EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of June 22, 1996, is made and entered
into by and between EMPLOYEE SOLUTIONS, INC., an Arizona corporation ("Employer"
or "ESI"), and XXXXXXX XXXXX ("Employee").
R E C I T A L S :
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A. WHEREAS, Employer is engaged in the business of
employee leasing.
B. WHEREAS, Employee was previously employed by TALENT,
ENTERTAINMENT AND MEDIA SERVICES, INC., a Delaware corporation, and GCK
ENTERTAINMENT SERVICES I, INC., a Delaware corporation (collectively, "TEAM"),
as president. As part of his TEAM duties, Employee was directly responsible for
the management and operation of TEAM's business, in the sale and marketing of
TEAM's entertainment industry-based leasing services, and in the recruitment and
training of TEAM personnel.
C. WHEREAS, on June 22, 1996, ESI acquired TEAM from
Employee and the other former stockholders of TEAM.
D. WHEREAS, in conjunction with ESI's acquisition of
TEAM, ESI desires to hire Employee, and Employee desires to be employed by ESI,
on a full-time basis, for the purposes of (1) operating, maintaining and
expanding TEAM's existing entertainment industry-based leasing business,
including the duties set forth in Recital B above, (2) training other ESI
employees and independent contractors with respect to the various aspects of
TEAM's business, (3) cross-selling TEAM's services to ESI's customers and ESI's
services to TEAM's customers and subscribers, and (4) marketing TEAM's and ESI's
services to existing and prospective customers and subscribers.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter set forth, the parties agree as follows:
1. Employment and Duties.
(a) Employer agrees to employ Employee on a
full-time basis, upon the terms and conditions provided herein, and Employee
agrees to accept such full-time employment upon said terms and conditions.
(b) During the term of this Agreement, unless
the parties mutually agree to the contrary, Employee will serve as one of
Employer's regional vice presidents; provided, however, that there shall be no
specific geographical region for which Employee is responsible.
(c) Employee's duties and responsibilities shall
include the services, duties and responsibilities described in Recital D above.
Without limiting the foregoing, Employee's duties and responsibilities also
shall include, but not necessarily be limited to, the training and support of
independent contractors retained by Employer, and operating under Employee's
day-to-day management, to solicit leasing business (the "Sales Agent(s)").
(d) In performing his duties hereunder, Employee
will coordinate his activities, to the extent reasonable and necessary, with
other ESI regional vice presidents and ESI executive officers in order to
maximize the training of ESI employees and independent contractors with respect
to the payroll administration, benefits sales and marketing, and workers'
compensation sales and marketing aspects of ESI's business.
(e) Subject to the provisions hereof and of that
Stock Purchase Agreement effective as of June 22, 1996, between ESI, TEAM,
Employee, and other former TEAM stockholders, ESI shall cooperate reasonably
with Employee in maintaining and increasing Employee's opportunities to market
and sell TEAM's and ESI's services.
2. Term. The term of this Agreement shall commence on
June 22, 1996, and shall continue for a period of three (3) years through June
21, 1999, unless earlier terminated as set forth below. The first year of this
Agreement, commencing on the commencement date listed above, and each subsequent
year of this Agreement, commencing on an anniversary date of the commencement
date, are each referred to herein as a "Contract Year."
3. Compensation.
(a) Base Salary. Employee shall receive a base
annual salary, before deducting all applicable withholdings, of $75,000, which
shall be payable in accordance with Employer's standard payroll policies, which
policies may be revised from time to time.
(b) Commissions. As partial consideration for
the services to be rendered by Employee, while Employee is employed hereunder
(and, to the extent provided in paragraph 3(c), after he is no longer employed
hereunder), Employer agrees to pay Employee commissions, subject to deductions
for all applicable withholdings, as follows: (i) for Employer's leasing business
generated directly by Employee's services and for which Employee acts as the
sales agent thereunder, the commissions payable to Employee shall be the total
of those amounts designated in the "Regional Vice President" and "Agent" columns
of Exhibit A, and (ii) for Employer's leasing business generated directly by the
services of Sales Agents, and for which such Sales Agents, and not Employee, act
as the sales agent thereunder, Employee will be entitled to commissions based
upon the amount designated in the "Regional Vice President" column
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of Exhibit A. Employee shall not be entitled to any commissions hereunder for
sale of TEAM's leasing business.
Notwithstanding the foregoing, the parties acknowledge that
the commission schedule set forth in Exhibit "A" is based on favorable contracts
with subscribers as currently in effect or as may be negotiated in the future.
