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Exhibit 10.2
TEAM AMERICA CORPORATION
Executive Employment Agreement
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THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made
in Columbus, Ohio effective as of October 26, 1999 (the "Effective Date") by and
between TEAM AMERICA CORPORATION, an Ohio corporation (the "Company"), and KEVIN
T. COSTELLO, an individual residing in Dublin, Ohio (the "Executive"), who
hereby agree as hereinafter provided.
ss.1. Definitions. As used herein, the following terms shall
have the meanings set forth below.
"Agreement" shall have the meaning set forth in the
introductory paragraph hereof.
"Base Compensation" shall have the meaning set forth in ss.5
(a).
"Beneficial Owner" shall have the meaning set forth in ss.10
(e)(2).
"Benefit Plans" shall have the meaning set forth in ss.7 (a).
"Board of Directors" means the incumbent directors of the
Company as of the point in time reference thereto is made in this
Agreement.
"Cause" shall have the meaning set form in ss. 10 (b).
"Change in Control" shall have the meaning set forth in ss.10
(e)(2).
"Common Shares" means the common shares, without par value, of
the Company.
"Company" shall have the meaning set forth in the introductory
paragraph of this Agreement, and shall include Subsidiaries where
appropriate.
"Competitive Business" shall have the meaning set forth in
ss.9 (a).
"Confidential Information" shall the meaning set forth in ss.9
c.
"Disability" of the Executive means that, as a result of the
Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from his duties on a full-time basis for six (6)
consecutive months, or for an aggregate of nine (9) months in any
consecutive 12-month period, and a physician selected by the Executive
is of the opinion that (a) he is suffering from "total disability" as
defined in the Company's disability insurance program or policy and (b)
he will qualify for Social Security Disability Payments and (c) within
30 days after written notice thereof is given by the Company to the
Executive (which notice may be given at any time after the end of such
six (6) or 12-month periods) the Executive shall not have returned to
the performance of his duties on a full-time basis. (If the Executive
is prevented from performing his duties because of Disability, upon
request by the Company the Executive shall submit to an examination by
a physician selected by the Company, at
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the Company's expense, and the Executive shall also authorize his
personal physician to disclose to the selected physician all of the
Executive's medial records.)
"Effective Date" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Employment Period" means the period commencing on the
Effective Date and ending on the Employment Termination Date.
Employment Termination Date" means the date the Employment
Period terminates as provided in ss.10.
"Executive" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Fiscal Year" means the fiscal year of the Company.
"Good Reason" shall have the meaning set forth in ss.10 (e).
"Group" shall have the meaning set forth in ss.10 (e)(2).
"Incentive Bonus Compensation" shall have the meaning set
forth in ss.5 (b).
"Notice of Termination" shall have the meaning set forth in
ss.10 (a) (1).
"Part of a group" shall have the meaning set forth in ss.10
(e)(2).
"Person" shall have the meaning set forth in ss.10 (e)(2).
"Restricted Period" shall have the meaning set forth in ss.9
(a).
"Sales Commissions" shall have the meaning set forth in ss.5
(c).
"Scheduled Employment Period" shall have the meaning set forth
in ss.2.
"Scheduled Employment Termination Date" means the last day of
the Scheduled Employment Period.
"Severance Payment" shall have the meaning set forth inss.10
(f) (1) (c)
"Subsidiaries" means wholly-owned subsidiaries of the Company.
ss.2. Employment and Term. The Company hereby employs the
Executive, and the Executive hereby accepts such employment by the
Company, for the purposes and upon the terms and conditions contained
in this Agreement. The term of such employment shall be for a period
(the :Scheduled Employment Period") of three (3) years commencing on
the Effective Date and, unless terminated in
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accordance with the provisions of this Agreement, on the first day of
each month during the term hereof, the remaining term of this Agreement
shall be automatically extended for one additional month.
ss.3. Employment Capacity and Duties. The Executive shall be
employed throughout the Employment Period as the President and Chief
Executive Officer of the Company. The Executive shall have the duties
and responsibilities incumbent with the positions of President and
Chief Executive Officer of the Company. Accordingly, and not by way of
limitation, as President and Chief Executive Officer of the Company,
the Executive shall superintend and manage the business of the Company
and coordinate and supervise the work of its other officers and employ,
direct, fix the compensation of, discipline and discharge its
personnel, employ agents, professional advisors and consultants and
perform all functions of a general manager of the Company's business.
The Company agrees that it will not, without the Executive's written
consent, relocate its principal executive offices to a location outside
the greater Columbus, Ohio area or require the Executive to be based
anywhere other than the Company's principal executive offices, except
for required travel on the Company's business to an extent
substantially consistent with present travel obligations.
ss.4. Executive Performance Covenants. The Executive accepts
the employment described in ss.3 and agrees to devote his full working
time and efforts (except for absences due to illness and appropriate
vacations) to the business and affairs of the Company and the
performance of the aforesaid duties and responsibilities. Nothing in
this Agreement, however, shall preclude the Executive from devoting a
reasonable amount of his time and efforts to civic, community,
charitable, professional and trade association affairs and matters.
ss.5. Compensation. The Company shall pay to the Executive,
for his services hereunder, the compensation hereinafter provided in
thisss.5. Such compensation shall be paid to the Executive at the times
and in the manner as provided below.
