Exhibit 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of December 28, 2000 between
Xxxx X. Xxxxxx ("Executive") and TEAM Mucho, Inc., an Ohio corporation (the
"Company").
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive hereby
agree as follows:
1. EMPLOYMENT AND DUTIES. On the terms and subject to the conditions
set forth in this Agreement, the Company agrees to employ Executive as its
Executive Vice President--Finance and Chief Financial Officer to render such
services as would be customary for such position and to render such other
services and discharge such other responsibilities as the Company's board of
directors, the Chief Executive Officer or the President may, from time to time,
stipulate.
2. PERFORMANCE. Executive accepts the employment described in Section
1 of this Agreement and agrees to devote adequate professional time and effort
to the performance of the services described therein. Nothing in this Agreement,
however, shall preclude the Executive from devoting a reasonable amount of his
time and efforts to civic, community, charitable, professional and trade
association affairs and matters. With the prior written permission of the Chief
Executive Officer, Executive may teach a class at a College or University.
3. TERM. The term of employment under this Agreement (the "Employment
Period") shall commence as of the date hereof and shall remain in effect for a
period of one (1) year thereafter, ending on the first anniversary of the date
hereof unless earlier terminated in accordance herewith; provided the Employment
Period shall be automatically extended for successive one (1) year periods,
except Executive's employment may be terminated by either party with or without
cause at any time.
4. COMPENSATION.
4.1 SALARY. For all the services to be rendered by Executive
hereunder, the Company agrees to pay, during the Employment Period, a base
salary at the rate of not less than $225,000 ("Base Salary") per annum payable
weekly or otherwise according to the Company's regular pay schedule for salaried
employees. The Company and Executive agree that the salary provided herein shall
be subject to annual review for cost of living and merit factors, with any
adjustments being mutually agreed between the Company and Executive.
4.2 INCENTIVE COMPENSATION. With respect to each fiscal year of the
Company during the Employment Period, the Company will pay Executive a bonus of
50% of the Base Salary set forth in Paragraph 4.1, or as thereafter in effect,
based upon
achievement of an EBITDA objective (the "EBITDA Objective"). For the fiscal year
2001, the EBITDA Objective is six million dollars ($6,000,000). Subsequent
EBITDA Objectives will be set by the CEO and the Board. The foregoing
notwithstanding, if the Executive is terminated WITH OR WITHOUT CAUSE before
June 30 of any calendar year, he shall not be eligible for any bonus under this
section 4.2 with respect to such year, even if the EBITDA Objective is reached
for such year; and provided further if Executive is terminated FOR CAUSE, as
defined below, at any time during any such year, he shall not be entitled to any
bonus hereunder; and provided further, if Executive's employment is terminated
WITHOUT CAUSE after June 30 of any calendar year, and if the EBITDA Objective is
thereafter reached, Executive shall be entitled to a pro-rated portion of the
bonus based on Executive's actual Base Salary paid with respect to such year.
(e.g., If Executive is terminated without cause on September 30 of a year, and
the EBITDA objective is thereafter reached with respect to such year, Executive
would receive a bonus equal to 37 1/2 % of the Base Salary paid to him through
the date of his termination.)
4.3 VACATION. Executive shall be entitled to take four weeks of
vacation, with pay, during each year of service under this Agreement. Vacation
allowances shall cumulate from year to year based upon Company's policies.
4.4 OTHER BENEFITS. Except as otherwise specifically provided herein,
during the Employment Period Executive shall be eligible for all non-wage
benefits the Company provides generally for its other corporate officers.
5. BUSINESS EXPENSES.
5.1 REIMBURSEMENT. The Company shall reimburse Executive for the
reasonable, ordinary, and necessary expenses incurred by him in connection with
the performance of his duties hereunder, including but not limited to, ordinary
and necessary travel expenses and entertainment expenses.
5.2 ACCOUNTING. Executive shall provide the Company with an accounting
of his expenses, which accounting shall clearly reflect which expenses are
reimbursable by the Company. Executive will provide the Company with such other
supporting documentation and other substantiation of reimbursable expenses as
will conform to Internal Revenue Service or other requirements.