However, the costs to Employer could increase after a subscriber contract is
agreed upon because of changes in SUTA, FUTA, FICA, Medicare, workers'
compensation, etc. In such a case, it may not be possible to pass the increase
along to the subscriber, with the result that Employer may have to absorb all or
part of the cost increase. This would have the practical effect of decreasing
the administration fee. Therefore, if Employer's cost for any item charged to a
subscriber should increase, without a corresponding increase in the fees paid by
the subscriber, the amount of such cost increase shall be treated as a reduction
in the net administration fee for purposes of determining the commissions
payable hereunder.
(c) Post-Termination Commissions. During the
period of the covenant not to compete set out in paragraph 6 of this Agreement
(and any extension thereof confirmed and agreed to by Employee in writing at
least thirty days prior to the end of the original non-compete period or
extended period thereof, as applicable), subject to the following conditions and
provided that Employee fully complies with the terms of paragraphs 5 and 6, and
also subject to the provisions of paragraph 3(b) above, Employee shall be
entitled to receive one hundred percent (100%) of his commissions, subject to
deductions for all applicable withholdings, during such non-compete period
following a termination or expiration of this Agreement, except if the
termination or expiration is due to the death of Employee, or is for cause, as
described in more detail in Paragraph 4 below. Employee shall not otherwise be
entitled to receive commission income under this Agreement following termination
or expiration of his employment. Employer shall supply Employee, within a
reasonable time following written request, with all documents and information
necessary for Employee to calculate his commissions; provided, however, that all
such information shall constitute Confidential Information and shall be subject
to the provisions of Paragraph 6 below.
(d) Travel Expenses. Except to the extent that
Employee is otherwise reimbursed for any travel expenses (e.g., reimbursement as
a member of Employer's board of directors for travel to board meetings), with
respect to matters relating solely to ESI's leasing business, Employer will pay
for all reasonable, ordinary and necessary expenses incurred by Employee for
purposes of attending business meetings in Phoenix, Arizona or elsewhere for
which Employer requests Employee's presence, all in compliance with Employer's
guidelines in effect from time to time. Employee shall be responsible for all
other travel, lodging and other expenses relating to ESI's leasing business.
With respect to matters relating solely to TEAM's leasing business or jointly to
TEAM's and ESI's leasing businesses, Employee shall be entitled to
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reimbursement from TEAM for his reasonable travel, lodging and other ordinary
and necessary business expenses, upon receipt by TEAM of appropriate
documentation.
(e) Fringe Benefits. During the term of this
Agreement, Employee and his dependents also shall be entitled to the same type
and amount of health and medical insurance and other fringe benefits as is
provided to Employer's Chief Financial Officer (except expense reimbursements,
which are covered elsewhere herein, and stock options, which are issued at the
sole discretion of Employer's Board of Directors, but for which Employee will be
considered in the same manner as all other employees of Employer).
(f) Vacation. During the term of this Agreement,
Employee shall be entitled to receive three (3) weeks of paid vacation for the
calendar years 1996 and 1997, and four (4) weeks of paid vacation for each year
thereafter. Vacation shall be prorated in any partial calendar year.
(g) Cash Advance. During each Contract Year,
Employer will advance commissions to Employee, in an aggregate amount of up to
Sixty Thousand Dollars ($60,000.00). Such advances shall be repaid solely from
offsets against commissions only, and not salary or other items, which would
otherwise be payable to Employee hereunder. It is the intent of the parties that
all cash advances shall be nonrecourse in nature and Employer shall not be
entitled to bring an action against Employee for repayment of such advances.
(h) Offsets. If Employer determines in good
faith that Employee is in default hereunder, then Employer may, in its sole
discretion, offset against the commissions, salary, reimbursements or any other
amounts which may otherwise be payable to the Employee, the amount or amounts
owed by Employee to Employer as a result of such default. The right of offset
set forth in the previous sentence shall not apply to cash advances under
Section 3(g) above, which are only subject to offset against commissions owing
from Employer to Employee. If the total amount of such obligations should exceed
the total amounts owed by Employer to Employee at such time then, unless
Employer otherwise agrees in writing, no additional amounts will be paid to
Employee and Employee shall remain liable to Employer for the amount by which
Employee's obligations exceed the total amounts owed by Employer to Employee,
plus interest thereon at the rate of nine percent (9%) per annum from the date
of delinquency until paid.
