Benefits. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors, executors, administrators and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
20. Binding Effect on Marital Community. Employee represents and
warrants to the Company that he has the power to bind his marital community (if
any) to all terms and provisions of this agreement by his execution hereof.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Employment Agreement and caused the same to be duly delivered on its behalf as
of the date first above written.
EMPLOYEE SOLUTIONS, INC.,
an Arizona corporation
By /S/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Chief Executive Officer
"COMPANY"
/S/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
"EMPLOYEE"
