<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the twelve months ended December 25, 1998
Commission file number: 0-23198
INTERIM SERVICES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-3536544
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
2050 SPECTRUM BOULEVARD, FORT LAUDERDALE, FLORIDA 33309
(Address of principal executive offices) (Zip code)
(954) 938-7600
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
COMMON STOCK--$.01 PAR VALUE New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, computed by reference to the closing price of the Registrant's
Common Stock as of January 22, 1999 on the New York Stock Exchange, was
$1,100,538,781.
Number of shares of Registrant's Common Stock, par value $.01 per share
("Common Stock"), outstanding on January 22, 1999 was 47,400,714.
Documents Incorporated by Reference:
Certain specified portions of the registrant's definitive proxy statement to
be filed within 120 days after December 25, 1998, are incorporated herein by
reference in response to Part III, Items 10 through 13, inclusive.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
COMPANY OVERVIEW
Interim Services Inc. ("Interim" or the "Company") is a leader in
identifying, recruiting, assessing and deploying talent for a wide variety of
businesses, as well as in measuring human performance. Through the Company's
three operating segments, North America, Europe and Australia/Asia, Interim
provides four services. Through these services, consulting, managed services,
search/recruitment and flexible staffing, the Company provides professionals in
the fields of information technology, finance, law, manufacturing and human
resources, as well as clerical, administrative and light industrial staffing.
The Company's former HealthCare Division ("HealthCare") was sold effective
September 26, 1997.
The Company operates within the staffing industry in 12 countries around the
world: Australia, Canada, France, Germany, Hong Kong, Italy, New Zealand,
Singapore, Spain, The Netherlands, the United Kingdom and the United States. The
Company is organized into three operating segments based upon geographic
location, North America, Europe and Australia/Asia. These operating segments
generally follow the management organization structure of the Company and also
represent, in the opinion of management, the most meaningful aggregation of the
Company's multiple operating units throughout the world. This aggregation is
based upon geographic similarities including market growth rates, foreign
currency exposure and local laws and regulations. In most of these operating
segments the Company's four services, consulting, managed services,
search/recruitment and flexible staffing, are provided. Operating segment and
services financial information appear in Management's Discussion and Analysis
and the notes to the consolidated financial statements included herein.
Since its January 1994 initial public offering ("IPO"), excluding
HealthCare, the Company's network of offices has more than doubled from 373 in
North America to 877 offices in 12 countries as of December 25, 1998. The
Company's revenues, excluding HealthCare, increased from $537.3 million in
fiscal 1994 to $1.9 billion in fiscal 1998. This growth has been accomplished
through strategic acquisitions, internal growth and by capitalizing on
cross-selling opportunities. During this period, the Company acquired 26
businesses with 256 offices, representing over $750 million in annualized
revenues for the year ended prior to acquisition, including one business
acquired in 1994, five businesses acquired in 1995, three businesses in 1996,
four businesses in 1997 and thirteen businesses in 1998. The most significant
recent acquisitions were Computer Power Group Limited ("Computer Power") and
Crone Corkill Group PLC ("Crone Corkill") in 1998 and Michael Page Group PLC
("Michael Page") and Aim Executive Holdings, Inc. ("Aim") in 1997. The Computer
Power acquisition expands the Company's technology consulting and staffing into
Australia and Southeast Asia. Crone Corkill expands the Company's flexible
staffing and search/recruitment of high-end secretarial and administrative
personnel in the United Kingdom. Michael Page is a premier international
recruiting and staffing company specializing primarily in accounting, banking
and finance. Michael Page's 58 offices are located in the United Kingdom,
Australia, France, Germany, Hong Kong, Italy, New Zealand, Singapore, Spain, The
Netherlands, and the United States. The Aim acquisition broadened the Company's
service offerings to include outplacement and other career consulting services.
Additionally, several smaller strategic acquisitions were made during 1998 to
expand Aim's (now Interim Career Consulting) geographic markets and service
offerings.
INDUSTRY OVERVIEW
The global staffing services industry has experienced significant growth in
response to the changing work environment worldwide. According to published
industry sources, the total staffing services market had revenues of
approximately $120 billion in 1997 (the latest available data). The staffing
industry is evolving from employers' traditional use of staffing services to
manage personnel costs and meet fluctuating staffing requirements to the
reduction of administrative overhead by outsourcing human resources
2
<PAGE>
operations that are not part of an employer's core business competencies. The
use of staffing services has allowed employers to improve productivity, to
outsource specialized skills and to avoid the negative effects of layoffs.
Rapidly changing regulations concerning employee benefits, insurance and
retirement plans, as well as the high cost of hiring, laying off and terminating
permanent employees, has also prompted many employers to take advantage of the
flexibility offered through temporary and contract staffing arrangements. In
addition to the economic conditions driving staffing industry growth, the
Company believes that changing demographics of the workforces of developed
economies and evolving attitudes concerning work patterns also contribute to
growth in the staffing industry. These trends have accelerated with the pace of
technological change and greater global competitive pressures.
The U.S. remains the largest and most developed staffing services market in
the world. According to Staffing Industry Report, U.S. staffing industry
revenue, including flexible staffing, managed services, search/recruitment and
outplacement, grew from approximately $29.3 billion in 1992 to an estimated
$76.8 billion in 1998, representing a compound annual growth rate of 17.4%. The
National Association of Temporary and Staffing Services has estimated that more
than 90% of all U.S. businesses utilize staffing services. Also, the U.S. Bureau
of Labor Statistics has stated that penetration of the U.S. workforce by
temporary and contract workers has increased from approximately 0.4% in 1982 to
approximately 2.0% in 1997. One of the fastest growing sectors for the staffing
services industry, as well as for the Company, is information technology.
According to Staffing Industry Report, 1998 revenue for this sector in the U.S.
is estimated to be $18.5 billion, representing a compound annual growth rate of
24% since 1992. In addition, flexible staffing services revenue in the areas of
accounting, finance and legal, is estimated to have grown from $1.8 billion in
1992 to $7.8 billion in 1998, representing a compound annual growth rate of 28%.
The Company believes that its unique mix of services in the U.S. positions it to
continue experiencing higher revenue growth rates than those companies that
provide primarily traditional flexible staffing.
The U.K. is the second largest national staffing services market in the
world. Staffing revenues in the U.K. grew an estimated 20% in 1997 to $17
billion. Published industry sources estimate the U.K.'s penetration rate of
temporary workers at 1.8%, compared with the U.S. (2.0%) and The Netherlands
(3.6%). Demographic indicators produced by the U.K. Institute for Employment
Studies predict a return to labor shortages in the U.K., particularly in
technical and skilled sectors. This shortage is expected to result from a
shrinking labor pool coupled with continued demand for specialized skills. While
a shrinking labor pool may reduce the number of suitable candidates for the
Company to place with its clients, it may also increase the demand for the
Company's specialized search/recruitment services. The Company believes that
these factors, as well as the continued relatively rapid growth in the service
sector, should increase the opportunities to provide services in the U.K.
The total staffing services market in the European Union (excluding the
U.K.) during 1997 was estimated by published industry sources to be
approximately $29 billion, with France, Germany, The Netherlands and Belgium
accounting for over 90% of such market. Discrete domestic markets that have no
significant cross-border contact currently characterize the continental European
staffing services industry. In 1997, staffing revenues grew 33% in France, 20%
in Germany, 30% in Spain, 19% in The Netherlands and 17% in Belgium. In many
other European countries, the staffing services industry has only recently begun
to develop. The European Commission has noted trends towards deregulation and
greater labor market flexibility that the Company believes will increase the use
of temporary and contract labor throughout Europe. For example, Spain, Sweden
and Italy have recently enacted legislation that eliminated or modified laws
that had previously significantly restricted or prohibited the operations of
staffing services companies. In the emerging markets of Eastern Europe, the
Company believes that demand for staffing services is increasing as a result of
deregulation of certain local labor laws and increasing economic development.
In certain countries in the Australia/Asia region, particularly Australia,
the staffing services industry is well developed, and the Company believes that
opportunities exist for continued expansion within all of the Company's service
offerings.
3
<PAGE>
The staffing services market in most countries in which the Company operates
is highly fragmented and includes a large number of small businesses, many of
which operate in a single geographic market. This fragmentation, combined with
changing client demands and competitive pressures, has resulted in a trend
towards industry consolidation. This consolidation is being driven by, among
other things, client demands for "one-stop shopping" from staffing providers.
Faced with a desire to minimize the number of vendors, coupled with the need for
sophisticated management information systems, the growth of national or global
relationships and the expansion of professional level specialties, clients have
begun to demand the services of large staffing companies capable of offering a
full range of staffing services over a broad geographic area. This ability has
been particularly important in fulfilling the needs of large regional, national
and international accounts. Within this more competitive environment, smaller
companies may have difficulties competing due to limited service offerings,
geographic concentration and lack of sufficient working capital and management
resources. As a result, many smaller companies have been acquired in recent
years and the Company believes that small and mid-sized staffing companies are
becoming increasingly responsive to acquisition proposals by larger firms, such
as the Company. Furthermore, the Company believes that consolidation may also
occur among larger regional and national companies.
BUSINESS STRATEGY
The Company's goal is to drive revenue and earnings growth by delivering
innovative integrated human resources solutions worldwide through its
consultative approach to workforce management. The Company intends to achieve
this goal through a growth strategy that includes strategic acquisitions, with
particular emphasis in its higher-margin consulting services and high skill
level flexible staffing services (i.e., accounting, technology, legal, etc.),
opening new offices in existing and new geographic markets and continued
development of its client base by capitalizing on cross-selling opportunities.
This growth strategy is complemented by an operating strategy of offering a
comprehensive range of innovative services under common brands through
decentralized, entrepreneurial offices providing specialized expertise.
The key elements of the Company's strategy are:
PROVIDE A COMPREHENSIVE RANGE OF SERVICES. The Company believes that
significant demand exists from current and prospective clients to procure a
substantial portion of their human resources solutions from a single company,
thereby enabling them to assess and deploy personnel more efficiently and
productively. Accordingly, the Company seeks to be regarded by its clients as
their human resources partner and is committed to developing a broad range of
innovative, value-added human resource solutions to meet their evolving needs on
a worldwide basis. Since the IPO, the Company has significantly increased the
range of services offered, moving from solely providing flexible staffing
services to offering a full range of human resource solutions including
consulting, managed services, search/recruitment and flexible staffing.
LEVERAGE BRAND IDENTITY. Interim is one of a small number of staffing
companies which provide a variety of human resource solutions under the same
brand name. This maximizes cross-selling opportunities (e.g., Interim
Technology, Interim Financial Solutions, Interim Legal Services, Interim
Attorneys, Interim Personnel, etc.). Through this common branding, the Company
and its franchisees and licensees are better able to benefit from national media
advertising. The Company also benefits from brand name recognition of certain of
its subsidiaries. Michael Page, a premier recruitment organization focusing on
the placement of finance professionals internationally, has established strong
name recognition within the world's largest financial markets. The Stratford
Group, the Company's executive search business specializing in the recruitment
of high-level executives, benefits from name recognition among senior
management. The Saratoga Institute, the Company's human capital measurement
business, is widely recognized within the human resources industry as the source
for human capital measurement data and consulting.
DELIVER SERVICES THROUGH SPECIALIZED OFFICES SUPPORTED BY DECENTRALIZED
STRUCTURE. The Company's businesses are operated to be responsive to local
business practices and market conditions. The Company believes that its existing
and potential clients choose service providers largely on the basis of brand
4
<PAGE>
awareness and local specialized expertise. Each of the Company's offices is
organized on this basis, thereby providing clients with perceived value and
enhanced services by enabling them to deal with Interim representatives who
"speak their language" and understand their specialized human resources
requirements. Further, all Interim managers are compensated based on profits
generated within their scope of responsibility and cross-selling activities, and
they are responsible for their own hiring, pricing, business mix and local
promotion. The Company believes that this (i) allows the Company to capitalize
on its managers' knowledge of local business conditions and markets, (ii) makes
the Company more attractive to acquisition candidates, (iii) allows for a smooth
transition of acquired businesses and (iv) enables local operating company
managers to develop long-term relationships with key decision makers at both
existing and potential clients.
MAINTAIN STRONG ORGANIC GROWTH. A significant portion of the Company's
growth has resulted from internal expansion, which includes new office openings
and development of existing offices. The Company intends to continue to add
offices by expanding into new geographic markets, both domestically and
internationally, and to open new offices in existing markets to increase the
range of services offered in such markets. New office openings are jointly
planned by corporate and local management based upon various criteria, including
market demand, availability of quality candidates and whether a new office would
complement or broaden the Company's current geographic network or service
offerings. The Company also believes that it has been able to accelerate the
growth of existing offices by capitalizing on cross-selling opportunities. To
this end, the Company's integration managers focus on facilitating cross-selling
opportunities on a regional basis. The Company opened 266 offices from the date
of the IPO through the end of fiscal 1998.
UTILIZE ADVANCED RECRUITMENT METHODS. The Company has added new techniques
to successfully recruit and retain candidates. Through five recruitment centers
in Europe, Asia and South Africa, Interim recruits information technology ("IT")
professionals, predominantly to the U.S., to fill a shortage of skills. In
addition, Interim was the first company in the staffing industry to implement
national television advertising featuring a toll-free number (1-800-A-CAREER)
and full-page Wall Street Journal advertising for managerial and executive
positions. Recruitment efforts are globally supported by both Internet and
Intranet-based technology and a developing central candidate database that will
allow the Company to maintain contact with candidates throughout the duration of
their careers. Once a candidate is employed, the Company focuses on training to
maintain or enhance skills and offers certain employees salaries, benefits and
participation in the Company's employee benefit plans as a form of retention.
PROVIDE INNOVATIVE PRODUCTS AND SERVICES. By taking a consultative approach
to client needs, the Company has developed innovative, value-added services that
help clients better manage their human assets. Interim On-Premise utilizes
proprietary software that provides "qualitative" measurement of performance,
quantitative analysis of staffing efficiencies and customized reporting. The
Company's "interim.com" website contains employment information that can be used
by both candidates and clients, and it was made part of the Smithsonian
Institution's Permanent Research Collection on Information Technology
Innovation. In addition, the Company conducted a nationwide survey with Louis
Harris and Associates to identify emerging workforce trends to assist clients in
human resource planning.
CONTINUE TO EXPAND THROUGH ACQUISITIONS. The Company believes that there is
an opportunity to acquire additional companies consistent with its business
strategy because of the highly fragmented nature of the staffing industry and
the pressures of increased competition. The Company intends to continue to make
complementary acquisitions that can be integrated into existing operations, as
well as strategic acquisitions that provide entry into new geographic markets or
service lines. This acquisition strategy focuses on strong, well managed
companies domestically and internationally. The Company has a proven track
record of successfully acquiring companies, integrating them within the
Company's existing operations and producing growth rates of acquired companies
in excess of their historical performance. Since the IPO, the Company has added
256 offices with over $750 million in annualized revenues for the year ended
prior to acquisition.
5
<PAGE>
ACQUISITIONS
The Company's corporate management team has extensive experience in
identifying acquisition candidates and integrating acquired operating companies
into the Company's international network. The Company believes its
decentralized, entrepreneurial management structure facilitates its efforts to
acquire branded staffing companies seeking alliances with an
internationally-focused provider of a broad range of human resources services.
Since the IPO, the Company has acquired 26 companies providing consulting,
managed services, search/recruitment and flexible staffing through 256 offices,
representing over $750 million in annualized revenues for the year ended prior
to acquisition. In addition to external acquisitions, Interim usually purchases
franchise and license operations which are for sale. The Company is generally
the purchaser of choice when an Interim franchisee or licensee decides to sell
its business. The Company has a first right of refusal on any franchise sale at
the same terms and conditions as may be agreed with another purchaser and has a
standard purchase option on licenses. Overall, Company-owned branches yield
higher profits than franchised or licensed offices, and the Company therefore
believes that the purchase of these offices can be accretive to overall
earnings. The Company regularly evaluates potential acquisitions of companies
that can be integrated into existing operations and strategic acquisitions that
provide entry into new geographic markets or service lines. Certain information
related to external acquisitions is summarized in the following table.
<TABLE>
<CAPTION>
NUMBER REVENUES
OF IN
ACQUISITION OFFICES MILLIONS
ACQUIRED BUSINESS DATE (1) (2) PRIMARY SERVICES (SKILLS)
- -------------------------------------- ------------- ----------- ----------- ----------------------------------------------
<S> <C> <C> <C> <C>
Computer Power Group (Australian and
Asian operations)................... 12/98 51 $ 143.0 Consulting, Flexible Staffing (Technology)
HR Easy............................... 12/98 3 6.6 Consulting (Human Capital Measurement &
Assessment)
Ouranos Informatica Groep B.V......... 11/98 1 20.0 Consulting (Technology)
Reedie & Company...................... 9/98 3 4.4 Consulting (Outplacement & Executive Coaching)
Polmar, Inc........................... 9/98 1 5.4 Consulting (Technology)
Clarke, Poynton & Associates;
C.P.G. Partners..................... 8/98 5 8.0 Consulting (Outplacement & Executive Coaching)
AGO Uitzendbureau B.V................. 7/98 30 17.9 Flexible Staffing (Administrative & Light
Industrial)
Saratoga Institute.................... 6/98 1 3.0 Consulting (Human Capital Measurement &
Assessment)
Smyth, Fuchs & Company................ 3/98 5 2.5 Consulting (Outplacement)
Crone Corkill......................... 3/98 2 38.4 Flexible Staffing, Search/Recruitment
(Administrative)
Network Companies..................... 2/98 2 5.0 Flexible Staffing, Search/Recruitment
(Accounting)
deRecat & Associates.................. 1/98 3 3.5 Consulting (Outplacement)
A.J. Burton Group, Inc................ 1/98 3 14.6 Flexible Staffing, Search/Recruitment
(Accounting)
Feldt Personnel Consultants........... 10/97 1 0.5 Flexible Staffing, Search/Recruitment
(Accounting)
Mainstream Access..................... 4/97 16 5.7 Consulting (Outplacement)
Michael Page Group PLC................ 4/97 40 220.0 Flexible Staffing, Search/Recruitment
(Accounting, Banking & Finance)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER REVENUES
OF IN
ACQUISITION OFFICES MILLIONS
ACQUIRED BUSINESS DATE (1) (2) PRIMARY SERVICES (SKILLS)
- -------------------------------------- ------------- ----------- ----------- ----------------------------------------------
<S> <C> <C> <C> <C>
Aim Executive Holdings................ 3/97 17 35.2 Consulting, Flexible Staffing, Search/
Recruitment (Outplacement & General
Management)
Allround/Interplan.................... 11/96 6 15.0 Flexible Staffing (Administrative & Light
Industrial)
Brandon Systems....................... 5/96 32 89.0 Flexible Staffing, Managed Services
(Technology)
Of-Counsel............................ 5/96 1 1.0 Flexible Staffing (Legal)
Computer Power Group (U.S. and U.K.
operations)......................... 12/95 17 81.0 Consulting (Technology)
Hernand & Partners.................... 11/95 3 2.7 Flexible Staffing (Legal)
Juntunen.............................. 10/95 2 13.6 Search/Recruitment, Flexible Staffing,
(Technology & General Management)
OCS Consulting Services............... 6/95 5 16.1 Consulting (Technology)
Career Associates/Career Temps........ 6/95 5 5.6 Flexible Staffing, Search/Recruitment
(Accounting)
ICS Temporary Services................ 12/94 1 1.6 Flexible Staffing (Administrative & Light
Industrial)
--- -----------
256 $ 759.3
--- -----------
--- -----------
</TABLE>
- --------------------------
(1) Office count at time of acquisition.
(2) Represents annualized revenues for the year ended prior to acquisition.
SERVICES OVERVIEW
The Company provides its operating segments with centralized national and
international support in training, information technology, recruitment,
marketing and sales. This includes national television advertising aimed at
building brand identity and recruiting candidates, centralized candidate
databases and expansive internet and intranet communication abilities. In
addition, back office support includes: payroll, billing, receivable management,
risk management, legal services and cash management. Corporate staff, as well as
integration managers in key markets, are dedicated to supporting cross-selling
activities and national/international account management and expansion. Business
units that pass revenue-generating leads to other business units are rewarded
with a corporate-paid fee. This approach facilitates an environment of high
communication among offices, unifies strategic initiatives and capitalizes upon
multinational resources.
The Company is organized into three operating segments based upon geographic
location, North America, Europe and Australia/Asia. These operating segments
generally follow the management organization structure of the Company. The
operating segments also represent, in the opinion of management, the most
meaningful aggregation of the Company's multiple operating units throughout the
world. This aggregation is based upon geographic similarities including market
growth rates, foreign currency exposure and local laws and regulations. Within
each of these operating segments, the Company provides its four services--
consulting, managed services, search/recruitment and flexible staffing. The
Company defines these services as follows:
CONSULTING -- Interim designs and delivers solutions to a specific client
challenge, including technology consulting and training, talent assessment,
career consulting and human capital measurement. Consultants engaged within this
group are full-time Interim employees.
MANAGED SERVICES -- Through Managed Services, clients engage Interim for its
management capabilities, such as Interim On-Premise, functional outsourcing and
vendor management. These engagements
7
<PAGE>
may or may not involve deployment of flexible staff, as Interim is often called
upon solely to provide management services.
SEARCH/RECRUITMENT -- Search/Recruitment focuses on full-time placement of
entry-level professionals through senior executives, for which Interim receives
a one-time fee from the client. Examples include the placement of professionals
in senior management, accounting and finance and sales and marketing.
FLEXIBLE STAFFING -- Through Flexible Staffing, Interim employees are placed
at the client's facility for assignments, ranging in length from a few days to
many months. Assignments also cross a wide range of skills, such as
administrative, light industrial, accounting, technology and legal.
CONSULTING
Consulting Services represented 15.2% of worldwide revenues in 1998. The
Company's primary focus within this service category is technology,
outplacement, executive coaching and human capital measurement and assessment.
Interim has built a leading information technology consulting group
operating through 84 offices of which 30 are in North America, 3 are in Europe
and 51 are in Australia/Asia, as well as recruiting centers in South Africa,
Asia and the United Kingdom. This service is provided primarily through Interim
Technology, The Consulting Group ("Technology Consulting"). Technology
Consulting specializes in the areas of software design, maintenance and
development, quality assurance, implementation and management and strategic IT
consulting. Technology Consulting has separate practices to supply specialized
expertise in the areas of client/server development, legacy systems support,
network integration, software quality management, systems engineering and
technical communications to clients including many Fortune 100 companies.
Consulting engagements are generally longer term, and are provided by highly
trained full-time employees.
Technology Consulting has grown both organically and through the acquisition
of Ouranos Informatica Groep B.V. ("Ouranos") and Computer Power (both which are
currently in the process of being rebranded Interim Technology). Ouranos
operates in The Netherlands and offers IT development and support through its
consulting services. Computer Power operates in Australia/Asia and provides
technology consulting, in addition to flexible staffing and education and
training.
With nationwide capabilities, Interim Career Consulting manages projects
ranging from large-scale national restructuring to individual cases and is
ranked among the top five outplacement firms in the U.S. Interim Career
Consulting operates through 48 offices in the U.S. This business provides career
management and outplacement services to help companies and their employees
address career transition and termination issues. Career Consulting provides
career assessment and management, executive coaching, leadership development and
team alignment. The Company was the first career transition firm to receive an
ISO 9001 certification for part of its domestic operations. Through an
international strategic alliance with Coutts Consulting Group, Interim Career
Consulting offers services to multinational clients in 80 markets throughout
Europe, Japan and Canada.
Interim expanded its core competency in identifying, assessing and deploying
talent with the 1998 purchase of Saratoga Institute. Saratoga Institute,
recognized throughout the human resource community as a leading source of human
capital performance measurement, serves many Fortune 500 companies. The
organization is well known for its Human Resource Financial Report, which
includes quantitative data such as revenue per employee, time to fill a vacant
position, cost per hire and other performance measurements that assess the
financial impact of human capital on an organization.
The Company acquired HR Easy, Inc. ("HReasy") in late 1998, further
expanding the Company's evolution from a staffing company to a complete human
capital management resource provider. HReasy (which is currently in the process
of being rebranded as Interim Assessment Solutions) helps clients identify which
job applicants are the most qualified and have the best cultural fit for
mid-management to
8
<PAGE>
hourly positions. HReasy also creates and implements customized attitude and
opinion surveys and exit interviews. HReasy helps ensure the right hire through
its use of interactive voice response technology to analyze qualifications and
behaviorally assess job candidates via telephone interviews. This business unit
currently works with a wide range of companies, most notably in retail, banking,
grocery, petroleum and manufacturing industries.
MANAGED SERVICES
Managed Services represented 16.7% of worldwide revenues in 1998. Within
this service category, clients engage Interim for its management capabilities,
such as Interim On-Premise, vendor management and functional outsourcing in such
areas as help desk and data centers.
In 1992, the Company introduced a new staffing concept, Interim On-Premise,
whereby a client delegates management of its staffing needs to the Company,
allowing the client to focus on its core business activities. The Company is
currently expanding Interim On-Premise into Europe. On-Premise has evolved to
include managing a client's entire workforce, a significant portion of which may
be permanent staff, and the management of other staffing vendors. To better
serve its On-Premise clients, the Company has developed proprietary software
that is designed to facilitate managing the productivity of personnel at the
client's work site.
The Company has found that Interim On-Premise clients, who had typically
utilized staffing services, are very receptive to other Interim services.
