Exhibit 10.7
Execution Copy
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of December, 2003 by and between
ACCUFACTS PRE-EMPLOYMENT SCREENING, INC., having a place of business at 0000
Xxxxx Xxxx 000 Xxxx, Xxxxx 0000 Xxxxxxxx, XX 00000 (hereinafter referred to as
"EMPLOYER") and XXXX XXXXXX, residing at ______________----(hereinafter referred
to as "EMPLOYEE").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the EMPLOYER is engaged in the business of conducting background
screening and related services; and
WHEREAS, the EMPLOYER is desirous of employing EMPLOYEE, and EMPLOYEE
wishes to be employed by EMPLOYER in accordance with the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
PROMISES AND OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, IT IS MUTUALLY AGREED
AS FOLLOWS:
1. EMPLOYMENT DUTIES AND TERM: The EMPLOYER does hereby employ, engage
and hire the EMPLOYEE as President and Chief Executive Officer of EMPLOYER for a
period of five (5) years two (2) months from the date first written above. The
duties of EMPLOYEE shall include, but not be limited to, acting as President and
Chief Executive Officer of EMPLOYER. EMPLOYEE will perform services on behalf of
EMPLOYER with respect to the management and general supervision of the business
of EMPLOYER.
2. GOOD FAITH PERFORMANCE OF DUTIES: The EMPLOYEE agrees that he will,
at all times, faithfully, industriously, and to the best of his ability,
experience and talent, perform all of the duties that may be required of and
from him, pursuant to the expressed and implicit term hereof.
3. COMPENSATION: EMPLOYER shall pay to the EMPLOYEE, and the EMPLOYEE
agrees to accept from the EMPLOYER, in full payment for the EMPLOYEE's services
hereunder, compensation at the rate of $300,000.00 per annum. EMPLOYEE will be
paid in accordance with the then applicable policy of Employer. Employee's
annual compensation will increase at a rate of five (5%) per annum during the
effective term of this agreement.
-1-
4. BONUS COMPENSATION: In the event during the term of this Agreement,
EMPLOYER has earnings before interest depreciation and amortization ("EBIDA")
that exceed $500,000.00 in fiscal year 2004; or EBIDA that exceed $600,000.00 in
fiscal year 2005; or EBIDA that exceed $700,000.00 in fiscal year 2006; or EBIDA
that exceed $1,000,000.00 at the end of the fiscal year 2007; or EBIDA that
exceed $1,300,000 in fiscal year 2008, EMPLOYEE will be entitled to receive
bonus compensation of either $125,000.00 or shares of restricted common stock
(as set forth below), with cost free piggyback registration rights. The payment
of bonus compensation in the form of cash or stock is to be at the sole
discretion of the Board of Directors or their duly appointed designee. The
number of shares of common stock to be issued will be determined by the
following formula:
125,000/ (Y*.8) = Z
Y = the average closing price of EMPLOYER's common stock as
reported by Bloomberg Financial Markets for the ten trading
days immediately preceding the end of the applicable fiscal
and the ten trading days immediately following the end of the
applicable fiscal year.
Z = bonus shares of common stock.
Bonus compensation will be payable to EMPLOYEE within thirty (30) days of the
EMPLOYER'S filing of its annual report for any given fiscal year wherein
EMPLOYER'S net earnings equal or exceed the amounts stated herein.
5. VACATION: Employee shall be entitled to four (4) weeks paid vacation
(taken consecutively or in segments) on an annual basis in accordance with the
EMPLOYER's policies generally applicable to other executives of the Company from
time to time, taken at such times as is reasonably consistent with proper
performance by Employee of Employee's duties and responsibilities hereunder.
6. DEDICATION OF TIME: EMPLOYEE shall devote all of his working time,
attention, knowledge and skill solely and exclusively to the business and
interest of the EMPLOYER. The EMPLOYEE expressly agrees that he will not, during
the term hereof until the termination of this Agreement, be involved directly or
indirectly, in any form, fashion or manner, as a partner, officer, director,
stockholder (owning in excess of 4.9%), advisor, consultant or employee in any
other business similar to or in any way competing with the business of the
EMPLOYER. Nothing herein contained shall, however, limit the rights of the
EMPLOYEE to own up to 5% of the capital stock or other securities of any
corporation, whose stock or securities are publicly owned or traded regularly on
a public exchange or in the over-the-counter market, or to prevent the EMPLOYEE
from investing financially in, or limiting the EMPLOYEE's rights to invest
financially in, other businesses not allied with or competing with the business
of the EMPLOYER, as long as EMPLOYEE continues to devote all of his working
time, attention, knowledge and skill, solely and exclusively to the business and
interest of the EMPLOYER. EMPLOYEE will be permitted to serve on the Board of
Directors of publicly owned companies.
