1
EXHIBIT 10.32
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
August 18, 1999, among StaffMark, Inc., a Delaware corporation (hereinafter
referred to as the "Company" or "StaffMark"), and Stephen R. Bova, (hereinafter
referred to as "Employee").
WITNESSETH
WHEREAS, in the course of building the business of StaffMark, and in
his capacity as an executive officer thereof, Employee will be engaged in a
confidential relationship and will gain knowledge of the business, affairs,
customers and methods of StaffMark and each of StaffMark's direct and indirect
subsidiaries during his employment with StaffMark and will have access to lists
of StaffMark's and its affiliates' customers and their needs, and will become
personally known to and acquainted with StaffMark's and its affiliates'
customers, thereby establishing a personal relationship with such customers for
the benefit of StaffMark.
WHEREAS, the Compensation Committee of the Board of Directors of
StaffMark has been delegated authority, by the Board of Directors of StaffMark
at its meeting on August 12, 1999, to determine the terms of, and approve, this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. TERM OF AGREEMENT. The term of this Agreement shall commence on the
date hereof and shall continue until the third anniversary thereof, unless
terminated sooner in accordance with Sections 5 or 6 hereof, and shall
automatically renew for successive one year periods unless one party gives
written notice to the other at least 90 days prior to any such renewal date
that the Agreement shall not be further extended. During the term of this
Agreement, the calendar year shall be referred to herein as a "Compensation
Year."
2. DUTIES AND PERFORMANCE.
(1) During the term of this Agreement, Employee shall be
employed by the Company on a full-time basis as its President and
Chief Operating Officer and shall have such authority and shall
perform such duties consistent with his position as may be reasonably
assigned to him by, and shall report to, the Chief Executive Officer
of the Company, the Board of Directors of the Company or any other
member of senior management designated by the Chief Executive Officer
or the Board of Directors; provided, however, that without the
approval of the Board of Directors of StaffMark, Employee may not, on
behalf of StaffMark (A) enter into term employment arrangements for
StaffMark's employees of terms longer than those in place on the date
hereof or as standard Company policy permits, (B) borrow funds or make
material capital expenditures or commitments, or (C) alter or adopt
any employee benefit plans. Employee shall use all reasonable efforts
to further the interests of StaffMark and shall devote substantially
all of his business time
1
2
and attentions to his duties hereunder; provided, however, that
Employee shall not be required to locate outside the Fayetteville area
without Employee's consent.
(2) Employee shall be entitled to be reimbursed in accordance
with the policies of StaffMark, as adopted and amended from time to
time, for all reasonable and necessary expenses incurred by him in
connection with the performance of his duties of employment hereunder;
provided Employee shall, as a condition of such reimbursement, submit
verification of the nature and amount of such expenses in accordance
with the reimbursement policies from time to time adopted by
StaffMark.
3. BASE SALARY. StaffMark shall pay to Employee a base salary at the
rate of $325,000 per annum, payable on a regular basis in accordance with
StaffMark's standard payroll procedures, but not less than bi-monthly. On at
least an annual basis, the Board of Directors of StaffMark or a duly
constituted committee thereof will review Employee's performance and increase
Employee's base salary if and to the extent it determines, in its discretion,
that any such increase is warranted.
4. BENEFITS.
(1) 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 shall be
entitled to four (4) weeks vacation per annum and such holidays as the
Company may establish as company policy.
(2) The Company shall pay to Employee on or about the first
(1st) day of each month an automobile allowance in the amount of $500
per month which shall be used to pay all automobile related expenses.
Employee shall maintain with respect to any automobile used for
business purposes such insurance coverage as may be reasonably
required by the Company, the cost of which shall be paid by Employee
from such monthly allowance. Employee shall provide the Company with a
copy of such insurance policy, which policy shall name the Company as
an additional insured party.
(3) The Company shall reimburse Employee for club dues
actually incurred by Employee for full golf membership at Pinnacle
Country Club, Rogers, Arkansas, provided that such club is used at
least 50 percent of the time for business purposes and such usage is
subject to audit by the Company.
(4) Employee shall be eligible to participate in the
Executive Incentive Compensation Plan of StaffMark and its affiliates
at the highest participatory level of 150% of base salary paid.
(5) Employee shall be eligible to participate in the
Company's nonqualified executive deferred compensation programs.
(6) Company shall provide Employee with life insurance in a
face amount of $500,000.
