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EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement is made and entered into by and between
Labor Ready, Inc., a Washington corporation, including its subsidiaries
("Company") and Richard L. King ("Executive") effective as of May 16, 2000.
RECITALS
WHEREAS, Company believes that Executive's experience, knowledge of
corporate affairs, reputation and abilities are of great potential value to
Company's future growth and profits; and
WHEREAS, Company wishes to employ Executive and Executive is willing to be
employed by Company; and
WHEREAS, the Company's Board of Directors has elected Executive to the
offices of Chief Executive Officer and President of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Company and Executive agree as follows:
1. EMPLOYMENT. The Company agrees to and hereby does employ Executive, and
Executive agrees to and hereby does become employed by the Company, subject to
the supervision and direction of the Board of Directors. Executive's employment
shall be for a period commencing on May 16, 2000 and ending on May 15, 2005,
unless such period is extended by written agreement of the parties or is sooner
terminated pursuant to the provisions of Paragraphs 4, 11 or 12.
2. DUTIES OF EXECUTIVE. Executive agrees to devote the necessary time,
attention, skill, and efforts to the performance of his duties as Chief
Executive Officer and President of the Company and such other duties as may be
assigned by the Board of Directors in its discretion.
3. COMPENSATION.
(a) Executive's initial salary shall be at the rate of Four Hundred
Seventy-five Thousand and No/100 Dollars ($475,000) per year, payable biweekly,
from May 16, 2000, until changed by the Board of Directors as provided herein.
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(b) Company, acting through its Board of Directors, may (but shall not
be required to) increase, but may not decrease, Executive's compensation and
award to Executive such bonuses as the board may see fit, in its sole and
unrestricted discretion, commensurate with Executive's performance and the
overall performance of the Company. Executives compensation shall be reviewed
annually by the Compensation Committee of the Board of Directors.
4. FAILURE TO PAY EXECUTIVE. The failure of Company to pay Executive his
salary as provided in Paragraph 3 may, in Executive's sole discretion, be deemed
a breach of this Agreement and, unless such breach is cured within fifteen days
after written notice to Company, this Agreement shall terminate. Executive's
claims against Company arising out of the nonpayment shall survive termination
of this Agreement.
5. OPTIONS TO PURCHASE COMMON STOCK. Executive is granted options to
purchase 350,000 shares of the Company's common stock. The terms and conditions
of the options are set forth in Exhibits A and B.
6. REIMBURSEMENT FOR EXPENSES. Company shall reimburse Executive for
reasonable out-of-pocket expenses that Executive shall incur in connection with
his services for Company contemplated by this Agreement, on presentation by
Executive of appropriate vouchers and receipts for such expenses to Company. At
times it may be in the best interests of the Company for Executive's spouse to
accompany him on such business travel. On such occasions Company shall reimburse
Executive for reasonable out-of-pocket expenses incurred for his spouse. Such
occasions shall be determined by guidelines established by the Board of
Directors, or in the absence of such guidelines, by Executive's sound
discretion.
7. VACATION. Executive shall be entitled each year during the term of this
Agreement to a vacation of twenty (20) business days, no two of which need be
consecutive, during which time his compensation shall be paid in full. The
length of annual vacation time shall increase by one day for every year of
service to the Company after 1999 to a maximum of 25 business days per year.
8. CHANGE IN OWNERSHIP OR CONTROL. In the event of a change in the
ownership of Company, effective control of Company, or the ownership of a
substantial portion of Company's assets, all unvested stock options shall
immediately vest.
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9. LIABILITY INSURANCE AND INDEMNIFICATION. The Company shall procure and
maintain throughout the term of this Agreement a policy or policies of liability
insurance for the protection and benefit of directors and officers of the
Company. Such insurance shall have a combined limit of not less than
$10,000,000.00 and may have a deductible of not more than $100,000.00. To the
fullest extent permitted by law, Company shall indemnify and hold harmless
Executive for any and all lost, cost, damage and expense including attorneys'
fees and court costs incurred or sustained by Executive, arising out of the
proper discharge by Executive of his duties hereunder in good faith.