6. COVENANTS OF EXECUTIVE.
6.1 NON-COMPETITION PROVISIONS. The Executive and the Company agree
that Company has protectable, private and confidential interests including but
not limited to marketing strategies, financial information, good will,
customers, customer lists, specific customer needs and contacts, current and
future business plans and the existence and terms of this Agreement, and as such
during the Employment Period the Executive shall not, without the written
consent of the Company, engage in, be employed by, act as a consultant for or
otherwise be compensated by, be a director of or own an equity interest in, any
business which is engaged in the professional employer (PEO or
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ASO), employee leasing or staffing business within the Company's (or its
affiliate's) market, nationally or internationally as constituted from time to
time, or disclose or use for his own benefit any of the protectable, private or
confidential information belonging to or pertaining to the Company or its
affiliates to any party without the prior written consent of the Company.
6.2 NON-SOLICITATION The Executive agrees that for a period of three
(3) years following the termination of his employment with the Company, for any
reason, Executive will not, without the written consent of the Company, solicit
for his own account or the account of any other person or entity the business of
the then existing clients or customers of the Company for any purpose which
directly or indirectly competes with the business of the Company.
6.3 CONFIDENTIALITY. The Executive agrees and acknowledges that, by
reason of the nature of his duties as an officer and employee, he will have or
may have access to and become informed of confidential and secret information
which is a competitive asset of the Company ("Confidential Information"),
including without limitation any lists of client organizations or worksite
employees, financial statistics, research data or any other statistics and plans
contained in profit plans, capital plans, critical issue plans, strategic plans
or marketing or operation plans or other trade secrets of the Company and any of
the foregoing which belong to any person or company but to which the Executive
has had access by reason of his employment relationship with the Company. The
Executive agrees faithfully to keep in strict confidence, and not, either
directly or indirectly, to make known, divulge, reveal, furnish, make available
or use (except for use in the regular course of his employment duties) any such
Confidential Information. The Executive acknowledges that all manuals,
instruction books, price lists, information and records and other information
and aids relating to the Company's business, and any and all other documents
containing Confidential Information furnished to the Executive by the Company or
otherwise acquired or developed by the Executive, shall at all times be the
property of the Company. Upon termination of the Employment Period, the
Executive shall return to the Company any such property or documents which are
in his possession, custody or control, but his obligation of confidentiality
shall survive such termination of the Employment Period until and unless any
such Confidential Information shall have become, through no fault of the
Executive, generally known to the trade. The obligations of the Executive under
this subsection are in addition to, and not in limitation or preemption of, all
other obligations of confidentiality which the Executive may have to the Company
under general legal or equitable principles.
7. TERMINATION.
7.1 TERMINATION WITHOUT CAUSE; SEVERANCE. In the event the Executive's
employment with the Company is terminated by the Company for any reason other
than cause (defined below), the Executive shall be immediately entitled to
severance equal to one (1) year's Base Salary as defined in Paragraph 4.1.
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7.2 TERMINATION WITH CAUSE. The Company shall have the option to
terminate the Employment Period, effective upon written notice of such
termination to Executive, for good cause, which shall consist of only the
following: (a) the death or permanent total disability of Executive or his
absence from employment by reason of illness or incapacity for a period of
twenty six consecutive weeks; (b) breach by Executive of his covenants under
this Agreement; (c) commission by Executive of theft or embezzlement of Company
property or any other acts of dishonesty; (d) commission by Executive of a crime
resulting in injury to the business, property or reputation of the Company or
commission of other significant activities harmful to the business or reputation
of the Company; provided Executive's refusal to take actions which he reasonably
and in good faith believes are materially adverse to the interests of the
Company and its shareholders shall not be deemed to be good cause for
termination.
7.3 SURRENDER OF PROPERTIES. Upon termination of Executive's
employment with the Company, regardless of the cause therefor, Executive shall
promptly surrender to the Company all property provided him by the Company for
use in relation to his employment, and, in addition, Executive shall surrender
to the Company any and all sales materials, lists of clients and prospective
clients, price lists, files, records, or other materials and information of or
pertaining to the Company or its clients or prospective clients or the products,
business, and operations of the Company.
7.4 SURVIVAL OF COVENANTS. The covenants of Executive set forth in
Section 6 of this Agreement shall survive the termination of the Employment
Period or termination of this Agreement, regardless of the cause therefor.
8. INDEMNIFICATION. The Company shall indemnify and hold harmless the
Executive to the fullest extent permitted by law for any action or inaction of
Executive while serving the Company.
9. SUCCESSORS AND ASSIGNS. This agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all its assets to expressly
assume and agree to perform this agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place.
