1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of
________________ by and among XXXX Acquisition Corp., a Delaware corporation
(subject to Section 12(b) below, the "Company"), and Xxxx Xxxxx of (the
"Executive"), and, with respect to Section 23 hereof, Provant, Inc., a Delaware
corporation ("Provant").
In consideration of the mutual promises, terms, provisions and
conditions set forth in this Agreement, the parties hereby agree as follows:
1. Employment. Subject to the terms and conditions set forth in
this Agreement, the Company hereby offers and the Executive hereby accepts
employment.
2. Term. Subject to earlier termination as hereafter provided,
the Executive's employment hereunder shall be for a term of three (3) years,
commencing effective [the Effective Time] (the "Effective Date"). The term of
this Agreement, as from time to time extended or renewed, is hereafter referred
to as "the term of this Agreement" or "the term hereof."
3. Capacity and Performance.
(a) During the term hereof, the Executive shall serve as the
____________ of the Company. In addition, and without further
compensation, the Executive shall serve as a director and/or officer of
the Company and/or one or more of the Company's Affiliates if so
elected or appointed from time to time.
(b) During the term hereof, the Executive shall be employed by
the Company on a full-time basis, shall have all powers and duties
consistent with his position and as one of the two most senior
executive officers of the Company (including without limitation the
power to conduct and direct the day-to-day operations of the Company,
the power to hire and dismiss personnel, and those other powers
customarily exercised by the senior-most executive officer of a
publicly-held business), subject to the direction and control of the
Company's Board of Directors (the "Board") and the Chief Executive
Officer of Provant or its or his designees, and shall perform such
other duties and responsibilities on behalf of the Company and its
Affiliates as may reasonably be designated from time to time by the
Company's Board of Directors (the "Board") and the Chief Executive
Officer of Provant or its or his designees consistent with the
Executive's office as set forth above.
(c) During the term hereof, the Executive shall devote
substantially all of his full business time and his best efforts,
business judgment, skill and
2
knowledge to the advancement of the business and interests of the
Company and to the discharge of his duties and responsibilities
hereunder. The Executive shall not engage in any other business
activity or serve in any industry, trade, professional, governmental or
academic position during the term of this Agreement, except as may be
expressly approved in advance by the Board in writing or to the extent
that any such activity or service does not materially and adversely
affect the discharge of his duties and responsibilities hereunder.
(d) The Company shall not require the Executive to relocate or
reassign the Executive to any location beyond a fifty (50) mile radius
of the location of the Company's headquarters as of the date hereof,
nor shall the Executive's duties hereunder be materially changed,
without the Executive's prior written consent.
4. COMPENSATION AND BENEFITS. As compensation for all services
performed by the Executive under and during the term hereof and subject to
performance of the Executive's duties and obligations, pursuant to this
Agreement or otherwise:
(a) BASE SALARY. During the term hereof, the Company shall pay
the Executive a base salary at the rate of One Hundred Seventy Five
Thousand Dollars ($175,000) per annum, payable in accordance with the
payroll practices of the Company for its executives and subject to
increase from time to time by the Board or a compensation committee of
the Board in its sole discretion. Such base salary, as from time to
time increased, is hereafter referred to as the "Base Salary".