(a) Base Compensation. The Executive shall be paid "Base
compensation" for each Fiscal Year at an annual rate
of $215,000 in weekly equal installments. The Base
Compensation may be increased (but may not be
decreased) at any time or from time to time by action
of the Board of Directors. The Base compensation
shall be pro-rated for any Fiscal Year hereunder
which is less than a full Fiscal Year. Any increase
in the Base Compensation shall not serve to limit or
reduce any other obligation of the Company hereunder.
(b) Incentive Bonus Compensation. The Executive shall be
paid "Incentive Bonus Compensation" for each Fiscal
Year in an amount to be determined by the Company's
Board of Directors based upon such factors as the
Board of Directors in its discretion shall deem
appropriate, including, without limitation, the
Company's results of operations and financial
condition and the Executive's performance during the
Fiscal Year.
(c) Sales commissions. The Executive shall be paid "Sales
Commissions" monthly in arrears in an amount equal to
two and one-half per cent (2 1/2%) of the Company's
fee income from its offices in the Eastern region.
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ss.6. Reimbursement of Expenses.The Company shall reimburse
the Executive for his reasonable expenses incurred in providing
services to the Company, including expenses for travel, entertainment
and similar items, in accordance with the Company's reimbursement
policies as determined from time to time by the Board of Directors. If
there is a dispute as to the eligibility of an expense for
reimbursement in accordance with the company's reimbursement policies,
then such expense shall be determined to be reimbursable if approved by
a majority of the Board of Directors.
ss.7. Employee Benefits: Vacations; Retirement. During the
Employment Period, the Executive shall receive the benefits and enjoy
the perquisites described below:
(a) Benefit Plans. The Company shall continue in
effect any perquisite, benefit or compensation plan (in addition to the
compensation provided for in ss.5) including its 401(k) plan, medical
insurance plan, life insurance plan, health and accident plan and
disability plan in which the Executive is currently participating, or
to maintain plans providing substantially similar benefits
(collectively referred to as the "Benefit Plans"); provided, however,
that the Company may make modifications in the Benefit Plans so long as
such modifications (I) are generally applicable to all salaried
employees of the Company and (ii) do not discriminate against the
Executive or other highly-compensated employees of the Company.
(b) Vacations. The Executive shall be entitled in
each Fiscal Year to a vacation of six weeks (30 working days), during
which time his compensation shall be paid in full, and such holidays
and other non-working days as are consistent with the policies of the
Company for executives generally.
(c) Retirement. The Company agrees to maintain one or
more life insurance policies on the life of the Executive in an
aggregate amount sufficient to pay the Executive's heirs at least
$110,000 per year for 15 years in the event that the Executive dies
prior to his retirement. No such benefit will be paid in the event that
the Executive dies after his retirement. In addition, upon the
Executive's retirement on or after his sixty-fifth birthday, the
Company shall pay the Executive an amount calculated to be equal to the
maximum loan available from such insurance policy which will not cause
such insurance policy to lapse prior to the Executive's life
expectancy. Thereafter, such amount shall be recalculated on an annual
basis and the Company will pay the Executive any increase in such
amount.
(d) Country Club Membership. The Company agrees to
maintain a country club membership for the Executive at The Country
Club at Muirfield Village or at such other country club as the Company
and the Executive shall mutually agree. Upon termination of this
Agreement for any reason, the Company shall immediately assign and
transfer the membership to the Executive.
(e) Company Car. The Company agrees to provide the
Executive with the use of a leased luxury car of a current year model
at the time the lease was entered into, and, upon the expiration of any
such lease, to enter into a new lease for a comparable model and year
as the expiring lease.
(f) Time Share Condominium The Company agrees to
provide the Executive with use of its time share condominium located in
Florida for a period of two (2) weeks each year.
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ss.8 Company Life Insurance. At any time during the Employment
Period, the Company may, in its discretion, apply for and procure as
owner and for its own benefit, life and/or disability insurance on the
Executive, in such amounts and in such form or forms as the Company may
determine. The Executive shall have no right to any interest in any
such policy or policies, but he shall, at the request of the Company,
submit to such medical examinations, supply such information and
execute such applications, instruments and other documents as
reasonably may be required by the insurance company or companies to
whom the Company has applied for such insurance. All the costs and
expenses of such medical examination shall be paid by the Company. The
Executive shall be entitled to a copy of all reports and other
information provided to the company in connection with any examination
referred to in this ss.8. Any failure to pass any such medical
examination or to meet any health criteria or medical standard shall
not of itself be cause for termination of the Employment Period by the
Company.
ss.9. Certain Company Protection Provisions. The below
provisions apply for the protection of the Company.
