EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT, dated as of February 10, 1999, by and between
OLSTEN CORPORATION, a Delaware corporation (the "Company"), and XXXXXX X.
XXXXXXXXXXXX ("Executive").
W I T N E S S E T H:
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WHEREAS, Executive has served the Company as its President and Chief
Operating Officer since October 19, 1998; and
WHEREAS, the Company desires that Executive assume the position of
Chief Executive Officer and Executive is willing to accept such appointment;
WHEREAS, the Company and Executive wish to enter into an agreement
embodying the terms of his employment as Chief Executive Officer (the
"Agreement"); and
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive hereby agree as follows:
1. Employment. Upon the terms and subject to the conditions of this Agreement,
the Company hereby agrees to continue to employ Executive and Executive hereby
agrees to continue his employment by the Company until February 9, 2002. At the
expiration of the original term or any extended term, Executive's employment
hereunder shall be automatically extended, upon the same terms and conditions,
for successive periods of two years each, unless either party, at least 90 days
prior to the expiration of the original term or any extended term, shall give
written notice to the other of its intention not to renew such employment.
Notwithstanding the foregoing, the term of this Agreement shall expire on the
last day of the month in which Executive attains age 65. The period during which
Executive is employed pursuant to this Agreement, including any extension
thereof in accordance with this Section 1, shall be referred to as the
"Employment Period."
2. Position and Duties. During the Employment Period, Executive shall serve as
Chief Executive Officer of the Company and shall be nominated for election, and
if so elected, shall serve as a member of the Board of Directors of the Company
(the "Board"). In addition, Executive shall serve in such other position or
positions with the Company and its subsidiaries commensurate with his position
and experience as the Board shall from time to time specify. During the
Employment Period, Executive shall have the duties, responsibilities and
obligations customarily assigned to individuals serving as the chief executive
officer of a New York Stock Exchange listed company, and such other duties,
responsibilities and obligations as the Board shall from time to time specify.
Executive shall devote his full time to the services required of him hereunder,
except for vacation time and reasonable periods of absence due to sickness,
personal injury or other disability, and shall use his best efforts, judgement,
skill and energy to perform such services in a manner consonant with the duties
of his position and to improve and advance the business and interests of the
Company and its subsidiaries. Nothing contained in this Section 2 shall preclude
Executive from (i) serving on the board of directors of any business
corporation, unless such service would be contrary to applicable law, (ii)
serving on the board of, or working for, any charitable or community
organization or (iii) pursuing his personal financial and legal affairs, so long
as such activities, individually or collectively, do not interfere with the
performance of Executive's duties hereunder or violate any of the provisions of
Section 6 hereof.
3. Compensation.
(a) Base Salary. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of $750,000 per annum. The annual
base salary payable under this section shall be reduced, however, to the extent
Executive elects to defer such salary under the terms of any deferred
compensation or savings plan or arrangement maintained or established by the
Company or any other arrangement acceptable to the Company. The Board (or the
appropriate committee of the Board) shall annually review Executive's base
salary in light of competitive practices, the base salaries paid to other
executive officers of the Company and the performance of Executive and the
Company, and may, in its discretion, increase such base salary by an amount it
determines to be appropriate. Any such increase shall not reduce or limit any
other obligation of the Company hereunder. Executive's base salary (as set forth
above or as may be increased from time to time) shall not be reduced, except
that Executive's base salary may be reduced in proportion to comparable
reductions in the base salaries of the Company's other executive officers (as
determined for purposes of Section 16(b) of the Securities Exchange Act of 1934,
as amended). Executive's annual base salary payable hereunder, as it may be
increased from time to time and without reduction for any amounts deferred as
described above, is referred to herein as "Base Salary." The Company shall pay
Executive the portion of his Base Salary not deferred not less frequently than
in equal bi-weekly installments.
(b) Annual Bonus. For each calendar year ending during the Employment
Period, Executive shall have the opportunity to receive an annual bonus ("Annual
Target Bonus Opportunity"), based on the achievement of target levels of
performance, equal to 80% of his Base Salary; provided that, so long as
Executive is employed on the last day of each such calendar year, in no event
shall the annual bonus payable to Executive for each of the Company's 1999 and
2000 fiscal years be less than an amount equal to 50% of Executive's Base
Salary, regardless of whether any applicable performance criteria have been met.