On-Premise managers are well positioned to enhance established relationships
with key decision-makers at client organizations and, as a result, introduce
other Interim services. Conversely, other business units such as Technology
Consulting or Interim Financial Solutions (formerly Interim Accounting
Professionals) can often identify instances where clients need additional
staffing services and introduce Interim On-Premise. These clients have also
sought to expand the Interim On-Premise service into their international
operations. Management believes the Company's geographic and service breadth
provide a strong competitive advantage in securing such broad-reaching
assignments. Additionally, once in place, the client's reliance on the Company's
knowledge, productivity and proprietary software makes them more reluctant to
seek alternate service providers who may not be able to deliver this value added
service.
Through the Company's Interim Technology, Staffing Solutions Group
("Technology Staffing"), the Company offers outsourcing services whereby its
clients delegate to Interim all responsibility for technology staffing and
performance issues in such environments as the help desk and data centers. The
Company manages day-to-day functional activities, as well as staffing services,
and the client maintains strategic control of their information systems and
data. This type of outsourcing service is typically provided to clients under a
contractual arrangement.
In 1997, the Company introduced Juris Partners through its Interim Legal
Services business, a product designed to be similar to Interim On-Premise. Juris
Partners is a comprehensive management program designed to increase the
effectiveness and cost-efficiency of a company's legal support. Through Juris
Partners, an on-site Interim manager evaluates and manages a company's entire
legal support function, supplying the necessary staff and services including
project staffing, litigation support, document management and court reporting.
SEARCH/RECRUITMENT
Search/Recruitment represented 13.6% of worldwide revenues in 1998. The
Company provides full-time placement of entry-level professionals through senior
executives for many types of skills.
Through the acquisition of Michael Page and the growth of Interim Financial
Solutions, the Company provides accounting, banking, finance and other
search/recruitment services worldwide. Michael Page specializes in recruiting in
areas such as mergers and acquisitions, corporate finance and funds management.
9
<PAGE>
Michael Page operates 58 offices in major financial centers across the globe,
including London, Paris, Frankfurt, Amsterdam, Hong Kong, Singapore and Sydney
and in 1997, opened its first office in New York. As a result of the Michael
Page acquisition, Interim is the largest provider of search/recruitment in the
accounting, banking and financial areas worldwide. In addition, Michael Page
provides Interim with a global presence to grow its On-Premise and flexible
staffing businesses. Through 22 offices in the U.S., Interim Financial Solutions
provides accounting and finance personnel at a variety of levels including
bookkeepers, degreed accountants, certified public accountants, auditors and
controllers. Interim Financial Solutions made two domestic acquisitions in 1998
which expanded its presence on the eastern U.S. coast.
Interim provides nationwide searches for all levels of employees, up to
president and CEO through over 30 offices in the U.S. Retained searches are
conducted for executives and high-level managers through Stratford, and
contingency recruitment is available for management and professional positions
through Interim Executive Recruiting and other business units. Businesses rely
on Interim to recruit industry experts who will provide strategic direction and
top management skills. The search group has developed a prestigious client list,
and has particular expertise in the technology industry, working with many
leading technology companies in the U.S. Relationships are established with
companies at the highest levels when recruiting for executives and management.
These relationships serve as an excellent point of entry for a whole host of
additional Interim services including information technology, legal, accounting,
HR, clerical and light industrial.
FLEXIBLE STAFFING
Flexible Staffing represented 54.5% of worldwide revenues in 1998. The
Company provides flexible staffing services at many skill levels, from light
industrial and clerical to accounting, legal and technology. Flexible staffing
is provided through most of the Company's business units, with differences
between the units based upon skill provided.
The Company's Michael Page and Interim Financial Solutions business units
provide flexible staffing in the areas of accounting, banking and finance in all
of the same locations in which the Company provides search/recruitment for the
same skill types. The typical office model in these businesses has search
consultants that focus on flexible staffing assignments and those that
concentrate on search/recruitment. Combining these business units' flexible
staffing and search/recruitment revenues makes Interim the second largest
provider of accounting, banking and finance skills in the world.
Technology Staffing provides operations-based staffing and support for IT
operations including help desk and data center operations, operations analysis,
communications, and PC support through 24 offices in the U.S. and one office in
the U.K. Technology Staffing generally provides large numbers of personnel for
shorter assignments. Computer Power provides flexible staffing and education and
training in areas such as end-user proficiency and certified vocational
training, in addition to technology consulting. Computer Power has 49 offices in
Australia and New Zealand, and one office each in Hong Kong and Singapore.
The Company's Interim Legal Services business unit provides attorneys,
paralegals, court reporters, litigation support and legal transcription services
predominantly to law firms and corporations in the U.S. This business unit has
14 offices in the U.S.
The Company's traditional flexible staffing business, Interim Personnel,
provides a wide variety of clerical, administrative, assembly and light
industrial skills in 465 offices in the U.S. In addition to supplying personnel
to perform general office tasks such as reception, copying and filing, the
Company provides personnel who are proficient in word processing, graphics,
spreadsheets or database management. In the light industrial area, Interim
Personnel supplies personnel to perform light industrial tasks such as
electronic and precision assembly, PC board assembly, packaging, shipping and
receiving, warehousing,
10
<PAGE>
landscaping, construction and equipment operation. The Company also offers
full-time placement of these skills.
The Company's traditional flexible staffing business expanded its European
operations through the 1998 acquisitions of Crone Corkill in the United Kingdom
and AGO Uitzendbureau ("AGO") in The Netherlands. Crone Corkill places primarily
high-end secretarial and administrative personnel. AGO provides clerical and
light industrial flexible staffing through 30 locations in The Netherlands.
HEALTHCARE
On September 26, 1997, the Company sold HealthCare. HealthCare revenue
represented 12% of total revenues for the year ended December 26, 1997. See the
notes to the Consolidated Financial Statements contained herein for discussion
of this transaction. In October 1998, the Company completed the sale of the
remaining portion of HealthCare, Interim HealthCare of New York, Inc. The
remaining portion of the sale did not have a material impact on results of
operations in 1998.
OFFICE STRUCTURE
Interim offices are Company-owned, franchised and licensed. Most offices
serve multiple clients in their respective geographic area, with the exception
of Interim On-Premise sites which are established at the client's location to
serve only that client. The Company believes that it can better leverage
profitability through its branch locations. Currently 84% of revenues are
derived from Company-owned branches, with the remaining being franchised and
licensed. The following table details the number of offices which are
Company-owned, franchised and licensed as of the end of the periods listed.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER
-------------------------------------
NUMBER OF OFFICES 1998 1997 1996
- ------------------------------------------------------------------------- ----- ----- -----
<S> <C> <C> <C>
Branch Offices........................................................... 543 399 283
Franchised Offices....................................................... 138 139 134
Licensed Offices......................................................... 196 168 176
--- --- ---
877 706 593
HealthCare............................................................... -- -- 405
--- --- ---
TOTAL INCLUDING HEALTHCARE....................................... 877 706 998
--- --- ---
--- --- ---
</TABLE>
OWNED OFFICES
As of December 25, 1998, the Company operated 543 branch offices. Branch
office expansion is generally pursued in markets where Interim has an
established presence and is used to increase market penetration. Additional
expansion is achieved by establishing On-Premise operations at client sites. The
Company intends to continue to expand Company-owned branches in those locations
where it can "cluster" multiple offices in close geographic proximity to utilize
centralized regional and area management and other administrative functions
which should increase growth opportunities and increase profitability.
LICENSED OFFICES
The Company grants licenses, which give the licensee the right to establish
a business utilizing the Company's trade names, service marks, advertising
materials, sales programs, operating procedures, manuals and forms within a
designated territory. As of December 25, 1998, the Company's 81 licensees
operated 196 licensed offices.
11
<PAGE>
Licensees are required to observe the Company's operating procedures and
standards and act as a representative of the Company in recruiting, screening,
classifying, employing and placing flexible staff in response to client orders.
The licensee is responsible for establishing the office and paying related
administrative and operating expenses, such as rent, utilities and salaries of
full-time employees. The Company is responsible for paying the wages of the
flexible staff and all related payroll taxes and insurance. As a result, the
Company provides a substantial portion of the working capital needed for the
licensed businesses.
Sales by the licensed offices are included in the Company's revenues, and
the direct costs of services are included in the Company's cost of services. The
licensee receives a commission from the Company, which generally is equivalent
to 75% of the licensed offices' gross profits. The licensee is required to
participate in the Company's national advertising program and use the Company's
billing, payroll and other data processing services for which a separate fee is
paid to the Company.
FRANCHISED OFFICES
The Company has been granting franchises for approximately 40 years. The
average tenure of franchise ownership exceeds 17 years, and a number of
franchisees are second generation owners. Most franchisees operate more than one
franchise. As of December 25, 1998, the Company's 18 franchisees operated 138
offices.
The Company grants franchisees the right to market and furnish flexible
staffing services within a designated geographic area using the Company's trade
names, service marks, advertising materials, sales programs, operating
procedures, manuals and forms. The Company provides franchises with its
national, regional and local advertising. Franchisees operate their businesses
autonomously within the framework of the Company's policies and standards and
recruit, employ and pay their own full-time and flexible staff. The Company
receives royalty fees from each franchise based upon its sales, and in return
supplies a variety of support and marketing services.
COMPETITION
The staffing services industry is intensely competitive and highly
fragmented, with few barriers to entry by potential competitors at the local
level. The Company faces significant competition in the markets it serves and
will continue to face significant competition in any geographic markets or
industry sectors that it may enter. In each market in which the Company
operates, it competes for both clients and qualified personnel with other firms
offering staffing services. The majority of competitors are significantly
smaller than the Company. However, certain of the Company's competitors have
greater marketing and financial resources than the Company. Many clients use
more than one staffing services company and it is common for a major client to
use several staffing services companies at the same time.
The Company's largest competitors are Adecco S.A., Manpower Inc., The Olsten
Corporation, Randstad Holdings, Kelly Services, Inc., Robert Half International
Inc., Modis, Inc., CDI Corporation and Norrell Corporation. The Company believes
that it is one of the ten largest worldwide providers of staffing services based
upon revenue.
The Company believes that the primary competitive factor in obtaining and
retaining clients is the breadth of services provided as clients seek out
providers that can service all of their staffing needs. Additionally, other
critical competitive factors include the number and location of offices, an
understanding of clients' specific job requirements, the ability to provide
personnel in a timely manner, the ability to monitor the quality of job
performance and pricing. The primary competitive factors in obtaining qualified
candidates for employment assignments are quality of available opportunities,
wages, responsiveness to work schedules and number of available work hours. The
Company believes it has a competitive advantage over its competitors because it
offers a wide range of services and broad availability of skills to its
customers worldwide.
12
<PAGE>
TRADEMARKS
In 1992, the Company changed its name and primary identifying trademark from
"PERSONNEL POOL" to "INTERIM" and related "INTERIM" marks. A few locations
continue to operate under the "PERSONNEL POOL" mark (or related marks used by
such locations prior to acquisition by the Company). With the exception of
Michael Page, Saratoga and Stratford Group, the names and trademarks of
businesses acquired by the Company are being or have been transitioned to an
appropriate "INTERIM" name, typically within a period of several months
following the date of acquisition. The Company has undertaken extensive national
and local advertising and marketing efforts to increase its name recognition in
the marketplace.
The Company uses and has registered with the United States Patent and
Trademark Office the trademarks: INTERIM, INTERIM ACCOUNTING, INTERIM ATTORNEYS,
INTERIM COURT REPORTING, INTERIM LEGAL, INTERIM ON-PREMISE, INTERIM PERSONNEL
SERVICES, HR EASY, DEPOLAB, SKILL ANALYZER, STRATFORD GROUP, TEMPLINK, TEST
CYCLE, VALI/TEST PRO and PERSONNEL POOL; it uses and has applications for
registration pending on the trademarks: INTERIM TECHNOLOGY, SQM TOOL SUITE, IT /
WORK REQUEST MANAGER, MICHAEL PAGE, HOW THE WORLD IS WORKING, 1-800-A-CAREER, IT
/ ENTERPRISE MANAGER, IT / REQUIREMENTS MANAGER and IT / TEST MANAGER; and it
uses and claims ownership of the unregistered trademarks: INTERIM CAREER
SERVICES, INTERIM PERSONNEL, INTERIM FACILITIES MANAGEMENT, INTERIM FINANCIAL
PERSONNEL, INTERIM MANAGED SERVICES, INTERIM OFFICE TECHNOLOGY, INTERIM
STAFFING, VICTOR PERSONNEL, INTERIM CAREER CONSULTING, INTERIM HR PROFESSIONALS,
INTERIM EXECUTIVE RECRUITING, INTERIM TECHNICAL STAFFING, INTERIM FINANCIAL
SOLUTIONS, INTERIM LEGAL PROFESSIONALS, INTERIM LEGAL SERVICES, INTERIM
INDUSTRIAL STAFFING, INTERIM TECHNOLOGY-STAFFING SOLUTIONS GROUP, INTERIM
TECHNOLOGY-CONSULTING GROUP and SARATOGA INSTITUTE. INTERIM is a registered
trademark of the Company in Canada and INTERIM TECHNOLOGY is a registered
European Community Trademark of the Company. The Company's U.S. trademark
registration for INTERIM expires April 6, 2003, but is renewable indefinitely
for successive ten-year terms.
The Company has licensed use of its INTERIM HEALTHCARE mark to Interim
HealthCare, Inc., (which is independent of the Company), for an initial period
of five years and renewable every two years thereafter.
GOVERNMENTAL REGULATION
Flexible staffing firms are generally subject to one or more of the
following types of government regulations: (i) regulation of the
employer/employee relationship between a firm and its flexible staff, (ii)
registration, licensing, record keeping and reporting requirements and (iii)
substantive limitations on its operations. Flexible staffing firms are the legal
employers of their flexible workers. Therefore, the firm is governed by laws
regulating the employer/employee relationship such as tax withholding or
reporting, social security or retirement, anti-discrimination and workers'
compensation.
13
<PAGE>
The Company has significant operations in a number of foreign countries. In
some of these countries, particularly in Europe, there is significant national
and local regulation of flexible staffing services. These laws generally require
that part-time, temporary and contract workers receive benefits similar to
full-time workers, such as vacation, welfare plan contributions and severance
pay. In some cases, hours of work and the duration of assignments are limited
and workers may not be assigned to certain industries. Industry-wide union
membership is also a requirement in some countries. The Company does not
anticipate that these legal structures and requirements will have a material
effect on its growth or prospects. However, any material change in national or
local regulation of flexible staffing services could have a material adverse
effect on the Company.
The Company's sale of franchises and licenses is regulated by the Federal
Trade Commission and by authorities in approximately 17 states and one Canadian
province. The Company must deliver a franchise offering circular (similar to a
prospectus) to prospective franchisees or licensees. The Company has filed
either the appropriate registration or obtained an exemption from registration
in states which require franchisors to register in order to sell franchises. The
Company does not anticipate that these requirements will have any material
effect on its ability to sell franchises or licenses.
EMPLOYEES
Interim employed more than 375,000 people in 1998. The Company estimates
that it assigned approximately 370,000 flexible personnel with its clients in
1998, of whom approximately 63,000 were assigned, on average, at any given time.
The Company placed approximately 26,000 people in permanent jobs. In addition,
the Company employs approximately 6,000 staff employees full-time in both its
national and international operations.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, each of whom has been elected to
serve at the discretion of the Board of Directors of the Company, are:
<TABLE>
<CAPTION>
NAME AND AGE POSITION
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Raymond Marcy, 48............. Chairman since August 1997; Chief Executive Officer since September 1991;
President and a Director since November 1989; Chief Operating Officer from
November 1989 until September 1991. Prior to joining the Company, Mr. Marcy
served as Senior Vice President of Operations for Adia Services, Inc. (Adia),
from 1980 through 1988. While retaining his position as Senior Vice President of
Operations for Adia, from May 1988 until November 1989, Mr. Marcy was President
and Chief Executive Officer of Nursefinders, Inc., the temporary nursing
subsidiary of Adia.
Robert E. Livonius, 50........ Chief Operations Officer since February 1997, Executive Vice President since
August 1993. Vice President, HealthCare from August 1991 to August 1993. Prior to
joining the Company, he served as Vice President-Field Operations for a division
of NYNEX Corporation, from June 1986 through June 1991.
Roy G. Krause, 52............. Executive Vice President and Chief Financial Officer since October 1995. Prior to
joining the Company, he served as Executive Vice President of HomeBank Federal
Savings Bank and HomeBank Mortgage Corporation from November 1980 to September
1995.
Ronald de Heer, 56............ Executive Vice President, European Operations since September 1996. Prior to
joining the Company he served as Managing Director for Adia Personnel for nearly
10 years in Holland, Belgium and Luxembourg.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE POSITION
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
John B. Smith, 59............. Senior Vice President since January 1980, Legal Counsel and Secretary since
January 1965, Director from January 1969 until May 1995.
Gary Peck, 46................. President (Commercial Staffing Group) since August 1997. Vice President
(Commercial Branch Operations) from January 1995 to August 1997; Vice President
(Special Services) from August 1991 to December 1994. Prior to joining the
Company, he served as Senior Vice President for Talent Tree Services, Inc., from
August 1988 to August 1991.
Shannon C. Allen, 32.......... Vice President since November 1998, Treasurer since May 1997. Assistant Treasurer
from October 1994 to May 1997. Prior to joining the Company, she worked in the
Treasury and Corporate Finance Department at W. R. Grace & Co., Inc. from April
1992 to October 1994. From August 1988 to September 1991 she worked in Corporate
Finance at Kidder, Peabody & Co., Incorporated.
Robert Evans, 55.............. Vice President/Chief Information Officer since May 1996. From January 1991 to May
1996, he served in several executive positions with AT&T including Vice President
Customer Care Strategy and Reengineering, Chief Technology Officer, Chief
Information Officer and General Manager of the Consumer Interactive Services
business unit.
Richard L. Gorman, 56......... Vice President (Marketing) since May 1991. Prior to joining the Company, he
served as Vice President of Marketing for Interim Systems Corporation, from
February 1988 to May 1991.
Kenneth Kilburn, 45........... Vice President (Business Integration) and Chief Administrative Officer since
January 1998. Before joining the Company, he was Director of PC Options
Manufacturing for Compaq Computer Corp. from July 1994 until January 1998. For
nearly 15 years prior thereto, he held various executive management positions in
purchasing and manufacturing operations with Digital Equipment Corp.
Robert W. Morgan, 39.......... Vice President (Human Resources) since September 1996. Prior to joining the
Company, he served as Vice President (Human Resources) for Office Depot from
March 1994 to September 1996. From March 1991 until March 1994, he served as Vice
President (Human Resources), Roses Stores, Inc.
Mark W. Smith, 36............. Vice President (Finance) since June 1997. Prior to joining the Company he served
as Group Director-- Financial Planning, Ryder Integrated Logistics, Inc. from
October 1996 to June 1997. Assistant Corporate Controller, Ryder System Inc. from
October 1993 to September 1996. He held other positions with Ryder System Inc.
from February 1990 to September 1993.
Janet Wahby, 44............... Vice President (Commercial Operations, Europe) since August 1998. Vice President
(Commercial Corporate Sales) from January 1995 to August 1998. Senior Director of
On-Premise Operations from 1994 to January 1995. Prior to joining the Company,
she served in several capacities including Regional Vice President and Regional
Manager at Norrell Corporation from 1987 to 1994.
</TABLE>
ITEM 2. PROPERTIES
The executive offices of the Company are located at 2050 Spectrum Boulevard,
Fort Lauderdale, Florida 33309, in a 113,000 square-foot building owned by the
Company which was constructed in 1989,
15
<PAGE>
and expanded in 1996. The Company also leases on a short-term basis
approximately 27,000 square feet in buildings within a mile of its executive
offices for operations associated with its corporate headquarters. The executive
office and nearby facilities are used primarily by the Company's North American
operating segment. All other offices of the Company and its subsidiaries in
North America, Europe and Australia/ Asia are operated in premises held
primarily under short-term leases providing fixed monthly rentals, usually with
renewal options. The Company has sub-let a portion of its executive offices to
its divested HealthCare business under the terms of a transitional service
agreement.
ITEM 3. LEGAL PROCEEDINGS
The Company, in the ordinary course of its business, is threatened with or
named as a defendant in various lawsuits. It is not possible to determine the
ultimate disposition of these matters; however, management is of the opinion
that the final resolution of any threatened or pending litigation is not likely
to have a material adverse effect on the financial position or results of
operations of the Company. The Company maintains insurance in such amounts and
with such coverages and deductibles as management believes are reasonable and
prudent. The principal risks that the Company insures against are workers'
compensation, personal injury, bodily injury, property damage, professional
malpractice, errors and omissions and fidelity losses.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the twelve months ended December 25, 1998.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Common Stock is traded on The New York Stock Exchange under the symbol
"IS." High and low prices for the Common Stock by quarter appear in "Quarterly
Financial Data" on page 50. All price data has been restated for the 100% stock
dividend (treated as a stock split) paid on September 5, 1997 to stockholders of
record as of close of business August 18, 1997. On January 22, 1999, there were
approximately 1,977 holders of record of the Company's Common Stock.
The Company has not paid, and does not intend to pay, cash dividends in the
foreseeable future.
16
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
(IN THOUSANDS, EXCEPT PER SHARE DATA AND OPERATING
INFORMATION)
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994(1)
---------- ---------- ---------- ---------- ----------
Income Statement Data:
Revenues:
Commercial division..................................... $1,890,113 $1,418,667 $ 915,883 $ 657,005 $ 537,297
HealthCare (2).......................................... -- 189,589 231,268 207,242 167,399
---------- ---------- ---------- ---------- ----------
Total revenues........................................ 1,890,113 1,608,256 1,147,151 864,247 704,696
Expenses:
Cost of services........................................ 1,255,319 1,081,113 795,789 600,169 491,404
---------- ---------- ---------- ---------- ----------
Gross profit.......................................... 634,794 527,143 351,362 264,078 213,292
Selling, general and admin.............................. 432,281 363,152 243,652 177,105 137,859
Licensee commissions.................................... 50,791 45,091 39,500 37,295 33,796
---------- ---------- ---------- ---------- ----------
Results of operations................................. 151,722 118,900 68,210 49,678 41,637
Amortization of intangibles............................. 22,550 18,492 8,802 6,884 6,041
Interest expense........................................ 30,157 25,271 5,696 990 112
Interest income......................................... (6,338) (1,002) -- -- --
Gain on sale of HealthCare business (3)................. -- (5,300) -- -- --
Merger expense (4)...................................... -- -- 8,600 -- --
---------- ---------- ---------- ---------- ----------
Earnings before income taxes and extraordinary item... 105,353 81,439 45,112 41,804 35,484
Income taxes............................................ 46,776 38,928 22,097 18,071 16,028
---------- ---------- ---------- ---------- ----------
Earnings before extraordinary item.................... 58,577 42,511 23,015 23,733 19,456
Extraordinary item-early extinguishment of debt, net of
income taxes.......................................... 2,773 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net earnings.......................................... $ 55,804 $ 42,511 $ 23,015 $ 23,733 $ 19,456
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Basic earnings per share (4)(5):........................
Earnings before extraordinary item...................... $ 1.32 $ 1.08 $ 0.71 $ 0.77 $ 0.64
Extraordinary item...................................... (0.06) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net earnings............................................ $ 1.26 $ 1.08 $ 0.71 $ 0.77 $ 0.64
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Diluted earnings per share(4)(5):
Earnings before extraordinary item...................... $ 1.29 $ 1.05 $ 0.69 $ 0.76 $ 0.63
Extraordinary item...................................... (0.06) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net earnings............................................ $ 1.23 $ 1.05 $ 0.69 $ 0.76 $ 0.63
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Earnings per share
(excl. merger expenses)(4):
Basic................................................. -- -- $ 0.94 -- --
Diluted............................................... -- -- 0.91 -- --
Weighted average shares(5):
Basic................................................. 44,237 39,305 32,450 30,804 30,386
Diluted............................................... 48,244 40,407 33,418 31,324 30,782
BALANCE SHEET DATA:
Total assets(6)......................................... $1,613,444 $1,091,734 $ 512,490 $ 424,489 $ 275,364
Long-term debt.......................................... 426,856 379,197 -- 60,000 --
Working capital......................................... 126,285 73,210 169,283 67,526 81,997
OPERATING INFORMATION:
Commercial offices (7).................................. 877 706 593 537 424
HealthCare offices (7).................................. -- -- 405 403 372
---------- ---------- ---------- ---------- ----------
877 706 998 940 796
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
17
<PAGE>
- ------------------------------
(1) The 1994 fiscal year contained 53 weeks. All other years contained 52 weeks.
(2) Revenues for HealthCare are included through the date of disposition of
September 26, 1997.
(3) On September 26, 1997, the Company sold its HealthCare business. Amount
represents pre-tax gain on sale. Taxes on the gain were $5,272.
(4) On May 23, 1996, the Company completed a pooling with Brandon Systems, an IT
staffing company. Merger expense represents all fees and expenses related to
the merger, consolidation and restructuring of the combined companies.
(5) On August 7, 1997, the Company announced a two-for-one stock split in the
form of a 100% stock dividend to stockholders of records as of the close of
business on August 18, 1997, payable on September 5, 1997. The effect has
been reflected and applied on a retroactive basis.
(6) Certain reclassifications have been made to prior periods to conform to
current year presentation.
(7) At end of period.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
Interim is a leader in identifying, recruiting, assessing and deploying
talent for a wide variety of businesses, as well as in measuring human
performance. Through the Company's three operating segments, North America,
Europe and Australia/Asia, Interim provides four services. The Company's four
services consist of the following: (1) consulting--including outplacement,
executive coaching and technology consulting; (2) managed services--such as
temporary and permanent workforce management, which includes Interim On-Premise,
functional outsourcing and vendor management; (3) search/recruitment-- including
a temporary to permanent assignment, contingency recruiting, or an executive
retained search assignment; and (4) flexible staffing--temporary personnel from
secretaries to interim chief financial officers. The Company has historically
operated through two operating divisions, Commercial and HealthCare. HealthCare
was sold effective September 26, 1997 and its results of operations are included
in the accompanying consolidated income statement through the date of sale.
