EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is by and between Larry E.
Darst (the "Executive") and Nationwide Staffing, Inc., a Delaware corporation
(the "Company"), which parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive and the
Executive hereby accepts employment by the Company, upon the terms and subject
to the conditions hereinafter set forth.
2. DUTIES. The Executive shall serve as the Chief Executive Officer of the
Company. The Executive will perform the duties attendant to his executive
position with the Company under the direction of the Company's Board of
Directors (the "Board"). The Executive agrees to (a) devote his full time and
best efforts to the performance of his duties to the Company, (b) devote his
best efforts to promote the success of the Company's business, and (c) cooperate
fully with the Board in the advancement of the best interests of the Company.
The Executive shall faithfully adhere to, execute and fulfill all policies
established by the Company from time to time. If the Executive is elected as a
director of the Company or as a director or officer of any of its affiliates,
the Executive will fulfill his duties as such director or officer without
additional compensation.
3. COMPENSATION. In consideration for the services of the Executive
hereunder, unless terminated sooner pursuant to the terms hereof, commencing on
the (i) date hereof and continuing until the date of the consummation of the
Company's underwritten initial public offering of the Company's Common Stock
(the "IPO"), the Company will pay the Executive $10,000 per month; and (ii) date
of the IPO and continuing for the remaining term hereof, the Company will pay
the Executive an annual salary of $175,000 (the "Salary"), which will be payable
in equal periodic installments according to the Company's customary payroll
practices but no less frequently than monthly. In addition, prior to the IPO,
the Company shall have adopted a bonus plan which provides that the Executive
shall be eligible to receive an annual cash bonus in an amount up to 100% of the
Salary in the event that the Company and the Executive achieve certain
performance objectives. The specific performance objectives of the bonus plan
shall be established each year by resolution of the Board.
Furthermore, during the term of the Executive's employment, the Company
shall provide to the Executive the following:
(i) group hospitalization, major medical, long-term disability,
vacation, life insurance coverages and pension, profit sharing, bonus and
other employee benefit plans on substantially the same terms and
conditions these benefits are made available to the Company's other
executive officers so long as the Executive's physical condition does not
make it commercially unreasonable for the Company to provide such
benefit(s); and
(ii) options to purchase shares of the Company's Common Stock on
terms to be agreed upon between the Executive and the Board (or the
appropriate committee thereof), which terms shall be consistent with the
terms of any stock option plans adopted by the Company and the terms of
Section 5 hereof.
4. TERM AND TERMINATION. The term of the Executive's employment pursuant
to this Agreement shall commence on the date hereof and shall continue until the
third anniversary of the IPO (the "Initial Term") and shall continue thereafter
on a year-to-year basis on the same terms and conditions contained herein unless
either party gives to the other written notice of termination no fewer than 30
days prior to the expiration of any such term that the party does not wish to
extend this Agreement. However, the Executive's employment pursuant to this
Agreement shall also terminate earlier in any one of the following ways:
(i) upon the death of the Executive;
(ii) upon the disability of the Executive immediately upon notice
from either party to the other;
(iii) upon three months prior notice of resignation by the Executive
to the Company;
(iv) upon notice by the Company to the Executive of termination
"without cause";
(v) upon notice by the Company to the Executive of termination "for
cause";
(vi) at the Executive's option, upon notice by the Executive to the
Company within 60 days following a Constructive Termination; or
(vii) immediately in the event (a) the IPO is not consummated on or
before January 31, 1998 (the "Failure of the IPO"); or (b) a majority of
the duly authorized representatives of the companies to be acquired by the
Company at the time of the IPO inform the Board that they do not desire
that the Executive serve as the Company's Chief Executive Officer (the
"Acquired Companies' Decision").
DEFINITION OF DISABILITY. For purposes of Section 4(ii), the Executive
will be deemed to have a "disability" if, for physical or mental reasons, the
Executive is unable to perform the Executive's duties under this Agreement for
120 consecutive days, or 180 days during any twelve month period, as determined
herein. The disability of the Executive will be determined by a medical doctor
selected by written agreement of the Company and the Executive upon the request
of either party by notice to the other. If the Company and the Executive cannot
agree on the selection of a medical doctor, each of them will select a medical
doctor and the two medical doctors will select a third medical
doctor who will determine whether the Executive has a disability. The
determination of the medical doctor selected under this Section 4 will be
binding on both parties. The Executive must submit to a reasonable number of
examinations by the medical doctor making the determination of disability under
this Section 4, and the Executive hereby authorizes the disclosure and release
to the Company of such determination and all supporting medical records. If the
Executive is not legally competent, the Executive's legal guardian or duly
authorized attorney-in-fact will act in the Executive's stead under this Section
4, for the purposes of selecting a medical doctor, submitting the Executive to
the examinations, and providing the authorization of disclosure, required under
this Section 4.
