Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 4th day of April 2005.
BETWEEN:
Stephen Lerch
of the City of Weston, Florida
(hereinafter referred to as the "Employee")
AND:
WORKSTREAM INC.,
a corporation incorporated under the laws of Canada
(hereinafter referred to as the "Employer")
WHEREAS:
A. The Employer wishes to employ the Employee and the Employee wishes to
serve the Employer upon the terms and subject to the conditions herein
contained.
NOW THEREFORE in consideration of the premises and the mutual covenants herein
and other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged by each of the parties, the parties hereto covenant and
agree as follows:
1. DEFINITIONS
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In this agreement, unless the context otherwise specifies or requires, the
following terms shall have the following meanings:
1.1 "Agreement," "hereto," "herein," "hereof," "hereunder" and
similar expressions refer to this Agreement and not to any
particular section or any particular portion of this Agreement
and includes all schedules attached to this Agreement;
1.2 "Executive Vice President/COO/CFO" shall mean the Executive
Vice President, Chief Operation Officer and Chief Financial
Officer of the Company;
1.3 "Court" shall mean a Court of competent jurisdiction;
1.4 "Parties" shall mean the Parties to this Agreement and "Party"
shall mean one of the Parties to this Agreement.
2. EMPLOYMENT
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2.1 The Employer agrees to employ the Employee and the Employee
agrees to act as Executive Vice President or in such other
employment as the Employer and the Employee may from time to
time agree and the Employee agrees to serve the Employer upon
the terms and subject to the conditions set out in this
Agreement.
2.2 The Employee specifically undertakes and agrees with the
Employer that he shall be responsible for the following:
2.2.1 for fulfilling the title and role of the Executive Vice
President/COO/CFO of the Employer; and
2.2.2 such other duties as may be reasonably required.
3. TERM
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3.1 The Initial Term of this Agreement shall be a period of one
(1) year from the date hereof. Unless written notice is given
by either party at least ninety (90) days before the end of
the Initial Term or any one (1) year extension thereof (each,
a "Renewal Term"), that they wish this Agreement to terminate
at the end of the Initial or respective Renewal Term,
whichever may apply, this Agreement will be automatically
extended by successive one year Renewal Terms. Any references
herein to the "Term" shall include both the Initial Term and
any and all Renewal Terms.
REMUNERATION
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4.1 In consideration of the Employee's undertaking and the
performance of the obligations contained in this Agreement,
the Employer shall, unless otherwise agreed upon by all
parties to this Agreement, pay and grant the following
remuneration to the Employee:
4.1.1 Base Salary. The Employee shall be entitled to receive a
salary, not less than $200,000.00 (U.S.) per year.
4.1.2 Bonus. In addition to the base salary specified in
section 4.1.1 the Employee shall be entitled to an
aggregate annual bonus of up to $200,000.00 (U.S.) based
on certain targets being achieved. The Parties will
mutually agree to these targets. Achievement of targets
will be assessed on a quarterly basis, and any bonus
earned for a particular quarter, as reasonably
determined by the Employer, will be paid to the Employee
within 30 days after the close of the quarter. In no
event shall the actual quarterly bonus payment be less
than $12,500.00.
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4.1.3 Stock Options. In addition to the base salary outlined
in section 4.1.1 on the first date of employment, the
Employee shall be granted a stock option to purchase
100,000 shares of common stock of the Employer (the
"Option Shares") at a price that is the closing price on
the NASDAQ market on the date of the option grant. These
options shall vest one third annually over a three (3)
year period, beginning on the first anniversary of the
date of the option grant. Within 60 days of separation
for any reason, Employee will be entitled to exercise
any stock options then vested.
4.1.4 Restricted Stock Units: In addition to the base salary
outlined in section 4.1.1 on the first date of
employment, the Employee shall be granted 50,000
Restricted Stock Units (the "RSU's"). These RSU's shall
vest one-fifth over a five (5) year period, beginning on
the first anniversary of the date of the grant. Upon
separation for any reason, Employee will be entitled to
any Restricted Stock then vested.