(a) Non-competition. During the Restricted Period (as
hereinafter defined), the Executive shall not directly or indirectly
compete with the Company by owning, managing, controlling or
participating in the ownership, management or control of, or be
employed or engaged by or otherwise affiliated or associated with, any
Competitive Business in any state from which the Company derives more
than 10% or more of its total gross revenue at any time during the
Employment Period. Ownership of not more than 10% of the stock of any
publicly traded company shall not be deemed a violation of this
provision. As used herein, the term "Restricted Period" means the
Employment Period and a period of one (1) year thereafter. As used
herein, a "Competitive Business" is any other corporation, partnership,
proprietorship, firm, association or other business entity which is
engaged in the business of arranging with one or more client employers,
under written contract, to employ all or part of the work force for any
such client employer and to place those workers on a permanent basis
with the client employer.
(b) Non-Interference.During the Restricted Period, the
Executive shall not induce or solicit any employee of the Company or
any person doing business with the Company to terminate his or her
employment or business relationship with the Company or otherwise
interfere with any such relationship.
(c) Confidentiality. The Executive agrees and acknowledges
that, by reason of the nature of his duties as an officer and employee,
he will have or may have access to and become informed of confidential
and secret information which is a competitive asset of the Company
("Confidential Information"), including without limitation any lists of
client organizations or worksite employees, financial statistics,
research data or any other statistics and plans contained in profit
plans, capital plans, critical issue plans, strategic plans or
marketing or operation plans or other trade secrets of the Company and
any of the foregoing which belong to any person or company but to which
the Executive has had access by reason of his employment relationship
with the Company. The Executive agrees faithfully to keep in strict
confidence, and not, either directly or indirectly, to make known,
divulge, reveal, furnish, make available or use (except for use in the
regular course of his employment duties) any such Confidential
Information. The Executive acknowledges that all manuals, instruction
books, price lists, information and records and other information and
aids relating to the Company's
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business, and any and all other documents containing Confidential
Information furnished to the Executive by the Company or otherwise
acquired or developed by the Executive, shall at all times be the
property of the Company. Upon termination of the Employment Period, the
Executive shall return to the Company any such property or documents
which are in his possession, custody or control, but his obligation of
confidentiality shall survive such termination of the Employment Period
until and unless any such Confidential Information shall have become,
through no fault of the Executive, generally known to the trade. The
obligations of the Executive under this subsection are in addition to,
and not in limitation or preemption of, all other obligations of
confidentiality which the Executive may have to the Company under
general legal or equitable principles.
(d) Remedies. It is expressly agreed by the Executive and the
Company that these provisions are reasonable for purposes of preserving
for the Company its business, goodwill and proprietary information. It
is also agreed that if any provision is found by a court having
jurisdiction to be unreasonable because of scope, area or time, then
that provision shall be amended to correspond in scope, area and time
to that considered reasonable by a court and as amended shall be
enforced and the remaining provisions shall remain effective. In the
event of any breach of these provisions by the Executive, the parties
recognize and acknowledge that a remedy at law will be inadequate and
the Company may suffer irreparable injury. The Executive acknowledges
that the services to be rendered by him are of a character giving them
peculiar value, the loss of which cannot be adequately compensated for
in damages; accordingly, the Executive consents to injunctive and other
appropriate equitable relief upon the institution of proceedings
therefor by the Company in order to protect the Company's rights. Such
relief shall be in addition to any other relief to which the company
may be entitled at law or in equity.
(e) Termination. If the Executive's employment is terminated
by the Company other than by reason for cause pursuant to ss.10 (b) or
of his disability pursuant to ss.10(c), death pursuant to ss.10 (d) or
voluntary resignation pursuant to ss.10(e) (2), the provisions of
ss.9(a) shall also terminate.
ss.10. TERMINATION OF EMPLOYMENT.
(a) Notice of Termination: Employment Termination Date.
(1) Any termination of the Executive's
employment by the Company or the Executive
shall be communicated by written Notice of
Termination to the other party thereto. For
purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall
indicate the specific termination provision
in this Agreement relied upon and shall set
forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination under the provision so
indicated. Furthermore, either the Executive
or the Company may give a Notice of
Termination to the other party for the
purpose of terminating this Agreement, as
such, without terminating the Executive's
employment with the Company, which Notice of
Termination shall have the effect of
terminating this Agreement on the Scheduled
Employment Termination Date as in effect on
the date of giving such Notice of
Termination. From and after the giving of a
Notice of Termination pursuant to thisss.10
(a) (1) through the Scheduled Termination
Date, all of the terms and provisions of
this Agreement shall remain in full force
and effect.