Depending on actual results as measured against the performance objectives
established, Executive's actual bonus payment may range from (i) a low of (A)
50% of Executive's Base Salary with respect to the Company's 1999 and 2000
fiscal years and (B) zero for subsequent fiscal years to (ii) a maximum of 120%
of Executive's Base Salary for each full fiscal year during the Employment
Period. Subject to the guaranteed minimum set forth above, the actual bonus, if
any, payable for any such year shall be determined in accordance with the terms
of the Company's Executive Officers' Bonus Plan (the "Annual Plan") based upon
the performance of the Company and/or Executive against target objectives
established under such Annual Plan. The determination of whether and to what
extent the requisite performance objectives have been met shall be made by the
committee responsible for administering the Annual Plan, whose determination
shall be final. Subject to Executive's election to defer all or a portion of any
annual bonus payable hereunder pursuant to the terms of any deferred
compensation or savings plan or arrangement maintained or established by the
Company, any annual bonus payable under this Section 3(b) shall be paid to
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Executive in accordance with the terms of the Annual Plan, provided, however
that, regardless of the terms of such Annual Plan, Executive shall have the
right to defer payment of up to that portion of his annual bonus which, when
coupled with any portion of his Base Salary deferred for the same year of
service, does not exceed 50% (or such greater percentage as the Company shall
permit) of the sum of his Base Salary and his annual bonus, provided, however,
that, any portion of Executive's annual bonus which would not be deductible to
the Company pursuant to the provisions of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), shall be deferred. Unless Executive shall
otherwise elect a different payment date or dates or a different number of
payments, any portion of Executive's annual bonus and/or Base Salary which is
deferred in accordance with this Section 3 (whether at Executive's election or
by reason of Section 162(m)) shall be payable to Executive in a single lump sum
as soon as practicable following termination of Executive's employment for any
reason and shall be credited with interest, on a compounded basis, on the last
day of each calendar quarter, at 1% above the prime rate (as reported in The
Wall Street Journal, Eastern Edition), as in effect on the first day of each
such calendar quarter. Any election by Executive to change the timing of the
distribution of the deferred amounts and/or the number of payments to be made
shall be made in writing in a calendar year prior to the date payment is to be
made, and shall only be effective if Executive completes at least six months'
additional service as an employee following the date any such election is filed
with the Secretary of the Company.
(c) Stock Option Grant. Effective as of the date of this Agreement,
Executive has been awarded a stock option (the "Option") in respect of 150,000
shares of the Company's common stock, par value $.10 per share (the "Common
Stock"). Subject to the provisions of Section 5, the Option shall become vested
and exercisable in five annual installments of 30,000 shares each on each of the
first five anniversaries of the date of grant, subject to acceleration of the
exercisability thereof in certain circumstances (including, without limitation,
a Change of Control as defined in the 1994 Stock Incentive Plan ("SOP")) to be
set forth in the option agreement related to such grant and subject to
forfeiture, in whole or in part, in the event of Executive's termination of
employment prior to the Option becoming exercisable in full. The Option shall
have a ten year term, subject to earlier termination in the event of Executive's
termination of employment. Except as otherwise provided above, the terms of the
Option shall be as determined under the SOP and as set forth in a separate stock
option agreement.
(d) Performance Based-Stock Award.
(i) Fifteen Dollar Performance Hurdle. If, at any date on or before
December 31, 2000, the trading price of a share of Common Stock reported on any
national securities exchange on which the Common Stock is listed for trade
equals or exceeds $15 or the Company's shareholders receive for a share of
Common Stock cash and/or property in any transaction constituting a Change of
Control, as defined below (the "Change of Control Consideration"), having a
combined value at any time on the date of such transaction at least to equal to
$15 (with the value of any property which does not have a readily ascertainable
fair market value to be conclusively determined by the Compensation Committee of
the Board, as constituted immediately prior to any such transaction), then, as
of such date (the "Stock Grant Date"), Executive shall be awarded 60,467 shares
of Common Stock (the "Restricted Shares") that are subject to forfeiture until
vested, in whole or in part, as hereinafter provided. Certificates evidencing
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the Restricted Shares shall be issued to Executive as soon as practicable after
the Stock Grant Date, but shall be legended in such manner as the Company shall
determine to reflect the fact that such Restricted Shares are not vested and
have not been registered under the Securities Act of 1933, as amended. Subject
to the restrictions imposed hereby, Executive shall have all rights of a
shareholder, including the right to vote the Restricted Shares and to receive
any amounts paid as a dividend thereon, from and after the Stock Grant Date and
unless and until such Restricted Shares are forfeited by Executive. The
Restricted Shares will vest in three installments of 20,155, 20,156 and 20,156
shares on each of the first, second and third anniversaries of the Stock Grant
Date, provided that Executive is still in the Company's employ on each such
anniversary date. Any Restricted Shares outstanding at such time will also vest
upon the occurrence of a Change of Control (as defined in Section 5(d) hereof).