4. Termination. This Agreement may be terminated under
any one or more of the following provisions:
(a) Termination for Cause. Employer may
terminate for "cause" if Employee materially fails to fulfill his obligations
hereunder, and such failure continues for at least ten (10) days after written
notice from Employer to Employee reasonably detailing such failure.
Additionally, Employer may terminate Employee for "cause" upon the occurrence of
any of the following events: (1) Employee's conviction of a felony; (2) an act
of fraud or theft on the part of Employee; or (3) any intentional or grossly
negligent act on the part of Employee which materially injures or is reasonably
likely to materially injure the reputation or interests of Employer (which shall
include, but not be limited to, any drug, alcohol and/or
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other substance abuse which materially impairs Employee's ability to perform his
services hereunder).
(b) Mutual Consent. At any time during the term
of this Agreement, the parties hereto may terminate this Agreement by mutual
consent, provided, however, that such termination by mutual consent must be made
in writing signed by both parties.
(c) Death of Employee. Upon the death of the
Employee, this Agreement shall terminate and Employer shall pay to the executor,
administrator or personal representative of Employee's estate any compensation
(including salary at the time of his death, pro rata bonus, commissions and
payments due under any employee benefit plans) earned by the Employee up to the
time of his death, but all further rights to commissions and any other
compensation shall cease upon Employee's death.
(d) Disability. If Employee becomes disabled,
Employer may immediately terminate this Agreement. For purposes of this
Agreement, Employee shall be deemed to have become disabled if, because of ill
health, physical or mental disability, Employee shall have been unable to
perform his duties under this Agreement for a period of either (i) sixty (60)
consecutive days, or (ii) seventy-five (75) days within any one hundred twenty
(120) day period.
5. Confidential Information.
(a) Employee acknowledges that, in his capacity
as an employee, he will occupy a position of trust and confidence, and that he
will develop and have much information about Employer and its operations that is
confidential or not generally known in the community. Employee agrees that all
such information (the "Confidential Information") is proprietary or confidential
or constitutes trade secrets and is the sole property of Employer. Employee
agrees to keep confidential, and will not reproduce, copy or disclose to any
other person or firm, any such Confidential Information, which shall include,
but not be limited to, any documents or information relating to Employer's
methods, clients, accounts, systems, programs, procedures, correspondence or
records, or any other documents used or owned by Employer (including, but not
limited to, this Agreement), nor will he advise, discuss with or in any way
assist any other person or firm in obtaining or learning about any of the items
described in this paragraph. Accordingly, he agrees that during the term of this
Agreement, and afterwards, he will not disclose, permit or encourage anyone to
disclose any such Confidential Information, nor will he utilize any such
Confidential Information, either alone or with others, outside the scope of his
duties and responsibilities as an employee of Employer. This paragraph 5 should
not, however, be construed or interpreted as preventing Employee from making any
disclosures required or otherwise ordered by any court of competent jurisdiction
or any government agency lawfully requiring or otherwise lawfully ordering such
a disclosure.
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(b) It is agreed that the restrictions contained
in this paragraph 5 are reasonable, but it is recognized that damages in the
event of the breach of any of the restrictions will be difficult or impossible
to ascertain; and, therefore, Employee has agreed that in addition to and
without limiting any other right or remedy Employer may have, Employer shall
have the right to an injunction against him issued by a court of competent
jurisdiction enjoining any such breach, and in addition thereto, Employer shall
be entitled to pursue any and all of its legal and equitable remedies against
Employee, including the recovery of provable damages. It is further specifically
acknowledged and agreed by the parties that, in the event of any material breach
of this paragraph 5, Employer shall have no further obligations under paragraph
3 above, including, but not limited to, the obligation to make any further
commission payments which might otherwise be required thereunder.
(c) Unless otherwise agreed by Employer in
writing, the obligations described in this paragraph 5 and paragraph 6 below
shall survive any termination or expiration of this Agreement or any termination
or expiration of the employment relationship created hereunder.