-2-
7. CONFIDENTIALITY: During the terms of EMPLOYEE's employment under
this Agreement, and for one (1) year thereafter, the EMPLOYEE specifically
agrees that he will not, at any time, in any fashion, form or manner, either
directly or indirectly, use, divulge, disclose or communicate to any person,
firm or corporation, in any manner whatsoever, any confidential or proprietary
information of any kind, nature or description concerning any matters affecting
or relating to the business of the EMPLOYER including, without limiting the
generality of the foregoing, any of its customers, its manner of operations, its
plans, its ideas, processes, programs, its intellectual property or other data,
information or materials of any kind, nature or description, without regard to
whether any or all of the foregoing matters shall be deemed confidential,
material or important. The parties hereto stipulate that, as between them, the
same are important, material, confidential and gravely affect the effective and
successful conduct of the business of the EMPLOYER and its goodwill, and that
any breach of the terms of this Paragraph is a material breach thereof, except
where the EMPLOYEE shall be acting on behalf of the EMPLOYER. EMPLOYEE
understands and agrees that, in the event that EMPLOYEE violates the terms and
conditions, as stated in this Paragraph, that he will be subject to an
injunction and damages, and understands and agrees that EMPLOYER's remedy to
prevent further or continued damages will include a petition for injunctive
relief. EMPLOYEE expressly acknowledges that the restrictions contained in this
Paragraph are reasonable and are properly required for the adequate protection
of the EMPLOYER's interests.
EMPLOYEE further understands and agrees that
EMPLOYER, in entering into this Agreement, is relying
upon EMPLOYEE's representation and warranty that all trade secrets and other
proprietary information of EMPLOYER will be kept strictly confidential by
EMPLOYEE and not utilized by EMPLOYEE in any manner whatsoever other than on
EMPLOYER's behalf during the course of EMPLOYEE's employment with EMPLOYER.
8. NON-COMPETITION: EMPLOYEE agrees that, during the term of this
Agreement and for six (6) months after termination hereof, he shall not, for
himself or any third party, directly or indirectly, divert or attempt to divert
from the EMPLOYER or its subsidiaries or affiliates any business of any kind in
which it is engaged or employed, solicit for employment, or recommend for
employment any person employed by the EMPLOYER or by any of its subsidiaries or
affiliates, during the period of such person's employment and for a period of
six (6) months thereafter. Not withstanding the foregoing, if EMPLOYEE is
dismissed without cause prior to the end of the term of this Agreement, then in
that event EMPLOYEE will not be prohibited from competing with EMPLOYER.
EMPLOYEE and EMPLOYER expressly acknowledge that the restrictions contained in
this paragraph are reasonable and are properly required for the adequate
protection of the EMPLOYER's interests.
9. EARLY TERMINATION: It is expressly understood and agreed that the
terms of this Agreement, may be terminated by the EMPLOYER prior to December 31,
2008, upon the occurrence of any of the following events:
(a) Automatically and without notice upon
the death of the EMPLOYEE; it is also understood
that EMPLOYEE will be entitled to twelve (12) months salary or the remainder of
salary under the term of this Agreement (whichever is less) which will be
payable to his estate;
(b) Deliberate and willful failure to
perform normal services and duties required of EMPLOYEE pursuant to this
Agreement, except if the performance of such duties or services
would result in a violation of EMPLOYEE's fiduciary responsibility to the
Company and its shareholders or is in a violation of applicable laws;
-3-
(c) Any willful act or failure to act, which
in the reasonable opinion of the Board, is in
bad faith and to the material detriment of the EMPLOYER;
(d) Conviction of a felony involving moral
turpitude or dishonesty;
(e) Total or partial disability of the
EMPLOYEE for a period of nine (9) consecutive months
or two hundred and seventy (270) days, in the aggregate, so that he is prevented
from satisfactorily performing a substantial part of his duties; it being
further understood and agreed that any proceeds received by EMPLOYEE from a
policy of disability benefits insurance or any other proceeds received from any
Federal, State or Municipal agency of government will be credited to the amount
of compensation paid to EMPLOYEE by EMPLOYER; and
(f) Fraudulent misconduct of the EMPLOYEE.
In the event of early termination for any reason stated in paragraphs 9 (b),
(c), (d), or (f) [any vested options under this Agreement will lapse immediately
and be null and void.]
In the event of early termination for any of
the reasons stated in paragraphs 9 (a) or 9 (e), the
EMPLOYEE, its estate or representatives as the case may be will have one hundred
twenty (120) days from the date of the termination to exercise any vested
options under this Agreement prior to their lapsing.