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(2) "Employment Termination Date" shall mean the
date on which the Employment Period and the
Executive's right and obligation to perform
employment services for the Company shall
terminate effective upon the first to occur
of the following, it being understood that
in no event may the Employment Period be
terminated other than as the result of one
of the following events:
(A) If the Executive's employment is terminated
for Disability, the date which is thirty
(30) days after Notice of Termination is
given (provided that the Executive shall not
have returned to the performance of his
duties on a full-time basis during such
thirty (30) day period):
(B) If the Executive's employment is terminated
by the Executive for Good Reason or
otherwise by voluntary action of the
Executive (see ss.10 (e), the date specified
in the Notice of Termination, which date
(except with the written consent of the
Company to the contrary shall be not more
than sixty (60) days after the date that the
Notice of Termination is given;
(C) The death of the Executive;
(D) If the Executive's employment is terminated
by the Company for Cause (seess.10 (b) (1)),
the date on which a Notice of Termination is
given; provided that if within thirty (30)
days after any Notice of Termination is
given the party receiving such notice of
Termination notifies the other party that a
dispute exists concerning the termination,
the Employment Termination Date shall be the
date on which the dispute is finally
determined, either by mutual written
agreement of the parties, by a binding and
final arbitration award or by a final
judgment, order or decree of a court of
competent jurisdiction (the time for appeal
therefrom having expired and no appeal
having been perfected); and
(E) If the Executive's employment is terminated
by the Company other than for Cause,
Disability or death of the Executive, the
date specified in the Notice of Termination
which date (except with the written consent
of the Executive to the contrary) shall be
at least three (3) years after the date that
the Notice of Termination is given.
(b) Termination for Cause.
(1) The Company may terminate the Executive's
employment and the Employment Period for
Cause. For the purposes of this Agreement,
the Company shall have "Cause" to terminate
employment hereunder only (A) if termination
shall have been the result of an act or acts
of misconduct materially injurious to the
Company, monetarily or otherwise, or (B)
upon the wilful and continued failure by the
Executive substantially to perform his
duties with the Company (other than any such
failure resulting from incapacity due to
mental or physical illness) after a demand
in writing for substantial performance is
delivered by the Board which
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demand specifically identifies the manner in
which the Board believes that the Executive
has not substantially performed his duties,
and such failure results in demonstrably
material injury to the Company. The
Executive's employment shall in no event be
considered to have been terminated by the
Company for Cause if such termination took
place as the result of (I) bad judgment or
negligence, or (ii) any act or omission
without intent of gaining therefrom directly
or indirectly a profit to which the
Executive was not legally entitled, or (iii)
any act or omission believed in good faith
to have been in or not opposed to the
interests of the Company, or (iv) any act or
omission in respect of which a determination
is made that the Executive met the
applicable standard of conduct prescribed
for indemnification or reimbursement or
payment of expenses under the Amended Code
of Regulations of the Company or the laws of
the State of Ohio, in each case, as in
effect at the time of such act or omission.
The Executive shall not be deemed to have
been terminated for Cause unless and until
there shall have been delivered to him a
copy of a resolution duly adopted by the
affirmative vote of not less than three
quarters of the entire membership of the
Board of Directors at a meeting of the Board
of Directors called and held for the purpose
(after not less than 30 days' written notice
to the Executive and an opportunity for him,
together with his counsel, to be heard
before the Board of Directors, such notice
of meeting to indicate the specific
termination provision of this Agreement
relied upon and specify in reasonable detail
the facts and circumstances claimed to
provide a basis for termination under the
provision so indicated), finding that in the
good faith opinion of the Board of Directors
the Executive was guilty of conduct set
forth above in clauses (A) or (B) of the
second sentence of this paragraph and
specifying the particulars thereof in
detail.
(2) If the Executive's employment shall be
terminated for Cause, the Company shall pay
the Executive within ten (10) days of such
termination, his unpaid Sales commissions
and Base Compensation through the Employment
Termination Date at the rate in effect at
the time Notice of Termination is given.
(c) Termination for Disability. The Company may terminate the
Executive's employment because of the Disability of the Executive and
thereafter shall pay to the Executive (or his successors) his unpaid
Sales Commissions and Base Compensation through the sixth full month
following the Employment Termination Date at the then effective rate.
In addition, the Executive shall be entitled to the amounts and
benefits specified in Paragraphs (2) and (3) of ss.10 (f) of this
Agreement.
(d) Termination Upon Executive's Death.In the event of the Executive's
death, the Company shall pay to the Executive's estate any unpaid
amount of Sales Commissions and Base Compensation through the date of
death at the then effective rate.
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(e) Termination of Employment by the Executive.