The Restricted Shares shall not be transferrable by Executive to any
person (other than the Company) prior to the time such Restricted Shares vest in
accordance herewith. Except as otherwise expressly provided herein, if
Executive's employment terminates for any reason, any Restricted Shares that
have not otherwise become vested in accordance with this Section 3(d)(i) shall
be forfeited and returned to the Company without any payment therefor. In the
event that Executive's employment terminates due to his death or Disability, or
in a Termination Without Cause or a Termination for Good Reason,
(i) on or after the Stock Grant Date and prior to fully vesting in any
Restricted Shares awarded hereunder, Executive will be deemed fully
vested in all of such Restricted Shares on the date of such
termination of employment or
(ii) prior to a Stock Grant Date and a Stock Grant Date occurs on or
before December 31, 2000 and
(A) on or before the three (3) month anniversary of Executive's
termination of employment, Executive shall be treated as fully
and automatically vested in all of the Restricted Shares on the
Stock Grant Date, or
(B) after the three month anniversary of Executive's termination of
employment, Executive shall be treated as automatically vested
in one-half of the Restricted Shares on the Stock Grant Date.
For purposes of subclauses (A) and (B) above, a monthly anniversary
date shall occur on the same date in a following month as the date of
termination or, if there is no same date in any subsequent month, on
the last day of such following month (e.g., if the termination date
is December 31, the relevant anniversary dates shall be January 31,
February 28 and March 31).
If a share of Common Stock does not trade at a value (or the shareholders do not
receive Change of Control Consideration) at least equal to $15 per share on or
before December 31, 2000, no Restricted Shares shall be awarded to Executive.
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(ii) Twenty-Five Dollar Performance Hurdle. If, at any time on or
before December 31, 2001, the trading price of a share of Common Stock reported
on any national securities exchange on which the Common Stock is listed for
trade equals or exceeds $25 or the Company's shareholders receive Change of
Control Consideration having a combined value at any time on the date of such
transaction at least to equal to $25 (with the value of any property which does
not have a readily ascertainable fair market value to be conclusively determined
by the Compensation Committee of the Board, as constituted immediately prior to
any such transaction), then, as of such date (the "Supplemental Stock Grant
Date"), Executive shall be awarded 76,280 shares of Common Stock (the
"Supplemental Restricted Shares") that are subject to forfeiture until vested,
in whole or in part, as hereinafter provided. Certificates evidencing the
Supplemental Restricted Shares shall be issued to Executive as soon as
practicable after the Supplemental Stock Grant Date, but shall be legended in
such manner as the Company shall determine to reflect the fact that such
Supplemental Restricted Shares are not vested and have not been registered under
the Securities Act of 1933, as amended. Subject to the restrictions imposed
hereby, Executive shall have all rights of a shareholder, including the right to
vote the Supplemental Restricted Shares and to receive any amounts paid as a
dividend thereon, from and after the Supplemental Stock Grant Date and unless
and until such Supplemental Restricted Shares are forfeited by Executive. The
Supplemental Restricted Shares will vest in three installments of 25,426, 25,427
and 25,427 shares on each of the first, second and third anniversaries of the
Supplemental Stock Grant Date, provided that Executive is still in the Company's
employ on each such anniversary date. The Supplemental Restricted Shares will
also vest upon the occurrence of a Change of Control (as defined in Section 5(d)
hereof).
The Supplemental Restricted Shares shall not be transferrable by
Executive to any person (other than the Company) prior to the time at which such
Supplemental Restricted Shares vest in accordance herewith. Except as otherwise
expressly provided herein, if Executive's employment terminates for any reason,
any Supplemental Restricted Shares that have not otherwise become vested in
accordance with this Section 3(d)(ii) shall be forfeited and returned to the
Company without any payment therefor. In the event that Executive's employment
terminates due to his death or Disability, or in a Termination Without Cause or
a Termination for Good Reason,
(i) on or after the Supplemental Stock Grant Date and prior to fully
vesting in any Supplemental Restricted Shares awarded hereunder,
Executive will be deemed fully vested in all of such Supplemental
Restricted Shares on the date of such termination of employment or
(ii) prior to a Supplemental Stock Grant Date and a Supplemental Stock
Grant Date occurs on or before December 31, 2001 and
(A) on or before the three (3) month anniversary of Executive's
termination of employment, Executive shall be treated as fully
and automatically vested in all of the Supplemental Restricted
Shares on the Supplemental Stock Grant Date, or
(B) after the three month anniversary of Executive's termination of
employment, Executive shall be treated as automatically vested
in one-half of the Supplemental Restricted Shares on the
Supplemental Stock Grant Date.
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For purposes of subclauses (A) and (B) above, a monthly anniversary
date shall occur on the same date in a following month as the date of
termination or, if there is no same date in any subsequent month, on
the last day of such following month (e.g., if the termination date
is December 31, the relevant anniversary dates shall be January 31,
February 28 and March 31).
If a share of Common Stock does not trade at a value (or the shareholders do not
receive Change of Control Consideration) at least equal to $25 per share on or
before December 31, 2001, no Supplemental Restricted Shares shall be awarded to
Executive.
(iii)In the event of a stock split (including a reverse stock split)
with respect to, or a stock dividend on, the Company's Common Stock or other
recapitalization or similar transaction affecting the capital stock of the
Company, the appropriate committee of the Board shall make an appropriate
adjustment to the stock price targets and the number of Restricted Shares and
Supplemental Restricted Shares referred to in subclauses (i) and (ii) above.