In 1998, the Company made two significant acquisitions, Computer Power and
Crone Corkill. The Computer Power acquisition expands both the Company's
technology consulting and flexible staffing internationally into Australia and
Southeast Asia. Crone Corkill expands the Company's flexible staffing and
placement of high-end secretarial and administrative personnel in the United
Kingdom. In 1997, the Company made two significant acquisitions, Aim and Michael
Page. The Aim acquisition broadened the Company's product offering to include
outplacement and career consulting services. The Michael Page acquisition
provided the Company with its initial launch into numerous international markets
and makes the Company one of the world leaders in accounting and finance
flexible staffing and search/ recruitment. The 58 offices of Michael Page are
located in the United Kingdom, Australia, France, Germany, Hong Kong, Italy, New
Zealand, Singapore, Spain, The Netherlands and the United States.
18
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth revenues and gross profit by service for the
periods indicated (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------------------------
DEC. 25, 1998 DEC. 26, 1997 DEC. 27, 1996
------------------------- ------------------------- -------------------------
% OF % OF % OF
TOTAL TOTAL TOTAL
EXCLUDING EXCLUDING EXCLUDING
HEALTHCARE HEALTHCARE HEALTHCARE
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Consulting..................... $ 286,250 15.2% $ 192,262 13.6% $ 135,950 14.8%
Managed Services............... 316,170 16.7% 250,308 17.6% 173,347 18.9%
Search/Recruitment............. 257,507 13.6% 148,892 10.5% 15,129 1.7%
Flexible Staffing.............. 1,030,186 54.5% 827,205 58.3% 591,457 64.6%
------------ ----------- ------------ ----------- ------------ -----------
1,890,113 100.0% 1,418,667 100.0% 915,883 100.0%
----------- ----------- -----------
----------- ----------- -----------
HealthCare..................... -- 189,589 231,268
------------ ------------ ------------
Total $ 1,890,113 $ 1,608,256 $ 1,147,151
------------ ------------ ------------
------------ ------------ ------------
<CAPTION>
% OF % OF % OF
REVENUES REVENUES REVENUES
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
GROSS PROFIT:
Consulting..................... $ 108,864 38.0% $ 66,460 34.6% $ 43,458 32.0%
Managed Services............... 65,747 20.8% 51,378 20.5% 34,631 20.0%
Search/Recruitment............. 196,044 76.1% 112,627 75.6% 11,463 75.8%
Flexible Staffing.............. 264,139 25.6% 220,140 26.6% 167,404 28.3%
------------ ----------- ------------ ----------- ------------ -----------
634,794 33.6% 450,605 31.8% 256,956 28.1%
HealthCare..................... -- N/A 76,538 40.4% 94,406 40.8%
------------ ----------- ------------ ----------- ------------ -----------
Total $ 634,794 33.6% $ 527,143 32.8% $ 351,362 30.6%
------------ ----------- ------------ ----------- ------------ -----------
------------ ----------- ------------ ----------- ------------ -----------
</TABLE>
FISCAL 1998 COMPARED WITH 1997
REVENUES. Revenues in 1998 increased 17.5% to $1.9 billion from $1.6
billion in 1997. Excluding revenues from HealthCare, which was sold at the end
of the third quarter 1997, 1998 revenues increased 33.2% from $1.4 billion. The
following comparisons exclude HealthCare. Consulting revenues increased 48.9%
reflecting strong internal growth primarily in IT; the acquisition of Aim in
March 1997, combined with its continued organic growth in outplacement and
executive coaching subsequent to the acquisition; and several smaller
acquisitions in outplacement in the first and third quarters of 1998. Managed
services revenues increased 26.3% reflecting the continued expansion of the
Interim On-Premise program and an increase in technology help-desk contracts.
Search/recruitment revenues increased 72.9% due to the acquisitions of Michael
Page in April 1997 and Aim in March 1997, combined with their continued organic
growth subsequent to the acquisitions; and several smaller accounting
acquisitions in the first and third quarters of 1998. Flexible staffing revenues
increased 24.5% reflecting the acquisitions of Crone Corkill in the United
Kingdom in March 1998, AGO in The Netherlands in July 1998, and Michael Page in
April 1997. Each of these acquired businesses showed strong organic growth
subsequent to acquisition. North American administrative and light industrial
flexible staffing grew at a slower rate than in the prior year.
GROSS PROFIT. Gross profit in 1998 increased 20.4% to $634.8 million from
$527.1 million in the prior year. Gross profit margin was 33.6% compared with
32.8% in fiscal 1997. Excluding HealthCare, gross profit margin was 31.8% last
year. Higher margins, excluding HealthCare, were principally due to an
19
<PAGE>
increase in the amount of consulting and search/recruitment revenues as a
percentage of total revenues. Consulting and search/recruitment revenues
generate higher gross profit margins than flexible staffing. Excluding
HealthCare, consulting and search/recruitment revenue represented 28.8% of 1998
total revenue compared with 24.1% of total revenue in 1997. Higher pricing in IT
also contributed to the increase in the gross profit margin in 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 19.0% to $432.3 million from $363.2 million in
the prior year period. Selling, general and administrative expenses as a
percentage of revenues were 22.9% compared with 22.6% a year ago due to the
increase in consulting and search/recruitment as a percentage of total revenues
in 1998. These higher gross margin businesses have higher operating expenses
than flexible staffing and managed services.
LICENSEE COMMISSIONS. Licensee commissions increased 12.6% to $50.8 million
from $45.1 million in the prior year period and is consistent with the growth in
licensee revenues. Licensee commissions as a percentage of the related licensee
revenues remained constant at 17.0%.
AMORTIZATION OF INTANGIBLES. Amortization expense increased 21.9% to $22.6
million from $18.5 million in the prior year period reflecting the increase in
intangible assets arising from acquisitions.
INTEREST EXPENSE. Interest expense increased 19.3% to $30.2 million from
$25.3 million last year. This increase primarily resulted from increased
borrowings for acquisitions, which began in the second quarter of 1997. The
Company had average borrowings outstanding during 1998 of $452.5 million at an
average rate of interest, including the effects of interest rate swaps, of 6.5%
compared with $361.2 million outstanding during 1997 at an average rate of
interest of 6.9%.
INTEREST INCOME. Interest income increased to $6.3 million from $1.0
million last year, primarily due to the investment of proceeds from the
Company's common stock and notes offerings in May 1998.
GAIN ON SALE OF HEALTHCARE BUSINESS. The gain on sale of HealthCare of $5.3
million in 1997 resulted from the divestiture of the Company's HealthCare
business in the third quarter of 1997. The Company consummated the sale of the
remaining portion of HealthCare, Interim HealthCare of New York, Inc. in October
1998, which did not have a material impact on results of operations in 1998.
TAXES ON EARNINGS. The effective tax rate for 1998 was 44.4% compared with
47.8% in 1997. The 1997 effective rate includes an approximate 100% effective
rate on the $5.3 million HealthCare sale gain due to a lower tax basis than book
basis in this business. Excluding the impact of the HealthCare gain, the
effective rate in 1997 was 44.2%.
EXTRAORDINARY ITEM. In June 1998, the Company prepaid its U.S. dollar
denominated term loan with a portion of the net proceeds from its common stock
and notes offerings, and recognized an extraordinary charge for early
extinguishment of debt of $2.8 million (net of income taxes) including costs
associated with the termination of the related interest rate swap agreements.
NET EARNINGS. Net earnings before the extraordinary loss on debt
extinguishment increased 37.8% to $58.6 million ($1.29 per diluted share) from
$42.5 million ($1.05 per diluted share) in the prior year period. This
represents a 22.9% increase in per share earnings before extraordinary item. The
weighted average number of shares (as adjusted for the dilutive impact of common
stock equivalents) increased to 48.2 million from 40.4 million in the prior
year, primarily due to the issuance of 7.0 million shares of common stock and
$207.0 million of convertible subordinated debt in the second quarter.
FISCAL 1997 COMPARED WITH 1996
REVENUES. Revenues in 1997 increased 40.2% to $1.6 billion from $1.1
billion in the prior year. Excluding revenues from the HealthCare Business, 1997
revenues increased 54.9% from $915.9 million.
20
<PAGE>
The following comparisons exclude HealthCare. Consulting revenues increased
41.4% reflecting strong internal growth in IT and the acquisition of Aim in
March 1997. Managed services increased 44.4% reflecting the continued expansion
of the Interim On-Premise program and an increase in technology help-desk
contracts. Search/recruitment increased to $148.9 million in 1997 from $15.1
million in the prior year primarily due to the acquisitions of Michael Page in
April 1997 and Aim in March 1997. Flexible staffing revenues increased 39.9%
reflecting an acquisition in The Netherlands in November 1996 and Michael Page
in April 1997; and strong organic growth in North American administrative and
light industrial flexible staffing.
GROSS PROFIT. Gross profit in 1997 increased 50.0% to $527.1 million from
$351.4 million in the prior year. Gross profit margin was 32.8% compared with
30.6% in fiscal 1996. Excluding HealthCare, gross profit margin was 31.8%
compared with 28.1% in fiscal 1996. Higher margins were principally due to an
increase in the amount of consulting and search/recruitment revenues as a
percentage of total revenues due to the acquisitions of Michael Page and Aim in
1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 49.0% to $363.2 million from $243.7 million in
the prior year period. Selling, general and administrative expenses as a
percentage of revenues were 22.6% compared with 21.2% in 1996 due to the
increase in consulting and search/recruitment as a percentage of total revenues
in 1997. These higher gross margin businesses have higher operating expenses
than flexible staffing, consulting, managed services.
LICENSEE COMMISSIONS. Licensee commissions increased 14.2% to $45.1 million
from $39.5 million in the prior year period and is consistent with the growth in
licensee revenues. Licensee commissions as a percentage of the related licensee
revenues approximated 17.0% in both 1997 and 1996.
AMORTIZATION OF INTANGIBLES. Amortization expense increased 110.1% to $18.5
million from $8.8 million in the prior year period reflecting the increase in
intangible assets arising from acquisitions, primarily Michael Page.
INTEREST EXPENSE. Interest expense increased 343.7% to $25.3 million from
$5.7 million in 1996. This resulted from increased borrowings for acquisitions,
primarily Michael Page. The Company had average borrowings outstanding during
1997 of $361.2 million and accrued an average interest rate of 6.9% compared
with average borrowings of $102.2 million outstanding during 1996 and an average
effective interest rate of 6.2%.
INTEREST INCOME. Interest income increased to $1.0 million in 1997,
primarily due to the investment of cash.
GAIN ON SALE OF HEALTHCARE BUSINESS. The gain on sale of HealthCare
Business of $5.3 million in 1997 resulted from the divestiture of the Company's
HealthCare Business in the third quarter of 1997.
TAXES ON EARNINGS. The effective tax rate for 1997 was 47.8% compared with
49.0% in 1996. The 1997 effective rate includes an approximate 100% effective
rate on the $5.3 million HealthCare sale gain due to a lower tax basis than book
basis in this business. The high rate in 1996 resulted from a large portion of
the 1996 merger expense being nondeductible. The effective tax rates excluding
these two unusual items were 44.2% and 43.0% for the years ended December 26,
1997 and December 27, 1996, respectively. The increase in the effective rate,
excluding unusual items, resulted from higher levels of non-deductible goodwill
in 1997.
21
<PAGE>
NET EARNINGS. Net earnings excluding merger expenses increased 39.1% to
$42.5 million ($1.05 per diluted share) from $30.6 million ($0.91 per diluted
share) in the prior year period. This represents a 15.4% increase in per share
earnings. Including merger expenses, net earnings increased 84.7% to $42.5
million ($1.05 per diluted share) from $23.0 million ($0.69 per diluted share)
in the prior year period. The weighted average number of shares used in the per
share calculation (as adjusted for the dilutive impact of common stock
equivalents) increased to 40.4 million from 33.4 million in the prior year
period, primarily due to the additional shares issued as a result of the public
offering on October 17, 1996.
OPERATING SEGMENTS
Interim currently operates in three operating segments: North America,
Europe and Australia/Asia. In 1997 and 1996, the Company's operating segments
also included HealthCare. See Operations Overview and notes to the consolidated
financial statements included herein for further discussion and financial
information regarding these operating segments.
22
<PAGE>
Information on operating segments and a reconciliation to earnings before
income taxes and extraordinary item for the years ended December 25, 1998,
December 26, 1997 and December 27, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------------------------
DEC. 25, 1998 DEC. 26, 1997 DEC. 27, 1996
------------------------- ------------------------- -------------------------
% OF % OF % OF
TOTAL TOTAL TOTAL
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
North America........................ $ 1,382,383 73.1% $ 1,159,089 72.1% $ 905,611 78.9%
Europe............................... 455,845 24.1% 223,345 13.9% 10,272 0.9%
Australia/Asia....................... 51,885 2.8% 36,233 2.2% -- --
------------ ----------- ------------ ----------- ------------ -----------
1,890,113 100.0% 1,418,667 88.2% 915,883 79.8%
HealthCare........................... -- -- 189,589 11.8% 231,268 20.2%
------------ ----------- ------------ ----------- ------------ -----------
$ 1,890,113 100.0% $ 1,608,256 100.0% $ 1,147,151 100.0%
------------ ----------- ------------ ----------- ------------ -----------
------------ ----------- ------------ ----------- ------------ -----------
<CAPTION>
% OF % OF % OF
REVENUES REVENUES REVENUES
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
GROSS PROFIT:
North America........................ $ 405,027 29.3% $ 326,416 28.2% $ 254,222 28.1%
Europe............................... 207,420 45.5% 107,514 48.1% 2,734 26.6%
Australia/Asia....................... 22,347 43.1% 16,674 46.0% -- --
------------ ----------- ------------ ----------- ------------ -----------
634,794 33.6% 450,604 31.8% 256,956 28.1%
HealthCare........................... -- -- 76,539 40.4% 94,406 40.8%
------------ ----------- ------------ ----------- ------------ -----------
$ 634,794 33.6% $ 527,143 32.8% $ 351,362 30.6%
------------ ----------- ------------ ----------- ------------ -----------
------------ ----------- ------------ ----------- ------------ -----------
<CAPTION>
% OF % OF % OF
REVENUES REVENUES REVENUES
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
SEGMENT CONTRIBUTION:
North America........................ $ 111,908 8.1% $ 91,293 7.9% $ 72,674 8.0%
Europe............................... 63,765 14.0% 35,057 15.7% 746 7.3%
Australia/Asia....................... 4,651 9.0% 4,533 12.5% -- --
------------ ----------- ------------ ----------- ------------ -----------
180,324 9.5% 130,883 9.2% 73,420 8.0%
Healthcare........................... -- -- 16,340 8.6% 22,425 9.7%
------------ ----------- ------------ ----------- ------------ -----------
180,324 9.5% 147,223 9.2% 95,845 8.4%
----------- ----------- -----------
Central Costs........................ 51,152 46,815 36,437
Gain on sale of HealthCare........... -- (5,300) --
Merger expense....................... -- -- 8,600
Interest, net........................ 23,819 24,269 5,696
------------ ------------ ------------
Earnings before income taxes and
extraordinary item................. $ 105,353 $ 81,439 $ 45,112
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
NORTH AMERICA. North American revenues, which represented 73.1% of total
revenues in 1998, increased 19.3% to $1.4 billion from $1.2 billion in the prior
year. 1998 gross profit in North America increased 24.1% over 1997 and the gross
profit margin increased to 29.3% from 28.2% in the prior year. Segment
contribution (income before central costs, interest and income taxes) increased
22.6% over 1997. Higher revenues in 1998 compared with 1997 resulted from strong
organic growth rates in most service offerings with particularly strong growth
in technology related consulting. Several acquisitions, including Aim in March
1997 and other acquisitions made throughout 1998 in outplacement and executive
coaching, also contributed to revenue growth. Both gross profit margin and
segment contribution rates expanded in
23
<PAGE>
1998 compared with 1997 due to higher pricing from Technology Consulting and an
increase in consulting and search/recruitment revenues as a percentage of total
revenues.
North American revenues, which represented 72.1% of total revenues in 1997,
increased 28.0% to $1.2 billion from $905.6 million in 1996. Gross profit in
North America increased 28.4% over 1996 and the gross profit margin increased to
28.2% in 1997 from 28.1% in the prior year. Segment contribution in 1997
increased 25.6% over 1996. Higher revenues in 1997 compared with 1996 resulted
from strong organic growth rates in most service offerings with particularly
strong growth in both technology related consulting and managed services
including the continued expansion of the On-Premise program. The Aim acquisition
in March 1997 also contributed to revenue growth. Lower segment contribution
rates resulted primarily from higher costs associated with self insured losses
and increased amortization.
EUROPE. European revenues, which represented 24.1% of total revenues in
1998, increased 104.1% to $455.8 million from $223.3 million in the prior year.
1998 gross profit in Europe increased 92.9% over 1997 and the gross profit
margin decreased to 45.5% from 48.1% in the prior year. Segment contribution
increased 81.9% over 1997. Factors contributing to the increase in revenues,
gross profit and segment contribution include the acquisitions of Crone Corkill
in March 1998, AGO in July 1998 and Michael Page in April 1997, combined with
Michael Page's continued organic growth subsequent to the acquisition. The
decrease in European gross profit margin is primarily due to increased flexible
staffing revenues as a percentage of total revenues. Flexible staffing gross
profit margins are lower than search/recruitment. The decline in gross profit
margin was partially offset by an increase in technology related consulting
revenues. The decrease in segment contribution as a percentage of revenues from
15.7% in 1997 to 14.0% in 1998 resulted primarily from lower gross profit
margin.
European revenues represented 13.9% of total revenues in 1997 and increased
to $223.3 million from $10.3 million in 1996. Gross profit in Europe increased
to $107.5 million from $2.7 million in 1996 and the gross profit margin
increased to 48.1% in 1997 from 26.6% in the prior year. Segment contribution in
1997 increased to $35.1 million from $0.7 million in 1996. Factors contributing
to the increase in revenues, gross profit and segment contribution include the
acquisition of Michael Page in April 1997, combined with Michael Page's
continued organic growth subsequent to the acquisition.
AUSTRALIA/ASIA. Australian/Asian revenues, which represented 2.8% of total
revenues in 1998, increased 43.2% to $51.9 million. 1998 gross profit in
Australia/Asia increased 34.0% over 1997 and the gross profit margin decreased
to 43.1% from 46.0% in the prior year. Segment contribution increased slightly
over 1997. The increase in revenues, gross profit and segment contribution was
due to the acquisition of Michael Page in April 1997, combined with its
continued organic growth subsequent to the acquisition. The December 1998
acquisition of Australia-based Computer Power had no impact on 1998 results. The
decrease in Australian/Asian gross profit margin and segment contribution margin
is primarily due to the disproportionate increase in flexible staffing revenues
compared with search/recruitment revenues.
Australian/Asian revenues in 1997 represented 2.2% of total revenues. The
Company did not have any operations in the Australian/Asian market in 1996.
HEALTHCARE. HealthCare revenues, which represented 11.8% of total revenues
in 1997, decreased 18.0% to $189.6 million from 1996 due to the sale of
HealthCare at the end of the third quarter in 1997. Gross profit and segment
contribution in HealthCare decreased 18.9% and 27.1%, respectively, over 1996.
24
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
Historically, the Company has financed its operations through cash generated
by operating activities and bank lines of credit. The Company's principal uses
of cash are funding acquisitions, capital expenditures, working capital needs
and repayment of debt. The nature of the Company's business requires payment of
wages to its flexible staff and consultants on a weekly or bi-weekly basis,
while payments from clients are generally received 30-60 days after billing. The
Company believes that its internally generated funds and lines of credit are
sufficient to support operating activities during the next 12 months.
In May 1998, the Company completed an offering of 7.0 million shares of its
Common Stock (the "Common Stock Offering"), resulting in proceeds to the Company
of approximately $197.0 million net of issuance costs and offering expenses.
Concurrently with the Common Stock Offering, the Company completed an offering
of $207.0 million of 4 1/2% Convertible Subordinated Notes due 2005 (the "Notes
Offering"), resulting in proceeds to the Company of approximately $201.3 million
net of issuance costs and offering expenses. A portion of the proceeds from the
Common Stock and Notes Offerings was used to repay borrowings under the
Company's existing credit facilities and for recent acquisitions. The balance of
the proceeds will be used for general corporate purposes, including strategic
acquisitions.
Cash provided by operating activities in 1998 was $69.2 million compared
with cash provided in 1997 of $57.8 million and cash used in 1996 of $6.1
million. Higher operating cash flow in 1998 resulted from increased earnings,
higher amortization and depreciation, a larger increase in other assets in 1997
associated with a long-term receivable related to a new major customer contract
and the 1997 gain on the sale of HealthCare. The increase in 1998 operating cash
flow was partially offset by less cash provided by changes in working capital in
1998 compared with 1997. Higher cash flow from working capital changes in 1997
was primarily due to the timing of the Company's fiscal year end in 1997,
increases in interest payable and the timing of advertising and sub-contracted
vendor payments at the end of 1997. Higher operating cash flow in 1997 compared
with cash used in 1996 resulted from increased earnings, amortization and
depreciation, combined with an increase in accounts payable and accrued
liabilities. Operating cash flow in 1996 was also impacted by higher receivable
levels due to increases in days sales outstanding and $7.6 million (after-tax)
of merger expenses paid.
Investing activities used $158.3 million in 1998 primarily due to
acquisitions in the areas of outplacement and career consulting, technology
consulting, accounting search/recruitment and flexible staffing and European
flexible staffing. Investing activities in 1998 included $37.5 million of
capital expenditures primarily for new computer hardware and software to upgrade
and expand the Company's information technology capabilities and new office
related expenditures. Investing activities used $474.7 million in 1997 primarily
for the acquisitions of Michael Page and Aim and capital expenditures of $24.9
million for the expansion of the Company's headquarters and branch locations and
for furniture and fixtures for new offices. Investing activities in 1997 were
partially offset by the proceeds from the sale of the HealthCare business.
Investing activities used $29.3 million in 1996 which included $33.0 million of
capital expenditures for the expansion of the Company's headquarters and to
upgrade many of its information technology systems. Management expects
expenditures in 1999 to approximate 1998 levels.
Cash provided by financing activities was $226.8 million, $413.5 million and
$50.3 million in 1998, 1997 and 1996, respectively. Cash provided by financing
activities in 1998 primarily reflects proceeds from the Common Stock and Notes
Offerings, offset by repayment of borrowings under the Company's existing credit
facilities. In 1997, cash provided by financing activities resulted from
borrowings under a multi-currency credit facility primarily for the acquisition
of Michael Page. Cash provided by financing activities in 1996 primarily
reflects proceeds from the October 1996 common stock offering, offset by the
repayment of borrowings under the Company's credit facilities.
25
<PAGE>
The Company intends to continue to make strategic acquisitions to grow its
business. Funding for these acquisitions will come from: i) internally generated
funds; ii) borrowings on the Company's credit facility; and iii) raising
additional capital.
FINANCING
The Company has a $359.2 million multi-currency syndicated credit agreement
entered into as of May 1, 1997 and amended thereafter ("Credit Facility").
Outstanding borrowings at December 25, 1998 subject to this Credit Facility were
a $214.1 million revolving loan and $14.3 million in loan notes to prior
shareholders of Michael Page. The revolving loans and loan notes are denominated
in British pound sterling. Borrowings under this Credit Facility are unsecured.
The Credit Facility is available to fund the Company's acquisitions, to supply
working capital and to provide for general corporate needs. Interest rates on
amounts outstanding under the Credit Facility are based on LIBOR plus a variable
margin. The Credit Facility contains customary covenants, which include
restrictions on the payment of cash dividends, as well as the maintenance of
certain financial ratios including minimum net worth, restrictions on the
incurrence of liens and additional indebtedness. In addition, the Company has
established short-term, unsecured lines of credit with certain banks. Interest
rates on these lines of credit are based on LIBOR and are available to fund the
Company's short-term capital requirements. There was approximately $132.6
million available for future borrowings under these agreements at December 25,
1998.
In May 1998, the Company also issued $207.0 million of 4 1/2% Convertible
Subordinated Notes due June 1, 2005. See notes to the consolidated financial
statements for discussion of these notes.
YEAR 2000 COMPLIANCE
As discussed in the Company's 1997 Annual Report on Form 10-K, the Company
determined it will be required to upgrade certain application systems to ensure
operability after the year 1999. To ensure that the Company's computer systems
are Year 2000 compliant, the Company continues to utilize internal and external
resources for testing and project management of the Year 2000 modifications
("Year 2000 project" or "project"). The Company anticipates completion of the
Year 2000 project in mid 1999, which is based upon expected vendor upgrades to
compliant versions of software.
The Company has implemented a five-step process to address Year 2000 issues,
consisting of awareness, assessment, renovation, validation and implementation.
This uniform process is being used across the entire Company, including new
acquisitions, to ensure consistent results throughout the project. A majority of
the Company's applications are either implemented or in the late phases of
implementation, and some of the Company's applications are in the validation
stage. The most critical business system, the Company's largest payroll and
billing system, has been validated and implemented.
The Company is in the process of contacting vendors and others on whom it
relies to assure that their systems will be converted in a timely fashion. Based
on current information received, the Company does not foresee any material
potential risk with its significant vendors and business partners. However,
there can be no assurance that the systems of other companies on which the
Company's systems rely will be converted timely, or that a failure to convert by
another company would not have a material adverse effect on the Company.