10. GENERAL PROVISIONS.
10.1 NOTICE. Any notice required or permitted hereunder shall be made
in writing (a) either by actual delivery of the notice into the hands of the
party thereunder entitled, or (b) by the mailing of the notice in the United
States mail, certified or registered mail, return receipt requested, all postage
prepaid and addressed to the party to whom the notice is to be given at the
party's respective address set forth below, or such other address as the parties
may from time to time designate by written notice as herein provided.
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As addressed to the Company: TEAM Mucho, Inc.
000 X. Xxxxxx Xxxxxx Xx.
Xxxxxxxxxxx, Xxxx 00000
Attention: S. Cash Xxxxxxxxx
As addressed to Executive: Xxxx Xxxxxx
The notice shall be deemed to be received in case (a) on the date of its actual
receipt by the party entitled thereto and in case (b) on the date of its
mailing.
10.2 AMENDMENT AND WAIVER. No amendment or modification of this
Agreement shall be valid or binding upon the Company unless made in writing and
signed by an officer of the Company duly authorized by the Board of Directors or
upon Executive unless made in writing and signed by him. The waiver by the
Company of the breach of any provision of this Agreement by Executive shall not
operate or be construed as a waiver of any subsequent breach by him.
10.3 GOVERNING LAW. The validity and effect of this Agreement and the
rights and obligations of the parties hereto shall be construed and determined
in accordance with the laws of the State of Ohio.
10.4 ENTIRE AGREEMENT. This Agreement contains all of the terms agreed
upon by the parties with respect to the subject matter hereof and supersedes all
prior agreements, arrangements and communications between the parties dealing
with such subject matter, whether oral or written.
10.5 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the transferees, successors and assigns of the Company,
including any company or corporation with which the Company may merge or
consolidate.
10.6 ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be resolved exclusively by arbitration in
Columbus, Ohio under the auspices and in accordance with the rules of the
American Arbitration Association then in effect; provided that all arbitration
expenses shall be borne by the Company. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that the
Executive shall be entitled to seek specific performance of his right to be paid
until the Employment Termination Date during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
10.7 COSTS OF ENFORCEMENT. In the event of any suit or proceeding
seeking to enforce the terms, covenants, or conditions of this Agreement, the
prevailing party shall, in addition to all other remedies and relief that may be
available under this
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Agreement or applicable law, recover his or its reasonable attorneys' fees
and costs as shall be determined and awarded by the court or arbitrator.
10.8 HEADINGS. Numbers and titles to paragraphs hereof are for
information purposes only and, where inconsistent with the text, are to be
disregarded.
10.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together, shall be and constitute one and the same instrument.
11. RELOCATION. Executive has agreed to relocate his principal
residence to Columbus, Ohio from Moraga, California no later than August 31,
2001. Executive shall not be required to further relocate. Company shall pay all
of Executive's actual and reasonable moving expenses, plus a moving allowance
("Moving Allowance") of twenty two thousand five hundred dollars ($22,500). In
the event Executive's employment is terminated without Cause prior to December
31, 2002, Company shall pay all of Executive's actual and reasonable relocation
expenses to a location of his choosing within the continental United States
(such cost in no event to exceed the amount of the move from Moraga California
to Columbus, Ohio); provided Executive must actually relocate within one (1)
year of the termination of his employment to be eligible to receive such amount.
If Executive terminates his employment with the Company prior to one year after
his relocation, he shall repay the Moving Allowance.
12. STOCK OPTION GRANT. Executive is hereby granted fifty thousand
stock options to purchase shares of the Company at a price of six dollars and
seventy-five cents ($6.75). The options shall be non-qualified and shall vest
fifty percent on December 31, 2001 and fifty percent on December 31, 2002,
provided Executive is employed by the Company on each respective date.
13. COMPENSATION COMMITTEE APPROVAL. Executive understands,
acknowledges and agrees that this agreement and the terms herein are expressly
subject to the approval of the Compensation Committee of the Board of Directors
and the signature of the CEO below is not binding until and unless the
Compensation Committee approves the terms of this Agreement and the Agreement is
countersigned by the Chairperson of the Compensation Committee.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date and year first written above.
TEAM MUCHO, INC.
/s/ S. Cash Xxxxxxxxx
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By: S. Cash Xxxxxxxxx
Title: CEO
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxxx
-------------------------------
Compensation Committee Chairperson
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