10. OTHER BENEFITS. Executive shall be entitled to all benefits offered
generally to employees of Company. Nothing in this Agreement shall be construed
as limiting or restricting any benefit to Executive under any pension,
profit-sharing or similar retirement plan, or under any group life or group
health or accident or other plan of the Company, for the benefit of its
employees generally or a group of them, now or hereafter in existence.
11. TERMINATION BY COMPANY. Company may terminate this Agreement under
either of the following circumstances:
(a) This Agreement may be terminated for cause at any time upon thirty
(30) days written notice to Executive. Cause shall exist if Executive is guilty
of dishonesty, gross neglect of duty hereunder, or other act or omission which
impairs Company's ability to conduct its ordinary business in its usual manner.
The notice of termination shall specify with particularity the actions or
inactions constituting such cause. In the event of termination under this
section, Company shall pay Executive all amounts due hereunder which are then
accrued but unpaid within thirty (30) days after Executive's last day of
employment.
(b) In the event that Executive shall, during the term of his
employment hereunder, fail to perform his duties as the result of illness or
other incapacity and such illness or other incapacity shall continue for a
period of more than six months, the Company shall have the right, by written
notice either personally delivered or sent by certified mail, to terminate
Executive's employment hereunder as of a date (not less than 30 days after the
date of the sending of such notice) to be specified in such notice.
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12. TERMINATION BY EXECUTIVE. If Company shall cease conducting its
business, take any action looking toward its dissolution or liquidation, make an
assignment for the benefit of its creditors, admit in writing its inability to
pay its debts as they become due, file a voluntary petition or be the subject of
an involuntary petition in bankruptcy, or be the subject of any state or federal
insolvency proceeding of any kind, then Executive may, in his sole discretion,
by written notice to Company, terminate his employment and Company hereby
consents to the release of Executive under such circumstances and agrees that if
Company ceases to operate or to exist as a result of such event, the
non-competition and other provisions of Paragraph 16 of this Agreement shall
terminate. In addition, Executive shall have the right to terminate this
Agreement upon giving three (3) months written notice to Company.
13. COMMUNICATIONS TO COMPANY. Executive shall communicate and channel to
Company all knowledge, business, and customer contacts and any other matters of
information that could concern or be in any way beneficial to the business of
Company, whether acquired by Executive before or during the term of this
Agreement; provided, however, that nothing under this Agreement shall be
construed as requiring such communications where the information is lawfully
protected from disclosure as a trade secret of a third party.
14. BINDING EFFECT. This Agreement shall be binding on and shall inure to
the benefit of any successor or successors of employer and the personal
representatives of Executive.
15. CONFIDENTIAL INFORMATION.
(a) As the result of his duties, Executive will necessarily have access
to some or all of the confidential information pertaining to Company's business.
It is agreed that "Confidential Information" of Company includes:
(1) The ideas, methods, techniques, formats, specifications,
procedures, designs, systems, processes, data and software
products which are unique to Company;
(2) All customer, marketing, pricing and financial information
pertaining to the business of Company;
(3) All operations, sales and training manuals;
(4) All other information now in existence or later developed which
is similar to the foregoing; and
(5) All information which is marked as confidential or explained to
be confidential or which, by its nature, is confidential.
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(b) Executive understands that he will necessarily have access to some
or all of the Confidential Information. Executive recognizes the importance of
protecting the confidentiality and secrecy of the Confidential Information and,
therefore, agrees to use his best efforts to protect the Confidential
Information from unauthorized disclosure to other persons. Executive understands
that protecting the Confidential Information from unauthorized disclosure is
critically important to the success and competitive advantage of Company and
that the unauthorized disclosure of the Confidential Information would greatly
damage Company.