(iv) Executive shall be entitled to elect to pay the amount of income
and employment taxes required to be withheld in respect of any Restricted Shares
or Supplemental Restricted Shares that become vested from such Shares by
directing the Company in writing to withhold from each installment thereof the
least number of shares as shall be necessary to satisfy such withholding
obligations and to distribute to Executive (or, in the event of his death, his
estate) the net number of such Restricted Shares or Supplemental Restricted
Shares as shall have become vested.
(v) Upon the vesting of any Restricted Shares and/or Supplemental
Restricted Shares, Executive shall surrender the legended certificate
representing such Shares and the Company shall issue a new certificate, without
legend, reflecting the number of Shares that have become vested (but reduced by
the number, if any, of shares applied to satisfy Executive's withholding
obligations in accordance with subsection (iii) above) and a new legended
certificate representing the remaining number of unvested Restricted Shares or
Supplemental Restricted Shares.
(vi) Prior Performance Award. The performance-based stock award
granted to Executive pursuant to Section 5 of the Letter Agreement by and
between Executive and the Company, dated as of September 11, 1998 (the "Letter
Agreement"), is hereby superseded in its entirety.
4. Benefits, Perquisites and Expenses.
(a) Benefits. During the Employment Period, Executive shall be eligible to
participate in (i) each welfare benefit plan sponsored or maintained by the
Company, including, without limitation, each group life, hospitalization,
medical, dental, health, accident or disability insurance or similar plan or
program of the Company, and (ii) each pension, retirement, deferred compensation
or savings plan sponsored or maintained by the Company, in each case, whether
now existing or established hereafter, to the extent that Executive is eligible
to participate in any such plan under the generally applicable provisions
thereof. Nothing in this Section 4(a) shall limit the Company's right to amend
or terminate any such plan in accordance with the procedures set forth therein.
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(b) SERP Supplement. Effective as of the date hereof, Executive shall be
credited, under the terms of the Company's Supplemental Retirement Plan for Key
Executives Designated by the Company ("SERP"), with 10 years of service, in
addition to any other service that may be credited thereunder based on
Executive's actual employment with the Company. In determining the maximum
benefit payable under the SERP in the case of Executive's retirement prior to
age 62, the fraction set forth in Section 5.5 of the SERP shall be deemed to be
one. Additionally, if Executive completes 10 years of actual service with the
Company prior to his termination of employment or if his employment is
terminated prior to completing 10 years of actual service in a termination which
is a Termination Without Cause or a Termination for Good Reason (in each case,
as defined in Section 5), then notwithstanding the provisions of Section 5.2 of
the SERP, the reduction for early commencement of his accrued benefits under
shall be 3% per annum. Notwithstanding the foregoing, if Executive's employment
with the Company is terminated by the Company in a Termination for Cause or by
Executive other than in a Termination for Good Reason prior to February 10,
2004, then, solely for purposes of determining the extent to which Executive is
vested in his accrued benefit pursuant to Section 5.7 of the SERP (but not for
purposes of determining the amount of such accrued benefit), Executive shall be
deemed to have only been credited with 5 years of additional service under this
Section 4(b). The following table illustrates the extent to which Executive
shall be vested if Executive's employment with the Company is terminated by the
Company in a Termination for Cause or by Executive other than in a Termination
for Good Reason prior to February 10, 2004:
|----------------------------------------------------------------------------|
| Date Employment Terminates | Percent Vested |
|------------------------------------|---------------------------------------|
| Before February 10, 2000 | At least 50% (based on |
| | 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2000 and | At least 60% (based on |
| before February 10, 2001 | 1 year of actual service, |
| | plus 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2001 and | At least 70% (based on |
| before February 10, 2002 | 2 years of actual service, |
| | plus 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2002 and | At least 80% (based on |
| before February 10, 2003 | 3 years of actual service, |
| | plus 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2003 and | At least 90% (based on |
| before February 10, 2004 | 4 years of actual service, |
| | plus 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2004 | 100% |
|----------------------------------------------------------------------------|
For purposes of determining Executive's benefit under the SERP with respect to
any calculation of Executive's benefits to be made prior to January 1, 2004,
Executive's Final Average Earnings determined using his actual compensation for
any full calendar year of service completed after 1998 and deeming Executive to
have been paid an amount equal to 180% of his Base Salary for that number of
additional years equal to the remainder of (i) five (5) and (ii) the actual
number of full years of service he has completed since 1998.
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(c) Perquisites. During the Employment Period, Executive shall be entitled
to at least four weeks' paid vacation annually and shall also be entitled to
receive such perquisites as are generally provided to other senior officers of
the Company in accordance with the then current policies and practices of the
Company, including leasing a car for Executive's use in accordance with the
Company's standard policy. The Company shall also pay or reimburse Executive for
the cost of a membership in a country club selected by Executive. The Company
shall also cause Executive's current residence (in which he resided prior to
joining the Company) to be purchased pursuant to a customary relocation program
with a third party relocation service selected by the Company.