5. BENEFITS
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5.1 In consideration of the Employee's undertaking and the
performance of the obligations contained in this Agreement,
the Employer shall, unless otherwise agreed upon by all
parties to this Agreement, pay and grant the following
benefits to the Employee:
5.1.1 Vacation. The Employee shall be entitled to vacation
time of three (3) weeks each calendar year. Such
vacation time shall be used at times mutually agreeable
to the Employee and the Employer.
5.1.2 Other Benefits. The Employee shall be entitled to
participate in all benefit programs provided by Employer
to its executives effective upon the Employee's start
date. The Employer shall pay for single coverage
premiums for the Employee for health and dental (if any)
insurance offered by the Employer. The Employer shall
pay for the Employee's STD/LTD premiums.
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5.1.3 Expenses. Employer shall pay Employee $500 per month
toward a car allowance. In addition, the Employer shall
reimburse the Employee for all reasonable and necessary
business expenses, including but not limited to cellular
phone expenses, upon the presentation to the Employer of
appropriate written documentation and receipts.
6. ATTENTION TO DUTIES
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The Employee shall devote his whole working time and attention to the
Employer during the Term of this Agreement and will not engage in any
other capacity or activity which, in the sole opinion of the Employer
acting reasonably, would hinder or interfere with the performance of the
duties of the Employee.
7. CONFIDENTIALITY
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The parties acknowledge that in carrying out his duties under this
Agreement, the Employee will have access to and become entrusted with
confidential information regarding the business plans and operations of
the Employer, computer systems and technology, unique methodology and
other proprietary information. The Employee acknowledges that the right to
maintain such detailed confidential information constitutes a proprietary
right, which the Employer is entitled to protect. Accordingly, the
Employee shall not, during the Term of this Agreement, or at any time
thereafter, disclose any of such detailed confidential information or
trade secrets of the Employer to any person or persons, firm, association
or corporation, nor shall the Employee use the same for any purpose, in
either case, except on behalf of the Employer. Notwithstanding the
foregoing, the obligations of the Employee in this Section 7 shall not
apply to confidential information (i) which at the date hereof or
thereafter becomes a matter of public knowledge without breach by the
Employee of this Agreement; or (ii) which is obtained by the Employee from
a person, firm, or entity (other than the Employer or an affiliate of the
Employer) under circumstances permitting its use or disclosure to others.
8. OWNERSHIP OF INVENTIONS
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8.1 The Employee shall promptly communicate and disclose to the
Employer all inventions, improvements, modifications,
discoveries, designs, formulae, methods and processes made,
discovered or conceived by the Employee either alone or
jointly with others, during the period of his employment with
the Employer, providing the same relate to or are capable of
being used by the corporation or any affiliate thereof in the
normal course of their businesses.
8.2 The Employee acknowledges and declares that all inventions,
improvements, modifications, discoveries, designs, formulae,
methods, processes, as are described in section 8.1 hereof,
and all patents and patent applications relating thereto are
the property of the Employer and hereby assigns to the
Employer all of the right, title and interest of the Employee
in any such inventions, improvements, modifications,
discoveries, designs, formulae, methods and processes, and in
any patents or patent applications relating thereto. The
Employee shall, at the Employer's expense, execute all
instruments and documents and do all such further acts and
things as may be necessary or desirable, in the Employer's
opinion to carry out the provisions of this section.