(1) The Executive may terminate his employment for Good
Reason and receive the payments and benefits
specified in ss.10 (f) in the same manner as if the
Company had terminated his employment other than
pursuant to ss.10 (b), (c) or (d). For purposes of
this Agreement, "Good Reason" will exist if any one
or more of the following occur:
(A) Failure by the Company to honor any of its
obligations under this Agreement, including, without
limitation, its obligations underss.3 (Employment
Capacity and Duties).ss.4 (Executive Performance
Covenants),ss.5 (Compensation).ss.6 (Reimbursement of
expenses),ss.7 (Employee Benefits, Vacations, Life
Insurance),ss.11 (Indemnification) andss.12
(Successors and Assigns); or
(B) Any purported termination by the Company of
Executive's employment that is not effected pursuant
to a Notice of Termination satisfying the
requirements of ss.10 (a) above and, for purposes of
this Agreement, no such purported termination shall
be effective.
(2) The Executive shall have the right voluntarily to
terminate his employment if there is a Change in
Control of the Company.
For purposes of Section 10 (e)(2), a "Change in
Control" of the Company shall be deemed to have
occurred as of the first day that any one or more of
the following conditions shall have been satisfied:
(A) Any Person (other than a Person in control of the
Company as of the Effective date, or other than a
trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or a company
owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as
their ownership of voting securities of the Company)
becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing a majority
of the combined voting power of the Company's then
outstanding securities;
(B) The stockholders of the Company approve: (i) a plan
of complete liquidation of the Company; or (ii) an
agreement for the sale or disposition of all or
substantially all the Company's assets; or (iii) a
merger, consolidation, or reorganization of the
Company with or involving any other corporation,
other than a merger, consolidation, or reorganization
that would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) at least a
majority of the combined voting power of the voting
securities of the Company (or such surviving entity)
outstanding immediately after such merger,
consolidation, or reorganization; or
(C) During any period of two consecutive years during the
term of this Agreement, individuals who at the
beginning of such period constitute the Company's
Board of Directors cease for any reason to constitute
at least a majority thereof, unless the election of
each director who was not a director at the beginning
of such period has been approved
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in advance by directors representing at least
two-thirds of the directors then in office who were
directors at the beginning of the period.
However, in no event shall a "Change in Control" be deemed to
have occurred, with respect to the Executive, if the Executive
is part of a purchasing group which consummates the Change in
Control transaction. The Executive shall be deemed "part of a
purchasing group" for purposes of the preceding sentence if
the Executive is an equity participant or has been identified
as a potential equity participant in the purchasing company or
group except for: (y) passive ownership of less than three
percent (3%) of the stock of the purchasing company; or (z)
ownership of equity participation in the purchasing company or
group which is otherwise not significant, as determined prior
to the Change in Control by a majority of the nonemployee
continuing directors.
For purposes of this definition of Change in Control, "Person"
shall have the meaning ascribed to such term in Section 3
(a)(9) of the Securities Exchange Act of 1934, and used in
Section 13 (d) and 14 (d) thereof, including a "group" as
defined in Section 13 (d) thereof, and "Beneficial Owner"
shall have the meaning ascribed to such term in Rule 13d-3 of
the General Rules and Regulations under the Securities
Exchange Act of 1934.
(f) Compensation Upon Certain Terminations.
(1) If the Company shall terminate the Executive's
employment other than pursuant to ss.10 (b), (c) or
(d), or if the Executive shall terminate his
employment for Good Reason pursuant to ss.10 (e)(1)
(but not a termination voluntarily by the Executive
other than for Good Reason under ss.10 (e)(2)), then:
(A) The Company shall continue to pay the Executive his
Sales commissions and Base compensation through the
Scheduled Employment Termination Date at the then
effective rate;
(B) The Company shall also pay all legal fees and
expenses incurred as a result of such termination
(including all such fees and expenses, if any,
incurred in contesting or disputing any such
termination, in seeking to obtain or enforce any
right or benefit provided by this Agreement, or in
interpreting this Agreement). The Company agrees, in
the event the Executive desires to relocate within
one (1) year after the Date of Termination, to pay
for (or reimburse) all reasonable moving expenses
incurred relating to a change of principal residence
in connection with such relocation and to indemnify
the Executive in connection with any loss he may
sustain in the sale of his primary residence;
(C) The Company shall also pay the Executive a "Severance
Payment" equal to $750,000, which amount shall be
paid to him in one lump sum within 30 days of the
Scheduled Employment Termination Date; and
(D) The Executive shall be under no obligation to seek
other employment and there shall be no offset against
any amounts due the Executive under this Agreement on
account of any
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remuneration attributable to any subsequent
employment that the Executive may obtain (any amounts
due under this ss.10 (f) are in the nature of
severance payments, or liquidated damages, or both,
and are not in the nature of a penalty).
(2) Unless the Executive is terminated for Cause, the
Company shall maintain in fullforce and effect, for
the Executive's continued benefit through the
Scheduled Employment Termination Date, all active and
retired Benefit Plans and other benefit programs or
arrangements in which he was entitled to participate
immediately prior to the Scheduled Employment
Terminate date (except as specified inss.7 (a) of
this Agreement), provided that continued
participation is possible under the general terms and
provisions of such plans and programs. In the event
that participation in any such plan or program is
barred, the company shall arrange to provide him with
benefits substantially similar to those which he is
entitled to receive under such plans and programs.