DEFINITION OF TERMINATION FOR CAUSE. For purposes of Section 4(v), the
Executive's termination "for cause" shall be defined to mean: (a) the
Executive's material breach of this Agreement, including, without limitation,
his failure to perform his obligations hereunder in a reasonably satisfactory
manner (other than any such failure resulting from incapacity due to physical or
mental reasons); (b) the appropriation (or attempted appropriation) of a
material business opportunity of the Company, including attempting to secure or
securing a personal benefit in connection with any transaction entered into on
behalf of the Company; or (c) the Executive's fraud or dishonesty with respect
to the business or affairs of the Company or if the Executive is convicted of,
indicted for (or its procedural equivalent) or pleads nolo contendere or guilty
to, any felony criminal offense or any civil offense involving fraud or moral
turpitude, the equivalent thereof, or any crime with respect to which
imprisonment is a possible punishment.
DEFINITION OF CONSTRUCTIVE TERMINATION. For purposes of Section 4 (vi),
the term "Constructive Termination" shall be defined to mean (i) a material
reduction in the Executive's duties and responsibilities without the Executive's
consent; or (ii) a reduction in or the failure by the Company to pay when due
any portion of the Salary.
COMPENSATION IF TERMINATED BY DEATH. If Executive's employment is
terminated because of the Executive's death, the Executive will be entitled to
receive the portion of the Salary that is due at the end of the calendar month
in which his death occurs. The payment of a bonus, if any, will be determined by
reference to the terms of the applicable bonus plan.
COMPENSATION IF TERMINATED BY DISABILITY. If the Executive's employment is
terminated by either party as a result of the Executive's disability, the
Company will pay the Executive the portion of the Salary that is due at the end
of the calendar month during which such termination is effective and for the
lesser of (a) six consecutive months thereafter, or (b) the period until
disability insurance benefits, if any, commence under any disability insurance
coverage furnished by the Company to the Executive. The payment of a bonus, if
any, will be determined by reference to the terms of the applicable bonus plan.
COMPENSATION IF TERMINATED BY EXECUTIVE'S RESIGNATION OR FOR CAUSE. If the
Company terminates the Executive's employment "for cause" or if the Executive
resigns his employment with the Company, the Executive will be entitled to
receive the portion of the Salary that is due through the date such termination
is effective. No bonus will be payable, notwithstanding any terms of the bonus
plan to the contrary.
COMPENSATION IF TERMINATED WITHOUT CAUSE OR BY CONSTRUCTIVE TERMINATION.
In the event the Executive's employment with the Company is terminated by the
Company "without cause" or by the Executive within 60 days following a
Constructive Termination, the Company will pay the Executive, as the Executive's
sole remedy in connection with such termination, a severance payment in an
amount equal to $350,000 (the "Severance Payment"). The Severance Payment shall
be payable to the Executive in equal monthly payments over a period of 24 months
following the date of termination. The Company will also pay the Executive the
portion of the Salary that is accrued but unpaid from the last payment date to
the date of termination.
COMPENSATION IF FAILURE OF THE IPO OR THE ACQUIRED COMPANIES' DECISION. If
this Agreement is terminated due to the Failure of the IPO or the Acquired
Companies' Decision, thereafter the Executive will not be entitled to any more
Salary, any bonus or any of the other benefits hereunder.
5. ACCRUED BENEFITS. The Executive's accrual of, or participation in plans
providing for, benefits will cease at the effective date of the termination of
the Executive's employment and the Executive will be entitled to accrued
benefits pursuant to such plans only as provided in such plans. Notwithstanding
anything herein to the contrary, the Executive will not receive, as part of his
termination pay pursuant to Section 4, any payment or other compensation for any
vacation, holiday, sick leave, or other leave unused on the date of termination.