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9. NON-COMPETITION
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The Employee shall not, without prior written consent of the Employer for
the period of his employment hereunder or for a period of one (1) year
following the termination of this Agreement or any renewal hereof, for any
reason be it for cause or not, either alone or in conjunction with any
individual, firm, corporation, association or any entity, except for the
Employer, whether as principal, agent, shareholder, employee or in any
other capacity whatsoever, perform the duties of or provide the services
as are described in section 2.2 hereof in a business which competes with
the Employer, within any geographical location where the Employer has
carried on business or expended time and personnel and financial
resources. Furthermore, the Employee also agrees that upon the termination
of his employment he will not attempt to hire or encourage to leave their
employ, any of the Employer's other employees. Notwithstanding the
foregoing, the Employee shall not be precluded from competing with the
business of the Employer in the event his employment is terminated by the
Employee for good reason or by the Employer other than for cause, unless
the Employer provides the applicable compensation and benefits set out in
section 10.1.3 hereof, in which case, the Employee shall be precluded from
competing as described in this section 9 until such time as such
compensation and benefits are terminated.
10. TERMINATION
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10.1 The parties understand and agree that employment pursuant to
this Agreement may be terminated during the Term in the
following manner in the specified circumstances:
10.1.1 by the Employee without good reason (as defined below),
on the giving of not less than one (1) month prior
written notice to the Employer, which the Employer may
waive, in whole or in part;
10.1.2 by the Employee for good reason on the giving of not
less than one (1) month prior written notice to the
Employer, if the Employer has not cured the event giving
rise to good reason by the end of such notice period.
For purposes of this Agreement good reason shall mean,
absent the Employee's prior written consent: (i) the
Employer's failure to timely provide the Employee with
the salary, bonus and equity as set forth in section 4.1
hereof or to provide benefits to the Employee in
accordance with section 5.1 hereof; (ii) a material
breach by the Employer of this Agreement or any other
agreement with the Employee; (iii) a material diminution
by the Employer in the Employee's title,
responsibilities, authority or reporting structure; (iv)
a requirement that the Employee relocate his home to
more than 350 miles away from his home in Florida; or
(v) failure of the Employer to ensure that any successor
or assign of the Employer agrees in writing to be bound
by the terms of this Agreement. If the Employee
terminates his employment for good reason, he shall be
entitled to the payments set forth in section 10.1.3
hereof, to be provided within thirty (30) days after his
termination;
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10.1.3 by the Employer in its absolute discretion without
cause upon not less than one (1) month prior written
notice to the Employee, on giving the Employee a payment
equal to (i) six (6) months salary at the rate in effect
on the Employee's termination date; (ii) the value of
six (6) months of benefits and entitlements the
Employee was enjoying as of his termination date
(including but not limited to the cost to Employee to
pay for six (6) months of COBRA payments for health and
dental (if any) family insurance coverage); and (iii)
all salary, benefits and entitlements to which the
Employee is entitled in accordance with any relevant
statute or law. The payment representing this aggregate
amount shall be paid within thirty (30) days from notice
provided herein;
10.1.4 by the Employer for cause. The parties agree that for
the purposes of this Agreement, "cause" shall mean the
following, as reasonably determined by the Employer in
good faith, and that the Employee shall be terminated
immediately upon written notice for such cause:
10.1.4.1 any material breach of the provisions of this
Agreement or of an established written policy of
the Employer after Employer provided written
notice to Employee and 10 day opportunity to cure
during which time Employee failed to cure;
10.1.4.2 any intentional or grossly negligent disclosure
of any confidential information as described in
section 7 hereof, by the Employee;
10.1.4.3 in carrying out his duties hereunder, the
Employee; (i) has been grossly negligent, or (ii)
has committed willful gross misconduct;
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10.1.4.4 personal conduct on the Employee's part which
is of such a serious and substantial nature that,
as reasonably determined in good faith in the sole
discretion of the Employer, it would materially
injure the reputation of the Employer if the
Employee is retained as an Employee; or
10.1.4.5 any and all omissions, commissions or other
conduct, which would constitute cause under
applicable law.
10.2 The Parties understand and agree that the giving of notice or
the payment of termination pay, and severance pay, as required
by the Employer to the Employee on termination shall not
prevent the Employer from alleging cause for the termination.