The Company estimates that the total cost of the project will be
approximately $750,000, which includes both personnel costs related to project
management, programming and hardware and software upgrades. Of this total,
approximately $450,000 has been incurred as of December 25, 1998. The cost of
the project and the estimated completion dates are based on management's best
estimates, which were derived utilizing assumptions of future events, including
the continued availability of certain resources, third-party modification plans
and other factors. There can be no assurance that these estimates will prove
accurate, and actual results could differ from those estimated if these
assumptions prove inaccurate. Based upon progress to date, the Company believes
that it is unlikely that the foregoing factors will cause actual results
26
<PAGE>
to differ significantly from those estimated. However, for those systems in the
pre-implementation phases, no assurance can be given that those systems will be
Year 2000 compliant, or that the ultimate costs required to address the Year
2000 issue or the impact of any failure to achieve substantial Year 2000
compliance will not have a material adverse effect on the Company's financial
condition. If certain systems or systems of other companies on which the Company
relies fail to be converted timely, the Company will develop a contingency plan
in early 1999.
INFLATION
The effects of inflation on the Company's operations were not significant
during the periods presented in the financial statements.
IMPACT OF THE EURO
The Euro was introduced on January 1, 1999, at which time the eleven
irrevocable participating European Monetary Union (EMU) member countries
established fixed conversion rates between their existing currencies (legacy
currencies) and the Euro. The legacy currencies will continue to be used as
legal tender through January 1, 2002. The Company has initiated an internal
analysis regarding the business and systems issues related to the Euro
conversion and has begun a comprehensive action plan to ensure that all
necessary modifications are made on a timely basis. The costs of addressing the
Euro conversion are not expected to be material. Depending upon the type of
cost, the amount will be charged to operations as incurred or capitalized as
software consistent with the Company's policies. The Company believes that the
conversion to the Euro will not have a significant impact on the marketing
strategy for the Company's international operations. The Company has studied the
implications of the overall Euro conversion and does not expect it to have a
material impact on the Company's financial condition or results of operations
upon adoption.
SEASONALITY AND CYCLICALITY OF BUSINESS
The Company's businesses are not seasonal in nature. However, the staffing
industry has historically been considered to be cyclical, often acting as a
coincidental indicator of both economic downswings and upswings. The Company
believes that the balance between the Company's service lines may help reduce
the impact of cyclicality. The growth of Aim, which specializes in outplacement,
is also expected to mitigate the impact of cyclicality as outplacement growth
rates amplify during a slower economy, offsetting other services which may be
fairly sensitive to economic declines. As a result of general shifting of
employment patterns, the Company believes it may become less cyclical. No single
customer accounts for more than 2% of the Company's revenues.
OTHER
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (the "Statement" or "SFAS No. 133"). The Statement
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 133 is effective for fiscal years beginning after
June 15, 1999 and cannot be applied retroactively. The Company has not yet
quantified the impacts of adopting SFAS No. 133 on its financial statements and
has not determined the timing of or method of adoption of the Statement.
27
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of December 25, 1998, the Company maintains a portion of its cash and
cash equivalents in financial instruments with original maturities of three
months or less. These financial instruments are subject to interest rate risk
and will decline in value if interest rates increase. Due to the short duration
of these financial instruments, an immediate increase of 1% in interest rates
would not have a material effect on the Company's financial condition.
The Company's outstanding debt under the revolving Credit Facility and other
borrowings excluding the convertible subordinated notes at December 25, 1998
were $241.8 million. Interest rates on these borrowings are based on LIBOR plus
a variable margin. Based on the outstanding balance, a change of 1% in the
interest rate would cause a change in interest expense of approximately $2.4
million on an annual basis not considering the offset of the interest rate swap
discussed below.
The Company utilizes interest rate swap agreements to reduce the impact on
interest expense of fluctuating interest rates on its variable rate debt. The
Company had a variable to variable interest rate swap agreement outstanding as
of December 25, 1998 with the notional amount of $125.5 million which
effectively converts interest from a British LIBOR basis to a broader index and
caps the Company's exposure to upward movement in rates at 8.5%. This agreement
expires in 2002. The fair value of the outstanding interest rate swap as of
December 25, 1998 was $4.1 million.
In May 1998, the Company issued $207.0 million of 4 1/2% Convertible
Subordinated Notes due June 2005. The fair value of the Company's fixed rate
convertible subordinated debt as of December 25, 1998 was $175.6 million
compared with the related carrying value of $207.0 million.
The purpose of the Company's foreign exchange hedging activities is to
mitigate the impact of changes in foreign currency exchange rates. The Company
attempts to hedge transaction exposures through natural offsets. To the extent
this is not practicable, exposure areas which are considered for hedging include
foreign currency denominated receivables and payables, intercompany loans, firm
committed transactions and dividends related to foreign subsidiaries. The
Company uses financial instruments, principally forward exchange contracts, in
its management of foreign currency exposures. The Company does not enter into
forward contracts for trading purposes. At December 25, 1998 the Company had
outstanding foreign currency forward contracts to purchase Australian dollars in
the notional amount of $96.1 million. The cost to terminate foreign currency
forward contracts as of December 25, 1998 was $2.5 million. The Company
purchased the Australian dollars pursuant to their contract subsequent to
year-end in order to complete the purchase of Computer Power.
Part I and Part II, Items 7 (Management's Discussion and Analysis of
Financial Condition and Results of Operations) and 7A (Quantitative and
Qualitative Disclosures about Market Risk) of this Annual Report on Form 10-K
contain forward-looking statements, including statements regarding, among other
matters: (i) the Company's plans, intentions and expectations with respect to
its future prospects, including its business and growth strategies; (ii)
industry trends and competitive conditions; (iii) expected capital expenditures
to be made in the future; (iv) the Company's plans, beliefs and expectations
with respect to changes which have been or will be made to its computerized
management information systems to address Year 2000 issues; (v) resolution of
pending litigation without material adverse effect on the Company; (vi) the
Company's expectations about the transition to the Euro; and (vii) the Company's
quantitative and qualitative estimates as to market risk. This notice is
intended to take advantage of the "safe harbor" provided by the Private
Securities Litigation Reform Act of 1995 with respect to such forward-looking
statements. These forward-looking statements involve a number of risks and
uncertainties. Among others, factors that could cause actual results to differ
materially from the Company's beliefs or expectations are the following:
industry trends and trends in the general economy; competitive factors in the
markets in which the Company operates; changes in regulatory requirements which
are applicable to the Company's business; and other factors referenced herein or
from time to time in the Company's Securities and Exchange Commission reports.
28
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Interim Services Inc.
Fort Lauderdale, Florida
We have audited the accompanying consolidated balance sheets of Interim
Services Inc. and subsidiaries as of December 25, 1998 and December 26, 1997,
and the related consolidated statements of earnings, stockholders' equity and
cash flows for each of the three years in the period ended December 25, 1998.
Our audits also included the financial statement schedule listed in the Index at
Item 14. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Interim Services Inc. and
subsidiaries as of December 25, 1998 and December 26, 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 25, 1998 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/s/ DELOITTE & TOUCHE LLP
Fort Lauderdale, Florida
February 4, 1999
29
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DEC. 25, DEC. 26, DEC. 27,
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenues................................................................ $ 1,890,113 $ 1,608,256 $ 1,147,151
Cost of services........................................................ 1,255,319 1,081,113 795,789
------------ ------------ ------------
Gross profit............................................................ 634,794 527,143 351,362
------------ ------------ ------------
Selling, general and administrative expenses............................ 432,281 363,152 243,652
Licensee commissions.................................................... 50,791 45,091 39,500
Amortization of intangibles............................................. 22,550 18,492 8,802
Interest expense........................................................ 30,157 25,271 5,696
Interest income......................................................... (6,338) (1,002) --
Gain on sale of HealthCare business..................................... -- (5,300) --
Merger expense.......................................................... -- -- 8,600
------------ ------------ ------------
529,441 445,704 306,250
------------ ------------ ------------
Earnings before income taxes and extraordinary item................... 105,353 81,439 45,112
Income taxes............................................................ 46,776 38,928 22,097
------------ ------------ ------------
Earnings before extraordinary item...................................... 58,577 42,511 23,015
Extraordinary item -- early extinguishment of debt, net of income
taxes................................................................. 2,773 -- --
------------ ------------ ------------
Net earnings............................................................ $ 55,804 $ 42,511 $ 23,015
------------ ------------ ------------
------------ ------------ ------------
Basic earnings per share:
Earnings before extraordinary item...................................... $ 1.32 $ 1.08 $ 0.71
Extraordinary item...................................................... (0.06) -- --
------------ ------------ ------------
Net earnings............................................................ $ 1.26 $ 1.08 $ 0.71
------------ ------------ ------------
------------ ------------ ------------
Diluted earnings per share:
Earnings before extraordinary item...................................... $ 1.29 $ 1.05 $ 0.69
Extraordinary item...................................................... (0.06) -- --
------------ ------------ ------------
Net earnings............................................................ $ 1.23 $ 1.05 $ 0.69
------------ ------------ ------------
------------ ------------ ------------
Basic weighted average shares outstanding............................... 44,237 39,305 32,450
------------ ------------ ------------
------------ ------------ ------------
Diluted weighted average shares outstanding............................. 48,244 40,407 33,418
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to Consolidated Financial Statements.
30
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DEC. 25, DEC. 26,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................................... $ 153,314 $ 15,570
Receivables, less allowance for doubtful accounts of $8,937 and $5,229.............. 327,296 238,834
Insurance deposits.................................................................. 22,140 23,974
Other current assets................................................................ 42,024 29,723
------------ ------------
Total current assets.......................................................... 544,774 308,101
Goodwill, net....................................................................... 705,837 475,656
Tradenames and other intangibles, net............................................... 213,357 219,472
Property and equipment, net......................................................... 90,622 65,475
Other assets........................................................................ 58,854 23,030
------------ ------------
$ 1,613,444 $ 1,091,734
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt................................................... $ 21,943 $ 33,827
Due to Computer Power shareholders.................................................. 111,008 --
Accounts payable and other accrued expenses......................................... 101,469 67,066
Accrued salaries, wages and payroll taxes........................................... 125,890 83,401
Accrued self-insurance losses....................................................... 34,947 29,744
Accrued income taxes................................................................ 23,232 20,853
------------ ------------
Total current liabilities..................................................... 418,489 234,891
Long-term debt........................................................................ 426,856 379,197
Other long-term liabilities........................................................... 30,159 4,054
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $.01 per share; authorized 2,500,000 shares; none issued
or outstanding.................................................................... -- --
Common stock, par value $.01 per share; authorized 100,000,000 shares; issued and
outstanding 47,335,654 and 39,745,761 shares...................................... 473 397
Additional paid-in capital.......................................................... 468,032 260,067
Retained earnings................................................................... 262,265 206,461
Accumulated other comprehensive income.............................................. 7,170 6,667
------------ ------------
Total stockholders' equity............................................................ 737,940 473,592
------------ ------------
$ 1,613,444 $ 1,091,734
------------ ------------
------------ ------------
</TABLE>
See notes to Consolidated Financial Statements.
31
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID IN TREASURY RETAINED COMPREHENSIVE
STOCK CAPITAL STOCK EARNINGS INCOME TOTAL
----------- ----------- ----------- --------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance as of December 29, 1995..................... $ 308 $ 84,967 $ -- $ 141,308 $ (294) $ 226,289
---------
Comprehensive income:
Net earnings...................................... -- -- -- 23,015 -- 23,015
Other comprehensive income, net of tax:
Unrealized loss on marketable securities........ -- -- -- -- (26)(a) (26)
Foreign currency translation adjustments........ -- -- -- -- 110(b) 110
---------
Comprehensive income.............................. 23,099
---------
Transactions of pooled company...................... -- 271 -- (373) -- (102)
Proceeds from exercise of employee stock options.... 2 3,116 -- -- -- 3,118
Sale of 7,900,000 shares of common stock in a public
offering, net...................................... 80 162,595 -- -- -- 162,675
Repurchase of 26,356 shares......................... -- -- (460) -- -- (460)
Other............................................... -- 92 -- -- -- 92
----- ----------- ----- --------- ------ ---------
Balance as of December 27, 1996..................... 390 251,041 (460) 163,950 (210) 414,711
---------
Comprehensive income:
Net earnings...................................... -- -- -- 42,511 -- 42,511
Other comprehensive income, net of tax:
Foreign currency translation adjustments........ -- -- -- -- 6,877(c) 6,877
---------
Comprehensive income.............................. 49,388
---------
Proceeds from exercise of employee stock options,
including tax benefit.............................. 7 8,744 460 -- -- 9,211
Common stock issued under Employee Stock Purchase
Plan............................................... -- 177 -- -- -- 177
Other............................................... -- 105 -- -- -- 105
----- ----------- ----- --------- ------ ---------
Balance as of December 26, 1997..................... 397 260,067 -- 206,461 6,667 473,592
---------
Comprehensive income:
Net earnings...................................... -- -- -- 55,804 -- 55,804
Other comprehensive income, net of tax:
Foreign currency translation adjustments........ -- -- -- -- 503(d) 503
---------
Comprehensive income.............................. 56,307
---------
Proceeds from exercise of employee stock options,
including tax benefit.............................. 5 8,966 -- -- -- 8,971
Sale of 7,000,000 shares of common stock in a public
offering, net...................................... 70 196,945 -- -- -- 197,015
Common stock issued under Employee Stock Purchase
Plan............................................... 1 2,054 -- -- -- 2,055
----- ----------- ----- --------- ------ ---------
Balance as of December 25, 1998..................... $ 473 $ 468,032 $ -- $ 262,265 $ 7,170 $ 737,940
----- ----------- ----- --------- ------ ---------
----- ----------- ----- --------- ------ ---------
</TABLE>
- --------------------------
(a) Net of tax benefit of $25
(b) Net of tax expense of $101
(c) Net of tax expense of $6,343
(d) Net of tax expense of $484
See notes to Consolidated Financial Statements.
32
<PAGE>
INTERIM SERVICES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DEC. 25, DEC. 26, DEC. 27,
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings before extraordinary item................................... $ 58,577 $ 42,511 $ 23,015
Adjustments to reconcile net earnings to net cash from operating
activities:
Depreciation and amortization.......................................... 44,351 34,874 18,911
Deferred income tax (benefit) expense.................................. (5,206) (5,654) 687
Gain on sale of HealthCare business.................................... -- (5,300) --
Changes in assets and liabilities, net of effects of acquisitions:
Receivables.......................................................... (47,645) (48,288) (40,724)
Other assets......................................................... (5,199) (12,615) (18,253)
Accounts payable and accrued liabilities............................. 23,911 50,772 8,828
Other................................................................ 453 1,457 1,437
----------- ----------- -----------
Net Cash Provided by (Used in) Operating Activities................ 69,242 57,757 (6,099)
----------- ----------- -----------
Cash Flows from Investing Activities:
Acquisition, net of cash acquired........................................ (136,223) (570,356) (11,964)
Capital expenditures..................................................... (37,502) (24,913) (32,982)
Proceeds from the sale of HealthCare business, net....................... 15,410 113,109 --
Net proceeds from the sale of marketable securities...................... -- 7,499 15,631
----------- ----------- -----------
Net Cash Used in Investing Activities.............................. (158,315) (474,661) (29,315)
----------- ----------- -----------
Cash Flows from Financing Activities:
Debt proceeds............................................................ 205,730 509,019 --
Debt repayments.......................................................... (186,843) (101,911) (114,727)
Net proceeds from common stock offering.................................. 197,015 -- 163,114
Proceeds from exercise of employee stock options and other............... 10,915 6,428 1,940
----------- ----------- -----------
Net Cash Provided by Financing Activities.......................... 226,817 413,536 50,327
----------- ----------- -----------
Increase/(decrease) in cash and cash equivalents......................... 137,744 (3,368) 14,913
Cash and cash equivalents, beginning of period........................... 15,570 18,938 4,025
----------- ----------- -----------
Cash and cash equivalents, end of period................................. $ 153,314 $ 15,570 $ 18,938
----------- ----------- -----------
----------- ----------- -----------
Suplemental Cash Flow Information:
CASH PAID DURING THE YEAR FOR:
Income taxes........................................................... $ 44,435 $ 37,917 $ 21,602
----------- ----------- -----------
----------- ----------- -----------
Interest............................................................... $ 32,896 $ 21,316 $ 6,546
----------- ----------- -----------
----------- ----------- -----------
NON-CASH ACTIVITY:
Payable in connection with purchase of Computer Power.................. $ 111,008 $ -- $ --
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to Consolidated Financial Statements.
33
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS -- Interim is a worldwide leader in recruiting, assessing and
deploying talent for a wide variety of businesses. Through consulting, managed
services, search/recruitment and flexible staffing, the Company provides
professionals in the fields of information technology, finance, law,
manufacturing and human resources, as well as clerical, administrative and light
industrial staffing.
The Company operates within the staffing industry in 12 countries around the
world: Australia, Canada, France, Germany, Hong Kong, Italy, New Zealand,
Singapore, Spain, The Netherlands, the United Kingdom and the United States. The
Company considers its operating segments to be North America, Europe and
Australia/Asia. These operating segments generally follow the management
organization structure of the Company. The operating segments also represent, in
the opinion of management, the most meaningful aggregation of the Company's
multiple operating units across the world. This aggregation is based upon
geographic similarities including market growth rates, profitability, foreign
currency exposure and local laws and regulations. In each of these operating
segments, the Company's four services, consulting, managed services,
search/recruitment and flexible staffing, are provided.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All material
intercompany transactions and balances have been eliminated. Certain prior year
amounts have been restated to conform with the current year presentation.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Due to the inherent uncertainty involved in making
estimates, actual results reported in future periods may be based upon amounts
which differ from those estimates.
FISCAL YEAR -- The Company's fiscal year is comprised of 52 or 53 weeks,
ending on the last Friday in December. The fiscal years ended December 25, 1998,
December 26, 1997 and December 27, 1996 were all 52 weeks.
CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid
investments with original maturities of 90 days or less at the time of purchase
to be cash equivalents. Cash equivalents are carried at cost which approximates
fair value.
ALLOWANCE FOR DOUBTFUL ACCOUNTS -- The Company carries accounts receivable
at the amount it estimates to be collectible. Accordingly, the Company provides
allowances for accounts receivable it estimates to be uncollectible based on
management's best estimates. Recoveries are recognized in the period they are
received. The ultimate amount of accounts receivable that become uncollectible
could differ from those estimated.
INTANGIBLE ASSETS -- Intangible assets consist principally of goodwill and
tradenames and are being amortized on a straight-line basis over periods of
approximately 37 years. The Company evaluates the recoverability of intangible
assets, as well as amortization periods, to determine whether an adjustment to
carrying values or a revision to estimated useful lives is appropriate.
Recoverability is determined through evaluation of anticipated cash flows on an
undiscounted basis. If the estimated future cash flows are projected to be less
than the carrying value, an impairment write-down would be recorded.
PROPERTY AND EQUIPMENT -- Property and equipment are stated at cost and
depreciated using the straight-line method over the estimated useful lives of
the related assets. Leasehold improvements are amortized over the shorter of
their estimated useful life or the lease term using the straight-line method.
Maintenance and repairs which do not improve or extend the life of an asset are
expensed as incurred.
34
<PAGE>
ACCRUED SELF-INSURANCE LOSSES -- The Company retains a portion of the risk
under its workers' compensation, general liability/professional liability,
employment practices liability insurance programs and health insurance benefits
programs. Reserves have been recorded which reflect the discounted estimated
liabilities including claims incurred but not reported. Workers' compensation
losses, general liability/professional liability and employment practices
liability losses have been discounted at approximately 4.9% and 5.8% at December
25, 1998 and December 26, 1997, respectively. Such liabilities are necessarily
based on estimates and, while management believes that the amount is adequate,
there can be no assurance that changes to management's estimates may not occur
due to limitations inherent in the estimation process. Changes in the estimates
of these accruals are charged or credited to income in the period determined.
The Company funds portions of its retained risks through deposits with insurance
carriers and others. These deposits are reflected as insurance deposits on the
accompanying Consolidated Balance Sheets and reflect the estimated fair market
value of such amounts.
FOREIGN CURRENCY TRANSLATION -- The Company's foreign operations use the
local currency as their functional currency. Assets and liabilities of these
operations are translated at the exchange rates in effect on the balance sheet
date. Income statement items are translated at the average exchange rates for
the year. The impact of currency fluctuation is included in stockholders' equity
as a translation adjustment.
REVENUE RECOGNITION -- The Company generates revenues from sales of services
by its own branch and licensed operations and from royalties earned on sales of
services by its franchise operations. Franchise royalties, which are included in
revenues, were $9.4 million, $23.1 million, and $27.0 million for the years
ended December 25, 1998, December 26, 1997 and December 27, 1996, respectively.
Revenues and the related labor costs and payroll taxes are recorded in the
period in which flexible staffing services are performed. Revenues on placements
are recognized when services provided are substantially completed. Allowances
are established to estimate losses due to placed candidates not remaining
employed for the Company's guarantee period.
The Company utilizes two forms of franchising agreements. Under the first
form, the Company records franchise royalties, based upon the contractual
percentage of franchise sales, in the period in which the franchisee provides
the service. Under the second form (termed "licensee" by the Company), revenues
generated by the licensee and related direct costs are included as part of the
Company's revenues and cost of services, respectively. The net distribution paid
to the licensee is based upon a percentage of the gross profit generated, and is
captioned "licensee commissions" in the Consolidated Statements of Earnings.
INCOME TAXES -- Deferred taxes arise from temporary differences between the
tax basis of an asset or liability and its reported amount in the financial
statements. The Company's policy is to not provide for U.S. income taxes on the
undistributed earnings of foreign operations as such earnings are considered to
be invested for an indefinite period of time and such earnings will only be
repatriated when tax effective to do so. At December 25, 1998, undistributed
earnings of foreign subsidiaries totaled $22.8 million. At December 26, 1997,
these earnings were immaterial. It is not practicable to estimate the amount of
the deferred tax liability on such earnings; however, foreign tax credits would
be available to reduce U.S. income taxes in the event of distribution of
earnings of foreign subsidiaries.
EARNINGS PER SHARE -- Basic earnings per share is computed by dividing the
Company's earnings by the weighted average number of shares outstanding during
the period.
Diluted earnings per share is computed by dividing the Company's earnings by
the weighted average number of shares outstanding and the impact of all dilutive
potential common shares, primarily stock options and convertible subordinated
notes. The dilutive impact of stock options is determined by applying the
treasury stock method and the dilutive impact of the convertible subordinated
notes is determined by applying the "if converted" method.
35
<PAGE>
On August 7, 1997, the Company announced a two-for-one stock split in the
form of a 100% stock dividend, to stockholders of record as of the close of
business on August 18, 1997, payable on September 5, 1997. All shares
outstanding and per share amounts have been restated to reflect the stock split.
DERIVATIVE FINANCIAL INSTRUMENTS -- The Company enters into interest rate
swap agreements and foreign exchange forward contracts as part of the management
of its interest rate and foreign currency exchange rate exposures; it has no
derivative financial instruments held for trading purposes and none of the
instruments are leveraged. All financial instruments are put into place to hedge
specific exposures. Amounts to be paid or received under swap agreements are
recognized over the terms of the agreements as adjustments to interest expense.
Amounts receivable or payable under the agreements are included in receivables
or accrued expenses in the Consolidated Balance Sheets. Gains and losses on
foreign currency forward contracts offset gains and losses resulting from the
underlying transactions. Gains and losses on contracts that hedge specific
foreign currency commitments are deferred and recorded in net income in the
period in which underlying transaction is recorded.
STOCK BASED COMPENSATION -- The Company has chosen to account for
stock-based compensation to employees using the intrinsic value method as
prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock Issued to Employees," and related Interpretations. Accordingly,
compensation cost for stock options issued to employees is measured as the
excess, if any, of the quoted market price of the Company's stock at the date of
grant over the amount an employee must pay for the stock. Compensation cost
related to restricted stock granted as part of bonus compensation is recognized
in the period the bonus is earned and measured using the quoted market price on
the effective grant date. Compensation cost related to stock options of
non-employees is recorded at fair value (in accordance with SFAS No. 123).
NEW ACCOUNTING PRONOUNCEMENTS -- In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (the "Statement"
or "SFAS No. 133"). The Statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The Statement requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. SFAS No. 133 is effective for fiscal years
beginning after June 15, 1999 and cannot be applied retroactively. The Company
has not yet quantified the impacts of adopting SFAS No. 133 on its financial
statements and has not determined the timing of or method of adoption of the
Statement.
ACQUISITIONS AND DISPOSITION
ACQUISITIONS
COMPUTER POWER GROUP LIMITED -- On December 8, 1998, the Company announced
that its cash offer to acquire all of the outstanding shares of Computer Power
Group Limited ("Computer Power"), a public company in Australia, for a maximum
cash amount of approximately $124.3 million (A$ 204.9 million) had become
unconditional. Computer Power provides information technology services,
including consulting, flexible staffing, education and training services with 49
offices in Australia and New Zealand, and one office each in Hong Kong and
Singapore. As of December 25, 1998, the Company had purchased or received and
accepted tenders for approximately 92% of the outstanding shares of Computer
Power. Interim is entitled to acquire the remaining 8% of shares outstanding
pursuant to Australia's compulsory acquisition procedures. This acquisition was
accounted for under the purchase method of accounting. Accordingly, the
operations of Computer Power are included in the Consolidated Statement of
36
<PAGE>
Earnings from the date of acquisition. Due to the nature of a cash tender offer
and timing of the acquisition, Computer Power's operations were immaterial to
the Company's Consolidated Statement of Earnings in fiscal 1998. The excess of
the purchase price over the fair value of the net tangible assets acquired was
$121.7 million. As of December 25, 1998, the purchase price in excess of net
tangible assets acquired has been allocated to goodwill on a preliminary basis
while the Company obtains final information regarding the fair value of assets
acquired and liabilities assumed. Although the allocation and amortization
periods are subject to adjustment, the Company does not expect that such
adjustments will have a material effect on the consolidated financial
statements. Subsequent to year end, $111.0 million of the purchase price was
paid and is included as Due to Computer Power shareholders in the Consolidated
Balance Sheet at December 25, 1998.