(b) BONUS COMPENSATION. Executive shall be entitled to
participate in such bonus plan as the Company provides to its
executives generally, in accordance with the terms of that plan, as
amended by the Company from time to time pursuant to which Executive
may receive a bonus of up to forty percent (40%) of his then Base
Salary. Such plan shall provide, with respect to the Executive, that
beginning with the 1999 fiscal year the Executive shall receive the
maximum bonus (i.e., 40% of Base Salary) if (i) he is employed
hereunder as of the last day of the Company's fiscal year (or if the
Executive's employment is terminated by the Company without cause
during such fiscal year other than on account of the expiration of the
term hereof, provided that the foregoing shall not be construed to give
the Company a contractual right to so terminate the Executive's
employment prior to the expiration of the term) and (ii) the Company
achieves or exceeds a targeted level of earnings before interest and
taxes (after accounting for all bonuses) ("EBIT") fixed in good faith
by the Board at or before the beginning of such year. The foregoing
determination shall be made after the end of each fiscal year during
the term hereof and the bonus, if any, with respect to such fiscal year
shall be paid within ninety (90) days following the end of such fiscal
year. Notwithstanding the foregoing, if this Agreement shall expire
prior to the end of the then-current fiscal year or the Executive's
employment hereunder shall be terminated on account of his death or
disability prior to the end of the then-
-2-
3
current fiscal year, the Executive shall be entitled to receive a pro
rata portion of the bonus, if any, he would have received based on the
Company's EBIT for the full fiscal year had he been employed hereunder
as of the last day of such year (based on the fraction of the year that
he was employed hereunder), determined and paid following the end of
such fiscal year.
(c) VACATIONS. During the term hereof, the Executive shall be
entitled to _____ weeks of vacation per annum, to be taken at such
times and intervals as shall be determined by the Executive, subject to
the reasonable business needs of the Company. Vacation time shall not
cumulate from year to year.
(d) OTHER BENEFITS. During the term hereof and subject to any
contribution therefor generally required of employees of the Company,
the Executive shall be entitled to participate in any and all employee
benefit plans from time to time in effect for employees of the Company
generally, except to the extent such plans are in a category of benefit
(including without limitation bonus compensation and severance
compensation) otherwise provided to the Executive. Such participation
shall be subject to (i) the terms of the applicable plan documents,
(ii) generally applicable Company policies and (iii) the discretion of
the Board or any administrative or other committee provided for in or
contemplated by such plan. The Company may alter, modify, add to or
delete any of the employee benefit plans maintained for its employees
generally at any time as it, in its sole judgment, determines to be
appropriate, without recourse by the Executive.
(e) BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable and necessary business expenses incurred
or paid by the Executive in the performance of his duties and
responsibilities hereunder, subject to any maximum annual limit and
other restrictions on such expenses set by the Board and to such
reasonable substantiation and documentation as may be specified by the
Company from time to time.
5. TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS.
Notwithstanding the provisions of Section 2 hereof, the Executive's employment
hereunder shall terminate prior to the expiration of the term under the
following circumstances:
(a) DEATH. In the event of the Executive's death during the
term hereof, the Executive's employment hereunder shall immediately and
automatically terminate. In that event, the Company shall pay to the
Executive's designated beneficiary or, if no beneficiary has been
designated by the Executive, to his estate, any earned and unpaid Base
Salary, prorated through the date of his death.
-3-
4
(b) DISABILITY.
(i) The Company may terminate the Executive's
employment hereunder, upon notice to the Executive, in the
event that the Executive becomes disabled during his
employment hereunder through any illness, injury, accident or
condition of either a physical or psychological nature and, as
a result, is unable to perform substantially all of his duties
and responsibilities hereunder for ninety (90) days during any
period of three hundred sixty-five (365) consecutive calendar
days.
(ii) The Board may designate another employee to act
in the Executive's place during any period of the Executive's
disability. Notwithstanding any such designation, the
Executive shall continue to receive the Base Salary in
accordance with Section 4(a) and his other benefits pursuant
to Section 4(d), to the extent permitted by the then-current
terms of the applicable benefit plans, until the Executive
becomes eligible for disability income benefits under any
disability income plan provided by the Company or until the
termination of his employment, whichever shall first occur.
(iii) If any question shall arise as to whether,
during any period, the Executive is disabled through any
illness, injury, accident or condition of either a physical or
psychological nature such that he is unable to perform
substantially all of his duties and responsibilities
hereunder, the Executive may, and at the request of the
Company shall, submit to a medical examination by a physician
selected by the Company to whom the Executive or his duly
appointed guardian, if any, has no reasonable objection to
determine whether the Executive is so disabled and such
determination shall for the purposes of this Agreement be
conclusive of the issue. If such question shall arise and the
Executive shall fail to submit to such medical examination,
the Company's determination of the issue shall be binding on
the Executive.