(c) Executive agrees not to disclose any Confidential Information to
others or use any Confidential Information for his own benefit. Executive
further agrees that upon request of the Chairman, President and Chief Executive
Officer of Company, he shall immediately return all Confidential Information,
including any copies of Confidential Information in his possession.
16. COVENANTS AGAINST COMPETITION. It is understood and agreed that the
nature of the methods employed in Company's business is such that Executive will
be placed in a close business and personal relationship with the customers of
Company. Thus, during the term of this Executive Employment Agreement and for a
period of two (2) years immediately following the termination of Executive's
employment, for any reason whatsoever, so long as Company continues to carry on
the same business, said Executive shall not, for any reason whatsoever, directly
or indirectly, for him or on behalf of, or in conjunction with, any other
person, persons, company, partnership, corporation or business entity:
(a) Call upon, divert, influence or solicit or attempt to call,
divert, influence or solicit any customer or customers of Company;
(b) Divulge the names and addresses or any information concerning any
customer of Company;
(c) Solicit, induce or otherwise influence or attempt to solicit,
induce or otherwise influence any employee of the Company to leave
his or her employment;
(d) Own, manage, operate, control, be employed by, participate in or
be connected in any manner with the ownership, management,
operation or control of the same, similar, or related line of
business as that carried on by Company within a radius of
twenty-five (25) miles from any then existing or proposed office
of Company; and
The time period covered by the covenants contained herein shall not include
any period(s) of violation of any covenant or any period(s) of time required for
litigation to enforce any covenant. If the provisions set forth are determined
to be too broad to be enforceable at law, then the area and/or length of time
shall be reduced to such area and time and that shall be enforceable.
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17. ENFORCEMENT OF COVENANTS.
(a) The covenants set forth herein on the part of Executive shall be
construed as an agreement independent of any other provision in this Executive
Employment Agreement and the existence of any claim or cause of action of
Executive against Company, whether predicated on this Executive Employment
Agreement or otherwise, shall not constitute a defense to the enforcement by
Company of the covenants contained herein.
(b) Executive acknowledges that irreparable damage will result to
Company in the event of the breach of any covenant contained herein and
Executive agrees that in the event of any such breach, Company shall be
entitled, in addition to any and all other legal or equitable remedies and
damages, to a temporary and/or permanent injunction to restrain the violation
thereof by Executive and all of the persons acting for or with Executive.
18. LAW TO GOVERN CONTRACT. It is agreed that this Agreement shall be
governed by, construed and enforced in accordance with the laws of the State of
Washington.
19. ARBITRATION. Company and Executive agree with each other that any claim
of Executive or Company arising out of or relating to this Agreement or the
breach of this Agreement or Executive's employment by Company, including,
without limitation, any claim for compensation due, wrongful termination and any
claim alleging discrimination or harassment in any form shall be resolved by
binding arbitration, except for claims in which injunctive relief is sought and
obtained. The arbitration shall be administered by the American Arbitration
Association under its Employment Arbitration Rules at the American Arbitration
Association Office nearest the place of employment. The award entered by the
arbitrator shall be final and binding in all respects and judgment thereon may
be entered in any Court having jurisdiction.
20. ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this Agreement shall not be binding upon either party
except to the extent incorporated in this Agreement.
21. MODIFICATION OF AGREEMENT. Any modification of this Agreement or
additional obligation assumed by either party in connection with this Agreement
shall be binding only if evidenced in writing signed by each party or an
authorized representative of each party.
22. NO WAIVER. The failure of either party to this Agreement to insist upon
the performance of any of the terms and conditions of this Agreement, or the
waiver of any breach of any of the terms and conditions of this Agreement, shall
not be construed as thereafter waiving any such terms and conditions, but the
same shall continue and remain in full force and effect as if no such
forbearance or waiver had occurred.
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23. ATTORNEYS' FEES. In the event that any action is filed in relation to
this Agreement, the unsuccessful party in the action shall pay to the successful
party, in addition to all other required sums, a reasonable sum for the
successful party's attorneys' fees.