Included in other assets in the accompanying Consolidated Balance Sheet as
of December 25, 1998 is $26.6 million related to funds held in escrow by
Computer Power pursuant to the terms of two Research and Development Syndicates
("R&D Syndicates") formed to develop new, commercially viable technology
products. The R&D Syndicates were formed under special legislation in Australia
to promote research and development. At the end of the research and development
projects, the R&D Syndicate investors can exercise put options through June 2002
to sell project results back to the Company for a return of the escrowed funds.
As such, the Company has recorded a $26.6 million liability for the probable
exercise of these put options. Such amount is included in accounts payable and
other long-term liabilities in the accompanying Consolidated Balance Sheet as of
December 25, 1998.
MICHAEL PAGE GROUP, PLC -- On April 18, 1997, the Company completed the
purchase of the outstanding shares of Michael Page Group, PLC ("Michael Page"),
a public company in the United Kingdom, for $577.6 million. This acquisition was
accounted for under the purchase method of accounting. Accordingly, the
operations of Michael Page are included in the Consolidated Statement of
Earnings from the date of acquisition. The excess of the purchase price over the
fair value of the net tangible assets acquired was $512.5 million. This amount
has been allocated to tradenames and goodwill based upon an independent
valuation performed to assist management in this allocation. Both intangible
assets are being amortized over 40 years.
BRANDON SYSTEMS CORPORATION -- On May 23, 1996, the Company completed its
merger with Brandon Systems Corporation ("Brandon"), an information technology
staffing company. The Company issued 7,745,380 shares of its common stock in
exchange for 100% of the outstanding shares of Brandon common stock. In
addition, Brandon stock options outstanding at the effective time of the merger
were converted into options to purchase an aggregate of 415,184 additional
Interim common shares. The merger has been accounted for as a
pooling-of-interests. Accordingly, the historical financial statements for the
periods prior to the merger are restated as though the companies had been
combined. All fees and expenses related to the merger and the consolidation and
restructuring of the combined companies have been expensed. Such fees and
expenses were $8.6 million.
Revenues of Brandon from periods prior to the merger are included in the
accompanying income statements and were $22.3 million for the quarter ended
March 29, 1996. Net earnings and earnings per share related to Brandon were $1.2
million and $0.04, respectively, for the quarter ended March 29, 1996.
OTHER ACQUISITIONS -- During 1998, 1997 and 1996 the Company made certain
other acquisitions that were accounted for under the purchase method of
accounting. Their operations are included in the Consolidated Statements of
Earnings from the date of acquisition.
37
<PAGE>
The fair value of assets acquired and liabilities assumed (excluding cash
acquired) in connection with all acquisitions follows (in thousands):
<TABLE>
<CAPTION>
DEC. 25, DEC. 26, DEC. 27,
1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
Working capital (deficit).................................. $ (1,537) $ (8,456) $ 615
Goodwill and tradenames.................................... 132,042 563,802 12,016
Other net assets........................................... 14,300 15,327 (667)
Debt assumed............................................... (8,582) (317) --
---------- ---------- ---------
Net assets acquired........................................ $ 136,223 $ 570,356 $ 11,964
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
DISPOSITION
HEALTHCARE -- On September 26, 1997, the Company completed the sale of its
HealthCare business to Cornerstone Equity Investors IV, L.P. ("Buyer"). The
Company received $118.6 million in cash at closing ($113.1 million net of
transaction related cash costs), with the remainder of the $134.0 million
purchase price paid in October 1998 when regulatory approval was received for
the ownership transfer of Interim HealthCare of New York Inc. to the Buyer. The
sale did not have a material impact on results of operations in 1998. The
pre-tax gain on sale recognized in 1997 was $5.3 million with taxes on the gain
of $5.3 million.
Pursuant to the terms of the sales agreement and subject to certain
restrictions, the Buyer is permitted to use the "Interim" trademark and trade
names for an initial period of five years. After that time, a license fee will
be charged. Under a transitional service agreement, the Company continues to
provide various services to the Buyer including access to and use of facilities
and information systems. These services will be provided at rates included in
the agreement which approximate the costs the Company will incur. This service
agreement is for two years with an option to request an additional year. The
Company has provided indemnification to the Buyer on various pending issues with
respect to the HealthCare business including certain medicare reimbursement
issues and the collectibility of loans related to the businesses' physical
therapy student loan program. The Company does not expect that the outcome of
these matters will have a material effect on the Company's financial position or
results of operation.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma information presents the results of
operations of the Company for the years ended December 25, 1998 and December 26,
1997 as if the sale of the Company's HealthCare business and the acquisitions of
Michael Page, Computer Power and other acquisitions had occurred at the
beginning of fiscal 1997 (in thousands, except for per share data):
<TABLE>
<CAPTION>
DEC. 25, DEC. 26,
1998 1997
------------ ------------
<S> <C> <C>
Revenues.......................................................... $ 2,105,985 $ 1,791,999
Net earnings before extraordinary item............................ 58,361 33,101
Net earnings...................................................... 55,588 33,101
Net earnings per share before extraordinary item:
Basic........................................................... $ 1.32 $ 0.84
Diluted......................................................... 1.28 0.82
Basic weighted average shares outstanding......................... 44,237 39,305
Diluted weighted average shares outstanding....................... 48,244 40,407
</TABLE>
The pro forma consolidated results of operations are based on historical
financial information of the Company and include adjustments to give effect to
the following: elimination of the gain on the sale of the HealthCare business;
amortization of goodwill and other intangibles arising from the transactions;
interest
38
<PAGE>
expense that would have been incurred to finance the acquisitions, offset by a
reduction of debt from cash flows generated from the sale of the HealthCare
business; elimination of one-time costs incurred by Michael Page and Computer
Power related to their being acquired by the Company; and certain other
adjustments, together with estimated related income tax effects. These unaudited
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which would have actually
resulted had the acquisitions and disposition occurred on the date indicated, or
of future results of operations of the consolidated entities.
39
<PAGE>
INTANGIBLE ASSETS
A summary of intangible assets is as follows (in thousands):
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE LIFE AVERAGE LIFE
(IN YEARS) DEC. 25, 1998 (IN YEARS) DEC. 26, 1997
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Goodwill................................ 37 $763,098 37 $516,058
Tradenames.............................. 39 222,643 40 223,216
Other................................... 5 787 5 3,098
------------ ------------- ------------ -------------
37 986,528 38 742,372
Less accumulated amortization........... (67,334) (47,244)
------------- -------------
$919,194 $695,128
------------- -------------
------------- -------------
</TABLE>
Amortization of intangible assets for the years ended December 25, 1998,
December 26, 1997 and December 27, 1996 amounted to $22.6 million, $18.5 million
and $8.8 million, respectively.
PROPERTY AND EQUIPMENT
A summary of property and equipment follows (in thousands):
<TABLE>
<CAPTION>
LIFE DEC. 25, DEC. 26,
(IN YEARS) 1998 1997
----------- --------- ----------
<S> <C> <C> <C>
Land........................................................ -- $ 4,167 $ 4,167
Buildings................................................... 10 - 40 14,727 14,331
Equipment................................................... 3 - 8 107,194 82,871
Software.................................................... 3 - 5 19,490 15,060
Leasehold improvements and other............................ 3 - 5 11,609 7,653
--------- ----------
157,187 124,082
Less accumulated depreciation and amortization.............. (66,565) (58,607)
--------- ----------
$ 90,622 $ 65,475
--------- ----------
--------- ----------
</TABLE>
Depreciation and amortization of property and equipment for the years ended
December 25, 1998, December 26, 1997 and December 27, 1996 amounted to $21.8
million, $16.4 million, and $10.1 million, respectively.
LONG-TERM DEBT
The Company's long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DEC. 25, DEC. 26,
1998 1997
------------ ------------
<S> <C> <C>
Revolving loan facility, due 2003--
British pound sterling denominated borrowings.................. $ 214,144 $ 209,488
U.S. dollar denominated borrowings............................. -- 10,000
Loan notes denominated in British pound sterling................. 14,322 16,836
U.S. dollar convertible subordinated notes....................... 207,000 --
U.S. dollar denominated term loan................................ -- 176,700
Other foreign debt............................................... 13,333 --
------------ ------------
448,799 413,024
Less current maturities of long-term debt........................ (21,943) (33,827)
------------ ------------
$ 426,856 $ 379,197
------------ ------------
------------ ------------
</TABLE>
40
<PAGE>
The Company has a $359.2 million multi-currency syndicated credit agreement
entered into as of May 1, 1997 and amended thereafter ("Credit Facility"). This
agreement provides a multi-currency revolving loan facility and previously
provided a U.S. dollar denominated term loan. The Credit Facility also allows
for and guarantees sterling denominated loan notes due to certain former
shareholders of Michael Page. Borrowings under this facility are unsecured.
Interest rates on amounts outstanding under the term loan, revolving loan and
loan notes are based on LIBOR plus a variable margin. The facility contains
customary covenants, which include restrictions on the payment of cash
dividends, as well as the maintenance of certain financial ratios including
minimum net worth, restrictions on the incurrence of liens and additional
indebtedness. The average interest rates on outstanding borrowings under this
Credit Facility for the years ended December 25, 1998 and December 26, 1997 were
6.5% and 6.9%, respectively. As of December 25, 1998 the Company had $132.6
million available for future borrowings under the revolving loan portion of this
Credit Facility and other available lines.
On April 23, 1998, the Company filed a registration statement on Form S-3
with the SEC for the sale of $207.0 million of 4 1/2% Convertible Subordinated
Notes (the "Notes Offering") due June 1, 2005. The Notes Offering was
consummated in May 1998 and resulted in proceeds to the Company of approximately
$201.3 million net of issuance costs and offering expenses. A portion of the
proceeds from the Notes Offering was used to repay the U.S. dollar denominated
term loan and other U.S. dollar denominated amounts outstanding under the Credit
Facility. The prepayment of the term loan and termination of the related
interest rate swap agreements resulted in an extraordinary charge for early
extinguishment of debt of $2.8 million ($4.6 million before tax) or $0.06 per
diluted share in 1998.
The 4 1/2% Convertible Subordinated Notes (the "Notes") are convertible into
common stock at any time prior to maturity at a conversion rate of 26.8052
shares per each $1,000 principal amount, equivalent to a conversion price of
approximately $37.31 per share. Interest on the Notes is payable semi-annually
on June 1 and December 1 of each year, commencing December 1, 1998. The Notes
are redeemable, in whole or in part, at the option of the Company at any time on
or after June 1, 2001 at the redemption prices (together with accrued interest
to the redemption date) set forth below. Such redemption prices (expressed as a
percentage of principal amount) are as follows for the 12-month period beginning
on June 1 of the following years:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ------------------------------------------------------------------------- ----------------
<S> <C>
2001..................................................................... 102.571%
2002..................................................................... 101.929
2003..................................................................... 101.286
2004..................................................................... 100.643
June 1, 2005 and thereafter.............................................. 100.000
</TABLE>
The Notes are unsecured obligations subordinated in right of payment to all
existing and future Senior Debt (as defined in the indenture) of the Company and
will be effectively subordinated in right of payment to all Senior Debt and
other liabilities of the Company and the Company's subsidiaries. The Notes will
not restrict the Company or its subsidiaries from incurring additional Senior
Debt or other indebtedness.
41
<PAGE>
INCOME TAXES
The provision for income taxes is comprised of the following (in thousands):
<TABLE>
<CAPTION>
DEC. 25, DEC. 26, DEC. 27,
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Current tax expense:
Federal.......................................... $ 24,058 $ 23,220 $ 17,062
State and local.................................. 5,745 6,055 4,110
Foreign.......................................... 22,179 15,307 238
------------ ------------ ------------
51,982 44,582 21,410
------------ ------------ ------------
Deferred tax (benefit) expense:
Federal.......................................... (3,100) (3,029) 538
State and local.................................. (715) (721) 149
Foreign.......................................... (1,391) (1,904) --
------------ ------------ ------------
(5,206) (5,654) 687
------------ ------------ ------------
Total Provision for Income Taxes................... $ 46,776 $ 38,928 $ 22,097
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The following table reconciles the U.S. Federal income tax rate to the
Company's effective tax rate:
<TABLE>
<CAPTION>
DEC. 25, 1998 DEC. 26, 1997 DEC. 27, 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Statutory Rate..................................... 35.0% 35.0% 35.0%
Increase (decrease) in rate resulting from:
State and local income taxes, net of Federal
benefit........................................ 3.1 4.3 6.2
Nondeductible amortization of intangibles........ 5.7 5.9 3.6
Sale of HealthCare business...................... -- 3.2 --
Merger expense................................... -- -- 4.7
Other, net....................................... 0.6 (0.6) (0.5)
--- --- ---
Effective Tax Rate................................. 44.4% 47.8% 49.0%
--- --- ---
--- --- ---
</TABLE>
Significant components of the Company's deferred tax assets and liabilities
are as follows (in thousands):
<TABLE>
<CAPTION>
DEC. 25, DEC. 26,
1998 1997
------------ ------------
<S> <C> <C>
Current deferred tax assets (liabilities):
Employee benefits and self-insurance........................... $ 12,126 $ 9,529
Sale of HealthCare business.................................... 3,058 --
Accrued expenses............................................... 3,117 --
Receivables allowances......................................... (71) 1,354
Other.......................................................... 27 26
------------ ------------
18,257 10,909
------------ ------------
Noncurrent deferred tax assets (liabilities):
Fixed assets................................................... (1,090) (1,123)
Intangible assets.............................................. (5,545) (2,947)
Other.......................................................... -- 16
------------ ------------
(6,635) (4,054)
------------ ------------
Net deferred tax assets.......................................... $ 11,622 $ 6,855
------------ ------------
------------ ------------
</TABLE>
42
<PAGE>
EMPLOYEE BENEFIT PLANS
The Company has a voluntary defined contribution 401(k) benefit plan
covering substantially all eligible U.S. employees. The Company's subsidiary,
Michael Page, operates a defined contribution plan covering substantially all
eligible U.K. employees. Company contributions to the plans are based on
employee contributions, the level of the Company match and, in the U.S., the
attainment of certain financial objectives. Contributions, net of forfeitures,
by the Company under the plan amounted to $3.7 million, $2.4 million and $0.4
million for the years ended December 25, 1998, December 26, 1997 and December
27, 1996, respectively.
The Company also has a non-qualified deferred compensation plan for certain
employees who are not eligible to participate in the Company's 401(k) benefit
plan. The plan allows eligible employees to defer receipt of a portion of their
compensation. The Company matches and accrues certain amounts deferred pursuant
to this plan based upon the same criteria as the 401(k) plan. The plan is
partially funded by Company owned life insurance policies. The deferred
compensation, along with the Company matching amounts and accumulated investment
earnings, is accrued. Such accrual amounted to $11.9 million, $5.5 million, $1.8
million at December 25, 1998, December 26, 1997 and December 27, 1996,
respectively.
Effective July 1997, the Company adopted an Employee Stock Purchase Plan to
provide substantially all employees who have been employed for at least 12
months an opportunity to purchase shares of its common stock at a discount of
15%. The aggregate amount an employee may purchase each calendar year is limited
to a maximum of 15% of an employee's compensation up to $25,000 of stock. There
were 95,516 and 9,294 shares issued in 1998 and 1997, respectively, under this
plan. A total of 495,190 shares are available as of December 25, 1998 for
purchase under the plan which expires on July 1, 2002.
STOCK-BASED COMPENSATION PLANS
The Company has three primary option stock plans, the 1997 Long-Term
Executive Compensation and Outside Directors Stock Option Plan, the 1997 Stock
Option Plan for employees of Michael Page and the 1994 Stock Option Plan for
Franchisees, Licensees and Agents. Under the plans, options may be granted to
outside directors, selected employees of the Company and its subsidiaries,
franchisees, licensees and agents to purchase the Company's Common Stock for
periods not to exceed ten years at a price that is not less than 100 percent of
fair market value on the date of grant. Options granted under all plans are
exercisable cumulatively 20% to 100% each year beginning one-year after the
initial date of grant. At December 25, 1998 and December 26, 1997 the Company
had 1.9 million and 2.0 million shares, respectively, reserved for future grants
under these plans.
As part of the Company's bonus plan, the Board of Directors has authorized
Common Stock to be used for payment of a portion of the bonus payable to certain
employees in the form of restricted shares of the Company's Common Stock. These
shares vest ratably over a three-year period. At December 25, 1998 and December
26, 1997 the Company had 20,036 and 21,858 shares, respectively, reserved for
future grant under this plan.
43
<PAGE>
Changes under these plans for 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
DEC. 25, 1998 DEC. 26, 1997 DEC. 27, 1996
---------------------- ---------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C>
Outstanding at beginning
of year................ 3,101,604 $ 16.28 2,642,554 $ 13.24 2,203,422 $ 10.60
Granted.................. 1,719,176 25.60 1,678,910 18.53 840,326 19.01
Exercised................ (497,841) 14.07 (866,241) 11.09 (281,692) 9.49
Forfeited................ (182,073) 20.43 (353,619) 16.85 (119,502) 14.25
--------- --------- ---------
Outstanding at end of
year................... 4,140,866 $ 20.24 3,101,604 $ 16.28 2,642,554 $ 13.24
--------- --------- ---------
--------- --------- ---------
Options exercisable at
year-end............... 1,321,478 $ 15.10 908,495 $ 13.01 927,968 $ 9.83
--------- --------- ---------
--------- --------- ---------
</TABLE>
The following table summarizes information about fixed stock options
outstanding at December 25, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------ ----------------------
<S> <C> <C> <C> <C> <C>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
RANGE OF EXERCISE PRICES AT 12/25/98 LIFE PRICE AT 12/25/98 PRICE
- ------------------------ ----------- ----------- -------- ----------- --------
$0.00-$ 9.99....... 14,120 3.72 $ 7.57 14,120 $ 7.57
$10.00-$14.99...... 753,786 5.71 11.62 647,692 11.61
$15.00-$19.99...... 1,737,685 7.56 18.50 610,906 18.45
$20.00-$24.99...... 219,245 9.13 21.25 48,760 21.72
$25.00-$29.99...... 1,346,277 9.11 26.73 -- --
$30.00-$34.99...... 69,753 9.42 30.68 -- --
----------- ----------- -------- ----------- --------
4,140,866 7.83 $20.24 1,321,478 $15.10
----------- ----------- -------- ----------- --------
----------- ----------- -------- ----------- --------
</TABLE>
The weighted average per share fair values of options granted under the
Company's stock option plans during 1998, 1997 and 1996 were $6.25, $3.90 and
$4.03, respectively. Had the fair value of the grants under these plans been
recognized as compensation expense over the vesting period of the awards,
compensation cost would have been increased by $5.8 million ($4.0 million after
tax, $.08 per share), $2.9 million ($2.0 million after tax, $0.05 per share) and
$2.1 million ($1.5 million after tax, $0.05 per share) in 1998, 1997, and 1996,
respectively.
The fair value of options at grant date was estimated using the
Black-Scholes multiple option model where each vesting increment is treated as a
separate option with its own expected life and own fair value. The following
weighted average assumptions were used:
<TABLE>
<CAPTION>
DEC. 25, 1998 DEC. 26, 1997 DEC. 27, 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Expected life...................................... 2 2 2
Interest rate...................................... 5.51% 5.99% 5.94%
Volatility......................................... 32.91% 29.79% 30.30%
Dividend Yield..................................... -- -- --
</TABLE>
44
<PAGE>
SHAREHOLDER RIGHTS PLAN
On February 17, 1994, the Company's Board of Directors adopted a shareholder
rights plan to protect shareholders in the event of an unsolicited attempt to
acquire the Company which is not believed by the Board of Directors to be in the
best interest of shareholders. Under the plan, a dividend of one right (a
"Right") per share was declared and paid on each share of the Company's Common
Stock outstanding on April 1, 1994. As to shares issued after such date, rights
will automatically attach to them after their issuance.
Under the plan, registered holders of each Right may purchase from the
Company one one-hundredth of a share of a new class of the Company's Preferred
Stock, $0.01 par value per share, at a price of $150.00, subject to adjustment,
when the Rights become exercisable. The Rights become exercisable when a person
or group of persons acquires 15% or more of the outstanding shares of the
Company's Common Stock without the prior written approval of the Company's Board
of Directors (an "Unapproved Stock Acquisition"), and after ten business days
following the commencement of a tender offer that would result in an Unapproved
Stock Acquisition. If a person or group of persons makes an Unapproved Stock
Acquisition, the registered holder of each Right has the right to purchase, for
the exercise price of the Right, a number of shares of the Company's Common
Stock having a market value equal to twice the exercise price of the Right.
Following an Unapproved Stock Acquisition, if the Company is involved in a
merger, or 50% or more of the Company's assets or earning power are sold, the
registered holder of each Right has the right to purchase, for the exercise
price of the Right, a number of shares of the common stock of the acquiring
company having a market value equal to twice the exercise price of the Right.
After an Unapproved Stock Acquisition, but before any person or group of
persons acquires 50% or more of the outstanding shares of the Company's Common
Stock, the Board of Directors may exchange all or part of the then outstanding
and exercisable Rights for Common Stock at an exchange ratio of one share of
Common Stock per Right. Upon any such exchange, the right of any holder to
exercise a Right terminates.
The Company may redeem the Rights at a price of $0.01 per Right at any time
prior to an Unapproved Stock Acquisition. The Rights expire on April 1, 2004,
unless extended by the Board of Directors. Until a Right is exercised, the
holder thereof, as such, has no rights as a stockholder of the Company,
including the right to vote or to receive dividends. The issuance of the Rights
alone has no dilutive effect and does not affect reported earnings per share.
FINANCIAL INSTRUMENTS AND FAIR VALUES
The Company utilizes interest rate swap agreements to reduce the impact on
interest expense of fluctuating interest rates on its variable rate debt. The
Company had a variable to variable interest rate swap agreement outstanding as
of December 25, 1998 with the notional amount of $125.5 million which
effectively converts interest from a British LIBOR basis to a broader index and
caps the Company's exposure to upward movement in rates at 8.5%. This agreement
expires in 2002. The notional amount outstanding at December 26, 1997 was $225.7
million. In June 1998, the Company terminated variable to variable interest rate
swap agreements in the notional amount of $100.0 million when the Company repaid
the related U.S. dollar denominated debt. Under these agreements, the Company
received an average variable rate of 7.0% and paid an average variable rate of
6.0% during the twelve months ended December 25, 1998. The Company received an
average variable rate of 6.3% and paid an average variable rate of 5.4% during
the twelve months ended December 26, 1997.
In June 1998, the Company also terminated variable to fixed interest rate
swap agreements in the notional amount of $100.0 million when the Company repaid
the related U.S. dollar denominated debt. Under these agreements, the Company
received an average variable rate of 5.7% and paid an average fixed rate of 6.2%
during the twelve months ended December 25, 1998. The Company received an
average
45
<PAGE>
variable rate of 5.8% and paid an average fixed rate of 6.2% during the twelve
months ended December 26, 1997. The costs to terminate the variable to variable
and variable to fixed interest rate swap agreements in June 1998 are included in
the extraordinary charge for early extinguishment of debt.
At December 25, 1998, the Company had outstanding foreign currency forward
contracts to purchase Australian dollars in the notional amount of $96.1 million
for the purpose of making the final payments for the purchase of Computer Power
subsequent to year-end.
Exposure to market risk on interest rate and foreign currency financial
instruments results from fluctuations in interest and currency rates,
respectively, during the periods in which the contracts are outstanding. The
counterparties to the Company's interest rate swap agreements and currency
exchange contracts consist of a diversified group of major financial
institutions, each of which is rated investment grade A or better. The Company
is exposed to credit risk to the extent of potential nonperformance by
counterparties on financial instruments. Any potential credit exposure does not
exceed the fair value as stated below. The Company believes the risk of
incurring losses due to credit risk is remote.
The carrying amount of cash and cash equivalents approximates fair value due
to the short-term maturities of these instruments. The cost to terminate the
outstanding interest rate swap as of December 25, 1998 was approximately $4.1
million. Book value at December 25, 1998 was a $0.2 million receivable. The cost
to terminate the outstanding interest rates swaps as of December 26, 1997 was
$5.1 million. Book value at December 26, 1997 was a $0.3 million receivable. The
cost to terminate foreign currency forward contracts as of December 25, 1998 was
$2.5 million. In estimating the fair value of its derivative positions, the
Company utilizes quoted market prices, if available, or quotes obtained from
outside sources. The cost to terminate the Company's fixed rate convertible
subordinated debt as of December 25, 1998 was $175.6 million, with a $207.0
million carrying value. The fair value of the Company's fixed rate debt is
estimated based on quoted market prices for the same issue. The fair values of
all other financial instruments, including debt other than the Notes,
approximate their book values as the instruments are short-term in nature.
COMMITMENTS AND CONTINGENCIES
Substantially all of the Company's field operations are conducted in leased
premises. The Company also leases data processing equipment. Total lease expense
for the years ended December 25, 1998, December 26, 1997 and December 27, 1996
was $25.2 million, $19.1 million and $11.5 million, respectively. Future minimum
lease payments under non-cancelable leases as of December 25, 1998 are $24.4
million, $20.6 million, $16.6 million, $9.9 million, $6.7 million and $9.6
million in 1999, 2000, 2001, 2002, 2003 and thereafter, respectively.
Additionally, the Company had outstanding irrevocable letters of credit of
approximately $23.4 million (same as fair value). These letters of credit
collateralize the Company's obligations under certain workers' compensation
insurance programs.