(c) BY THE COMPANY FOR CAUSE. The Company may terminate the
Executive's employment hereunder for Cause at any time upon notice to
the Executive setting forth in reasonable detail the nature of such
Cause. The following, as determined by the Board in its reasonable and
good faith judgment, shall constitute Cause for termination: (i)
conviction in a court of law of any felony (other than a felony arising
out of the operation of a motor vehicle) or a plea of nolo contendere
to such an offense, (ii) commission of any act involving theft,
embezzlement, fraud, dishonesty or moral turpitude which act relates to
or otherwise has an adverse effect (including through publicity) on the
Company or its Affiliates, (iii) material breach of any of the material
provisions of this Agreement (other than breaches of the nature
described in clause (iv) below) or of any other material agreement
between the Executive and the Company, or (iv) repeated and consistent
willful misconduct or
-4-
5
dereliction of duty in the performance of his duties under this
Agreement, or repeated and consistent failure to be present at work,
which conduct or failure continues for more than thirty (30) days after
notice given to the Executive, such notice to set forth in reasonable
detail the nature of such conduct or failure. Upon the giving of notice
of termination of the Executive's employment hereunder for Cause, the
Company shall not have any further obligation or liability to the
Executive, other than for Base Salary earned and unpaid, accrued
vacation time and unreimbursed business expenses outstanding at the
date of termination.
(d) SEVERANCE PAYMENTS UPON EXPIRATION. If the Executive shall
cease to be employed by the Company (or any of its Affiliates) upon the
expiration of this Agreement, the Executive shall be entitled, subject
to the immediately following sentence, to receive as a severance
benefit periodic payments in an amount equal to his Base Salary in
effect at the date of such expiration divided by the number of payroll
periods per year then applicable to executives of the Company
(hereinafter, "Severance Payments"), for a period of six months from
and after the date of such expiration. The Executive's rights to
receive Severance Payments hereunder is conditioned upon (X) the
Executive's prior execution and delivery to the Company of a general
release of any and all claims and causes of action of the Executive
against the Company, Provant and their respective officers, directors
and Affiliates, excepting only (i) the right to any Base Salary and/or
reimbursable expenses then accrued and unpaid under Section 4 of this
Agreement, and (ii) the right to receive any Additional Shares to which
the Executive then is entitled or may thereafter be entitled under that
certain Agreement and Plan of Merger among Provant, the corporate
predecessor of the Company, the Executive and certain other Persons,
and (Y) the Executive's continued performance of those obligations
hereunder that continue by their express terms after the termination of
his employment, including without limitation those set forth in
Sections 7 and 8. Any Severance Payments to be paid hereunder shall be
payable in accordance with the payroll practices of the Company for its
executive generally as in effect from time to time, and subject to all
required withholding of taxes.
6. EFFECT OF TERMINATION. Upon termination of this Agreement, all
obligations and provisions of this Agreement shall terminate except with respect
to any accrued and unpaid monetary obligations and except for the provisions of
Section 7 through (and inclusive of) 23 hereof.
7. COVENANT NOT TO COMPETE. Provided only that the Company is not then
in default on its payment obligations under this Agreement, for a period of five
(5) years from the Effective Date the Executive will not engage or become
interested, directly or indirectly, as an owner, employee, director, partner,
consultant, through stock ownership, investment of capital, lending of money or
property, rendering of services, or otherwise, either alone or in association
with others, in the operation, management or supervision of any type of business
or enterprise in any way similar
-5-
6
to or competitive with the business of the Company. In addition, during such
period the Executive will not, directly or indirectly, whether on his behalf or
on behalf of anyone else, (i) solicit or accept orders from any present or past
customer of the Company for a product or service offered or sold by, or
competitive with a product or service offered or sold by, the Company; (ii)
induce or attempt to induce any such customer to reduce such customer's
purchases from the Company; (iii) use for the benefit of the Executive or
disclose the name and/or requirements of any such customer to any other person
or persons, natural or corporate; or (iv) solicit any of the Company's employees
or consultants to leave the employ of the Company or hire anyone who was an
employee of the Company or a consultant to the Company at any time within one
year from the date the Executive's employment with the Company terminated. The
foregoing restrictions shall not prevent the Executive from hiring or otherwise
engaging any professional firm.