6. EFFECT OF TERMINATION ON OPTIONS. Any options to purchase the Company's
Common Stock held by the Executive will automatically expire if the Executive's
employment with the Company is terminated "for cause" or if the Executive
voluntarily leaves the employment of the Company. If the Executive's employment
with the Company ends for any reason other than termination for cause, voluntary
departure or due to death, the Executive's options will remain exercisable and
will vest and expire in accordance with the terms of the applicable option
agreements. If the Executive dies while employed by the Company, his options
shall become fully exercisable on the date of his death and shall expire twelve
months thereafter.
7. EFFECT OF TERMINATION OF PURCHASED COMMON STOCK. The Executive has
purchased 100 shares of the Company's Common Stock (the "Shares") for $3.00 per
share. Before the Executive's acquisition of the Shares, there were outstanding
1,000 shares of the Company's Common Stock, all of which are owned by WJG
Capital, L.L.C. It is the intention of the Company and the Executive that on the
date the Securities and Exchange Commission declares effective the Company's
registration statement in connection with the IPO (the "Effective Date"), the
Executive will own 2% of the Company's outstanding Common Stock (after taking
into account the shares to be issued
in the IPO and to the shareholders of companies to be acquired concurrently with
the IPO). Accordingly, on the Effective Date, either (a) the Executive will
convey to the Company without consideration; or (b) the Company will convey to
the Executive without consideration, that number of shares of Company Common
Stock that will result in the Executive owning 2% of the Company's outstanding
Common Stock.
Notwithstanding the foregoing, in the event that the Executive is not the
Chief Executive Officer of the Company at the Effective Date because: (i) of the
Employee's disability (as defined in Section 4); (ii) the Executive's death;
(iii) the Executive is terminated by the Company "without cause;" or (iv) the
Executive's employment is terminated due to the Acquired Companies' Decision,
the Executive (or his estate, heirs, or administrators) will convey to the
Company that number of shares that would leave him a number of shares equal to
0.50% of the Company's outstanding Common Stock on the Effective Date; provided,
however, in the event the Executive is terminated due to the Acquired Companies'
Decision, the Executive shall be left with a portion of the Shares that are
worth at least $500,000 on the date of the IPO, based on the price such Shares
are sold by the Company to the underwriter(s). In the event that the Executive
is not the Chief Executive Officer of the Company at the Effective Date because:
(i) the Executive resigned from his employment hereunder; or (ii) the
Executive's employment was terminated "for cause," the Executive will convey to
the Company all of the Shares in consideration of $300.
Prior to the Effective Date, the Executive shall not transfer, pledge or
otherwise dispose of any Shares without (i) the prior written consent of the
Company, (ii) compliance with applicable securities laws and the exemption
pursuant to which the Executive acquired such Shares, and (iii) compliance with
any existing Stockholders Agreement. In the event that the Executive desires to
transfer, pledge or otherwise dispose of any Shares, the Executive shall
immediately notify the Company in writing. Then, the Company shall have the
right, but not the obligation for a period of 30 days following receipt of such
notice, to purchase the Shares which the Company desires to transfer at a
redemption price of $3.00 per share. The Company shall have the right to assign
to any party or parties its right to purchase Shares from the Executive. The
Executive may not transfer any of the Shares under any circumstances except in
compliance with this Section 7.
For purposes hereof, the percent of the Company's outstanding Common Stock
referred to herein will be computed as if the currently outstanding warrants
giving the holders thereof the right to acquire an aggregate of 50,000 shares of
the Company's Common Stock had been exercised.
8. CONFIDENTIALITY. The Executive acknowledges that he will have access to
confidential information regarding the Company, the Acquired Companies and their
businesses. The Executive agrees that he will not, during or subsequent to his
employment, divulge, furnish, or make accessible to any person (other than with
the prior written consent of the Board) any information or plans of the Company
or any Acquired Business. However, confidential information or plans shall
exclude
information or plans which: (a) at the time of disclosure already is in the
public domain or which, after disclosure, is published or otherwise becomes part
of the public domain through no fault of the Executive; (b) the Executive can
show was in his possession at the time of the Company's disclosure to the
Executive and was not acquired, directly or indirectly, from the Company or from
a third party under an obligation of confidence; or (c) the Executive can show
was received by the Executive after the time of the Company's disclosure from a
third party who did not require the Executive to hold it in confidence.