(d) Business Expenses. During the Employment Period, the Company shall pay
or reimburse Executive for all reasonable expenses incurred or paid by Executive
in the performance of Executive's duties hereunder, upon presentation of expense
statements or vouchers and such other information as the Company may require and
in accordance with the generally applicable policies and procedures of the
Company.
(e) Indemnification. During the Employment Period, the Company shall
indemnify Executive and hold Executive harmless from and against any claim, loss
or cause of action arising from or out of Executive's performance as an officer,
director or employee of the Company or any of its subsidiaries or in any other
capacity, including any fiduciary capacity, in which Executive serves at the
request of the Company to the maximum extent permitted by applicable law and the
Company's Restated Certificate of Incorporation and By-Laws.
5. Termination of Employment.
(a) Early Termination of the Employment Period. Notwithstanding Section 1,
the Employment Period shall end upon the earliest to occur of (i) a termination
of Executive's employment on account of Executive's death, (ii) a termination
due to Executive's Disability, (iii) Termination for Cause, (iv) a Termination
Without Cause or (v) a Termination for Good Reason.
(b) Benefits Payable Upon Termination. Following the end of the Employment
Period pursuant to Section 5(a), Executive (or, in the event of his death, his
surviving spouse, if any, or his estate) shall be paid the type or types of
compensation determined to be payable in accordance with the following table at
the times established pursuant to Section 5(c):
|------------------------------------------------------------------------|
| | Earned | Vested | Severance | Additional |
| | Salary | Benefits | Benefits | Benefits |
|------------------|-----------|------------| ------------|--------------|
| Termination | Payable | Payable | Not | Available |
| due to death | | | Payable | |
|------------------|-----------|------------| ------------|--------------|
| Termination due | Payable | Payable | Not | Available |
| to Disability | | | Payable | |
|------------------|-----------|------------| ------------|--------------|
| Termination | Payable | Payable | Not | Not |
| for Cause | | | Payable | Available |
|------------------|-----------|------------| ------------|--------------|
| Termination for | Payable | Payable | Payable | Available |
| Good Reason | | | | |
|------------------|-----------|------------| ------------|--------------|
| Termination | Payable | Payable | Payable | Available |
| Without Cause | | | | |
|------------------------------------------------------------------------|
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(c) Timing of Payments. Earned Salary shall be paid in cash in a single
lump sum as soon as practicable, but in no event more than 10 days, following
the end of the Employment Period. Vested Benefits shall be payable in accordance
with the terms of the plan, policy, practice, program, contract or agreement
under which such benefits have been awarded or accrued. Severance Benefits shall
be paid in a single lump sum cash payment as soon as practicable, but in no
event later than 10 days after the Executive's termination. Additional Benefits
shall be provided or made available at the times specified below as to each such
Additional Benefit.
(d) Definitions. For purposes of Sections 5 and 6, capitalized terms have
the following meanings:
"Additional Benefits" means, if Executive's employment terminates due
to death or in a Termination due to Disability, the benefits described in
subclause (i) below, or if the Executive's employment is terminated in a
Termination Without Cause or a Termination for Good Reason, the benefits
described in subclauses (i) and (ii):
(i) Executive (or, in the event of Executive's death during the
90-day period following such termination, Executive's
beneficiary or estate) shall have the right, during the 90-day
period following Executive's termination of employment for any
reason other than death or the 270-day period following
Executive's termination of employment due to death, to exercise
any outstanding options to purchase shares of Common Stock of
the Company that have become exercisable prior to the date of
such termination and that would have become exercisable by
Executive in accordance with the applicable option agreement and
the applicable equity incentive plan of the Company assuming
that Executive continued in the employ of the Company for an
additional 18 months after the date of his termination of
employment;
(ii) Executive (and, to the extent applicable, his dependents) will
be entitled to continue participation in all of the Company's
medical, dental and vision care plans (the "Health Benefit
Plans"), until the 18-month anniversary of Executive's
termination of employment; provided that Executive's
participation in the Company's Health Benefit Plans shall cease
on any earlier date that Executive becomes eligible for
comparable benefits from a subsequent employer. Executive's
participation in the Health Benefit Plans will be on the same
terms and conditions (including, without limitation, any
contributions that would have been required from Executive) that
would have applied had Executive continued to be employed by the
Company. To the extent any such benefits cannot be provided
under the terms of the applicable plan, policy or program, the
Company shall provide a comparable benefit under another plan or
from the Company's general assets.
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"Change of Control" shall have the meaning ascribed thereto in
Section 9.2 of the SOP, as in effect on the date hereof, except that the
threshold for a change of control related to the acquisition of voting power in
subsection 9.2(a) shall be applied under this Section 5 by substituting 40% for
25%.
"Disability" means long-term disability within the meaning of the
Company's long-term disability plan or program.