8. CONFIDENTIAL INFORMATION.
(a) The Executive acknowledges that the Company and its
Affiliates will continually develop Confidential Information, that the
Executive may develop Confidential Information for the Company or its
Affiliates and that the Executive may learn of Confidential Information
during the course of employment. The Executive agrees that, except as
required for the proper performance of his duties for the Company, he
will not, directly or indirectly, use or disclose any Confidential
Information, as defined below. The Executive understands and agrees
that this restriction will continue to apply after his employment
terminates, regardless of the reason for termination.
(b) The Executive agrees that all Confidential Information
which he creates or to which he has access as a result of his
employment is and shall remain the sole and exclusive property of the
Company. Except as required for the proper performance of his duties,
the Executive will not copy any documents, tapes or other media
containing Confidential Information ("Documents") or remove any
Documents, or copies, from Company premises. The Executive will return
to the Company immediately after his employment terminates, and at such
other times as may be specified by the Company, all Documents and
copies and all other property of the Company then in his possession or
control.
9. ENFORCEMENT OF COVENANTS. The Executive acknowledges that he
has carefully read and considered all the terms and conditions of this
Agreement, including the restraints imposed upon him pursuant to Sections 7 and
8 hereof. The Executive further agrees that all goodwill of the Company and its
Affiliates is their exclusive property. The Executive further acknowledges and
agrees that, were he to breach any of the covenants contained in Sections 7 and
8 hereof, the damage would be irreparable. The Executive therefore agrees that
the Company or any of its Affiliates, as the case may be, in addition to any
other remedies available to it, shall be entitled to preliminary and permanent
injunctive relief against any breach or
-6-
7
threatened breach by the Executive of any of said covenants, without having to
post bond, provided the Company has made a prima facie showing of such a breach
or threatened breach.
10. INDEMNIFICATION. Subject to the second sentence of this
Section 10, the Company agrees to indemnify Executive against all liabilities
and expenses, including amounts paid in satisfaction of judgments, in compromise
or as fines and penalties, together with counsel fees, in each case reasonably
incurred by him in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, in which he may be involved
or with which he may be threatened during the term of this Agreement or
thereafter, in each case to the extent incurred by reason of his serving or
having served (a) as an executive officer or director of the Company, or (b) at
its request as a director or executive officer of any organization in which the
Company directly or indirectly owns shares or of which it is directly or
indirectly a creditor, or (c) at its request in any capacity with respect to any
employee plan. Notwithstanding the immediately preceding sentence, the Company
shall not indemnify the Executive if the Executive (i) did not act in good faith
and in a manner the Executive reasonably believed to be in or not opposed to the
best interests of the Company, and (ii) with respect to any criminal action or
proceeding, had reasonable cause to believe that the Executive's conduct was
unlawful. Provant shall purchase and maintain in force directors' and officers'
liability insurance having policy limits and other terms reasonably determined
by the Provant Board of Directors.
11. CONFLICTING AGREEMENTS. The Executive hereby represents and
warrants that the execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which the Executive is a party or is bound and that the Executive is not
subject to any covenants against competition or similar covenants that would
affect the performance of his obligations hereunder. The Executive will not
disclose or use any proprietary information of a third party without such
party's consent.
12. DEFINITIONS. Words or phrases which are initially capitalized
or are within quotation marks shall have the meanings provided in this Section
12 and as provided elsewhere herein. For purposes of this Agreement, the
following definitions apply:
(a) "Affiliates" means all persons and entities directly or
indirectly controlling, controlled by or under common control with the
Company, where control may be by either management authority or equity
interest , including without limitation Provant.