10.3 The Employee authorizes the Employer to deduct from any
payment, any amounts properly owed to the Employer by the
Employee by reason of advances, loans or in recommence for
damages to or loss of the Employer's property and equipment,
save only that this provision shall be applied so as not to
conflict with any applicable law or legislation.
11. RESULTS OF TERMINATION
----------------------
11.1 If this Agreement is terminated for cause, as described in
section 10.1.4 hereof, the Employee shall be entitled to
receive his remuneration to the date of such termination for
cause, including any and all vacation pay and bonuses earned
to date.
11.2 If this Agreement is terminated upon written notice as
described in paragraphs 10.1.1, 10.1.2, and 10.1.3 hereof, the
Employer shall pay to the Employee to the end of the notice
period his salary and at the end of the date terminating the
notice provision, the Employer shall pay to the Employee
vacation pay equivalent and any other monies due under
applicable United States federal or state law, as well as any
and all amounts to which he may be entitled pursuant to
sections 10.1.2 or 10.1.3.
12. MEDIATION/ARBITRATION
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12.1 Should any dispute or disagreement of any kind arise at any
time; (i) regarding the rights and liabilities of the Parties
hereof or with respect to the interpretation, validity,
construction, meaning, performance, effect or application of
this Agreement, as amended from time to time; or (ii) between
the Employer and the Employee, the Parties agree that good
faith negotiations shall take place between the Employer and
the Employee. If such good faith negotiations have not
resolved the dispute or disagreement within a reasonable
period of time, either Party may request mediation between the
Parties, or either Party may refer the dispute or disagreement
directly to arbitration without going to mediation.
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12.2 The mediator shall be agreed upon by the both Parties. In the
event that the Parties are unable to agree upon the mediator,
the dispute or disagreement shall be referred to arbitration
in accordance with this section.
12.3 All discussions before the mediator shall be non-binding,
confidential and without prejudice to the position of either
Party. The Parties agree that if the mediation process does
not result in a satisfactory solution of the dispute or
disagreement after the lesser of either; (a) ten (10) hours of
mediation, or (b) thirty (30) days from the commencement of
the mediation, then either Party may refer the dispute or
disagreement to arbitration pursuant to the provisions of the
American Arbitration Association's National Rules for the
Resolution of Employment Disputes in effect at the time of the
arbitration demand, in accordance with the following:
12.3.1 the reference to arbitration shall be to one (1)
arbitrator.
12.3.2 any such arbitration shall be held in the city of
Orlando, Florida. The arbitration shall be completely
private. The arbitrator shall fix the appropriate
procedures which may include discovery, an oral
hearing(s) and any other procedures the arbitrator deems
appropriate. The issue or issues to be decided by the
arbitrator shall be defined in an arbitration agreement
filed on consent by the aggrieved party. In the event
the Parties to the arbitration shall be unable to agree
upon the issue or issues to be decided by the arbitrator
in any arbitration pursuant to this paragraph, the
arbitrator shall have jurisdiction to determine the
issue or issues to be so decided. The Parties shall do
all such acts and things as are necessary to enable the
arbitrator to make a proper finding respecting the
matters in issue. The arbitrator may order interest on
any award and the arbitrator may award costs, including
attorneys' fees, to either Party, provided that such
award is permitted by the applicable law governing the
underlying claim. In the absence of any award of costs,
each of the Parties shall bear their own costs,
including attorneys' fees, of any arbitration pursuant
to this paragraph and one-half of the cost of the
arbitrator. The arbitrator shall be strictly bound by
applicable legal principles and the general nature of
this Agreement in rendering his/her/its decision.
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12.3.3 The Parties agree that good faith negotiations,
mediation and arbitration shall all be without recourse
to the Courts. The award of the arbitrator shall be
final and binding, except that either Party may appeal
an arbitration award to the Courts on a question of law.
Judgment upon the award rendered by the arbitrator may
be entered in any Court having jurisdiction.