"Earned Salary" means any Base Salary earned, but unpaid, for
services rendered to the Company on or prior to the date on which the Employment
Period ends pursuant to Section 5(a)(other than Base Salary deferred pursuant to
Executive's election, as provided in Section 3(a) or (b) hereof).
"Severance Benefit" means an amount equal to two times the sum of
(i) Executive's Base Salary plus
(ii) the average of
(X) Executive's Annual Target Bonus Opportunity payable under
Section 3(b) hereof for the calendar year in which
Executive's employment terminates and
(Y) the actual bonus payable to Executive in respect of the
calendar year ended immediately before the calendar year in
which such termination occurs;
provided that, in the event that any severance payment is to be
made subsequent to any Change of Control, the amount described
in subclause (ii) shall be deemed to be the greater of the
amount determined as calculated above or the amount described in
subclause (X) thereof.
"Termination for Cause" means a termination of Executive's employment
by the Company due to (i) Executive's conviction of a felony, (ii) Executive's
willful and continued failure to perform the material duties of his position
which has had (or is expected to have) a material adverse effect on the business
of the Company or its subsidiaries and which breach is not cured within a
reasonable period of time following such breach, or (iii) Executive's breach of
any material Company policy or procedure which has had (or is expected to have)
a material adverse effect on the business of the Company or its subsidiaries and
which breach is not cured within a reasonable period of time following such
breach.
"Termination for Good Reason" means a termination of Executive's
employment by Executive (i) within 90 days following (A) a material diminution
in Executive's positions, duties and responsibilities from those described in
Section 2 hereof, (B) the removal of Executive from, or the failure to re-elect
Executive as a member of, the Board, (C) a reduction in Executive's annual Base
Salary (other than any reduction therein which is in proportion to reductions in
the base salaries of all of the Company's executive officers, as contemplated by
Section 3(a) hereof), (iv) delivery by the Company of a notice that it does not
intend to renew the term of this Agreement as contemplated in Section 1 hereof,
or (D) a material breach by the Company of any other provision of this Agreement
or (ii) any voluntary termination by Executive occurring after a Change of
Control and prior to the first anniversary thereof.
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"Termination Without Cause" means any termination of Executive's
employment by the Company other than a Termination for Cause.
"Vested Benefits" means amounts which are vested or which Executive
is otherwise entitled to receive under the terms of or in accordance with any
plan, policy, practice or program of, or any contract or agreement with, the
Company or any of its subsidiaries, at or subsequent to the date of his
termination without regard to the performance by Executive of further services
or the resolution of a contingency.
(e) Full Discharge of Company Obligations. Except as expressly provided in
the last sentence of this Section 5(e), the amounts payable to Executive
pursuant to this Section 5 following termination of his employment (including
amounts payable with respect to Vested Benefits) shall be in full and complete
satisfaction of Executive's rights under this Agreement and any other claims he
may have in respect of his employment by the Company or any of its subsidiaries.
Such amounts shall constitute liquidated damages with respect to any and all
such rights and claims and, upon Executive's receipt of such amounts, the
Company shall be released and discharged from any and all liability to Executive
in connection with this Agreement or otherwise in connection with Executive's
employment with the Company and its subsidiaries. If requested by the Company,
Executive shall execute a release following termination of his employment, in
form and substance satisfactory to the Company (but not inconsistent with the
terms of this Agreement), as a prior condition to the receipt of the benefits
payable pursuant to this Section 5. Nothing in this Section 5(e) shall be
construed to release the Company from its commitment to indemnify Executive and
hold Executive harmless from and against any claim, loss or cause of action as
described in Section 4(e).
(f) Certain Further Payments by the Company.
(i) In the event that any amount or benefit paid or distributed to
the Executive pursuant to this Agreement, taken together with any amounts or
benefits otherwise paid or distributed to the Executive by the Company or any
affiliated company (collectively, the "Covered Payments"), are or become subject
to the tax (the "Excise Tax") imposed under Section 4999 of the Code, or any
similar tax that may hereafter be imposed, the Company shall pay to the
Executive at the time specified in Section 5(f)(v) below an additional amount
(the "Tax Reimbursement Payment") such that the net amount retained by the
Executive with respect to such Covered Payments, after deduction of any Excise
Tax on the Covered Payments and any Federal, state and local income or
employment tax and Excise Tax on the Tax Reimbursement Payment provided for by
this Section 5(f), but before deduction for any Federal, state or local income
or employment tax withholding on such Covered Payments, shall be equal to the
amount of the Covered Payments.