6. Non-Competition.
(a) During the term of this Agreement, Employee
agrees that all employee leasing business and activities performed by him will
be performed hereunder or in accordance herewith, for the benefit of, and/or on
behalf of, Employer. In addition, Employee agrees that, for a period of two (2)
years after any expiration or termination of this Agreement, Employee shall not
engage, directly or indirectly, whether on his own account or as a shareholder
(other than as a less than one percent (1%) shareholder of a publicly-held
company), partner, joint venturer, employee, consultant, advisor, and/or agent,
of any person, firm, corporation, or other entity, in any or all of the
following activities within the States of Arizona, Illinois, Michigan,
California or New York or any other state in which TEAM operated on or prior to
June 22, 1996 (collectively, the "Restricted States"):
(1) Enter into or engage in the
business of employee leasing or training persons in connection with any such
business in any manner whatsoever in any one or more of the Restricted States or
provide employee leasing services or leased employees to any employers located
or conducting business in any one or more of said Restricted States;
(2) Solicit customers, suppliers, or
business patronage, or use any customer lists for the purpose of or which
results in competition with Employer concerning the employee leasing business in
the Restricted States;
(3) Solicit the employment of any
Employer officers, directors, employees or independent contractors; or
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(4) Promote or assist, financially or
otherwise, any person, firm, association, corporation, or other entity engaged
in the employee leasing business in any one or more of the Restricted States.
So long as Employee is in compliance with all of the terms and conditions of
this Agreement, the parties further agree that the initial term of this
non-competition agreement (and any extension or extended term thereof) may be
extended by Employee, on a year-by-year basis, by delivering to Employer a
written, unconditional notice to such effect, specifically referring to this
Paragraph 6(a), at least thirty (30) days prior to the end of said initial term
(or extended term, as applicable). In consideration for any such timely
extension of the non-competition agreement, Employer agrees to continue the
payment of post-termination commissions to Employee for the period of such
extension; subject, however, to the terms and conditions of Paragraph 3(b)
above. If Employee should fail to timely extend the period of the
non-competition agreement, this option to extend the same shall thereafter be
null, void and of no further force or effect, unless otherwise agreed by
Employer in writing.
(b) It is agreed that the restrictions contained
in this paragraph 6 are reasonable, but it is recognized that damages in the
event of the breach of any of the restrictions will be difficult or impossible
to ascertain; and, therefore, Employee has agreed that, in addition to and
without limiting any other right or remedy Employer may have, Employer shall
have the right to an injunction against him issued by a court of competent
jurisdiction enjoining any such breach, and in addition thereto, Employer shall
be entitled to the following amounts in the event of any such breach or
violation, not as a penalty but as liquidated damages: fifty percent (50%) of
any and all salaries, wages, fees, compensation, remuneration, gross profits or
other gross income of any kind or nature whatsoever resulting from or otherwise
derived in connection with said breach or violation.
(c) Employee also agrees, acknowledges,
covenants, represents and warrants as follows:
(1) That he has read and fully
understands the foregoing restrictions and that he has consulted with a
competent attorney regarding the uses and enforceability of restrictive
covenants in the Restricted States;
(2) That he is aware that there may be
defenses to the enforceability of the foregoing restrictive covenants, based on
time or geographic considerations, and that he knowingly, consciously,
intentionally and entirely voluntarily, irrevocably waives any and all such
defenses relating to time or geographic considerations and will not assert the
same in any action or other proceeding brought by Employer for the purpose of
enforcing the restrictive covenants or in any other action or proceeding
involving Employer and Employee; and
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(3) That he is fully and completely
aware that, and further understands that, the foregoing restrictive covenants
are an essential part of the consideration for Employer entering into this
Agreement and that Employer is entering into this Agreement in full reliance on
these acknowledgments, covenants, representations and warranties.
(d) In the event that the period of time and/or
geographic limitation described above are nevertheless held to be in any respect
an unreasonable restriction (after giving due consideration to the provisions of
paragraph 6(c) above), then it is agreed that the court so holding may reduce
the territory to which the restriction pertains or the period of time in which
it operates or may reduce both such territory and such period, to the minimum
extent necessary to render such provision enforceable.
(e) Nothing herein shall be deemed to prevent
Employee after termination of his employment, from engaging in business
competitive with that of Employer, provided he does not violate the above
provisions, any other provisions in this Agreement, or any other agreements then
in effect between Employer and Employee.
7. Warranties. The parties hereto acknowledge,
represent, warrant and covenant as follows:
(a) Each represents, warrants and covenants that
he or it will use reasonable efforts to comply with all applicable laws,
ordinances, statutes, and governmental rules and regulations, with respect to
the performance of his or its obligations hereunder.
(b) Each represents, warrants and covenants that
his or its duties to be performed and his or its business will be run with
integrity and honesty so as to not adversely affect the reputation, goodwill and
name of the other.
(c) Each represents, warrants and covenants that
he or it has the full right and legal authority to enter into and fully perform
this Agreement in accordance with its terms.
(d) Each represents, warrants and covenants that
this Agreement, when executed and delivered by him or by its President, will be
his or its legal, valid and binding obligation enforceable against him or it in
accordance with its terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, or other similar laws affecting creditors'
rights generally.