2
3
(7) Employee shall be reimbursed for relocation expenses
actually incurred in accordance with the Company's executive
relocation policy, and shall be reimbursed for Employee's share of the
New York stock transfer tax.
5. TERMINATION OF AGREEMENT.
(1) The Company, by the approval of a 75% vote of its Board
of Directors, shall be entitled to terminate Employee's services, in
any of the following circumstances:
(1) For "cause," which shall mean by reason of any
of the following: (A) Employee's conviction of, or plea of
nolo contendere to, any felony or to any crime or offense
causing substantial harm to the Company or any of its
affiliates (whether or not for personal gain) or involving
acts of theft, fraud, embezzlement, moral turpitude or
similar conduct, (B) Employee's violation of the Company's
substance abuse policy, (C) malfeasance in the conduct of
Employee's duties, including but not limited to (i) willful
and intentional misuse or diversion of the Company's or any
of its affiliates' funds, (ii) embezzlement, and/or (iii)
fraudulent, willful or material misrepresentations or
concealments on any written reports submitted to the Company
or its affiliates, (D) material failure to perform the duties
of such person's employment, (E) material failure to follow
or comply with the reasonable and lawful directives of the
Chief Executive Officer, any member of senior management
designated by the Chief Executive Officer, or the Board of
Directors of the Company, (F) a material breach by Employee
of the provisions of this Agreement (including without
limitation any breach of Section 7 of this Agreement), or (G)
a determination by an applicable adjudicative entity that
Employee has violated a non-competition agreement with a
former employer, or a settlement of a claim of such violation
that results in material expense to the Company; provided,
however, that in the case of the foregoing clauses (D) and
(E), Employee shall have been informed, in writing, of such
material failure referred to in the foregoing clauses (D) and
(E), respectively;
(2) If, for any reason, Employee is unable to
perform the essential functions of such person's duties, with
or without reasonable accommodation, for a consecutive period
of six (6) months, or such other period as may be required by
applicable employment laws; or
(3) The death of Employee.
(2) Except as provided in Section 6 hereof, in the event of
the termination of Employee's employment:
(1) For cause, or in the event of the resignation of
Employee (excluding circumstances involving Good Reason, as
defined below), then as of the date of such termination all
of the Company's obligations hereunder, including, without
limitation, the Company's obligations to pay Employee's base
salary accruing after the date of such termination, and any
benefits (except as otherwise required by applicable law),
other than
3
4
those obligations which have accrued but remain unpaid as of
the date of such termination (such as accrued but unpaid
salary, expense reimbursements, health insurance premiums,
retirement plan contributions, if any, vacation pay, sick
pay, etc.), shall cease and Employee shall not be entitled to
receive any incentive compensation for the Compensation Year
of such termination;
(2) By the Company for any other reason other than
for the reasons set forth in clause (i) above, or by Employee
for Good Reason (as defined below), then in such event the
Company shall pay Employee's base salary, in such amount as
is determined by reference to clauses (A) and (B) below and
on such payment terms as set forth in the last sentence of
this paragraph (ii)(without offset for any compensation
received by Employee from any subsequent employment by any
person other than by an affiliate of the Company or in
violation of Section 7 hereof) and provide for the
continuation of any Company health insurance benefits for
which he would be eligible but for such termination, for a
period which is the greater of (A) sixty (60) days from the
date of such termination, or (B) the lesser of two (2) years
or the remaining term of this Agreement. The continuation of
health insurance benefits referenced above in this Section
5(b)(iii) shall extend to (i) Employee and his eligible
dependants under the terms of the applicable StaffMark
sponsored health care plan by which he was covered at the
time of such termination of employment, as such plan may be
in effect or may be modified from time to time, in
consideration for Employee's payment of such premiums as may
be required to be paid by active employees of StaffMark from
time to time ("Required Premium Payments") or (ii) if such
StaffMark sponsored health care plan does not by its terms
allow Employee's participation or continued participation,
StaffMark shall obtain (in return for Required Premium
Payments) insurance coverage on behalf of Employee and/or
Employee's eligible dependents that provides all benefits
otherwise provided under such StaffMark sponsored health care
plan or, at StaffMark's election (in return for Required
Premium Payments) shall provide such benefits from its own
assets (collectively, "Continued Health Care Coverage").