(ii) For purposes of determining whether any of the Covered Payments
will be subject to the Excise Tax and the amount of such Excise Tax,
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(A) such Covered Payments will be treated as "parachute payments"
within the meaning of Section 280G of the Code, and all
"parachute payments" in excess of the "base amount" (as defined
under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent
that, in the good faith judgment of the Company's independent
certified public accountants appointed prior to the Change of
Control or tax counsel selected by such Accountants (the
"Accountants"), the Company has a reasonable basis to conclude
that such Covered Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable
compensation for personal services actually rendered (within the
meaning of Section 280G(b)(4)(B) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not
subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
(iii)For purposes of determining the amount of the Tax Reimbursement
Payment, the Executive shall be deemed to pay:
(A) Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Tax
Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in
which the Tax Reimbursement Payment is to be made, net of the
maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid
in such year.
(iv) In the event that the Excise Tax is subsequently determined by
the Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to be less than the amount taken into account hereunder in
calculating the Tax Reimbursement Payment made, the Executive shall repay to the
Company, at the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of such prior Tax Reimbursement Payment that
would not have been paid if such Excise Tax had been applied in initially
calculating such Tax Reimbursement Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement
Payment to be refunded to the Company has been paid to any Federal, state or
local tax authority, repayment thereof shall not be required until actual refund
or credit of such portion has been made to the Executive, and interest payable
to the Company shall not exceed interest received or credited to the Executive
by such tax authority for the period it held such portion. The Executive and the
Company shall mutually agree upon the course of action to be pursued (and the
method of allocating the expenses thereof) if the Executive's good faith claim
for refund or credit is denied.
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In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the time
the Tax Reimbursement Payment is made (including, but not limited to, by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(v) The Tax Reimbursement Payment (or portion thereof) provided for
in Section 5(f)(i) above shall be paid to the Executive not later than 10
business days following the payment of the Covered Payments; provided, however,
that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot
be finally determined on or before the date on which payment is due, the Company
shall pay to the Executive by such date an amount estimated in good faith by the
Accountants to be the minimum amount of such Tax Reimbursement Payment and shall
pay the remainder of such Tax Reimbursement Payment (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than 45 calendar days after
payment of the related Covered Payment. In the event that the amount of the
estimated Tax Reimbursement Payment exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth business day after written demand by the Company
for payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
6. Noncompetition and Confidentiality. By and in consideration of the salary and
benefits to be provided by the Company hereunder, including particularly the
severance arrangements set forth herein, Executive agrees that:
(a) Noncompetition. Executive acknowledges that the Company and its
subsidiaries conduct business throughout the United States, the District of
Columbia, Canada, Mexico, Latin America and Europe, and that his duties to
Company relate to some or all of these territories and to some or all business
lines of the Company. During the Employment Period and during the nine month
period following any termination of Executive's employment, other than a
Termination Without Cause or a Termination for Good Reason, Executive shall not
directly or indirectly: (i) perform or provide any services to any individual or
business which is engaged in the type of business(es) similar to the type of
business(es) conducted by Company or any of its subsidiaries; and/or (ii) own,
manage, operate, control, be employed by, participate in, provide services or
financial assistance to, or be connected in any manner with, the ownership,
management, operation or control of any business which directly competes with
Company or any of its subsidiaries or engages in the type of business(es)
principally conducted by the Company or any of its subsidiaries, except that
Executive may own for investment purposes up to 1% of the capital stock of any
such company whose stock is publicly traded.
(b) Confidentiality. Except as may be required by the lawful order of a
court or agency of competent jurisdiction, or applicable law, or except to the
extent that Executive has express authorization from the Company, Executive
agrees to keep secret and confidential indefinitely all non-public information
(including, without limitation, information regarding litigation and pending
13
litigation and any information that may be subject to attorney-client privilege)
concerning the Company, its subsidiaries and affiliates (collectively, the
"Company Group") which was acquired by or disclosed to Executive during the
course of Executive's employment with the Company, and not to disclose the same,
either directly or indirectly, to any other person, firm, or business entity, or
to use it in any way. Such non-public information shall include, but not be
limited to, the following:
(i) information which the Company Group has compiled to identify,
develop and service its clients and customers, including
"negative research" to identify those entities who have not
subscribed to the services of the Company and its subsidiaries;
(ii) information which the Company Group has compiled concerning the
operations of the clients and customers of the Company and its
subsidiaries, including key contacts within the clients' and
customers' business, familiarity with special needs and customer
characteristics, workers' compensation information, billing
rates, profit margins, sales volumes, and other sensitive
financial information;
(iii)information which the Company Group has compiled concerning the
employees and labor force at the Company and its subsidiaries,
including compilations of their names, addresses, job skills,
employment histories and employment records.
Upon termination of Executive's employment, Executive shall promptly deliver to
the Company all materials of a confidential nature relating to the business of
the Company and its subsidiaries and which are Executive's possession or
control. To the extent that Executive obtained information on behalf of the
Company or any subsidiary or affiliate that may be subject to attorney-client
privilege, Executive shall take reasonable steps to maintain the confidentiality
of such information and to preserve such privilege.
