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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") by and between StaffMark, Inc., a
Delaware corporation (the "Company"), and Gordon Y. Allison ("Employee") is
hereby entered into and effective as of June 23, 1997. This Agreement hereby
supersedes any other employment agreements or understandings; written or oral,
between the Company and Employee.
R E C I T A L S
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in the
temporary staffing business.
Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of his employment with the Company, has and
will continue to become familiar with and aware of information as to the
Company's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company, and future
plans with respect thereto, all of which has been and will be established and
maintained at great expense to the Company; this information is a trade secret
and constitutes the valuable goodwill of the Company.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
A G R E E M E N T S
1. Employment and Duties.
(a) The Company hereby employs Employee as Executive Vice
President and General Counsel. As such, Employee shall have
responsibilities, duties and authority reasonably accorded to and
expected of a General Counsel and Chief Legal Officer and will report
directly to the Chief Executive Officer and the Board of Directors of
the Company (the "Board"). Employee hereby accepts this employment upon
the terms and conditions herein contained and, subject to paragraph
1(b), agrees to devote his working time, attention and efforts to
promote and further the business of the Company.
(b) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain,
profit or other pecuniary advantage except to the extent that such
activity (i) does not interfere with Employee's duties and
responsibilities hereunder and (ii) does not violate paragraph 3
hereof. The foregoing limitations shall not be construed as prohibiting
Employee from serving on the boards of directors of other companies or
making personal investments in such form or manner as will require his
services, other than to a minimal extent, in the operation or affairs
of the companies or enterprises in which such investments are made nor
violate the terms of paragraph 3 hereof.
2. Compensation. For all services rendered by Employee, the
Company shall compensate Employee as follows:
(a) Base Salary. The base salary payable to Employee shall be
$120,000 per year, payable on a regular basis in accordance with the
Company's standard payroll procedures but not less than bi-monthly. On
at least an annual basis, the CEO and Compensation Committee will
review Employee's performance and may make increases to such base
salary if, in its discretion, any such increase is warranted. Such
recommended increase would, in all likelihood, require approval by the
Board or a duly constituted committee thereof.
(b) Incentive Bonus Plan. For 1997 and subsequent years, it is
the Company's intent to develop a written Incentive Bonus Plan setting
forth the criteria under which Employee and other officers and key
employees will be
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eligible to receive year-end bonus awards. Employee shall be eligible
for a bonus opportunity of up to 50% of his base salary in accordance
with this Incentive Bonus Plan, unless such bonus opportunity
percentage is increased by the CEO or Board or a duly constituted
committee thereof. The award of any bonus shall be based on the total
performance of the Company, but shall be related to the earnings per
share and stock price per share growth of the Company and shall be
payable in various increments based on the performance of the Company
versus targeted goals. The incremental payments and the Company's
targeted performance shall be determined by the Chief Executive Officer
or the compensation committee of the Board.
(c) Executive Perquisites, Benefits and Other Compensation.
Employee shall be entitled to receive additional benefits and
compensation from the Company in such form and to such extent as
specified below:
(i) When eligible under non-discriminatory standards,
Employee shall be entitled to participate in any employee
benefit plan maintained by the Company for its full time
employees, and such benefits shall be not less favorable than
the benefits provided to other Company executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of his services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in
reasonable detail by Employee upon submission of any request
for reimbursement, and in a format and manner consistent with
the Company's expense reporting policy.
(iii) Four weeks paid vacation for each year during the
period of employment or such greater amount as may be afforded
officers and key employees generally under the Company's
policies in effect from time to time (pro rated for any year in
which Employee is employed for less than the full year).
(iv) An automobile allowance in the amount of $300 per
month.
(v) The Company shall reimburse Employee up to $150 per
month for club dues actually incurred by Employee, provided
that such club is used at least fifty (50%) percent of the time
for business purposes and such usage is subject to audit by the
Company.
(vi) The Company shall provide Employee with other
executive perquisites as maybe available to or deemed
appropriate for Employee by the Board and participation in all
other company-wide employee benefits as available from time to
time.
(vii) Employee shall be granted options (the "Options")
to acquire 30,000 shares of Common Stock at $16.00 or price
upon execution of agreement, whichever is lower. The Options
shall be exercisable as follows: 5 years @ 20% per year. All
terms and conditions shall be subject to the Company's 1996
Stock Option Plan.