(e) Each represents, warrants and covenants that
the execution and delivery of this Agreement has been duly authorized by him or
it and such execution and the performance of his or its obligations hereunder do
not and will not violate or cause a breach of any other agreements or
obligations to which he
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or it is a party or by which he or it is bound, including, but not limited to
(in the case of the Employee), any employment agreements, restrictive covenants,
or similar contracts or obligations which may be applicable to Employee.
(f) Employee further represents and warrants
that he has not obtained or requested the services of any placement agencies or
similar companies in connection with this Agreement or his hiring by Employer.
Employee agrees that he alone will be responsible for timely paying, in full
(and holding Employer completely harmless from any liability or obligations with
respect to), any and all amounts which may be owed to any placement agencies or
similar companies, as a finder's fee, placement fee or other payment which may
be owed as a result of, or in connection with, any agreements, contracts or
other arrangements entered into by or on behalf of Employee.
8. Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed duly given upon receipt if either
personally delivered (including overnight courier service) or sent by certified
mail, return receipt requested, addressed to the parties as follows:
If to Employer:
---------------
Xxxxxx X. Xxxxx
President and CEO
EMPLOYEE SOLUTIONS, INC.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
with a copy to:
---------------
Xxxxxx X. Xxxxxxxx, Esq.
XXXXXXX & XXXXX
Xxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
If to Employee:
---------------
Xxxxxxx Xxxxx
0000 Xxxxx Xxxxxxxxx Xxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
with a copy to:
---------------
Xxxxxxx Xxxxx, Esq.
XXXXXXXX & XXXXXX, LTD.
00 Xxxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
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or to such other address as any party may provide to the other in accordance
herewith.
9. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior or contemporaneous understandings or agreements in
regard thereto. No modification or addition to this Agreement shall be valid
unless in writing, specifically referring to this Agreement and signed by both
Employer and Employee. No waiver of any rights under this Agreement shall be
valid unless in writing and signed by the party to be charged with such waiver.
No waiver of any term or condition contained in this Agreement shall be deemed
or construed as a further or continuing waiver of such term or condition, unless
the waiver specifically provides otherwise.
10. Governing Law and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of Arizona.
Venue for any legal actions or other proceedings brought by either party in
regard to or otherwise arising out of or relating to this Agreement shall be in
either the Maricopa County, Arizona Superior Court, or the United States
District Court for the District of Arizona, Phoenix Division.
11. Construction. 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 for nor against any party. The paragraph headings
contained in this Agreement are for reference purposes only and will not affect
in any way the meaning or interpretation of this Agreement. All terms used in
one number or gender shall be construed to include any other number or gender as
the context may require. The parties agree that each party has reviewed this
Agreement and has had the opportunity to have counsel review the same and that
any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not apply in the interpretation of this
Agreement or any amendment or any exhibits thereof.
12. Benefit and Assignment. Subject to paragraphs 4(c)
and (d) hereof, this Agreement shall be binding upon and inure to the benefit of
the parties hereto, their heirs, personal representatives, successors, assigns,
and beneficiaries-in-interest. However, this Agreement may not be assigned in
whole or in part by Employee without the prior written consent of ESI, which may
be withheld in its sole and absolute discretion. This Agreement may be assigned
by ESI without Employee's prior consent to a successor-in-interest of ESI's
business.
13. Severability. In the event any term or provision of
this Agreement is declared by a court of competent jurisdiction to be invalid or
unenforceable for any reason, this Agreement shall remain in full force and
effect, and either (a) the invalid or
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unenforceable provision shall be modified to the minimum extent necessary to
make it valid and enforceable or (b) if such modification is not possible, this
Agreement shall be interpreted as if such invalid or unenforceable provision
were not a part hereof.
14. Litigation. Except as otherwise provided herein, in
the event any party hereto institutes an action or other proceeding to enforce
any rights arising out of this Agreement, the party prevailing in such action or
other proceeding shall be paid all reasonable costs and attorneys' fees by the
non-prevailing party, such fees to be set by the court and not by a jury and to
be included in any judgment entered in such proceeding.
DATED as of the date first above written.
EMPLOYER: EMPLOYEE:
EMPLOYEE SOLUTIONS, INC., an
Arizona corporation
By /s/ Xxxxxx X. Xxxxx /s/ Xxxxxxx Xxxxx
------------------------------ ------------------------
Xxxxxx X. Xxxxx, President Xxxxxxx Xxxxx
and Chief Executive Officer
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