9. NONCOMPETITION. For two years after termination of the Executive's
employment hereunder, the Executive will not (i) engage directly or indirectly,
alone or as a shareholder, partner, officer, director, employee or consultant of
any other business organization, in any business activities which (a) relate to
the ownership or operation of a business owned or proposed to be owned by
Company (the "Designated Business"), and (b) were either conducted by the
Company prior to the Executive's termination or proposed to be conducted by the
Company at the time of such termination, (ii) divert to any competitor of the
Company in the Designated Business any customer of the Company, or (iii) solicit
or encourage any officer, employee, or consultant of the Company to leave its
employ for employment by or with any competitor of the Company in the Designated
Business.
The parties hereto acknowledge that the Executive's noncompetition
obligations hereunder will not preclude the Executive from owning less than 1%
of the common stock of any publicly traded corporation conducting business
activities in the Designated Business. The Executive will continue to be bound
by the provisions of this Section 9 until their expiration and will not be
entitled to any compensation from the Company with respect thereto. If at any
time the provisions of this Section 9 are determined to be invalid or
unenforceable, by reason of being vague or unreasonable as to area, duration or
scope of activity, this Section 9 will be considered divisible and will become
and be immediately amended to only such area, duration and scope of activity as
will be determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter; and the Executive agrees that this Section
9 as so amended will be valid and binding as though any invalid or unenforceable
provision had not been included herein.
10. REIMBURSEMENT OF EXPENSES. The Company will reimburse the Executive
for all reasonable out-of-pocket costs and expenses incurred by him in
connection with his employment hereunder (the "Reimbursable Expenses"). Such
Reimbursable Expenses shall include the Executive's out-of-pocket costs and
expenses for travel, hotel rooms, long-distance telephone calls, delivery
charges, parking fees and copying charges. On or about the last day of each
month, the Executive will submit an invoice to the Company describing in
reasonable detail the Reimbursable Expenses to be reimbursed. All such invoices
shall include adequate supporting documentation, including receipts where
appropriate. All such invoices will be reimbursed by the Company within 30 days
of the Company's receipt of the invoice.
11. ARBITRATION. Any dispute between the Company and the Executive arising
out of or related to this Agreement or breach thereof shall be settled by
binding arbitration in accordance with the rules of the American Arbitration
Association. The arbitration shall be conducted by three neutral arbitrators who
shall sit in Houston, Texas. Any award made by such arbitrators shall be binding
and conclusive for all purpose thereof, may include injunctive relief, as well
as orders for specific performance and may be entered as a final judgment in any
court of competent jurisdiction. No arbitration arising out of or relating to
this Agreement shall include, by consolidation or joinder or in any other
manner, parties other than the Company or the Executive and other persons
substantially involved in common question of fact or law whose presence is
required if complete relief is to be afforded in arbitration. The cost and
expenses of such arbitration shall be borne in accordance with the determination
of the arbitrators and may include reasonable attorneys' fees. Each party hereby
further agrees that service of process may be made upon it by registered or
certified mail or personal service at the address provided for herein.
12. RETURN OF DOCUMENTS. The Executive agrees that all documents, plans,
records, computer programs, notes, drawings, models and other materials (whether
or not secret or confidential) that he receives, prepares or otherwise acquires
during his employment with the Company, and which pertain to the business or
affairs of the Company or any Acquired Company, are the property of the Company.
The Executive will deliver to the Company all original and all copies of such
materials in his possession or under his control whenever the Company requests.
In the event of his termination of employment with the Company for whatever
reason, the Executive shall produce to the Company for its inspection all such
materials then in his possession or under his control.
13. EQUITABLE RELIEF. In the event of a breach by the Executive of any of
the provisions of Sections 8, 9 or 12, the Company shall, in addition to any
other rights and remedies existing in its favor, be entitled to receive from any
court of law or equity of competent jurisdiction order(s) for specific
performance and injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof.
14. SURVIVAL. The rights and obligations of the parties hereto shall
survive the term of the Executive's employment under this Agreement to the
extent that any performance is required under this Agreement after the
expiration of the Executive's employment.
15. MISCELLANEOUS.
15.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. This Agreement
supersedes all letters, memoranda and term sheets previously prepared in
connection with the negotiations surrounding the execution of this Agreement.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any third party
any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.