3. Non-Competition Agreement.
(a) Employee acknowledges that in the course of his employment
by the Company he has and will become privy to various economic and
trade secrets and relationships of the Company and its affiliates.
Therefore, in consideration of this Agreement, Employee hereby agrees
that neither he nor his spouse nor any member of his immediate family
that resides with him will, directly or indirectly, except for the
benefit of the Company or its affiliates or subsidiaries, or with the
prior written consent of the Board of Directors of the Company, which
consent may be granted or withheld at the sole discretion of the
Company's Board of Directors:
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(i) During the Noncompetition Period (as hereinafter
defined), become an officer, director, stockholder, partner,
member, manager, associate, employee, owner, agent, creditor,
independent contractor, co-venturer, consultant or otherwise,
or be interested in or associated with any other person,
corporation, firm or business engaged in providing temporary or
permanent staffing services, IT, consulting and related
business outsourcing or medical or clinical staffing or
recruiting (a "StaffMark, Inc. Services Business") within a
radius of fifty (50) miles from any office operated during the
Noncompetition Period by the Company or any of its affiliates
(collectively, the "Territory") or in any StaffMark, Inc.
Services Business directly competitive with that of the Company
or any of its affiliates, or itself engage in such business;
provided, however, that
(A) Nothing herein shall be construed to prohibit
Employee from owning not more than five percent (5%) of
any class of securities issued by an entity which is
subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, or which is traded
over the counter;
(ii) During the Noncompetition Period, in the
Territory, solicit, cause or authorize, directly or indirectly,
to be solicited for or on behalf of himself or third parties,
from parties who are or were customers of the Company or its
affiliates, any StaffMark, Inc. Services Business transacted by
or with such customer by the Company or its affiliates; or
(iii) During the Noncompetition Period, in the
Territory, accept or cause or authorize, directly or
indirectly, to be accepted for or on behalf of himself or for
third parties, any such StaffMark, Inc. Services Business from
any such customers of the Company or its affiliates; or
(iv) During the Noncompetition Period, use, publish,
disseminate or otherwise disclose, directly or indirectly, any
information heretofore or hereafter acquired, developed or used
by the Company or its affiliates relating to their business or
the operations, employees or customers of the Company or its
affiliates which constitutes proprietary or confidential
information of the Company or its affiliates ("Confidential
Information"), including without limitation any Confidential
Information contained in any customer lists, mailing lists and
sources thereof, statistical data and compilations, patents,
copyrights, trademarks, trade names, inventions, formulae,
methods, processes, agreements, contracts, manuals or any other
documents; and (B) from and after the date hereof, use,
publish, disseminate or otherwise disclose, directly or
indirectly, any information heretofore or hereafter acquired,
developed or used by the Company or its affiliates which
constitutes Confidential Information, but excluding any
Confidential Information which has become part of common
knowledge or understanding in the StaffMark, Inc. Services
Business industry or otherwise in the public domain (other than
from disclosure by Employee in violation of this Agreement);
provided, however, this subparagraph (iv) shall not be
applicable to the extent Employee is required to testify in a
judicial or regularity proceeding pursuant to the order of a
judge or administrative law judge after Employee requests that
such Confidential Information be preserved; or
(v) During the Noncompetition Period, in the
Territory,
(A) Solicit, entice, persuade or induce, directly
or indirectly, any employee (or person who within the
preceding ninety (90) days was an employee) of the
Company or its affiliates or any other person who is
under contract with or rendering services to the
Company or its affiliates, to terminate his or her
employment by, or contractual relationship with, such
person or to refrain from extending or renewing the
same (upon the same or new terms) or to refrain from
rendering services to or for such person or to become
employed by or to enter into contractual relations with
any persons other than such person or to enter into a
relationship with a competitor of the Company or its
affiliates;
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(B) Approach any such employee for any of the
foregoing purposes; or
(C) Authorize or knowingly approve or assist in
the taking of any such actions by any person other than
the Company or its affiliates.
(b) For purposes of this Agreement, the term "Noncompetition
Period" shall mean the period commencing on the date hereof and ending
[twenty-four (24) months] after the date Employee ceases to be an
officer or employee of, or consultant to, the Company, or any of its
affiliates; provided, however, that the Noncompetition Period shall end
one (1) year from the date of termination of the employment of Employee
by the Company under this Agreement which is without cause.