(c) Non-Solicitation of Employees. During the Employment Period and the
one-year period following any termination of Executive's employment, Executive
shall not directly or indirectly, for his own benefit or that of any other
person, offer any employment in a similar field or business association to any
of the Company's employees, agents or representatives or suggest or in any way
encourage, any of the Company's employees, agents or representatives to
terminate their employment or business association with the Company.
(d) Non-Solicitation of Clients and Customers. During the Employment
Period and the one-year period following any termination of Executive's
employment, Executive shall not solicit or accept for Executive's own benefit or
the benefits of any other person any of the Company's customers and/or clients
with a view to sell or provide any product or service competitive with any
product or service sold or provided or under development by the Company. For the
purposes of this Section 6(d), the term "customers" shall include any person or
entity to whom the Company has sold, provided or been obligated to provide, any
service or product, or who has otherwise received any service or benefit from
the Company within the last 24 months or, during the Restriction Period, within
the 24-month period preceding the date Executive's employment terminates.
14
(e) Company Property. Except as expressly provided herein, promptly
following Executive's termination of employment, Executive shall return to the
Company all property of the Company.
(f) Injunctive Relief and Other Remedies with Respect to Covenants.
Executive acknowledges and agrees that the covenants and obligations of
Executive with respect to noncompetition, nonsolicitation, confidentiality and
Company property, relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations may cause the
Company irreparable injury for which adequate remedies are not available at law.
Therefore, Executive agrees that the Company shall be entitled to seek an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing any violation of
the covenants and obligations contained in this Section 6. This remedy is in
addition to any other rights and remedies the Company may have at law or in
equity.
7. Miscellaneous.
(a) Survival. Sections 5 (relating to early termination), 6 (relating to
noncompetition, nonsolicitation and confidentiality), 7(b) (relating to
arbitration), 7(c)(relating to legal fees) and 7(m) (relating to governing law)
shall survive the termination hereof.
(b) Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be resolved by binding arbitration. The arbitration
shall be held in New York City and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Expedited Employment
Arbitration Rules of the American Arbitration Association then in effect at the
time of the arbitration, and otherwise in accordance with principles which would
be applied by a court of law or equity. The arbitrator shall be acceptable to
both the Company and Executive. If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three arbitrators one
appointed by each of the parties and the third appointed by the other two
arbitrators.
(c) Binding Effect. This Agreement shall be binding on, and shall inure to
the benefit of, the Company and any person or entity that succeeds to the
interest of the Company (regardless of whether such succession does or does not
occur by operation of law) by reason of the sale of all or a portion of the
Company's stock, a merger, consolidation or reorganization involving the Company
or, unless the Company otherwise elects in writing, a sale of the assets of the
business of the Company (or portion thereof) in which Executive performs a
majority of his services. This Agreement shall also inure to the benefit of
Executive's heirs, executors, administrators and legal representatives.
(d) Assignment. Except as provided under Section 7(c), neither this
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party.
15
(e) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein. No
other agreement (other than awards made in accordance with the terms of one of
the Company's applicable compensatory plans, programs or arrangements) relating
to the terms of Executive's employment by the Company, oral or otherwise,
including, without limitation, the Letter Agreement (other than the provisions
of Section 13 thereof, which relates to Executive's relocation to Long Island
from Villanova), shall be binding between the parties. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he is entering
into this Agreement of his own free will and accord, and with no duress, that he
has read this Agreement and that he understands it and its legal consequences.
(f) Severability; Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event that any
of the provisions of any of Section 6(a), (b) or (c) is not enforceable in
accordance with its terms, Executive and the Company agree that such Section
shall be reformed to make such Section enforceable in a manner which provides
the Company the maximum rights permitted at law.
(g) Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement shall be implied
from any course of dealing between the parties hereto or from any failure by
either party hereto to assert its or his rights hereunder on any occasion or
series of occasions.
(h) Notices. Any notice required or desired to be delivered under this
Agreement shall be in writing and shall be delivered personally, by courier
service, by certified mail, return receipt requested, or by telecopy and shall
be effective upon actual receipt by the party to which such notice shall be
directed, and shall be addressed as follows (or to such other address as the
party entitled to notice shall hereafter designate in accordance with the terms
hereof):
If to the Company:
Olsten Corporation
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
If to Executive:
The home address of Executive
noted on the records of the Company
(i) Amendments. This Agreement may not be altered, modified or amended
except by a written instrument signed by each of the parties hereto.
16
(j) Headings. Headings to sections in this Agreement are for the
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
(k) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
(l) Withholding. Any payments provided for herein shall be reduced by any
amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income or employment tax laws or similar
statutes or other provisions of law then in effect.
(m) Governing Law. This Agreement shall be governed by the laws of the
State of New York, without reference to principles of conflicts or choice of law
under which the law of any other jurisdiction would apply.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and Executive has hereunto set his hand
as of the day and year first above written.
OLSTEN CORPORATION
By:________________________
Xxxxxxx X. Xxxxxxxxxx
Executive Vice President
_______________________
Xxxxxx X. Xxxxxxxxxxxx
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