The Company in the ordinary course of its business is threatened with or
named as a defendant in various lawsuits. It is not possible to determine the
ultimate disposition of these matters; however, management is of the opinion
that the final resolution of any threatened or pending litigation is not likely
to have a material adverse effect on the financial position or results of
operations of the Company.
SEGMENT INFORMATION
In 1998, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION. SFAS No. 131 supersedes SFAS No. 14, FINANCIAL REPORTING FOR
SEGMENTS OF A BUSINESS ENTERPRISE, replacing the "industry segment" approach
with the "management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source
46
<PAGE>
of the Company's reportable operating segments. SFAS No. 131 also requires
disclosures about products and services, geographic areas, and major customers.
The adoption of SFAS No. 131 did not affect results of operations or financial
position but did affect the disclosure of segment information.
The Company operates within the staffing industry in 12 countries around the
world: Australia, Canada, France, Germany, Hong Kong, Italy, New Zealand,
Singapore, Spain, The Netherlands, the United Kingdom and the United States. The
Company considers its operating segments to be North America, Europe and
Australia/Asia. These operating segments generally follow the management
organization structure of the Company and also represent, in the opinion of
management, the most meaningful aggregation of the Company's multiple operating
units across the world. This aggregation is based upon geographic similarities
including market growth rates, profitability, foreign currency exposure and
local laws and regulations. In each of these operating segments the Company's
four services, consulting, managed services, search/recruitment and flexible
staffing, are provided. In 1997 and 1996, the Company's reportable operating
segments also included HealthCare. The Company evaluates the performance of its
operating segments and allocates resources to them based on revenues, gross
profit and segment contribution. Segment contribution is defined as income
before central costs, interest and income taxes. All intercompany revenues and
expenses are eliminated in computing segment revenues, gross profit and segment
contribution. Prior years' data has been restated to conform to the current year
reportable operating segments presentation.
47
<PAGE>
Information on operating segments and a reconciliation to earnings before
income taxes and extraordinary item for the years ended December 25, 1998,
December 26, 1997 and December 27, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------
DEC. 25, DEC. 26, DEC. 27,
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
North America.......................................... $1,382,383 $1,159,089 $ 905,611
Europe................................................. 455,845 223,345 10,272
Australia/Asia......................................... 51,885 36,233 --
----------- ----------- -----------
1,890,113 1,418,667 915,883
HealthCare............................................. -- 189,589 231,268
----------- ----------- -----------
$1,890,113 $1,608,256 $1,147,151
----------- ----------- -----------
----------- ----------- -----------
GROSS PROFIT:
North America.......................................... $ 405,027 $ 326,416 $ 254,222
Europe................................................. 207,420 107,514 2,734
Australia/Asia......................................... 22,347 16,674 --
----------- ----------- -----------
634,794 450,604 256,956
HealthCare............................................. -- 76,539 94,406
----------- ----------- -----------
$ 634,794 $ 527,143 $ 351,362
----------- ----------- -----------
----------- ----------- -----------
SEGMENT CONTRIBUTION:
North America.......................................... $ 111,908 $ 91,293 $ 72,674
Europe................................................. 63,765 35,057 746
Australia/Asia......................................... 4,651 4,533 --
----------- ----------- -----------
180,324 130,883 73,420
HealthCare............................................. -- 16,340 22,425
----------- ----------- -----------
180,324 147,223 95,845
Central costs.......................................... 51,152 46,815 36,437
Gain on sale of HealthCare............................. -- (5,300) --
Merger expense......................................... -- -- 8,600
Interest, net.......................................... 23,819 24,269 5,696
----------- ----------- -----------
Earnings before income taxes and extraordinary item.... $ 105,353 $ 81,439 $ 45,112
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
DEC. 25, DEC. 26, DEC. 27,
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
TOTAL ASSETS:
North America........................................................ $ 694,967 $ 466,350 $ 444,404
Europe............................................................... 656,360 548,183 10,722
Australia/Asia....................................................... 262,117 77,063 --
------------ ------------ ------------
1,613,444 1,091,596 455,126
HealthCare........................................................... -- 138 57,364
------------ ------------ ------------
$1,613,444 $1,091,734 $ 512,490
------------ ------------ ------------
------------ ------------ ------------
LONG-LIVED ASSETS:(1)
North America........................................................ $ 55,069 $ 47,049 $ 45,971
Europe............................................................... 28,130 16,751 285
Australia/Asia....................................................... 7,423 1,675 --
------------ ------------ ------------
90,622 65,475 46,256
HealthCare........................................................... -- -- 3,539
------------ ------------ ------------
$ 90,622 $ 65,475 $ 49,795
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
- ------------------------
(1) Represents property and equipment, net.
48
<PAGE>
The Company provides skills through its business units in four service
lines--consulting, managed services, search/recruitment and flexible staffing.
The following table sets forth revenues and gross profit by service for the
periods indicated (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
DEC. 25, DEC. 26, DEC. 27,
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Consulting........................................................... $ 286,250 $ 192,262 $ 135,950
Managed Services..................................................... 316,170 250,308 173,347
Search/Recruitment................................................... 257,507 148,892 15,129
Flexible Staffing.................................................... 1,030,186 827,205 591,457
------------ ------------ ------------
1,890,113 1,418,667 915,883
HealthCare........................................................... -- 189,589 231,268
------------ ------------ ------------
Total................................................................ $1,890,113 $1,608,256 $1,147,151
------------ ------------ ------------
------------ ------------ ------------
GROSS PROFIT:
Consulting........................................................... $ 108,864 $ 66,460 $ 43,458
Managed Services..................................................... 65,747 51,378 34,631
Search/Recruitment................................................... 196,044 112,627 11,463
Flexible Staffing.................................................... 264,139 220,140 167,404
------------ ------------ ------------
634,794 450,605 256,956
HealthCare........................................................... -- 76,538 94,406
------------ ------------ ------------
Total................................................................ $ 634,794 $ 527,143 $ 351,362
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The Company has no single customer representing greater than 10 percent of
its revenues. Revenues in the United Kingdom were $318.0 million, $160.5 million
and $7.7 million for the years ended December 25, 1998, December 26, 1997 and
December 27, 1996, respectively. Long-lived assets in the United Kingdom were
$17.6 million, $11.6 million and $51,000 at December 25, 1998, December 26, 1997
and December 27, 1996, respectively.
49
<PAGE>
QUARTERLY FINANCIAL DATA (unaudited - amounts in thousands, except per share
amounts)
The following is a tabulation of the quarterly results of operations for the
years ended December 25, 1998 and December 26, 1997.
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------
DEC. 25, SEPT. 25, JUNE 26, MARCH 27, DEC. 26, SEPT. 26, JUNE 27,
1998 1998 1998 1998 1997 1997(b) 1997
--------- ---------- ------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................... $ 514,249 $ 498,051 $ 461,622 $416,191 $ 412,868 $ 455,770 $ 422,833
Gross profit...................... 169,669 167,586 158,021 139,518 134,331 153,414 141,958
Earnings before extraordinary
item............................ 17,417 17,021 13,586 10,553 12,017 12,047 9,922
Net earnings...................... 17,417 17,021 10,813(a) 10,553 12,017 12,047 9,922
Basic earnings per share (c)...... 0.37 0.36 0.32 0.26 0.30 0.31 0.25
Diluted earnings per share (c).... 0.36 0.35 0.31 0.26 0.29 0.30 0.25
Share price:
High.............................. 22 15/16 32 1/4 34 1/4 33 13/16 31 25 5/8 21 7/16
Low............................... 13 1/4 18 15/16 26 15/16 22 7/8 23 5/8 21 3/4 17 9/16
<CAPTION>
MARCH 28,
1997
---------
<S> <C>
Revenues.......................... $316,785
Gross profit...................... 97,440
Earnings before extraordinary
item............................ 8,525
Net earnings...................... 8,525
Basic earnings per share (c)...... 0.22
Diluted earnings per share (c).... 0.21
Share price:
High.............................. 21 9/16
Low............................... 17 1/8
</TABLE>
- --------------------------
(a) Includes $2,773 after tax extraordinary loss resulting from the early
extinguishment of debt.
(b) Includes pretax gain on sale of HealthCare business of $5,300 and taxes of
$5,272.
(c) Before extraordinary item in the quarter ended September 25, 1998.
EARNINGS PER SHARE
The following table reconciles the numerator (earnings) and denominator
(shares) of the basic and diluted earnings per share computations for earnings
before extraordinary item.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
--------------------------------------------------------------------------
DECEMBER 25, 1998 DECEMBER 26, 1997
------------------------------------ ------------------------------------
EARNINGS EARNINGS
BEFORE BEFORE
EXTRAORDINARY PER-SHARE EXTRAORDINARY PER-SHARE
ITEM SHARES AMOUNT ITEM SHARES AMOUNT
------------ --------- ----------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS................................. $ 58,577 44,237 $ 1.32 $ 42,511 39,305 $ 1.08
----- -----
----- -----
Effect of Dilutive Securities:
Stock options........................... -- 778 -- 1,102
Convertible subordinated notes.......... 3,471 3,229 -- --
------------ --------- ------------ ---------
Diluted EPS............................... $ 62,048 48,244 $ 1.29 $ 42,511 40,407 $ 1.05
------------ --------- ----- ------------ --------- -----
------------ --------- ----- ------------ --------- -----
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change in the registrant's principal accountants during
the two most recent fiscal years or any subsequent interim time period.
50
<PAGE>
PART III
ITEMS 10, 11, 12 AND 13.
Information regarding Executive officers of the Registrant is contained in
Part I. The remaining information required by Item 10 and the information
required by Items 11, 12 and 13 of this Part III is omitted because, no later
than 120 days from December 25, 1998, the Company will file and distribute its
definitive proxy statement containing the information required by such Items.
Such omitted information is incorporated herein by this reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
The following consolidated financial statements of Interim Services Inc. and
subsidiaries are filed as part of this Report:
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report........................................................... 29
Consolidated Statements of Earnings.................................................... 30
Consolidated Balance Sheets............................................................ 31
Consolidated Statements of Stockholders' Equity........................................ 32
Consolidated Statements of Cash Flows.................................................. 33
Notes to Consolidated Financial Statements............................................. 34
</TABLE>
(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule is filed as part of this Report:
Schedule II--Valuation and Qualifying Accounts
Schedules not filed herewith are either not applicable, the information is
not material or the information is set forth in the financial statements or
notes thereto.
(3) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Restated Certificate of Incorporation of the registrant, as last amended May 18, 1998, filed as Exhibit
3.1 to the registrant's Form 10-Q for the quarter ended June 26, 1998, is incorporated herein by
reference.
3.2 By-Laws of registrant, as amended, filed as Exhibit 3.2 to the registrant's Form 10-Q for the quarter
ended September 27, 1996, are incorporated herein by reference.
4.1 Form of Stock Certificate, filed as Exhibit 4.3 to the registrant's Form 10-K for the fiscal year ended
December 27, 1996, is incorporated herein by reference.
4.2 Rights Agreement dated as of March 17, 1994 between the registrant and Boatmen's Trust Company, filed as
Exhibit 1.1 to the registrant's Form 8-A filed April 11, 1994, is incorporated herein by reference.
4.3 Certificate of Designation, Preferences and Rights filed with the Secretary of State of the State of
Delaware, filed as Exhibit 2.1 to the registrant's Form 8-A filed April 11, 1994, is incorporated
herein by reference.
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.4 Amendment No. 1, dated as of June 26, 1996, to Rights Agreement dated March 17, 1994, between the
registrant, Boatmen's Trust Company and ChaseMellon Shareholder Services L.L.C., filed as Exhibit
4.1(A) to the registrant's Form 10-Q for the quarter ended September 27, 1996, is incorporated herein
by reference.
4.5 Amendment No. 2, dated as of February 25, 1997, to Rights Agreement dated March 17, 1994, between the
registrant and ChaseMellon Shareholder Services L.L.C., filed as Exhibit 4.1(B) to the registrant's
Form 10-Q for the quarter ended March 28, 1997, is incorporated herein by reference.
4.6 Articles Fourth, Fifth, Seventh, Eighth and Tenth of the Restated Certificate of Incorporation of the
registrant, as last amended May 18, 1998, filed as Exhibit 4.6 to the registrant's Form 10-Q for the
quarter ended June 26, 1998, are incorporated herein by reference.
4.7 Sections Four through Twelve and Thirty-five through Forty-one of the Bylaws of the registrant, as
amended, filed as part of Exhibit 4.2 to registrant's Form S-3 filed September 16, 1996, are
incorporated herein by reference.
4.8 Certificate of Increase of Shares Designated as Participating Preferred Stock, filed as Exhibit 2.2 to
the registrant's Form 8-A/A2, dated November 3, 1997, is incorporated herein by reference.
4.9 Indenture, including form of Notes, dated as of May 27, 1998, from the registrant to The Bank of New
York with respect to the registrant's 4 1/2% Convertible Subordinated Notes due 2005, issued or to be
issued pursuant to the registrant's Form S-3 dated April 23, 1998, filed on May 6, 1998, filed as
Exhibit 4.9 to the registrant's Form 10-Q for the quarter ended June 26, 1998, is incorporated herein
by reference.
4.10 Amendment No. 3, dated as of January 20, 1998, to Rights Agreement dated as of March 17, 1994, between
the registrant and ChaseMellon Shareholder Services L.L.C., is filed herewith as Exhibit 4.10.
10.1 1994 Stock Option Plan for Franchisees, Licensees and Agents, as amended, filed as Exhibit 10.4A to the
registrant's Form S-3, filed on July 12, 1995, is incorporated herein by reference.
10.2 Indemnification Agreement dated January 1, 1994, by and between Interim Services Inc. and H&R Block,
Inc., filed as Exhibit 10.8 to the registrant's Form S-1 dated November 5, 1993, is incorporated
herein by reference.
10.3 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Raymond
Marcy, is filed herewith as Exhibit 10.3.
10.4 Credit Agreement between the registrant and NationsBank dated as of May 1, 1997, filed as Exhibit 10.11
to the registrant's Form 10-Q for the quarter ended March 28, 1997, is incorporated herein by
reference.
10.5 Recommended Cash Offer dated March 14, 1997, by J.P. Morgan on behalf of Interim Services (UK) PLC, a
wholly-owned subsidiary of Interim Services Inc., for Michael Page Group PLC filed as Exhibit 10.12 to
the registrant's Form 10-Q for the quarter ended June 27, 1997, is incorporated herein by reference.
10.6 Interim Services Inc. 1997 Long Term Executive Compensation and Outside Directors Stock Option Plan,
filed as Exhibit I to the registrant's Proxy Statement dated April 10, 1997, is incorporated herein by
reference.
10.7 Interim Services Inc. Incentive Plan for 162(m) Executives, filed as Exhibit III to the registrant's
Proxy Statement dated April 10, 1997, is incorporated herein by reference.
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.8 Restated Stock Purchase Agreement, dated September 26, 1997 among Interim Services Inc., Catamaran
Acquisition Corp. and Cornerstone Equity Investors IV, L.P., filed as Exhibit 2.1 to the registrant's
Form 8-K dated September 26, 1997 and filed October 13, 1997, is incorporated herein by reference.
10.9 The Deferred Compensation Plan of Interim Services Inc., filed as Exhibit 4.1 to the registrant's Form
S-8 filed on July 23, 1997, is incorporated herein by reference.
10.10 The Interim Services Inc. Outside Directors' Compensation Plan dated July 1, 1998, is filed herewith as
Exhibit 10.10.
10.11 The 1997 Stock Purchase Assistance Plan for executives of the registrant, filed as Exhibit 10.16 to the
registrant's Form 10-K for the fiscal year ended December 26, 1997, is incorporated herein by
reference.
10.12 Amendment Agreement No. 1, dated as of June 1, 1997, to the Credit Agreement dated as of May 1, 1997,
between the registrant and NationsBank filed as Exhibit 10.17 to the registrant's Form 10-K for the
fiscal year ended December 26, 1997, is incorporated herein by reference.
10.13 Interim Services Inc. 1998 Stock Incentive Plan, filed as Exhibit B to the registrant's Proxy Statement
dated March 24, 1998, is incorporated herein by reference.
10.14 Amendment Agreement No. 2, dated as of May 21, 1998, to the Credit Agreement, dated as of May 1, 1997,
between the registrant and NationsBank, filed as Exhibit 10.15 to the registrant's Form 10-Q for the
quarter ended June 26, 1998, is incorporated herein by reference.
10.15 Amendment Agreement No. 3, dated as of May 21, 1998, to the Credit Agreement, dated as of May 1, 1997,
between the registrant and NationsBank, filed as Exhibit 10.16 to the registrant's Form 10-Q for the
quarter ended June 26, 1998, is incorporated herein by reference.
10.16 Recommended Cash Offer dated November 8, 1998 by Interim Services Australia Pty Limited, a wholly-owned
(indirect) subsidiary of Interim Services Inc. for Computer Power Group Limited is filed herewith as
Exhibit 10.16.
10.17 Amendment Agreement No. 4, dated as of October 8, 1998, to the Credit Agreement, dated as of May 1,
1997, as amended, between the registrant and NationsBank, is filed herewith as Exhibit 10.17.
10.18 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Robert E.
Livonius, is filed herewith as Exhibit 10.18.
10.19 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Roy G.
Krause, is filed herewith as Exhibit 10.19.
10.20 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Gary Peck,
is filed herewith as Exhibit 10.20.
10.21 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Robert
Evans, is filed herewith as Exhibit 10.21.
10.22 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and
Raymond Marcy, is filed herewith as Exhibit 10.22.
10.23 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and
Robert E. Livonius, is filed herewith as Exhibit 10.23.
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.24 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Roy
G. Krause, is filed herewith as Exhibit 10.24.
10.25 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Gary
Peck, is filed herewith as Exhibit 10.25.
10.26 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and
Robert Evans, is filed herewith as Exhibit 10.26.
11. See "Earnings Per Share" in the Notes to Consolidated Financial Statements included at page 50 herein.
21. Subsidiaries of Registrant is filed herewith as Exhibit 21.
23.1 Consent of Deloitte & Touche LLP.
27. Financial Data Schedule.
</TABLE>
(b) REPORTS ON FORM 8-K
During the last quarter of the period covered by this report, no reports on
Form 8-K were filed.
(c) EXHIBITS FILED WITH THIS FORM
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.10 Amendment No. 3, dated as of January 20, 1998, to Rights Agreement dated as of March 17, 1994, between
the registrant and ChaseMellon Shareholder Services L.L.C.
10.3 Employment Agrement dated as of November 18, 1998, by and between Interim Services Inc. and Raymond
Marcy.
10.10 The Interim Services Inc. Outside Directors' Compensation Plan dated July 1, 1998.
10.16 Recommended Cash Offer dated November 8, 1998 by Interim Services Australia Pty Limited, a wholly-owned
(indirect) subsidiary of Interim Services Inc. for Computer Power Group Limited.
10.17 Amendment Agreement No. 4, dated as of October 8, 1998, to the Credit Agreement, dated as of May 1,
1997, as amended, between the registrant and NationsBank.
10.18 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Robert E.
Livonius.
10.19 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Roy G.
Krause.
10.20 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Gary Peck.
10.21 Employment Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Robert
Evans.
10.22 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and
Raymond Marcy.
10.23 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and
Robert E. Livonius.
10.24 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Roy
G. Krause.
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.25 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and Gary
Peck.
10.26 Change In Control Agreement dated as of November 18, 1998, by and between Interim Services Inc. and
Robert Evans.
21. Subsidiaries of Registrant.
23.1 Consent of Deloitte & Touche LLP.
27. Financial Data Schedule.
</TABLE>
(d) OTHER FINANCIAL STATEMENTS
There were no other financial statements of the type described in
subparagraph (d) of Item 14 of Part IV required to be filed herein.
55
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
INTERIM SERVICES INC.
March 12, 1999 By /s/ RAYMOND MARCY
-----------------------------------------
Raymond Marcy,
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ ------------------------------
<C> <S>
/s/ STEVEN S. ELBAUM
- ------------------------------ Director
Steven S. Elbaum
/s/ WILLIAM F. EVANS
- ------------------------------ Director
William F. Evans
/s/ JEROME B. GROSSMAN
- ------------------------------ Director
Jerome B. Grossman
/s/ CINDA A. HALLMAN
- ------------------------------ Director
Cinda A. Hallman
/s/ RAYMOND MARCY
- ------------------------------ Director
Raymond Marcy
/s/ J. IAN MORRISON
- ------------------------------ Director
J. Ian Morrison
/s/ A. MICHAEL VICTORY
- ------------------------------ Director
A. Michael Victory
</TABLE>
(Signed as to each on March 12, 1999)
56
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ ------------------------------
<C> <S>
/s/ RAYMOND MARCY Chairman, President and Chief
- ------------------------------ Executive Officer (principal
Raymond Marcy executive officer)
Executive Vice President and
/s/ ROY G. KRAUSE Chief Financial Officer
- ------------------------------ (principal financial
Roy G. Krause officer)
/s/ MARK W. SMITH Vice President Finance
- ------------------------------ (principal accounting
Mark W. Smith officer)
</TABLE>
(Signed as to each on March 12, 1999)
57
<PAGE>
INTERIM SERVICES INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS (amounts in thousands)
<TABLE>
<CAPTION>
COLUMN C
COLUMN B ADDITIONS COLUMN E
----------- ------------------------ -----------
COLUMN A BALANCE AT CHARGED TO CHARGED TO COLUMN D BALANCE AT
- ---------------------------------------------------- BEGINNING COSTS AND OTHER ----------- END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 27, 1996
Allowance for doubtful accounts..................... $ (2,176) $ (2,445) $ -- $ 1,598 $ (3,023)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accumulated Amortization:
Goodwill.......................................... $ (32,518) $ (8,241) $ (34) $ 15 $ (40,778)
Tradenames........................................ (251) (58) -- -- (309)
Other............................................. (2,930) (503) (104) -- (3,537)
----------- ----------- ----------- ----------- -----------
$ (35,699) $ (8,802) $ (138) $ 15 $ (44,624)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
YEAR ENDED DECEMBER 26, 1997
Allowance for doubtful accounts..................... $ (3,023) $ (4,863) $ (2,274) $ 4,931 $ (5,229)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accumulated Amortization:
Goodwill.......................................... $ (40,778) $ (14,193) $ (117) $ 14,686 $ (40,402)
Tradenames........................................ (309) (3,877) (67) 111 (4,142)
Other............................................. (3,537) (422) -- 1,259 (2,700)
----------- ----------- ----------- ----------- -----------
$ (44,624) $ (18,492) $ (184) $ 16,056 $ (47,244)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
YEAR ENDED DECEMBER 25, 1998
Allowance for doubtful accounts..................... $ (5,229) $ (6,946) $ (363) $ 3,601 $ (8,937)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accumulated Amortization:
Goodwill.......................................... $ (40,402) $ (16,828) $ (43) $ 12 $ (57,261)
Tradenames........................................ (4,142) (5,558) (25) 204 (9,521)
Other............................................. (2,700) (164) -- 2,312 (552)
----------- ----------- ----------- ----------- -----------
$ (47,244) $ (22,550) $ (68) $ 2,528 $ (67,334)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
58
<PAGE>
EXHIBIT 21
---------
SUBSIDIARIES OF INTERIM SERVICES INC.