(b) "Company" means, for purposes of Sections 7, 8, and 12(c)
only, the Company or any of its Affiliates; and means the corporation
named in the preamble for purposes of all other Sections.
-7-
8
(c) "Confidential Information" means any and all information,
inventions, discoveries, ideas, research, engineering methods,
practices, processes, systems, formulae, designs, concepts, products,
projects, improvements and developments that are not generally known by
others, developed by or known to the Executive prior to or during the
term of this Agreement and relating in any material respect to the
Company or its Affiliates, including their respective businesses,
products or services (or learned by the Executive after the term hereof
from a source known to the Executive to be violating an obligation to
the Company or an Affiliate not to disclose the same), including but
not limited to (i) products and services, technical data, methods and
processes, (ii) marketing activities and strategic plans, (iii) costs
and sources of supply, (iv) the identity and special needs of customers
and prospective customers and vendors and prospective vendors, and (v)
the people and organizations with whom the Company has or plans to have
business relationships and those relationships. Confidential
Information also includes such information that the Company may receive
or has received belonging to customers or others who do business with
the Company and any publication or literary creation of the Executive,
developed in whole or in significant part during the term hereof, in
whatever form published, whose content in whole or in part is
competitive in any material respect with the products or services
offered by the Company (including as such products or services could
reasonably be expected to evolve or be extended in the foreseeable
future).
(c) "PERSON" means an individual, a corporation, an
association, a partnership, an estate, a trust and any other entity or
organization.
13. WITHHOLDING. All payments made under this Agreement shall be
reduced by any tax or other amounts required to be withheld under applicable
law.
14. ASSIGNMENT. Neither the Company nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of the Executive in the event that the Company shall
hereafter effect a reorganization, consolidate with, or merge into, any other
Person or transfer all or substantially all of its properties or assets to any
other Person unless the Executive shall object in writing to such assignment
within 60 days following the effective date thereof, in which event the
Executive's sole remedy shall be to terminate this Agreement, which termination
shall have the effect set forth in Section 6 hereof. This Agreement shall inure
to the benefit of and be binding upon the Company and the Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
15. SEVERABILITY. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then
-8-
9
the remainder of this Agreement, or the application of such portion or provision
in circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
16. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
17. NOTICES. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person or deposited in the United States mail,
postage prepaid, registered or certified, and addressed to the Executive at his
last known address on the books of the Company or, in the case of the Company,
at Provant's principal place of business, to the attention of Chief Executive
Officer, or to such other address as either party may specify by notice to the
other actually received.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of the
Executive's employment, including without limitation any agreements relating to
employment between the Executive and any corporate predecessor of the Company,
any such agreement being hereby terminated by the mutual agreement of the
parties without liability to either party.
19. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by an expressly authorized
representative of the Company.
20. HEADINGS. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
22. GOVERNING LAW. This Agreement shall be construed and enforced under
and be governed in all respects by the laws of the State of New Jersey, without
regard to the conflict of laws principles thereof.
23. GUARANTY BY PROVANT. Provant hereby unconditionally and irrevocably
guarantees all of the Company's obligations to the Executive provided in this
-9-
10
Agreement. Provant's guaranty is of the full payment and performance of all of
the Company's covenants, agreements, duties and obligations under this
Agreement, and not a guaranty of collection. This is a continuing guaranty for
all future amounts. Provant waives all rights of subrogation it may have against
the Company until all amounts due or to become due hereunder have been paid to
the Executive, and Provant waives all other defenses and remedies available to
guarantors at law or in equity with respect to the guaranty hereby provided.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Executive and by the Company and Provant. by their respective
duly authorized representatives, as of the date first above written.
Executive: XXXX ACQUISITION CORP.
_______________________________ By:_____________________________
Name:
Title:
As to paragraph 23:
PROVANT, INC.
By:_____________________________
Name:
Title:
-10-