(c) The invalidity or non-enforceability of this paragraph 3 in
any respect shall not affect the validity or enforceability of this
paragraph 3 in any other respect or of any other provisions of this
Agreement. In the event that any provision of this paragraph 3 shall be
held invalid or unenforceable by a court of competent jurisdiction by
reason of the geographic or business scope or the duration thereof,
such invalidity or unenforceability shall attach only to the scope or
duration of such provision and shall not affect or render invalid or
unenforceable any other provision of this Agreement, and, to the
fullest extent permitted by law, this Agreement shall be construed as
if the geographic or business scope or the duration of such provision
had been more narrowly drafted so as not to be invalid or unenforceable
and further, to the extent permitted by law, such geographic or
business scope or the duration thereof may be re-written by a court of
competent jurisdiction to make such sufficiently limited to be
enforceable.
(d) Employee acknowledges that the Company's remedy at law for
any breach of the provisions of this paragraph 3 is and will be
insufficient and inadequate and that the Company shall be entitled to
equitable relief, including by way of temporary and permanent
injunction, in addition to any remedies the Company may have at law.
(e) The provisions of this paragraph 3 shall survive
termination of this Agreement.
4. Place of Performance.
(a) Employee has agreed to employment at the Company's
corporate headquarters in Fayetteville, Arkansas.
(b) If Employee is requested by the Board to relocate and
Employee refuses, such refusal shall not constitute "good cause" for
termination of this Agreement under the terms of paragraph 5 (c).
5. Term; Termination; Rights on Termination. The term of this Agreement
shall begin on the date hereof and continue for four (4) years (the "Initial
Term"), and, unless terminated sooner as herein provided, shall continue
thereafter on a year-to-year basis on the same terms and conditions contained
herein. Upon termination of this Agreement for any reason provided in clauses
(a) through (e) below, Employee shall be entitled to receive all compensation
earned and all benefits vested and reimbursements due through the effective
date of termination, as well as the particular payments, vesting and other
rights enumerated in clauses (a), (b), (d), and (e), which items shall survive
termination of this Agreement in accordance with said clauses. This Agreement
and Employee's employment may be terminated in any one of the following ways:
(a) Death. The death of Employee shall immediately terminate
the Agreement. Employee's estate shall receive from the Company, in a
lump-sum payment due within thirty (30) days of Employee's death, the
lesser of the base salary at the rate then in effect (i) for whatever
time period is remaining under the Initial Term of this Agreement or
(ii) for one (1) year.
(b) Disability. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been absent from his
full-time duties hereunder for six (6) consecutive months, then thirty
(30) days after receiving written notice (which notice may occur before
or after the end of such six (6) month period, but which shall not be
effective earlier than the last day of such six (6) month period), the
Company may terminate Employee's employment
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hereunder provided Employee is unable to resume his full-time duties at
the conclusion of such notice period. Also, Employee may terminate his
employment hereunder if his health should become impaired to an extent
that makes the continued performance of his duties hereunder hazardous
to his physical or mental health or his life, provided that Employee
shall have furnished the Company with a written statement from a
qualified doctor to such effect and provided, further, that, at the
Company's request made within thirty (30) days of the date of such
written statement, Employee shall submit to an examination by a doctor
selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the
conclusion of Employee's doctor. In the event this Agreement is
terminated as a result of Employee's disability, Employee shall receive
from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the lesser of the base salary at the
rate then in effect (i) for whatever time period is remaining under the
Initial Term of this Agreement or (ii) for one (1) year.
(c) Good Cause. The Company may terminate the Agreement ten
(10) days after written notice to Employee for good cause, which shall
be: (1) Employee's material and irreparable breach of this Agreement;
(2) Employee's negligence in the performance or intentional
nonperformance (continuing for ten (10) days after receipt of the
written notice) of any of Employee's material duties and
responsibilities hereunder; (3) Employee's dishonesty, fraud or
misconduct with respect to the business or affairs of the Company which
materially and adversely affects the operations or reputation of the
Company; (4) Employee's conviction of a felony crime; or (5) chronic
alcohol abuse or illegal drug abuse by Employee. In the event of a
termination for good cause, as enumerated above, Employee shall have no
right to any severance compensation.