------------------------------------------
Following is a list of the direct and indirect subsidiaries of Interim Services
Inc., a Delaware corporation. Certain inactive subsidiaries have been excluded
from the list below as such subsidiaries, when considered in the aggregate as
one subsidiary, would not constitute a "significant subsidiary." All active
subsidiaries do business under their corporate name listed below, or close
derivatives thereof, except where indicated otherwise:
<TABLE>
<S> <C>
Interim Accounting Personnel Inc........................................ Texas (1)*
Interim Career Services Inc............................................. Delaware (1)*
Interim Financial Corporation........................................... Delaware (1)
Interim Legal Services Inc.............................................. Florida (1)*
Interim Personnel Inc................................................... Florida (1)*
Interim Real Estate Solutions Inc....................................... Florida (1)
Interim Services (Europe) Inc........................................... Delaware (1)
Interim Technology Inc. (n/k/a Interim U.S. Inc.)....................... Florida (1)
Interim Technology (UK) Limited......................................... United Kingdom (1)
Michael Page International Inc.......................................... Delaware (1)
Rich Field Agency, Inc.................................................. Florida (1)
Saratoga Institute, Inc................................................. California (1)
Spectrum Financial Corporation.......................................... Delaware (1)
Spectrum Insurance Company Ltd.......................................... Cayman Islands (1)
Michael Page International Pte Ltd...................................... Singapore (1)
HR Easy, Inc............................................................ North Carolina (1)
Interim Services Atlantic LLC........................................... Delaware (2)
Interim Services Pacific LLC............................................ Delaware (2)
Interim Technology (Asia) Pte Ltd....................................... Singapore (3)
Michael Page Group Plc.................................................. United Kingdom (4)
Interim UK Limited...................................................... United Kingdom (4)
Ago Uitzendbureau B.V................................................... Netherlands (5)
Interim Services Australia Pty Limited.................................. Australia (5)
Interplan Uitzenbureau Voor Kantoorpersoneel B.V. d/b/a Interim
Uitzenbureau.......................................................... Netherlands (5)
Interplan Uitzenbureau Voor Technisch & Industriel Personeel B.V. d/b/a
Interim Uitzenbureau.................................................. Netherlands (5)
Interim Detachering B.V. (f/k/a Allround Data B.V. d/b/a Interim
Uitzenbureau)......................................................... Netherlands (5)
Interim Industrie B.V. (f/k/a Allround Industrie B.V. d/b/a Interim
Uitzenbureau)......................................................... Netherlands (5)
Interim Registratie B.V. (f/k/a Allround Registratie B.V. d/b/a Interim
Uitzenbureau)......................................................... Netherlands (5)
Interim Services Netherlands B.V. (f/k/a Allround Uitzenburo B.V. d/b/a
Interim Uitzenbureau)................................................. Netherlands (5)
Ouranos Informatica Groep B.V........................................... Netherlands (5)
Michael Page Recruitment Group Ltd...................................... United Kingdom (6)
</TABLE>
59
<PAGE>
<TABLE>
<S> <C>
Plusbox Limited......................................................... United Kingdom (6)
Michael Page Holdings Ltd............................................... United Kingdom (7)
Accountancy Additions Ltd............................................... United Kingdom (8)
Accountancy Additions (North) Ltd....................................... United Kingdom (8)
Michael Page UK Ltd..................................................... United Kingdom (8)
Michael Page Ltd........................................................ United Kingdom (9)
Sales Recruitment Specialist Ltd........................................ United Kingdom (9)
Questor International Ltd............................................... United Kingdom (9)
Michael Page International (Italia) SRL................................. Italy (10)
Michael Page (Espana) SA................................................ Spain (10)
Michael Page International (France) SA.................................. France (10)
Page Interim SA......................................................... Spain (10)
Michael Page International (Australia) Pty Ltd.......................... Australia (10)
Michael Page International (Deutschland) GmbH........................... Germany (10)
Michael Page International (Hong Kong) Ltd.............................. Hong Kong (10)
Michael Page International (Nederland) B.V.............................. Netherlands (10)
Michael Page International (New Zealand) Ltd............................ New Zealand (10)
Page Interim SA......................................................... France (11)
Page Interim (Banking) EURL............................................. France (12)
Page Interim (East) EURL................................................ France (12)
Page Interim (South) EURL............................................... France (12)
Page Interim (West) EURL................................................ France (12)
Business Interim EURL................................................... France (12)
Compagnie Du Recrutor EURL.............................................. France (13)
Societe Des Nouveaux Recruteurs EURL.................................... France (13)
Michael Page Advertising SA............................................. France (13)
Michael Page Services EURL.............................................. France (13)
Les Recrutuers Renunis EURL............................................. France (13)
Michael Page Informatique EURL.......................................... France (13)
Crone Corkill Group PLC................................................. United Kingdom (14)
C.C. Agency Services Limited............................................ United Kingdom (15)
Crone Corkill Limited................................................... United Kingdom (15)
Interim Office Professionals Limited (f/k/a Hobstones Limited).......... United Kingdom (15)
Interim Technology Limited (f/k/a Westwood Young Limited)............... United Kingdom (15)
Interim On-Premise (UK) Ltd............................................. United Kingdom (15)
ONS Nederlanse Software Bedrijf (ONS) B.V............................... Netherlands (16)
Maintain Software Management B.V........................................ Netherlands (17)
Pontos Project Managemens B.V........................................... Netherlands (18)
Q&B Serving the Client B.V.............................................. Netherlands (18)
Ouranos Enterprises to be B.V........................................... Netherlands (18)
Kronos Software Engineering B.V......................................... Netherlands (19)
Novos Joined IT Generations B.V......................................... Netherlands (20)
Novos Noord Nederland B.V............................................... Netherlands (21)
Screenup Client Engineering B.V......................................... Netherlands (22)
</TABLE>
60
<PAGE>
<TABLE>
<S> <C>
Maintain Operational Services B.V....................................... Netherlands (23)
Computer Power Group Limited............................................ Australia (24)
Computer Power Pty Ltd.................................................. Australia (25)
Computer People Pty Ltd................................................. Australia (25)
Computer Power Education Pty Ltd........................................ Australia (25)
Equus People Pty Ltd.................................................... Australia (25)
Emppay Pty Ltd.......................................................... Australia (25)
CP Software Export Pty Ltd.............................................. Australia (25)
Parity People Pty Ltd................................................... Australia (25)
Edilina Pty Ltd......................................................... Australia (25)
Computer Power Group (S) Pte Ltd........................................ Singapore (25)
MTE Management Technology Education Pty Ltd............................. Australia (26)
Computer Power Education Pty Ltd........................................ New Zealand (26)
MTE Management Technology Education Pty Ltd............................. New Zealand (26)
Parity People Pty Ltd................................................... New Zealand (27)
CP International Limited................................................ Hong Kong (28)
Computer Power Educational Services Limited............................. Hong Kong (28)
DP Recruitment Services (S) Pte Ltd..................................... Singapore (28)
CPG Computer Power Group (M) SDN BHD.................................... Malaysia (28)
Interim Services Worldwide Holding B.V.................................. Netherlands (29)
</TABLE>
- ------------------------
* Merged with and into Interim Technology Inc., n/k/a Interim U.S. Inc., a
Florida corporation, effective as of 12:01 a.m. on December 26, 1998.
NOTES TO SUBSIDIARIES OF INTERIM SERVICES INC.:
1. Subsidiary of Interim Services Inc.
2. Sole member is Interim Technology Inc., n/k/a Interim U.S. Inc.
3. Subsidiary of Interim Technology Inc., n/k/a Interim U.S. Inc. (50%) and
third party (50%)
4. Subsidiary of Interim Services (Europe) Inc.
5. Subsidiary of Interim Services Worldwide Holding B.V.
6. Subsidiary of Michael Page Group Plc
7. Subsidiary of Michael Page Recruitment Group Ltd.
8. Subsidiary of Michael Page Partnership Ltd. (an inactive subsidiary)
9. Subsidiary of Michael Page (UK) Ltd.
10. Subsidiary of Michael Page International Holdings Ltd.
11. Subsidiary of LPM Professional Recruitment Ltd. (an inactive subsidiary)
12. Subsidiary of Page Interim SA (France)
13. Subsidiary of Michael Page International (France) SA
14. Subsidiary of Plusbox Limited
15. Subsidiary of Crone Corkill Group PLC
61
<PAGE>
16. Subsidiary of Ouranos Informatica Groep B.V. (25%) and third parties (75%)
17. Subsidiary of Ouranos Informatica Groep B.V. (70.5%) and Interim Services
Worldwide Holding B.V. (29.5%)
18. Subsidiary of Ouranos Informatica Groep B.V.
19. Subsidiary of Ouranos Informatica Groep B.V. (100% A Shares, 100% B Shares,
60% C Shares) and Interim Services Worldwide Holding B.V. (40% C Shares)
20. Subsidiary of Ouranos Informatica Groep B.V. (60%) and Interim Services
Worldwide Holding B.V. (40%)
21. Subsidiary of Novos Joined IT Generations B.V. (80%) and Interim Services
Worldwide Holding B.V. (20%)
22. Subsidiary of Ouranos Informatica Groep B.V. (65%) and Interim Services
Worldwide Holding B.V. (35%)
23. Subsidiary of Maintain Software Management B.V.
24. Subsidiary of Interim Services Australia Pty Limited
25. Subsidiary of Computer Power Group Limited
26. Subsidiary of Computer Power Education Pty Ltd
27. Subsidiary of Parity People Pty Ltd (Australia)
28. Subsidiary of Computer Power Group (S) Pte Ltd
29. Subsidiary of Atrium (NL-A) Inc., f/k/a Interim Temporary Personnel Inc.
(an active subsidiary)
62
<PAGE>
Exhibit 4.10
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 3,entered into as of the 20TH day of January, 1998,
by and among INTERIM SERVICES INC., a Delaware corporation (the "Company"), and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., a New York limited liability company
("Chase" or the "Rights Agent"), amends that certain Rights Agreement, dated
March 17, 1994, entered into by the Company and Boatmen's Trust Company (the
"Rights Agreement").
R E C I T A L S
A. Pursuant to the Rights Agreement, the Company appointed
Boatmen's as the initial rights agent to act as agent for the Company and the
holders of the Rights in accordance with the terms and conditions of the
Rights Agreement.
B. The Company, Boatmen's Trust Company and Chase entered into
that certain Amendment No. 1 to Rights Agreement dated June 26, 1996 whereby
the Company removed Boatmen's as rights agent and appointed Chase as
Successor Rights Agent in accordance with the terms and conditions of said
Rights Agreement.
C. The Company and Chase entered into that certain Amendment No. 2
to Rights Agreement dated February 25, 1997, whereby certain additional
provisions of the Rights Agreement were amended.
D. The Company now wishes to increase the Purchase Price as
established in the Rights Agreement, as provided herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein and in the Rights Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Rights Agent hereby agree as follows:
Section 7(b) of the Rights Agreement is hereby amended by deleting the
"$98.00" amount in the second line of such Section and substituting in place
thereof the amount of "$150.00."
In all other respects, except as herein stated, the Rights Agreement,
as previously amended, shall remain in full force and effect.
This Amendment No. 3 may be executed in any number of counterparts,
each of which shall constitute an original, which such counterparts shall
together constitute but one and the same instrument. Capitalized terms not
defined herein shall, unless the context otherwise requires, have the meanings
assigned to such terms in the Rights Agreement, as amended. The preamble and
recitals hereto are hereby incorporated into this Amendment No. 3 and made a
part hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
3 to Rights Agreement to be duly executed, effective as of the date first above
written.
INTERIM SERVICES INC. CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/ John B. Smith By: /s/ Marilyn Spisak
---------------------------------- --------------------------------
John B. Smith Vice President
Secretary and General Counsel Marilyn Spisak
2
<PAGE>
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of November 18, 1998, is by and between
INTERIM SERVICES INC., a Delaware corporation (hereinafter referred to as the
"Company"), and RAYMOND MARCY (hereinafter the "Executive").
RECITALS
A. The Executive currently serves as the Company's Chairman of the
Board, President and Chief Executive Officer and his services and knowledge are
valuable to the Company in connection with the management of its business.
B. The Company desires to continue to employ the Executive and to
enter into a new agreement embodying the terms of such employment.
C. The Executive desires to continue the Executive's employment and
to enter into a new agreement embodying the terms of such employment.
AGREEMENTS
NOW, THEREFORE, to induce the Executive to remain in the employ of
the Company and its subsidiaries, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Executive agree as follows:
1. EMPLOYMENT.
a) TITLES AND DUTIES. During the Term of Employment (as defined in
Section 2 hereof), the Executive shall serve as Chairman of the Board, President
and Chief Executive Officer of the Company. The Executive shall perform and
assume all duties and responsibilities customary to such position and shall
devote all of his business time and energies thereto. In carrying out such
duties and responsibilities, the Executive shall report to, and be subject to
the direction of, the Board of Directors of the Company (the "Board").
b) OTHER ACTIVITIES. Notwithstanding the foregoing, the Executive
may, with the prior written approval of the Board, serve on the boards of
directors of nonprofit organizations and business corporations, provided that
the Board concludes in its sole discretion none of the foregoing activities
interferes with the performance of the Executive's duties hereunder.
c) BOARD SERVICE. It is the intention of the parties that the
Executive be elected by the shareholders of the Company to serve as a member of
the Board during the Term of Employment.
2. TERM.
a) IN GENERAL. The Term of Employment under this Agreement shall
commence as of the date of this Agreement and end on April 30, 2001, unless
further extended or sooner terminated as hereinafter provided (the "Term of
Employment").
1
<PAGE>
b) EXTENSION. On April 30, 2001 and each succeeding April 30, the
Term of Employment shall automatically be extended for an additional one year
period unless, not later than six months prior to such anniversary, either party
shall have given written notice to the other that the Term of Employment shall
not be extended further.
3. BASE SALARY.
The Company shall pay the Executive, in accordance with the Company's
regular payroll practices applicable to salaried employees, an annualized base
salary at the rate in effect on the date of this Agreement, as the same may from
time to time be increased or decreased (subject to Section 8(d) hereof) at the
sole discretion of the Compensation Committee of the Board (the "Compensation
Committee").
4. INCENTIVE AWARDS.
a) The Executive shall participate in the Company's annual incentive
plan for senior-level executives as in effect from time to time, subject to the
performance standards set by the Compensation Committee. Payment of any annual
incentive award shall be made at the same time that such awards are paid to
other senior-level executives of the Company. The Executive's annual incentive
award target shall be set by the Compensation Committee.
b) The Executive shall be eligible to receive grants under the
Company's long-term incentive plan as in effect from time to time; provided,
however, that the size, type and other terms and conditions of any such grant to
the Executive shall be determined by the Compensation Committee.
5. BENEFITS, FRINGES AND PERQUISITES.
The Executive shall be entitled to participate in all employee pension
and welfare benefit, fringe benefit and perquisite plans and programs made
available to the Company's senior-level executives as in effect from time to
time.
6. VACATION.
The Executive shall be entitled to vacation in accordance with the
Company's vacation policy applicable to its senior-level executives, but not
less than six weeks. Vacations shall be arranged in order that they not
materially interfere with the normal functioning of the Company's business
activities or the performance of the Executive's duties hereunder.
7. BUSINESS EXPENSES.
The Company shall reimburse the Executive for any ordinary, necessary
and reasonable business expenses that the Executive incurs in connection with
the performance of his duties under this Agreement, in accordance with the
Company's policy regarding the reimbursement of business expenses.
8. TERMINATION OF EMPLOYMENT.
a) DEATH OR DISABILITY. The Executive's employment shall terminate
upon the Executive's Death, and Company may terminate the Executive's employment
due to Disability
2
<PAGE>
(as defined herein). If, during the Term of Employment, the Executive's
employment is terminated due to Death or Disability, the Executive (or
Executive's estate or legal representative, as the case may be) shall be
entitled to receive:
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
ii) an amount, payable at the same time that annual incentive
awards for the year in which the Executive's employment so terminates are
paid to senior-level executives of the Company, equal to the product of the
Executive's annual incentive award target for such year and a fraction, the
numerator of which is the number of days in such year through the date of
such termination of employment, and the denominator of which is 365;
provided, however, that no such amount shall be paid to the Executive (or
to Executive's estate or legal representative, as the case may be) if
annual incentive awards for such year are not paid to senior-level
executives of the Company generally;
iii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
iv) any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts); and
v) any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
For purposes of this Agreement, "Disability" shall mean the Executive's
inability, by reason of illness or other physical or mental disability, to
perform the principal duties required by the position held by the Executive
at the inception of such illness or disability, for any consecutive 180-day
period. A determination of Disability shall be subject to the certification
of a qualified medical doctor agreed to by the Company and the Executive or,
in the Executive's incapacity to designate a doctor, the Executive's legal
representative. If the Company and the Executive cannot agree on the
designation of a doctor, then each party shall nominate a qualified medical
doctor and the two doctors shall select a third doctor, and the third doctor
shall make the determination as to Disability.
b) FOR CAUSE. The Company may terminate the Executive's employment
for Cause (as defined herein) if the Board determines that Cause exists and
serves written notice of such termination to the Executive. If, during the Term
of Employment, the Company terminates the Executive's employment for Cause, all
of the Executive's annual incentive awards, long-term incentive awards, stock
options and other stock or long-term incentive grants which are not then vested
or not then exercisable shall be canceled as of the date of the Board's written
notice of termination, and the Executive shall be entitled to receive:
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
3
<PAGE>
ii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
iii) any vested deferred base salary and vested annual incentive
awards (including, without limitation, interest or other credits on such
deferred amounts but not including unvested bonuses or amounts payable for
the year in which the Board's written notice of termination for Cause is
made, or unvested bonuses or amounts payable after the Board's written
notice of termination for Cause is made); and
iv) any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
The Executive shall be entitled to receive no other compensation or
benefits, whether pursuant to this Agreement or otherwise, except as and to
the extent required by law.
For purposes of this Agreement, "Cause" shall mean one or more of the
following:
(I) the material violation of any of the terms and conditions of this
Agreement or any written agreements the Executive may from time to time
have with the Company (after 30 days following written notice from the
Board specifying such material violation and Executive's failure to cure or
remedy such material violation within such 30-day period);
(II) inattention to or failure to perform Executive's assigned duties
and responsibilities competently for any reason other than due to
Disability (after 30 days following written notice from the Board
specifying such inattention or failure, and Executive's failure to cure or
remedy such inattention or failure within such 30-day period);
(III) engaging in activities or conduct injurious to the reputation
of the Company or its affiliates including, without limitation,
engaging in immoral acts which become public information or repeatedly
conveying to one person, or conveying to an assembled public group,
negative information concerning the Company or its affiliates;
(IV) commission of an act of dishonesty, including, but not limited
to, misappropriation of funds or any property of the Company; or
(V) commission by the Executive of an act which constitutes a
misdemeanor (involving an act of moral turpitude) or a felony.
c) WITHOUT CAUSE. The Company may terminate the Executive's
employment without Cause. The Company's written notice to the Executive that
the Term of Employment shall not be extended as provided in Section 2(b) hereof
shall constitute a termination of the Executive's employment without Cause. If,
during the Term of Employment, the Company terminates the Executive's employment
without Cause, other than due to
4
<PAGE>
Disability, then in lieu of any amount otherwise payable under this
Agreement, or as damages for termination of Executive's employment without
Cause, the Executive shall be entitled to receive:
i) Within thirty (30) days of the date of the Board's written
notice of termination without Cause, a lump sum cash severance payment
(reduced by any applicable payroll or other taxes required to be withheld)
equal to the product of three (3) times the sum of the Executive's annual
salary for the current year plus his target bonus for the current year
(provided that if the notice of termination is given prior to the
determination of the Executive's salary or target bonus for the year in
which the notice of termination is given, then the amounts shall be the
annual salary for the prior year and the greater of the target bonus for
the prior year or the actual bonus earned by the Executive for the prior
year). The current year shall be (A) for purposes of determining annual
salary, the year then generally used by the Company for setting salaries
for senior-level executives (currently April 1 through the following
March 31), and (B) for purposes of determining target bonus, the year then
generally used by the Company for setting target bonuses for senior-level
executives (currently the calendar year), in which the Board gives the
Executive written notice of termination, and the prior year shall be the
twelve-month period immediately preceding the current year.
ii) During the thirty-six (36) months following the notice of
termination (the "Continuation Period"), the Company shall continue to keep
in full force and effect all programs of medical, dental, vision, accident,
disability, life insurance, including optional term life insurance, and
other similar health or welfare programs with respect to the Executive and
his dependents with the same level of coverage, upon the same terms and
otherwise to the same extent as such programs shall have been in effect
immediately prior to the notice of termination, and the Company and the
Executive shall share the costs of the continuation of such insurance
coverage in the same proportion as such costs were shared immediately prior
to the notice of termination or, if the terms of such programs do not
permit continued participation by the Executive (or if the Company
otherwise determines it advisable to amend, modify or discontinue such
programs for employees generally), the Company shall otherwise provide
benefits substantially similar to and no less favorable to the Executive in
terms of cost or benefits ("Equivalent Benefits") than he was entitled to
receive at the end of the period of coverage, for the duration of the
Continuation Period. All benefits which the Company is required by this
Section 8(c)(ii) to provide, which will not be provided by the Company's
programs described herein, shall be provided through the purchase of
insurance unless the Executive is uninsurable. If the Executive is
uninsurable, the Company will provide the benefits out of its general
assets.
iii) Reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment.
iv) Any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts).
v) Any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
5
<PAGE>
If the Company terminates Executive's employment without Cause, any
vesting or service requirements with respect to any employee stock options
granted to the Executive and then outstanding shall be deemed satisfied.
Notwithstanding the foregoing, if the Executive obtains other
employment during the Continuation Period which provides health or welfare
benefits of the type described in Section 8(c)(ii) hereof ("Other
Coverage"), then Executive shall notify the Company promptly of such other
employment and Other Coverage and the Company shall thereafter not provide
the Executive and his dependents the benefits described in Section 8(c)(ii)
hereof to the extent that such benefits are provided under the Other
Coverage. Under such circumstances, the Executive shall make all claims
first under the Other Coverage and then, only to the extent not paid or
reimbursed by the Other Coverage, under the plans and programs described in
Section 8(c)(ii) hereof.
d) FOR GOOD REASON. The Executive may terminate his employment for
Good Reason. If, during the Term of Employment, the Executive terminates his
employment for Good Reason, then the Executive shall be entitled to receive:
i) Within thirty (30) days of the date of the Executive's
written notice of termination of employment for Good Reason, a lump sum
cash severance payment (reduced by any applicable payroll or other taxes
required to be withheld) equal to the product of three (3) times the sum of
the Executive's annual salary for the current year plus his target bonus
for the current year (provided that if the notice of termination is given
prior to the determination of the Executive's salary or target bonus for
the year in which the notice of termination is given, then the amounts
shall be the annual salary for the prior year and the greater of the target
bonus for the prior year or the actual bonus earned by the Executive for
the prior year). The current year shall be (A) for purposes of determining
annual salary, the year then generally used by the Company for setting
salaries for senior-level executives (currently April 1 through the
following March 31), and (B) for purposes of determining target bonus, the
year then generally used by the Company for setting target bonuses for
senior-level executives (currently the calendar year), in which the
Executive gives the Company written notice of termination, and the prior
year shall be the twelve-month period immediately preceding the current
year.
ii) During the thirty-six (36) months following the notice of
termination (the "Continuation Period"), the Company shall continue to keep
in full force and effect all programs of medical, dental, vision, accident,
disability, life insurance, including optional term life insurance, and
other similar health or welfare programs with respect to the Executive and
his dependents with the same level of coverage, upon the same terms and
otherwise to the same extent as such programs shall have been in effect
immediately prior to the notice of termination, and the Company and the
Executive shall share the costs of the continuation of such insurance
coverage in the same proportion as such costs were shared immediately prior
to the notice of termination or, if the terms of such programs do not
permit continued participation by the Executive (or if the Company
otherwise determines it advisable to amend, modify or discontinue such
programs for employees generally), the Company shall otherwise provide
benefits substantially similar to and no less favorable to the Executive in
terms of cost or benefits ("Equivalent Benefits") than he was entitled to
receive at the end of the period of coverage, for the
6
<PAGE>
duration of the Continuation Period. All benefits which the Company is
required by this Section 8(d)(ii) to provide, which will not be provided
by the Company's programs described herein, shall be provided through the
purchase of insurance unless the Executive is uninsurable. If the
Executive is uninsurable, the Company will provide the benefits out of its
general assets. In the event the Executive obtains other employment
during the Continuation Period which employment offers health plan
benefits similar to those described above, the Executive shall be obligated
to notify the Company promptly and the Company shall no longer be obligated
to provide such benefits.
iii) Reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment.
iv) Any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts).
v) Any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
If Executive terminates Executive's employment for Good Reason, any
vesting or service requirements with respect to any employee stock options
granted to the Executive and then outstanding shall be deemed satisfied.
Notwithstanding the foregoing, if the Executive obtains other
employment during the Continuation Period which provides health or welfare
benefits of the type described in Section 8(d)(ii) hereof ("Other
Coverage"), then Executive shall notify the Company promptly of such other
employment and Other Coverage and the Company shall thereafter not provide
the Executive and his dependents the benefits described in Section 8(d)(ii)
hereof to the extent that such benefits are provided under the Other
Coverage. Under such circumstances, the Executive shall make all claims
first under the Other Coverage and then, only to the extent not paid or
reimbursed by the Other Coverage, under the plans and programs described in
Section 8(d)(ii) hereof.
The Executive shall be deemed to have terminated his employment for
"Good Reason" if he terminates employment within six months of:
(I) a demotion or a material reduction in the Executive's duties or
responsibilities as contemplated by Section 1(a) hereof, except for Cause
or due to Disability;
(II) a reduction in the Executive's base salary, except in the event
of an across-the-board salary reduction applicable to the Company's
senior-level executives generally;
(III) a reduction in the Executive's "annual total cash
compensation," which for purposes of this provision shall mean base salary
plus annual incentive award target, by more than twenty percent (20%); or
7
<PAGE>
(IV) the failure of the Company to obtain an agreement from any
successor to assume and agree to perform this Agreement.
Notwithstanding the foregoing, any failure to extend the Term of
Employment pursuant to Section 2(b) shall not constitute Good Reason.
e) VOLUNTARY TERMINATION. If, during the Term of Employment, the
Executive terminates his employment other than for Good Reason or due to
Retirement, the Executive shall be entitled to receive:
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
ii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
iii) any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts); and
iv) no other compensation or benefits except as and to the
extent required by law.
f) INELIGIBILITY FOR SEVERANCE PLAN PAYMENTS. Anything in this
Agreement to the contrary notwithstanding, Executive shall not be entitled to
any payment under any of the Company's severance plans, programs or
arrangements.
9. COMPANY POLICIES.
The Executive shall strictly follow and adhere to all written policies
of the Company which are not inconsistent with this Agreement or applicable law
including, without limitation, securities laws compliance (including, without
limitation, use or disclosure of material nonpublic information, restrictions on
sales of Company stock, and reporting requirements), conflicts of interest
(including, without limitation, doing business with the Company or its
affiliates without the prior approval of the Board), and employee harassment.
10. CONFIDENTIALITY.
The Executive will not at any time (whether during or after
Executive's employment with the Company) disclose or use for Executive's own
benefit or purposes, or for the benefit or purpose of any other person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise, any trade secrets, information, data, or
other confidential information relating to customers, employees, job applicants,
services, development programs, prices, costs, marketing, trading, investment,
sales activities, promotion, processes, systems, credit and financial data,
financing methods, plans, proprietary computer software, request for proposal
documents, or the business and affairs of the Company generally, or of any
affiliate of the Company; provided, however, that the foregoing shall not apply
to information which is generally known to the industry or the public other than
as a result of the Executive's breach of this covenant. The Executive agrees
that upon termination of his
8
<PAGE>
employment with the Company for any reason, he will return to the Company
immediately all memoranda, books, papers, plans, information, letters and
other data, and all copies thereof or therefrom (whether in written, printed
or electronic form), in any way relating to the business of the Company and
its affiliates.
The Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section would
be inadequate and, in recognition of this fact, the Executive agrees that, in
the event of such a breach or threatened breach, in addition to any remedies at
law, the Company, without posting any bond, shall be entitled to obtain
equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which
may then be available.