"Good Reason" shall mean any of the following circumstances
unless remedied by StaffMark within thirty (30) days after
receipt of written notification by Employee that such
circumstances exist or have occurred: (A) assignment to
Employee of any duties inconsistent with Employee's position,
authority, duties or responsibilities as contemplated by
Section 2 of the Agreement, or any other action by StaffMark
that results in diminution of such position, authority,
duties or responsibilities; or (B) any failure by StaffMark
to comply with any of the material provisions of the
Agreement. The payment of Employee's base salary amount under
the circumstances set forth in the first sentence of this
paragraph shall be made in two equal payments (equal to
one-half of such aggregate amount) on each of the effective
date of termination and ninety days after the effective date
of termination.
6. CHANGE IN CONTROL
(a) If Employee's employment with StaffMark is terminated
within two years following a Change in Control either by
StaffMark for any reason or no reason or by the Employee for
Good Reason only, StaffMark shall pay Employee a lump sum in
the amount of two (2) times the sum of (i) Employee's base
salary then in
4
5
effect and (ii) the greater of (A) $100,000.00 or (B) his
bonus percentage for the year immediately preceding the year
in which the termination of his employment occurs, multiplied
by his base salary in effect at the time of such termination.
Such lump sum payment shall be due on the effective date of
the termination of Employee's employment. In addition, in the
case of any such termination, Employee shall be permitted to
receive Continued Health Care Coverage for the period
described in clause 5(b)(iii)(B).
(b) A "Change in Control" shall be deemed to have occurred
if: (i) any person, other than StaffMark or an employee
benefit plan of StaffMark, acquires directly or indirectly
the "beneficial ownership" (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended, "Beneficial
Ownership") of any voting security of StaffMark 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 StaffMark voting securities of
StaffMark; (ii) the individuals (A) who, as of the effective
date of StaffMark's registration statement with respect to
its initial public offering, constitute the Board of
Directors of StaffMark (the "Original Directors") or (B) who
thereafter are elected to the Board of Directors of StaffMark
and whose election, or nomination for election to the Board
of Directors of StaffMark 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 StaffMark and whose
election, or nomination for election, to the Board of
Directors of StaffMark 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
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
StaffMark; (iii) the stockholders of StaffMark shall approve
a merger or merger agreement involving StaffMark, a
consolidation transaction involving StaffMark, a
recapitalization or reorganization of StaffMark, a reverse
stock split of outstanding StaffMark voting securities, or
the consummation of any such transaction if stockholder
approval is not sought nor obtained, provided, however, that
the foregoing referenced transactions or events in this
clause (iii) shall not constitute a "Change of Control" if
such transaction or event would result in at least 75% of the
total voting power represented by outstanding securities of
the surviving or resulting entity (immediately after such
transaction or event after giving effect to the consideration
issued or transferred in such
5
6
transaction or event on an as-converted or fully-diluted
basis) being Beneficially Owned by at least 75% of the
holders of outstanding voting securities of StaffMark
immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such
continuing holders not altered in the transaction in any
material way; or (iv) the stockholders of StaffMark shall
approve a plan of complete liquidation of StaffMark or an
agreement for the sale or disposition by StaffMark of all or
a substantial portion of StaffMark's assets (i.e., 50% or
more of the total assets of StaffMark).
(c) (i) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined
that any payment or distribution by StaffMark to or for the
benefit of Employee, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would constitute an "excess
parachute payment" within the meaning of section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"),
amounts payable or distributable to or for the benefit of
Employee pursuant to this Agreement that are determined to be
"parachute payments" within the meaning of section 280G(b)(2)
of the Code (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement
Payments") shall not be paid or distributed in the amounts or
at the times otherwise required by this Agreement, but shall
instead be paid or distributed annually, beginning as of the
effective date of the termination of Employee's employment
and thereafter on each anniversary thereof, in the maximum
substantially equal amounts and over the minimum number of
years that are determined to be required to reduce the
aggregate present value of Agreement Payments to an amount
that will not cause any Payment to be non-deductible under
section 280G of the Code. For purposes of this Section 6,
present value shall be determined in accordance with section
280G(d)(4) of the Code.
(ii) All determinations to be made under this
Section 6 shall be made by StaffMark's independent public
accountant immediately prior to the Change of Control (the
"Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to
StaffMark and Employee within 10 days of the effective date
of the termination of Employee's employment. Any such
determination by the Accounting Firm shall be binding upon
StaffMark and Employee.