The Company shall transfer to the Executive any and
all life insurance and disability insurance policies,
provided, however, that the Executive assumes the
premiums on such insurance policies.
(3) Unless the Executive is terminated for Cause, the
Company shall allow the Executive, at the Company's
expense, to continue to utilize the services of
Arthur Andersen LLP and/or another accountant or
attorney of his choice for assistance in enforcing
this Agreement and preparation of his tax returns for
the year following termination of employment.
(4) In addition to the Executives rights under ss.10
(e)(2), if a "Change in Control" shall have occurred,
the Executive shall be entitled to the benefits
described below if his employment is terminated
following a Change in Control for Cause:
(A) The Company shall maintain for the
Executive's benefit until the later of (i)
24 months after termination of employment
following a Change in Control, or (ii) the
Scheduled Employment Termination Date, all
life insurance, medical, health and
accident, and disability plans or programs
and other perquisites listed inss.7 in which
the Executive shall have been entitled to
participate prior to termination of
employment following a Change in Control,
provided the Executive continued
participation is permitted under the general
terms of such plans and programs after the
Change in Control. In the event the
Executive's participation in any such plan
or program is not permitted, the company
will provide directly the benefits to which
the Executive would be entitled under such
plans and programs.
(B) All outstanding stock options issued to the
Executive shall become 100% vested and
exercisable in accordance with such
governing stock option agreements and plans.
(g) Compensation Upon Disability. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to
physical or mental illness, he shall continue to receive
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his full Sales Commissions and Base Compensation at the rate then in
effect all until this agreement is terminated pursuant to ss.10 (c)
hereof. Thereafter, his benefits shall be determined in accordance with
the Company's Benefit Plans.
ss.11. Certain Tax Matters
(a) Optional Right of Partial Disclaimer.
It is recognized that under certain circumstances:
(1) Payments or benefits provided to the Executive under this
Agreement and/or under the Company" 1996 Incentive Stock Plan
might give rise to an ""excess parachute payment: within the
meaning of Section 280G of the Internal Revenue Code of 1986,
or any successor provision thereof.
(2) It might be beneficial to the Executive to disclaim some
portion of the payment or benefit in order to avoid such
"excess parachute payment" and thereby avoid the imposition of
an excise tax resulting therefrom.
(3) Under such circumstances it would not be to the
disadvantage of the Company to permit the Executive to
disclaim any such payment or benefit in order to avoid the
"excess parachute payment" and the excise tax resulting
therefrom.
Accordingly, the Executive may, at the Executive's option,
exerciseable at any time or from time to time, disclaim any entitlement to any
portion of the payment or benefits arising under this Agreement which would
constitute "excess parachute payments," and it shall be the Executive's choice
as to which payments or benefits shall be so surrendered, if and to the extent
that the Executive exercises such option, so as to avoid "excess parachute
payments."
(b) Additional Payments.
(1) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined
(as hereafter provided) that any payment or
distribution to or for the executive's benefit,
whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement
(including without limitation the 1996 Incentive
Stock Plan or other similar agreement)or similar
right (a "Payment"), would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue
Code of 1986 (or any successor provision thereto), or
any interest or penalties with respect to such excise
tax (such excise tax, together with any such interest
and penalties, are hereafter collectively referred to
as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment or payments
(a "Gross-Up Payment") in an amount such that, after
payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the
Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
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(2) Subject to the provisions ofss.11 (b) (5), all
determinations required to be made under this
Sectionss.11 (b), including whether an Excise Tax is
payable by the Executive, the amount of such Excise
Tax, whether a Gross-Up Payment is required, and the
amount of such Gross-Up Payment, shall be made by
Arthur Andersen LLP or another nationally recognized
accounting firm or law firm selected by the Executive
in the Executive's sole discretion (the "Firm"). The
Executive agrees to direct the Firm to submit its
determination and detailed supporting calculations to
both the Executive and the Company as promptly as
practicable. If the Firm determines that any Excise
Tax is payable by the Executive and that a Gross-Up
Payment is required, then the Company shall pay the
Executive the required Gross-Up Payment within ten
business days after receipt of such determination and
calculations. If the Firm determines that no Excise
Tax is payable by the Executive, then it shall, at
the same time as it makes such determination, furnish
the Executive with an opinion that the Executive has
substantial authority not to report any Excise Tax on
the Executive's federal income tax return. Any
determination by the Firm as to the amount of the
Gross-Up Payment shall be binding upon the Executive
and the Company. As a result of the uncertainty in
the application of Section 4999 of the Internal
Revenue Code of 1986 (or any successor provision
thereto) at the time of the initial determination by
the Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company
should have been made (an "Underpayment"). In the
event that the Company exhausts its remedies pursuant
toss.11 (b)(5) hereof and the Executive thereafter is
required to make a payment of any Excise Tax, the
Executive may direct the Firm to determine the amount
of the Underpayment (if any) that has occurred and to
submit its determination and detailed supporting
calculations to both the Executive and the Company as
promptly as possible. Any such Underpayment shall be
promptly paid by the Company to the Executive, or for
the executive's benefit, within ten business days
after receipt of such determination and calculations.