Subject to terms contained herein, this
Agreement shall not be terminated by any:
(x) Merger or consolidation, where the
Company is not the consolidating or surviving; or
(y) Transfer of all or a substantial
majority of the assets of the Company;
Not withstanding the foregoing, in the event
of any merger or consolidation or transfer of all, or
a substantial majority, of the assets of the Company or acquisition or control
of fifty percent (50%) (or an amount of stock ownership that has the ability to
elect the Board of Directors of EMPLOYER) or more of the Company's issued and
voting equity share capital by any party or by parties acting in concert or
under common control (`Change in Control"), the surviving or resulting entity or
the transferee or transferees of the Company's assets or its issued and voting
equity share capital, shall be bound by, and shall have the benefit of, the
provision of this Agreement, and the Company shall endeavor to take all actions
necessary to ensure that such entity or transferee or transferees shall be bound
by the provisions of the Agreement. Moreover, in the event of such merger or
consolidation, or transfer of all or a substantial majority of the assets of the
Company or acquisition of the Company of the Company's issued and voting equity
share capital otherwise known as a Change in Control as aforesaid, the EMPLOYER
and its successor will be unconditionally obligated to effect full settlement of
-4-
all the EMPLOYEE's entitlements under the terms of this Agreement, which
settlement shall also include the payment of EMPLOYEE's remuneration for the
full term of the Agreement but in no event less than twelve (12) months salary.
Additionally, EMPLOYER and its successor will be obligated to pay all bonus
compensation that the EMPLOYEE may be eligible to receive for the ensuing year
in the form of a cash payment (for purposes of this provision it will be assumed
that the Company will meet the annual milestone as set forth in Section 4 of
this Agreement for the applicable year and EMPLOYEE will be entitled to total
bonus compensation of $125,000 in addition to the remuneration as set forth
herein). This obligation to make payment to EMPLOYEE in the event of a Change in
Control shall survive any assignment, transfer or sale of the EMPLOYER's voting
equity and is absolute regardless of whether EMPLOYER meets the milestones as
set forth in Section 4. Payments under this Section to EMPLOYEE must be made
concurrently with Change in Control.
10. BENEFITS: EMPLOYER agrees that EMPLOYEE will be entitled, during
the term, to all fringe benefits in effect for executive officers of the
EMPLOYER, such as medical insurance. EMPLOYEE will also receive a monthly
automobile allowance of $1,000.00 under this agreement.
11. SEVERANCE: In the event this Agreement is terminated by EMPLOYER
prior to the end of its term for any reason OTHER than those set forth in
paragraphs 9(a) through 9(g) herein, then in that event EMPLOYEE will be
entitled to full settlement of all the EMPLOYEE's entitlements under the terms
of this Agreement, which settlement shall also include the payment of EMPLOYEE's
remuneration for the full term of the Agreement but in no event less than twelve
(12) months salary.
If EMPLOYEE is terminated for any
reason set forth in paragraphs 9(a) through 9(g), then
EMPLOYEE will not be entitled to any form of severance unless otherwise
provided.
12. NO WAIVER: The parties hereto do further agree that no waiver or
modification of this Agreement or of any covenant, condition or limitation
herein contained, shall be valid, unless in writing and duly executed by the
party to be charged therewith, and that no evidence of any proceedings or
litigation between either of the parties arising out of or affecting this
Agreement or the rights and obligations of any party hereunder shall be valid
and binding unless such waiver or modification is in writing, duly executed, and
the parties further agree that the provisions of this paragraph may not be
waived except as herein set forth.
13. GOVERNING LAW: The parties hereto agree that it is their intention
and covenant that this Agreement and the performance hereunder shall be
construed in accordance with and under the laws of the State of Florida, and
that the terms hereof may be enforced in any court of competent jurisdiction in
an action for specific performance which may be instituted under this Agreement,
and that in the event of any dispute or claim under the within Agreement, that
same will be resolved in the Courts of the State of Florida.
14. OPPORTUNITY TO REVIEW: EMPLOYEE and EMPLOYER warrant and represent
that each has had sufficient and adequate opportunity to consult with
independent counsel concerning the within Agreement, and has requested that the
firm of Xxxxxxx & Xxxxxxxxx prepare the within Agreement, and is aware that said
firm is relying upon the within representation prior to the parties entering
into the Agreement herein.
-5-
15. NOTICES: All notices required or permitted to be given by either
party hereunder shall be in writing and mailed by registered mail, return
receipt requested and by regular mail to the other party addressed as follows:
If to EMPLOYER at:
Accufacts Pre-Employment Screening, Inc.
0000 Xxxxx Xxxx 000 Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxx 00000
If to EMPLOYEE at:
Xxxx Xxxxxx
c/o Accufacts Pre-Employment Screening, Inc.
0000 Xxxxx Xxxx 000 Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxx 00000
Any notice mailed, as provided above, shall be deemed completed on the date of
receipt, or five (5) days from the postmark on said postal receipt.
16. CAPTION HEADINGS: Caption headings in this Agreement are
provided merely for convenience and are of no force and effect.
17. ENTIRE AGREEMENT: This Agreement contains the total and entire
Agreement between the parties and shall, as of the effective date hereof,
supersede any and all other Agreements between the parties. The parties
acknowledge and agree that neither of them has made any representations that are
not specifically set forth herein, and each of the parties hereto acknowledges
that he or it has relied upon his or its own judgment in entering into same, and
that the within Agreement has been approved by the EMPLOYERS compensation
committee and its board of directors.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day, month and year first above written.
ACCUFACTS PRE-EMPLOYMENT SCREENING, INC.
By:
-------------------------------------
XXXX XXXXXX
-6-