(iii) Within two years after the effective date of
the termination of Employee's employment, the Accounting Firm
shall review the determinations made by it pursuant to
paragraph (i), above. If at that time, as a result of the
uncertainty in the application of section
6
7
280G of the Code at the time of the initial determination by
the Accounting Firm hereunder, the annual amounts of
Agreement Payments or the period over which Agreement
Payments are paid or distributed, as determined pursuant to
paragraph (i), above, are determined not to satisfy the
requirements of paragraph (i), then the annual amounts of
future Agreement Payments and/or the period over which future
Agreement Payments are paid or distributed shall be
redetermined to satisfy the requirements of paragraph (i),
and all future Agreement Payments shall be paid or
distributed in accordance with such redetermination.
(iv) All of the fees and expenses of the Accounting
Firm in performing the determinations referred to in
paragraphs (ii) and (iii) above shall be borne solely by
StaffMark. StaffMark agrees to indemnify and hold harmless
the Accounting Firm of and from any and all claims, damages
and expenses resulting from or relating to its determinations
pursuant to paragraphs (ii) and (iii) above, except for
claims, damages or expenses resulting from the negligence or
misconduct of the Accounting Firm.
7. COVENANT NOT TO COMPETE, CONFIDENTIALITY.
(1) 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:
(1) 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, or clinical staffing or
recruiting (a "StaffMark, Inc. Services Business") in the
State of Arkansas and, outside the State of Arkansas, 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
(1) Nothing herein shall be construed to
prohibit Employee from owning not more than five
percent (5%) of any class of securities issued by an
7
8
entity which is subject to the reporting
requirements of the Securities Exchange Act of 1934,
as amended, or which is traded over the counter;
(2) The foregoing shall not restrict
Employee with respect to businesses, other than
StaffMark, Inc. Services Businesses, engaged in by
the Company or its affiliates during the
Noncompetition Period unless Employee either is or
was substantially involved in such other businesses
of the Company or such affiliates or had access to
Confidential Information (as hereinafter defined)
with respect to such other businesses; or
(2) 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
(3) 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
(4) 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 regulatory proceeding pursuant to
the order of a judge or administrative law judge after
Employee requests that such Confidential Information be
preserved; or
(5) During the Noncompetition Period, in the
Territory,
(1) 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
8
9
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;
(2) Approach any such employee for any of
the foregoing purposes; or
(3) Authorize or knowingly approve or
assist in the taking of any such actions by any
person other than the Company or its affiliates.
(2) 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 immediately upon a termination of the employment of Employee by
the Company under this Agreement which is not for cause or by Employee
for Good Reason.
(3) The invalidity or non-enforceability of this Section 7 in
any respect shall not affect the validity or enforceability of this
Section 7 in any other respect or of any other provisions of this
Agreement. In the event that any provision of this Section 7 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.
(4) Employee acknowledges that the Company's remedy at law
for any breach of the provisions of this Section 7 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.
(5) The provisions of this Section 7 shall survive
termination of this Agreement.
8. DIVISIBILITY OF AGREEMENT. In the event that any term, condition or
provision of this Agreement is for any reason rendered void, all remaining
terms, conditions and provisions shall remain and continue as valid and
enforceable obligations of the parties hereto.
9. NOTICES. Any notices or other communications required or permitted
to be sent hereunder shall be in writing and shall be duly given if personally
delivered or sent postage prepaid by certified or registered mail, return
receipt requested, or sent by prepaid overnight courier service, delivery
confirmed, as follows:
9
10
(1) If to Employee:
Stephen R. Bova
(2) If to the Company:
Clete T. Brewer
c/o StaffMark, Inc.
302 E. Millsap Road
Fayetteville, Arkansas 72703
Attn: Chief Executive Officer
Either party may change his or its address for the sending of notice to such
party by written notice to the other party sent in accordance with the
provisions hereof.
10. COMPLETE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the employment of Employee and
supersedes all prior arrangements or understandings with respect thereto. This
Agreement may not be altered or amended except by a writing, duly executed by
the party against whom such alteration or amendment is sought to be enforced.
11. 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
lease or sell all or substantially all of its assets and may be assigned by the
Company to any affiliate of the Company or to any corporation or entity with
which such affiliate shall merge or consolidate or which shall lease or acquire
all or substantially all of the assets of such affiliate.
12. 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.
13. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Delaware.
10
11
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement in multiple counterparts as of the day and year first above written.
EMPLOYEE
/s/ STEPHEN R. BOVA
---------------------------
Stephen R. Bova
/s/ RANDALL E. GRIGG
- --------------------------
Witness
STAFFMARK, INC.
By: /s/ CLETE T. BREWER
-------------------------------
Clete T. Brewer, Chief Executive Officer
11