(d) Without Cause. At any time after the commencement of
employment, the Company may, without cause, terminate this Agreement
and Employee's employment, effective thirty (30) days after written
notice is provided to the Employee. Should Employee be terminated by
the Company without cause, Employee shall receive from the Company two
payments, each equal to one-half of the following: the lesser of the
base salary at the rate then in effect (i) for whatever time period is
remaining under the Initial Term of this Agreement or (ii) for two (2)
years ("Severance Pay"). The first payment shall be due on the
effective date of termination and the second payment shall be due
ninety days after the effective date of termination. Upon the effective
date of termination by the Company without cause, all Options granted
to Employee in paragraph 2(c)(vii) shall become immediately
exercisable. Further, any termination without cause by the Company
shall operate to shorten the period set forth in paragraph 3 (b) and
during which the terms of paragraph 3 apply to one (1) year from the
date of termination of employment.
(e) Change in Control. Refer to paragraph 9 below.
(f) Termination by Employee Without Cause. If Employee resigns
or otherwise terminates his employment, Employee shall receive no
severance compensation. All other rights and obligations of the Company
and Employee under this Agreement shall cease as of the effective date
of termination, except that the Employee's obligations under paragraphs
3, 6 and 7 herein shall survive such termination in accordance with
their terms.
6. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company or its
representatives, vendors or customers which pertain to the business of the
Company shall be and remain the property of the Company and be subject at all
times to its discretion and control. Likewise, all correspondence, reports,
records, charts, advertising materials and other similar data pertaining to the
business, activities or future plans of the Company which is collected by
Employee shall be delivered promptly to the Company without request by it upon
termination of Employee's employment.
7. Trade secrets. Employee agrees that he will not, during or after the
term of this Agreement with the Company, disclose the specific terms of the
Company's relationships or agreements with its significant vendors or customers
or any other significant and material trade secret of the Company, whether in
existence or proposed, to any person, firm, partnership, corporation or
business for any reason or purpose whatsoever, except as is disclosed in the
ordinary course of business.
8. Assignment; Binding Effect. This Agreement and the rights and
obligations hereunder shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives and successors
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or assigns and shall also bind and inure to the benefit of any successor of the
Company by merger or consolidation except to any such successor, purchaser, or
assignee of the Company, neither this Agreement nor any rights, duties, or
benefits hereunder or any portion thereof may be assigned by either party
hereto.
9. Change in Control.
(a) Unless he elects to terminate this Agreement pursuant to
(c) below, Employee understands and acknowledges that the Company may
be merged or consolidated with or into another entity and that such
entity shall automatically succeed to the rights and obligations of the
Company hereunder.
(b) In the event of a pending Change in Control wherein the
Company and Employee have not received written notice at least fifteen
(15) business days prior to the anticipated closing date of the
transaction giving rise to the Change in Control from the successor to
all or a substantial portion of the Company's business and/or assets
that such successor is willing as of the closing to assume and agree to
perform the Company's obligations under this Agreement in the same
manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a
termination of this Agreement by the Company without cause and the
applicable portions of paragraph 5(d) will apply; however, under such
circumstances, the amount of the lump-sum severance payment due to
Employee shall be 100% of the amount calculated under the terms of
paragraph 5(d) and the non-competition provisions of paragraph 3 shall
not apply whatsoever.