(3) The Executive and the Company shall each provide the
Firm access to and copies of any books, records and
documents in the possession of the Company or the
Executive as the case may be, reasonably requested by
the Firm, and otherwise cooperate with the Firm in
connection with the preparation and issuance of the
determination contemplated by ss.11 (b) (2) hereof.
(4) The fees and expenses of the Firm for its services in
connection with the determinations and calculations
contemplated by ss.11 (b) (2) hereof shall be borne
by the Company. If such fees and expenses are
initially paid by the Executive, then the Company
shall reimburse the Executive the full amount of such
fees and expenses within ten business days after
receive from the Executive of a statement therefor
and reasonable evidence of the Executive's payment
thereof.
(5) The Executive agrees to notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company
of a Gross-Up Payment. Such notification shall be
given as promptly as practicable but no later than
ten business days after the Executive actually
receives notice of such claim. The executive agrees
to further apprise the Company of the nature of such
claim and the date on which such claim is requested
to be paid (in each case, to the extent known by the
Executive). The Executive agrees not to pay such
claim prior to the earlier of (a) the expiration of
the 30-
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calendar-day period following the date on which the
Executive gives such notice to the Company and (b)
the date that any payment with respect to such claim
is due. If the Company notifies the Executive in
writing at least five (5) business days prior to the
expiration of such period that it desires to contest
such claim, then the Executive agrees to:
(a) provide the Company with any written records
or documents in the Executive's possession
relating to such claim reasonably requested
by the Company;
(b) take such action in connection with
contesting such claim as the Company shall
reasonably request in writing from time to
time, including without limitation accepting
legal representation with respect to such
claim by an attorney competent in respect of
the subject matter and reasonably selected
by the Company;
(c) cooperate with the Company in good faith in
order effectively to contest such claim; and
(d) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall
bear and pay directly all costs and expenses
(including interest and penalties) incurred
in connection with such contest and shall
indemnify and hold the Executive harmless,
on an after-tax basis, from and against any
Excise Tax or income tax, including interest
and penalties with respect thereto, imposed
as a result of such representation and
payment of costs and expenses. Without
limiting the foregoing provisions of
thisss.11 (b) (5), the Company shall control
all proceedings taken in connection with the
contest of any claim contemplated by
thisss.11 (b) (5) and, at its sole option,
may pursue or forego any and all
administrative appeals, proceedings,
hearings and conferences with the taxing
authority and all in respect of such claim
(provided, however, that the Executive may
participate therein at the Executive's own
cost and expense) and may, at its option,
either direct the Executive to pay the tax
claimed and sue for a refund or contest the
claim in any permissible manner, and the
Executive agrees to prosecute such contest
to a determination before any administrative
tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the
Company shall determine; provided, however,
that if the Company directs the Executive to
pay the tax claimed and sue for a refund,
the Company shall advance the amount of such
payment to the Executive on an interest-free
basis and shall indemnify and hold the
Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including
interest or penalties with respect thereto,
imposed with respect to such advance; and
provided further, however, that any
extension of the statue of limitations
relating to payment of taxes for the
Executive's taxable year with respect to
which the contested amount is claimed to be
due is limited solely to such contested
amount. Furthermore, the Company's control
of any such contested claim shall be limited
to issues with respect to which a Gross-Up
Payment would be payable hereunder and the
Executive shall be entitled to settle or
contest, as the case may be, any other issue
raised by the Internal Revenue Service or
any other taxing authority.
(6) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to ss.11 (b) (5) hereof, the
Executive receives any refund with respect to such claim, the
Executive agrees (subject to the Company's complying with the
requirements of ss.11 (b) (5) hereof) to
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promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after any
taxes applicable thereto). If, after the Executive's receipt
of an amount advanced by the Company pursuant to ss.11 (b) (5)
hereof, a determination is made that the Executive is not
entitled to any refund with respect to such claim and the
Company does not notify the executive in writing of its intent
to contest such denial of refund prior to the expiration of 30
calendar days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid
pursuant to this ss.11 (b).
ss.12 Indemnification. As an employee, officer and director of the
Company, the Executive shall be indemnified against all liabilities, damages,
fines, costs and expenses by the Company in accordance with the indemnification
provisions of the Company's Amended Code of Regulations as in effect on the date
hereof, and otherwise to the fullest extent to which employees, officers and
directors of a corporation organized under the laws of Ohio may be indemnified
pursuant to Section 1701.13(E) of the Ohio Revised Code, as the same may be
amended from time to time (or any subsequent statue of similar tenor and
effect), subject to the terms and conditions of such statute.