15.2. NOTICES. Any notices permitted or required to be given under the
terms of this Agreement shall be in writing and shall be deemed given if
delivered to the party to be notified at the address specified below, by first
class mail, overnight courier or fax with hard copy being sent by first class
mail or overnight courier. Such notice shall be deemed received 24 hours after
it is sent via fax (with receipt confirmed) or overnight courier. Any notice
given in any other manner shall be effective only if and when received.
The Executive: Larry E. Darst
6022 Village Glen Drive #4228
Dallas, Texas 75206
Telephone No.: (214) 265-6934
Facsimile No.: (214) 363-0296
The Company: Nationwide Staffing, Inc.
1100 Louisiana, Suite 3535
Houston, Texas 77002
Attention: Board of Directors
Telephone No.: (713) 651-2833
Facsimile No.: (713) 651-2817
The address of any party may be changed by notice given in the manner provided
in this Section 15.2.
15.3 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO CHOICE OF LAW OR CONFLICTS OF LAWS PRINCIPLES.
15.4 WITHHOLDING. All payments required to be made by the Company under
this Agreement to the Executive will be subject to the withholding of such
amounts, if any, relating to federal, state and local taxes as may be required
by law.
15.5 PRESERVATION OF BUSINESS; FIDUCIARY RESPONSIBILITY. Throughout the
term of the Executive's employment hereunder, the Executive shall use his best
efforts to preserve the business and organization of the Company, to keep
available to the Company the services of its employees and to preserve the
business relations of the Company with suppliers, customers and others. The
Executive shall not commit any act which would injure the Company. In addition,
the Executive shall observe and fulfill proper standards of fiduciary
responsibility attendant upon his service and office.
15.6 SEVERABILITY. If a provision of this Agreement is declared
unenforceable by a court of last resort, such provision shall be enforced to the
greatest extent permitted
by law, and such declaration shall not affect the validity of any other
provision of this Agreement.
15.7 REPRESENTATION BY SEPARATE COUNSEL. The Executive acknowledges that
he has been advised to retain separate legal counsel to represent his interests
under this Agreement and he has done so. Neither Carl L. Norton nor any attorney
affiliated with Norton, Jacobs, Kuhn & McTopy, L.L.P. represented the Executive
in connection herewith.
15.8 AMENDMENTS AND WAIVERS. This Agreement may be amended only by a
written instrument designated as an "amendment" to this Agreement and signed by
the parties hereto, and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument signed by the person specifically
waiving such observance.
15.9 MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
be deemed one instrument.
Executed to be effective as of the 1st day of April, 1997.
THE EXECUTIVE:
______________________________
Larry E. Darst
THE COMPANY:
NATIONWIDE STAFFING, INC.
______________________________
By: Warren L. Williams, President
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement ("Amendment") is between Nationwide
Staffing, Inc., a Delaware corporation (the "Company"), and Larry E. Darst (the
"Executive"), who agree as follows:
1. The Company and the Executive are parties to that certain Employment
Agreement dated as of April 1, 1997 (the "Employment Agreement").
2. The Company and the Executive desire to amend the Employment Agreement
as follows:
(a) The first two paragraphs of Section 7 are amended to read in
their entirety as follows:
"7. STOCK OF EXECUTIVE.
As of April 11, 1997, the Company issued to Executive 100 shares of
Company Common Stock for $3.00 per share. As expressly contemplated in the
Employment Agreement, and for the same $3.00, the Company is issuing to
Executive an additional 60 shares, for a total of 160 shares. Such 160
shares are herein referred to as the "Shares."
The Shares shall not be subject to any repurchase or reduction
obligation of the Executive or right of the Company.
(b) The first sentence of the third paragraph of Section 7 shall
continue in effect. The balance of the third paragraph of Section 7 is
eliminated and of no further force or effect.
(c) The fourth paragraph of Section 7 is eliminated and of no
further force or effect.
3. In all other respects, the terms of the Employment Agreement, as
amended above, remain in full force and effect, and are confirmed by the Company
and the Executive.
Agreed as of the 8th day of September, 1997.
"Company"
NATIONWIDE STAFFING, INC.
By: ____________________
Name: _________________
Title: ________________
"Executive"
By: ____________________
Larry E. Darst
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