(c) In any Change in Control situation in which Employee has
received written notice from the successor to the Company that such
successor is willing to assume the Company's obligations hereunder,
Employee may nonetheless, at his sole discretion, elect to terminate
this Agreement by providing written notice to the Company at least five
(5) business days prior to the anticipated closing of the transaction
giving rise to the Change in Control. In such case, the applicable
provisions of paragraph 5(d) will apply with the exception of any lump
sum severance payments. Employee will still be eligible to exercise all
options vested or unvested but not to any severance pay. The
non-competition provisions of paragraph 3 shall all apply for a period
of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 5 under the
circumstances described in (b) and (c) above, the effective date of
termination will be the closing date of the transaction giving rise to
the Change in Control and all compensation, reimbursements and lump-sum
payments due Employee must be paid in full by the Company at or prior
to such closing. Further, Employee will be given sufficient time and
opportunity to elect whether to exercise all or any of his vested
options to purchase Common Stock of the Company such that he may
convert the options to shares of Common Stock of the Company at or
prior to the closing of the transaction giving rise to the Change in
Control, if he so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly
the Beneficial Ownership (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended) of any voting
security of the Company and immediately after such acquisition
such person is, directly or indirectly, the Beneficial Owner of
voting securities representing 50% or more of the total voting
power of all of the then-outstanding voting securities of the
Company;
(ii) the individuals (A) who, as of the effective date
of the Company's registration statement with respect to its
initial public offering, constitute the Board of Directors of
the Company (the "Original Directors") or (B) who thereafter
are elected to the Board of Directors of the Company and whose
election, or nomination for election, to the Board of Directors
of the Company was approved by vote of at least two-thirds
(2/3) of the Original Directors then still in office (such
directors becoming "Additional Original Directors" immediately
following their election) or (C) who are elected to the Board
of Directors of the Company and whose election, or nomination
for election, to the Board of Directors of the Company was
approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in
office (such directors also
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becoming "Additional Original Directors immediately following
their election), cease for any reason to constitute a majority
of the members of the Board of Directors of the Company;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of
the Company, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not sought nor obtained, other than any
such transaction which would result in at least 75% of the
total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction
being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Company immediately prior
to the transaction, with the voting power of each such
continuing holder relative to other such continuing holders not
substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or a substantial
portion of the Company's assets (i.e., 50% or more of the total
assets of the Company).
(f) Employee must be notified by the Company at any time that
the Company or any member of its Board anticipates that a Change in
Control may take place.
(g) Employee shall be reimbursed by the Company or its
successor for any excise taxes that Employee incurs under Section 4999
of the Internal Revenue Code of 1986, as a result of any Change in
Control. Such amount will be due and payable by the Company or its
successor within ten (10) days after Employee delivers a written
request for reimbursement accompanied by a copy of his tax return(s)
showing the excise tax actually incurred by Employee.
10. Complete Agreement. This Agreement is not a promise of future
employment. Employee has no oral representations, understandings or agreements
with the Company or any of officers, directors or representatives covering the
same subject matter as this Agreement. This Agreement is the final, complete
and exclusive statement and expression of the agreement between the Company and
Employee and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral
or written agreements. This Agreement may not be later modified except by a
further writing signed by a duly authorized officer of the Company and
Employee, and no term of this Agreement may be waived except by writing signed
by the party waiving the benefit of such term.
11. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To the Company: StaffMark, Inc.
302 E. Millsap Road
Fayetteville, Arkansas 72703
Attn: Clete T. Brewer, President & Chief
Executive Officer
With a copy to: Wright, Lindsey, & Jennings
200 West Capitol Avenue, Suite 2200
Little Rock, AR 72201-3699
Attn: Fred Perkins
To Employee: Gordon Y. Allison
2162 Revere Place
Fayetteville, AR 72701
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change
in accordance with this paragraph 11.
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12. Severability: Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of this
Agreement or of any part hereof.
13. Assignment. This Agreement is personal and non-assignable by
Employee. It shall inure to the benefit of any corporation or other entity with
which the Company shall merge or consolidate or to which the Company shall sell
all or substantially all of its assets.
14. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original and all of which together shall constitute one
and the same instrument.
15. Reasonableness of Conditions. Employee has carefully read all of
the terms herein stated and agrees that the same are necessary for the
reasonable and proper protection of the Company's business; and that Employee
has been induced to offer this employment upon the representation of Employee
that he will abide by and be bound by each of the aforesaid covenants and
restraints; and that each and every covenant is reasonable with respect to such
matter, length of time, and the geographical area embraced; and that
irrespective of all other conditions, the covenants and restrictions
hereinabove provided shall be operative during the full period and throughout
the geographical area described.
16. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Arkansas.
I HAVE READ AND UNDERSTAND THIS AGREEMENT AND IN PARTICULAR THE NON-COMPETITION
ASPECTS HEREOF CONTAINED IN PARAGRAPH 3, AND DO HEREBY EXECUTE THE SAME BEFORE
THE WITNESS WHO HAS SIGNED HEREUNDER.
[EMPLOYEE]
/s/ GORDON Y. ALLISON
-----------------------------------
Gordon Y. Allison
/s/ DANA R. WILLIAMS
- --------------------------
WITNESS
STAFFMARK, INC.
/s/ CLETE T. BREWER
-----------------------------------
Clete T. Brewer, President & Chief
Executive Officer
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