ss.13 Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Columbus, Ohio in accordance with the rules of the American Arbitration
Association then in effect; provided that all arbitration expenses shall be
borne by the Company. Notwithstanding the pendency of any dispute or controversy
concerning termination or the effects thereof, the Company will continue to pay
the Executive his full compensation in effect immediately before any Notice of
Termination giving rise to the dispute was given (including, but not limited to,
Base Salary, Sales Commissions and Incentive Bonus Compensation) and continue
him as a participant in all compensation, benefit and insurance plans in which
he was then participating, until the dispute is finally resolved. Judgment may
be entered on the arbitrators' award in any court having jurisdiction; provided,
however, that the Executive shall be entitled to seek specific performance of
his right to be paid until the Employment Termination Date during the pendency
of any dispute or controversy arising under or in connection with this
Agreement.
ss.14. Successors and Assigns. Except as hereinafter expressly
provided, the agreements, covenants, terms and provisions of this Agreement
shall bind the respective heirs, executors, administrators, successors and
assigns of the parties. Specifically, and not by way of limitation of the
foregoing, the Executive shall be bound by the terms and conditions of this
Agreement to any successor assignee of the Company's rights and obligations
hereunder as a result of any merger, consolidation or sale or lease of all or
substantially all of the Company's business and assets. If any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company fails,
concurrently with the effectiveness of any such succession, to agree in writing
in form and substance reasonably satisfactory to the Executive expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place, then the Executive shall have the right, effected by notice to such
successor not later than ninety (90) days after the effectiveness of such
succession, to terminate the Employment Period under ss.10 (e) as though such
failure was an uncured breach by the Company of a material covenant or agreement
of the Company contained in this Agreement.
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If the executive should die while any amounts are payable to him
hereunder, or if by reason of his death payments are to be made to him
hereunder, then this Agreement shall inure to the benefit of and be enforceable
by the Executive's executors, administrators, heirs, distributees, devisees and
legatees and all amounts payable hereunder shall then be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee or other
designee or, if there is no such designee, to his estate.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except as hereinbefore provided in this
ss.14. Without limiting the foregoing, the Executive's right to receive payments
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by his will or by the
laws of descent or distribution, and in the event of any attempted assignment or
transfer contrary to this paragraph the Company shall have no liability to pay
to the purported assignee or transferee any amount so attempted to be assigned
or transferred.
As used in this Agreement, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in the first
paragraph of this ss.14 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
ss.15 Notices. Any notice or other communication required or desired to
be given hereunder shall be in writing and shall be deemed sufficiently given
when personally delivered or when mailed by first class certified mail, return
receipt requested and postage prepaid, addressed to the parties at their
respective addresses set forth under their respective signatures below or such
other person or addresses as shall be given by notice of any party.
ss.16. Waiver: Remedies Cumulative. No waiver of any right or option
hereunder by any party shall operate as a waiver of any other right or option,
or the same right or option as respects any subsequent occasion for its
exercise, or of any legal remedy. No waiver by any party of any breach of this
Agreement or of any agreement or covenant contained herein shall be held to
constitute a waiver of any other breach or a continuation of the same breach.
All remedies provided by this Agreement are in addition to all other remedies by
it or the law provided.
ss.17. Governing Law: Severability. This Agreement is made and is
expected to be performed in Ohio, and the various terms, provisions, covenants
and agreements, and the performance thereof, shall be construed, interpreted and
enforced under and with reference to the laws of the State of Ohio. It is the
intention of the Company and the Executive to comply fully with all laws and
matters of public policy relating to employment agreements and restrictive
covenants, and this Agreement shall be construed consistently with such laws and
public policy to the extent possible. If and to the extent any one or more
covenants, agreements, terms and provisions of this Agreement or any portion or
portions thereof shall be held invalid or unenforceable by a court of competent
jurisdiction, then such covenants, agreements, terms and provisions (or portions
thereof) shall be deemed separable from the remaining covenants, agreements,
terms and provisions of this Agreement and such holding shall in no way affect
the validity or enforceability of any of the other covenants, agreements, terms
and provisions hereof.
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ss.18. Miscellaneous. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be modified, changed or amended except in a writing
signed by each of the parties hereto. This Agreement may be signed in multiple
counterparts, each of which shall be deemed an original hereof. The captions of
the several sections and subsections of this Agreement are not a part of the
context hereof, are inserted only for convenience in locating such sections and
subsections and shall be ignored in construing this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed
multiple counterparts of this Agreement.
COMPANY: EXECUTIVE:
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TEAM AMERICA CORPORATION
110 E. Wilson Bridge Road
Worthington, Ohio 43085
By: /s/ William W. Johnston /s/ Kevin T. Costello
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William W. Johnston KEVIN T. COSTELLO, individually
Chairman of the Board of Directors Address: 5352 Dunniker Park Drive
Dublin, Ohio 43017
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