13. RIGHT TO INJUNCTIVE RELIEF
--------------------------
As a violation by the Employee of the provisions of paragraphs 7 and 9
hereof could cause irreparable injury to the Employer and there is no
adequate remedy at law for such violation, the Employer shall have the
right, in addition to any other remedies available to it at law or in
equity, to enjoin the Employee in a court of equity from violating such
provisions. The provisions of paragraphs 7 and 9 hereof shall survive the
termination of this Agreement.
14. ASSIGNMENT OF RIGHTS
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The rights and obligations which accrue to the Employer under this
Agreement shall automatically inure to the benefit of and be binding on
its successors and assigns, whether by operation of law or otherwise. The
rights of the Employee under this Agreement are not assignable or
transferable in any manner, except that any accrued salary or bonus,
vested options or other benefits shall be provided to the Employee's
heirs, beneficiaries or estate, or trustee under any trust set up by and
for Employee.
15. CHANGE OF CONTROL
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The Employer agrees that should there be a change in control of the
Employer during the Employee's employment with the Employer, all stock
options, RSU's and restricted stock held by the Employee shall become
immediately vested and exercisable in full. The Employer further agrees
that should there be a change in control of the Employer and the
Employee's employment is terminated for any reason save and except for
cause, the Employee shall receive, any payments or benefits to which he is
entitled pursuant to section 10.1.3 hereof or the remaining salary for the
Term whichever amount is greater. For the purposes of this section,
"change in control" shall be defined as such term is defined the
Employer's 2002 Amended and Restated Stock Option Plan.
16. RESIDENCE
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The Employer has agreed to secure a corporate apartment in Orlando,
Florida, if necessary, to which the Employee would have access and the
cost of such apartment will be paid for by the Employer.
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17. INDEMNIFICATION
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The Employer agrees to fully indemnify and defend the Employee against all
claims, liabilities, costs, attorneys' fees, settlement payments and
damages relating to or arising from any threatened or actual legal action
against the Employee by the company with which the Employee was last
employed before the date hereof, in relation in any manner to section 7 of
the Employee's prior employment agreement with such company.
18. CURRENCY
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All dollar amounts referred to in this Agreement are in United States
funds.
19. AMENDMENT OF AGREEMENT
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This Agreement may be altered or amended at any time by the mutual consent
in writing of the parties hereto.
20. TIME OF ESSENCE
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Time shall be of the essence hereof.
21. GOVERNING LAW
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This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario.
22. HEADINGS
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The headings appearing throughout this Agreement are inserted for
convenience only and form no part of the Agreement.
23. SEVERABILITY
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The invalidity or unenforceability of any provision of this Agreement will
not affect the validity or enforceability of any other provision hereof
and any such invalid or unenforceable provision will be deemed to be
severable.
24. ENTIRE AGREEMENT
----------------
This Agreement constitutes the entire agreement between the parties and
supersedes all prior and contemporaneous agreements, understandings and
discussions, whether oral or written, and there are no other warranties,
agreements or representations between the parties except as expressly set
forth herein.
25. AGREEMENT BINDING
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This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective personal representatives, executors,
administrators, successors and assigns.
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26. INDEPENDENT LEGAL ADVICE
------------------------
The Employee acknowledges that he has read and understands the Agreement
and acknowledges that he has had the opportunity to obtain independent
legal advice regarding the terms of the Agreement and their legal
consequences.
27. SURVIVAL
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In the event this Agreement terminates for any reason, sections 7, 9,
10.1.2, 10.1.3, 11, 15 and 17 hereof shall survive to the extent necessary
to give full effect to their terms.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
the date first set forth above.
SIGNED, SEALED & DELIVERED
_/s/ Stephen Lerch
---------------------------------------
Stephen Lerch
Witness
WORKSTREAM INC.
Per: /s/ Michael Mullarkey
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Michael Mullarkey
Title: Chief Executive Officer
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