24. NOTICES. Any notice provided for or concerning this Agreement shall be
in writing and shall be deemed sufficiently given when personally delivered or
when sent by certified or registered, return receipt requested mail if sent to
the respective address of each party as set forth below, or such other address
as each party shall designate by notice.
25. SURVIVAL OF CERTAIN TERMS. The terms and conditions set forth in
Paragraphs 15 through 19 of this Agreement shall survive termination of the
remainder of this Agreement.
IN WITNESS WHEREOF, each party to this Agreement has caused it to be
executed on the date indicated below.
EXECUTIVE: COMPANY:
Richard L. King Labor Ready, Inc.,
a Washington corporation
BY: /S/ Richard L. King By: /S/ Glenn A. Welstad
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Richard L. King Glenn A. Welstad, Chairman
Date: MAY 16, 2000 Date: MAY 16, 2000
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EXHIBIT A
STOCK OPTION GRANT
GRANT DATE: May 16, 2000
GRANT PRICE: $10.00 (Closing price on the Grant Date)
TOTAL NUMBER OF SHARES: 250,000
VESTING SCHEDULE: Options for the specified number of shares shall vest on the
following dates:
<TABLE>
<CAPTION>
DATE NUMBER OF SHARES
---- ----------------
<S> <C>
May 16, 2001 62,500
May 16, 2002 62,500
May 16, 2003 62,500
May 16, 2004 62,500
</TABLE>
TERMS AND CONDITIONS OF THE STOCK OPTION GRANT:
1. Except as otherwise provided herein, all unexercised options shall
expire five (5) years from the Grant Date or upon the termination date,
whichever is earlier, if the Executive Employment Agreement is terminated for
cause. If the Executive Employment Agreement is terminated by Executive without
cause, then all options shall terminate ninety days after termination of
employment. If the Executive Employment Agreement is terminated for any other
reason, then all options shall immediately vest and the exercise date shall be
extended to a date which is five years after the date of termination.
2. The options are categorized as non-qualified stock options. A
non-qualified stock option requires payment of income taxes on the difference
between the option price and the market value on the date of exercise. Executive
shall be responsible for any income tax consequences and expense associated with
the grant or exercise of the options, and is responsible for consulting his
individual tax advisor.
3. Payment for shares purchased through the exercise of options may be
made either in cash or its equivalent or by tendering previously acquired shares
at market value, or both.
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EXHIBIT B
STOCK OPTION GRANT
GRANT DATE: May 16, 2000
GRANT PRICE: $10.00 (Closing price on the Grant Date)
TOTAL NUMBER OF SHARES: 100,000
VESTING SCHEDULE: Options for the specified number of shares shall vest on the
following dates:
<TABLE>
<CAPTION>
DATE NUMBER OF SHARES
---- ----------------
<S> <C>
November 16, 2004 100,000
</TABLE>
TERMS AND CONDITIONS OF THE STOCK OPTION GRANT:
1. Except as otherwise provided herein, all unexercised options shall
expire five (5) years from the Grant Date or upon the termination date,
whichever is earlier, if the Executive Employment Agreement is terminated for
cause. If the Executive Employment Agreement is terminated by Executive without
cause, then all options shall terminate ninety days after termination of
employment. If the Executive Employment Agreement is terminated for any other
reason, then all options shall immediately vest and the exercise date shall be
extended to a date which is five years after the date of termination.
2. The options are categorized as non-qualified stock options. A
non-qualified stock option requires payment of income taxes on the difference
between the option price and the market value on the date of exercise. Executive
shall be responsible for any income tax consequences and expense associated with
the grant or exercise of the options, and is responsible for consulting his
individual tax advisor.
3. Payment for shares purchased through the exercise of options may be
made either in cash or its equivalent or by tendering previously acquired shares
at market value, or both.
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