11. COVENANT NOT TO COMPETE.
a) IN GENERAL. The Executive agrees that during Executive's
employment with the Company and for a period of one (1) year after the
termination of such employment for whatever reason (the "Non-Compete Period"),
he shall not, anywhere in the world:
i) engage in any business, whether as an employee, consultant,
partner, principal, agent, representative or stockholder (other than as a
stockholder of less than a one percent (1%) equity interest) or in any
other corporate or representative capacity with any other business, whether
in corporate, proprietorship, or partnership form or otherwise, where such
business is engaged in any activity which competes with the business of the
Company or its affiliates as conducted on the date the Executive's
employment terminated or during the 180 day period prior thereto, or which
will compete with any proposed business activity of the Company in the
planning stage on such date or during such period;
ii) solicit business from, or perform services for, or induce
others to perform services for, any company or other business entity which
at any time during the one (1) year period immediately preceding the
Executive's termination of employment with the Company was a client of the
Company or its affiliates; or
iii) offer, or cause to be offered, employment with any business,
whether in corporate, proprietorship, or partnership form or otherwise,
either on a full-time, part-time or consulting basis, to any person who was
employed by the Company or its affiliates or for whom the Company or its
affiliates performed outplacement services, in either case at any time
during the one (1) year period immediately preceding the date the
Executive's termination of employment with the Company.
For purposes of this Agreement, affiliates of the Company include
subsidiaries 50% or more owned by the Company and the Company's franchisees
and licensees.
b) CONSIDERATION. The consideration for the foregoing covenant not
to compete, the sufficiency of which is hereby acknowledged, is the Company's
agreement to employ the Executive and provide compensation and benefits pursuant
to this Agreement.
9
<PAGE>
c) EQUITABLE RELIEF AND OTHER REMEDIES. The Executive acknowledges
and agrees that the Company's remedies at law for a breach or threatened breach
of any of the provisions of this Section would be inadequate and, in recognition
of this fact, the Executive agrees that, in the event of such a breach or
threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
d) REFORMATION. If the foregoing covenant no to compete would
otherwise be determined invalid or unenforceable by a court of competent
jurisdiction, such court shall exercise its discretion in reforming the
provisions of this Section to the end that the Executive be subject to a
covenant not to compete, reasonable under the circumstances, enforceable by the
Company.
12. COMPANY POLICIES, PLANS AND PROGRAMS.
Whenever any rights under this Agreement depend on the terms of a
policy, plan or program established or maintained by the Company, any
determination of these rights shall be made on the basis of the policy, plan or
program in effect at the time as of which the determination is made. No
reference in this Agreement to any policy, plan or program established or
maintained by the Company shall preclude the Company from prospectively or
retroactively changing or amending or terminating that policy, plan or program
or adopting a new policy, plan or program in lieu of the then-existing policy,
plan or program.
13. BINDING AGREEMENT; SUCCESSORS.
a) This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns. The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. For purposes
of this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid.
b) This Agreement shall be binding up and shall inure to the benefit
of the Executive and the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, beneficiaries,
devises and legatees. If the Executive should die while any amounts are payable
to him hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, beneficiary or other designee or, if there be no such designee, to the
Executive's estate.
14. CHANGE IN CONTROL AGREEMENTS.
Simultaneously with the execution and delivery of this Agreement, the
Company and the Executive have executed and delivered a Change In Control
Agreement ("C-I-C Agreement"), which applies under the circumstances and during
the period described therein. If circumstances arise which cause both the C-I-C
Agreement and this Agreement to apply to the Company and the Executive, then, to
the extent of any inconsistency between the provisions of
10
<PAGE>
this Agreement and the C-I-C Agreement, the terms of the C-I-C Agreement
alone shall apply. However, if the C-I-C Agreement does not apply (as, for
example, if there is no Change in Control as described therein, or the C-I-C
Agreement has expired, or the C-I-C Agreement simply does not apply), then
the provisions of this Agreement shall control and be unaffected by the C-I-C
Agreement.
15. NOTICES.
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii) on
the date of transmission, if delivered by confirmed facsimile, (iii) on the
first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (iv) on the third business day following the date
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Raymond Marcy
7911 N. Upper Ridge Drive
Parkland, Florida 33067
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
16. GOVERNING LAW.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Florida, without regard
to principles of conflicts of laws.
17. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the C-I-C Agreement contain the entire agreement
between the parties concerning the subject matter hereof and supersede all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect to the subject matter hereof.
No provisions of this Agreement may be amended, modified, waived or discharged
unless such amendment, waiver, modification or discharge is agreed to in writing
signed by the Executive and the Company. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
11
<PAGE>
18. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which will constitute one and
the same instrument.
19. NON-ASSIGNABILITY.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign, or transfer this Agreement or
any rights or obligations hereunder, except as provided in Section 13. Without
limiting the foregoing, the Executive's right to receive payments hereunder
shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than a transfer by his will or trust or by
the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph the Company shall have no
liability to pay any amount so attempted to be assigned or transferred.
20. RESOLUTION OF DISPUTES.
a) The parties shall submit any claim, demand, dispute, charge or
cause of action (in any such case, a "Claim") arising out of, in connection
with, or relating to this Agreement to binding arbitration in conformance with
the J*A*M*S/ENDISPUTE Streamlined Arbitration Rules and Procedures or the
J*A*M*S/ENDISPUTE Comprehensive Arbitration Rules and Procedures, as applicable,
but expressly excluding Rule 28 of the J*A*M*S/ ENDISPUTE Streamlined Rules and
Rule 32 of the J*A*M*S/ENDISPUTE Comprehensive Rules, as the case may be. All
arbitration procedures shall be held in Fort Lauderdale, Florida and shall be
subject to the choice of law provisions set forth in Section 16 of this
Agreement.
b) In the event of any dispute arising out of or relating to this
Agreement for which any party is seeking injunctive relief, specific performance
or other equitable relief, such matter may be resolved by litigation.
Accordingly, the parties shall submit such matter to the exclusive jurisdiction
of the United States District Court for the Southern District of Florida or, if
jurisdiction is not available therein, any other court located in Broward
County, Florida, and hereby waive any and all objections to such jurisdiction or
venue that they may have. Each party agrees that process may be served upon
such party in any manner authorized under the laws of the United States or
Florida, and waives any objections that such party may otherwise have to such
process.
21. NO SETOFF.
The Company shall have no right of setoff or counterclaim in respect
of any claim, debt or obligation against any payment provided for in this
Agreement.
22. NON-EXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its subsidiaries or successors
and for which the Executive may qualify, nor shall anything herein limit or
reduce such rights as the Executive may have under any other
12
<PAGE>
agreements with the Company or any of its subsidiaries or successors.
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Company or any of its
subsidiaries shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.
23. WITHHOLDING.
The Company may withhold from any amounts payable under this Agreement
such federal, state and local taxes as are required to be withheld (with respect
to amounts payable hereunder or under any benefit plan or arrangement maintained
by the Company) pursuant to any applicable law or regulation.
24. INVALIDITY OF PROVISIONS.
In the event that any provision of this Agreement is adjudicated to be
invalid or unenforceable under applicable law in any jurisdiction, the validity
or enforceability of the remaining provisions thereof shall be unaffected as to
such jurisdiction and such adjudication shall not affect the validity or
enforceability of such provision in any other jurisdiction. To the extent that
any provision of this Agreement is adjudicated to be invalid or unenforceable
because it is overbroad, that provision shall not be void but rather shall be
limited to the extent required by applicable law and enforced as so limited.
The parties expressly acknowledge and agree that Sections 11 and 24 are
reasonable in view of the parties' respective interests.
25. NON-WAIVER OF RIGHTS.
The failure by the Company or the Executive to enforce at any time any
of the provisions of this Agreement or to require at any time performance by the
other party of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement, or
any part hereof, or the right of the Company or the Executive thereafter to
enforce each and every provision in accordance with the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING THAT
THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY
BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT;
(C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT TO ASK ANY
QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED SATISFACTORY
ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE EXECUTIVE'S RIGHTS AND
OBLIGATIONS UNDER THE AGREEMENT.
13
<PAGE>
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
---------------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Raymond Marcy
---------------------------------------------
Raymond Marcy
14
<PAGE>
Exhibit 10.10
INTERIM SERVICES INC.
OUTSIDE DIRECTORS' COMPENSATION PLAN
July 1, 1998
Outside directors of the Company shall receive an annual retainer. The annual
retainer shall be determined by the Board of Directors at the regularly
scheduled meeting of the directors coinciding with the annual meeting of the
stockholders of the Company, and such annual retainer shall be effective for the
twelve month period commencing on the next July 1st. The Board of Directors may
designate the manner in which the annual retainer shall be payable including,
but not limited to, in cash, in shares of the Company's common stock or in any
combination thereof. Further, the Board of Directors may permit up to fifty
percent (50%) of the annual retainer to be deferred and paid to the directors in
the form of stock units, after a plan permitting such deferral and issuance of
stock units is adopted by the Company. Effective July 1, 1998, the annual
retainer payable to each outside director shall be $25,000, payable in cash.
Compensation for directors' attendance at meetings of the directors and/or board
committee meetings shall be determined by the Board of Directors at the
regularly scheduled meeting of the directors coinciding with the annual meeting
of the stockholders of the Company, and such compensation shall be effective for
the twelve month period commencing on the next July 1st. Effective July 1,
1998, attendance at meetings of the directors shall be compensated at the rate
of $2,000 per meeting, payable in cash. Effective July 1, 1998, attendance at
board committee meetings shall be compensated at the rate of $1,500 per meeting,
payable in cash.
Pursuant to the Company's 1998 Stock Incentive Plan, each outside director shall
receive an annual stock option grant to purchase 4,000 shares of the Company's
common stock, vesting on the first anniversary of the date of grant. The annual
stock option grant shall be made on the date coinciding with the annual meeting
of stockholders of the Company.
Outside directors shall be reimbursed for expenses incurred by them in
connection with their service as directors of the Company.
This Plan shall remain in effect until amended or terminated by the Board of
Directors.
<PAGE>
Exhibit 10.16
OFFER
BY
INTERIM SERVICES AUSTRALIA PTY LIMITED
(ACN 084 748 827)
("INTERIM")
TO ACQUIRE ALL OF YOUR ORDINARY SHARES
IN
COMPUTER POWER GROUP LIMITED
(ACN 002 956 087)
("COMPUTER POWER")
- --------------------------------------------------------------------------------
1. INTERIM'S OFFER
- --------------------------------------------------------------------------------
1.1 Interim offers to acquire all of Your Shares on the terms and conditions of
this Offer.
1.2 If you accept this Offer, Interim will be entitled to receive all Rights
attaching to Your Shares.
- --------------------------------------------------------------------------------
2. CONSIDERATION
- --------------------------------------------------------------------------------
The consideration Interim offers you is $5.75 cash for each of Your Shares.
- --------------------------------------------------------------------------------
3. OFFER PERIOD
- --------------------------------------------------------------------------------
Unless withdrawn in accordance with the Law, this Offer will remain open for
acceptance for a period commencing on the date of this Offer and ending at 5 pm
(Sydney time) on 8 December 1998 subject to Interim's right to extend such
period in accordance with section 656 of the Law.
- --------------------------------------------------------------------------------
4. WHO MAY ACCEPT
- --------------------------------------------------------------------------------
4.1 This Offer is made to you as the holder of Computer Power Shares which are
registered or entitled to be registered in your name in the register of
members of Computer Power on the date this Offer is sent or at any time
prior to the end of the Offer Period. If at any time during the Offer
Period, another person is, or is entitled to be, registered as a holder of
some or all of Your Shares ("the Transferred Shares"), then in accordance
with section 649 of the Law:
1
<PAGE>
(a) an offer corresponding to this Offer is deemed to have been made to
that person in respect of the Transferred Shares of which that person
is, or is entitled to be, so registered as a holder;
(b) an offer corresponding to this Offer is deemed to have been made to
you in respect of the remainder (if any) of the Computer Power Shares
other than the Transferred Shares registered in your name on the date
this Offer is sent, or at any time prior to the end of the Offer
Period; and
(c) this original Offer is deemed to have been withdrawn.
4.2 If:
(a) at any time during the Offer Period and prior to acceptance of this
Offer, Your Shares consist of two or more Distinct Portions (for
example, if you hold Your Shares as trustee for 2 or more persons);
and
(b) you give to Interim a notice which:
(i) if it relates to Your Shares in a CHESS Holding, is in an
electronic form approved by the SCH Business Rules; or
(ii) if it relates to Your Shares which are certificated or
uncertificated but not in a CHESS Holding, is in writing,
stating that Your Shares consist of Distinct Portions and specifying
the number of Your Shares in each Distinct Portion for which you
wish to accept this Offer (which number, in respect of each
Distinct Portion, must comply with clause 5.1),
this Offer will be deemed to consist of separate Offers made to you in
relation to the respective Distinct Portions of Your Shares.
- --------------------------------------------------------------------------------
5. HOW TO ACCEPT
- --------------------------------------------------------------------------------
5.1 Subject to clause 4, this Offer may only be accepted in respect of all (but
not some only) of Your Shares.
5.2 You may accept this Offer in respect of Your Shares at any time during the
Offer Period.
5.3 To accept this Offer in respect of Your Shares which are certificated or
are uncertificated but not in a CHESS Holding, you should complete and sign
the Acceptance Form in accordance with the instructions on it and then post
the Acceptance Form to:
Corporate Registry Services
GPO Box 7045
Sydney NSW 1115
2
<PAGE>
or hand deliver the Acceptance Form to:
Corporate Registry Services
Level 3, 60 Carrington Street
Sydney NSW
so that it is received before the expiry of the Offer Period.
5.4 To accept this Offer in respect of Your Shares which are uncertificated and
which are in a CHESS Holding you must do so in accordance with the SCH
Business Rules and, specifically:
(a) if you are a Broker or Non-Broker Participant, you should initiate
acceptance of this Offer in accordance with the SCH Business Rules
before the expiry of the Offer Period; or
(b) otherwise, you should instruct your Controlling Participant (this will
normally be the stockbroker who purchased your Computer Power Shares
for you) to initiate acceptance of this Offer in accordance with the
SCH Business Rules before the expiry of the Offer Period.
5.5 When accepting this Offer for Your Shares which are certificated, you must
also provide all certificates relating to Your Shares, or fulfil all the
requirements of Interim and Computer Power if you are unable to provide the
certificates, to enable the registration of Interim as a bona fide
purchaser of Your Shares for value and without notice of any defect in your
title to Your Shares.
5.6 Subject to clause 5.4, acceptance of the Offer will not be complete until
the completed Acceptance Form has been received at the address set out in
clause 5.3 and the requirements of clauses 5.3 and 5.5 have been complied
with. However:
(a) Interim may in its sole discretion treat the receipt by it of the
Acceptance Form without some or all of the relevant certificate(s) for
Your Shares which are certificated or other documents as a valid
acceptance; and
(b) where the requirements of clauses 5.3 and 5.5 have been complied with
in respect of some but not all of Your Shares, Interim may in its sole
discretion deem your acceptance of this Offer complete in respect of
those Computer Power Shares for which the requirements have been
complied with but not in respect of the remainder.
- --------------------------------------------------------------------------------
6. EFFECT OF ACCEPTANCE
- --------------------------------------------------------------------------------
6.1 By initiating acceptance of this Offer in respect of Your Shares through
CHESS or signing and returning an Acceptance Form to Interim in accordance
with clause 5 above, you will be deemed to have:
3
<PAGE>
(a) accepted this Offer irrevocably in accordance with its terms in
respect of all Your Shares;
(b) subject to this Offer being declared free of the conditions set out in
clause 7 below or such conditions being fulfilled, transferred Your
Shares to Interim for the consideration in this Offer;
(c) represented and warranted to and agreed with Interim that:
(i) on the date of registration of the transfer of Your Shares to
Interim, Your Shares will be free from all mortgages, charges,
liens and other encumbrances (whether legal or equitable) of any
kind;
(ii) on the date of registration of the transfer of Your Shares to
Interim, Your Shares will be fully paid up;
(iii) you have full right, power and authority to sell and transfer
all of Your Shares to Interim in accordance with the terms and
conditions of this Offer;
(iv) Interim will be entitled to receive all dividends, distributions
and other Rights accruing to Your Shares at the time of and
following the Statement Lodgment Date;
(v) if for any reason Interim does not receive any dividends,
distributions or other Rights to which it is entitled under
paragraph (iv) above, Interim will be entitled to reduce the
amount of cash consideration to which you would otherwise be
entitled in accordance with this Offer by the amount or value of
such dividends, distributions or other Rights; and
(vi) if for any reason, Interim does not receive any certificate(s)
for Your Shares or other documents in relation to Your Shares
(except for any of Your Shares which are held in uncertificated
form) then you must promptly deliver to Interim the relevant
certificate(s) and/or other documents, or acceptable evidence of
loss or destruction and an acceptable indemnity in relation to
those certificates and/or other documents;
(d) authorised Interim (by its officers, servants or agents) to complete
on the Acceptance Form correct details of Your Shares, fill in any
blanks remaining on the Acceptance Form and rectify any error in or
omission from the Acceptance Form;
4
<PAGE>
(e) if you signed the Acceptance Form in respect of Your Shares which are
uncertificated and which are in a CHESS Holding, authorised Interim
(or any of its officers, servants or agents) to instruct your
Controlling Participant to initiate acceptance of the Offer in respect
of those Computer Power Shares in accordance with the SCH Business
Rules and take all other steps necessary under the SCH Business Rules
to accept the Offer in respect of Your Shares;
(f) with effect after the contract resulting from the acceptance of this
Offer is or becomes unconditional, irrevocably appointed Interim and
each director of Interim from time to time, as your attorney for you
and on your behalf to:
(i) requisition and/or convene (or join in requisitioning and/or
convening) general meetings of Computer Power in accordance with
the Constitution of Computer Power or the Law;
(ii) consent to any such meetings being held on short notice;
(iii) attend and vote in respect of Your Shares at any and all general
meetings of Computer Power;
(iv) request Computer Power, prior to registering the transfer of
Your Shares, to transmit Your Shares to such registers
maintained by or on behalf of Computer Power as Interim may
specify; and
(v) execute all forms, notices, instruments (including an instrument
appointing a director of Interim as a proxy in respect of any or
all of Your Shares and any application to Computer Power for a
replacement certificate in respect of any certificate which has
been lost or destroyed) and resolutions relating to Your Shares
and generally to exercise all powers and rights which you may
have as the holder of those shares,
and to have agreed that in exercising the powers conferred by that
power of attorney any such director will be entitled to act in the
interests of Interim as the beneficial owner and intended registered
holder of Your Shares; and
(g) irrevocably authorised and directed Computer Power to pay to Interim
or to account to Interim for all dividends, distributions and other
Rights in respect of Your Shares, subject however to any such
dividends, distributions or other Rights received by Interim being
accounted for by Interim to you in the event that this Offer is
withdrawn or the contract formed by your acceptance of this Offer is
rendered void pursuant to clause 7.
- --------------------------------------------------------------------------------
7. CONDITIONS OF THIS OFFER
- --------------------------------------------------------------------------------
7.1 Subject to clause 7.3, this Offer and any contract that results from the
acceptance of this Offer are each conditional upon:
5
<PAGE>
(a) Interim being entitled at the end of the Offer Period to not less than
90% of the Computer Power Shares on issue at that time;
(b) the Treasurer of the Commonwealth of Australia ("Treasurer")
consenting unconditionally to or stating prior to the end of the Offer
Period that he has no objection under the Commonwealth Government's
foreign investment policy to the purchase by Interim of all Computer
Power Shares in accordance with the Offers or the Treasurer ceases to
be entitled to make an order under the Foreign Acquisitions and
Takeovers Act 1975 in respect of that purchase;
(c) Computer Power receiving, by the end of the Offer Period, a deed
substantially in the form of the Cancellation and Termination Deed
contained in the Annexure in respect of every Option which is still on
issue at the end of the Offer Period, duly executed by the holder of
the relevant Option, and neither Computer Power nor the relevant
Option holder terminating, waiving or varying any such executed deed;
(d) none of the following occurrences happening during the period
commencing on the Statement Lodgment Date and ending on the expiry of
the Offer Period:
(i) Computer Power converting all or any of its shares into a
larger or smaller number of shares;
(ii) Computer Power or a subsidiary of Computer Power resolving to
reduce its share capital in any way;
(iii) Computer Power or a subsidiary of Computer Power:
(A) entering into a buy-back agreement; or
(B) resolving to approve the terms of a buy-back agreement
under sections 257C or 257D of the Law;
(iv) Computer Power or a subsidiary of Computer Power making an
allotment (other than an allotment which occurs as a result of
the exercise of Options) of, or granting an option to subscribe
for, any of its shares (of any class), or agreeing to make such
an allotment or grant such an option;
(v) Computer Power or a subsidiary of Computer Power issuing, or
agreeing to issue, convertible notes;
(vi) Computer Power or a subsidiary of Computer Power disposing, or
agreeing to dispose, of the whole, or a substantial part, of
its business or property;
(vii) Computer Power or a subsidiary of Computer Power charging, or
agreeing to charge, the whole, or a substantial part, of its
business or property;
6
<PAGE>
(viii) Computer Power or a subsidiary of Computer Power resolving that
it be wound up;
(ix) the appointment of a provisional liquidator of Computer Power
or of a subsidiary of Computer Power;
(x) the making of an order by a court for the winding up of
Computer Power or of a subsidiary of Computer Power;
(xi) an administrator of Computer Power, or of a subsidiary of
Computer Power, being appointed under section 436A, 436B or
436C of the Law;
(xii) Computer Power or a subsidiary of Computer Power executing a
deed of company arrangement; or
(xiii) the appointment of a receiver, or a receiver and manager, in
relation to the whole, or a substantial part, of the property
of Computer Power or of a subsidiary of Computer Power; and
(e) during the period commencing on 2 October 1998 and ending on the
expiry of the Offer Period no material adverse change occurs to the
structure, business, financial or trading position or condition,
assets or liabilities, prospects or profitability of Computer Power
and its subsidiaries, taken as a whole.
7.2 Subject to the Law, the conditions in clause 7.1 (other than the condition
in clause 7.1(b)) are conditions subsequent and a breach or non-fulfilment
of any condition set out in clause 7.1 will not prevent a contract arising
from acceptance of this Offer. Those conditions will not merge on
completion of any contract arising from acceptance of this Offer and may
only be relied upon by Interim. The condition in clause 7.1(b) is a
condition precedent, and any contract arising from acceptance of this Offer
will not become binding unless and until that condition is fulfilled.
7.3 It is a term of this Offer that Interim, subject to and in accordance with
the Law, may declare this Offer and all other Offers made under the
Takeover Scheme and all contracts formed by acceptance of such Offers, to
be free from the conditions (or any one or more of them or any part of any
of them) set out in clause 7.1. Any declaration made under this clause 7.3
must be made by Interim not less than 7 days before the end of the Offer
Period, and a notice in that respect must be published in accordance with
the requirements of section 663 of the Law.
7.4 If at the time immediately after the end of the Offer Period in respect of
any condition in clause 7.1:
(a) Interim has not declared this Offer and all other Offers made by
Interim under the Takeover Scheme to be free from that condition;
(b) the Offers have not become free of that condition by virtue of the
operation of subsection 664(2) of the Law; or
7
<PAGE>
(c) that condition has not been fulfilled;
all contracts resulting from the acceptance of Offers and all Offers that
have been accepted and from whose acceptance binding contracts have not yet
resulted, are void. In that event Interim will, if you have accepted this
Offer, return any Acceptance Form and other documents forwarded by you, to
your address as shown in the Acceptance Form.
7.5 Interim agrees to take all reasonable steps to ensure the consent or
statement of no objection by the Treasurer referred to in clause 7.1(b) is
given.
- --------------------------------------------------------------------------------
8. PAYMENT
- --------------------------------------------------------------------------------
If you validly accept (or are treated by Interim pursuant to clause 5.6 as
having validly accepted) this Offer and:
(a) all of the conditions set out in clause 7.1 have been fulfilled; or
(b) Interim has declared the Offers constituting the Takeover Scheme to be free
from those conditions to the extent that they have not been fulfilled,
Interim will pay the consideration payable to you by cheque in Australian
dollars sent to you at your risk by pre-paid ordinary mail (or, in the case of
overseas shareholders, by pre-paid airmail) to your address shown on the
Acceptance Form within 30 days after the Offer is accepted by you or the Offer
or the contract resulting from acceptance of the Offer becomes unconditional,
whichever is the later, but in any event not later than 21 days after the end of
the Offer Period.
- --------------------------------------------------------------------------------
9. WITHDRAWAL OF OFFER
- --------------------------------------------------------------------------------
Subject to compliance with section 653 of the Law and any conditions imposed
pursuant to that section, Interim may withdraw this Offer.
- --------------------------------------------------------------------------------
10. VARIATION OF THE OFFER
- --------------------------------------------------------------------------------
Interim may at any time, and from time to time, vary this Offer in accordance
with sections 654 to 661 of the Law.
- --------------------------------------------------------------------------------
11. ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
11.1 According to information provided by Computer Power, the total number of
ordinary shares in Computer Power on issue at the date of this Offer is
33,755,531. A further 1,871,343 ordinary shares may be issued if all of the
Options are exercised.
8
<PAGE>
11.2 Immediately before this Offer was sent, Interim was entitled to 1,840,447
(approximately 5.45%) Computer Power Shares. Interim is not entitled to any
Options.
11.3 All stamp duty payable on transfers of Computer Power Shares in respect of
which Offers are accepted will be paid by Interim.
11.4 This Offer is accompanied by a copy of the Part A Statement.
11.5 The date of publication of the notice referred to in section 663(4) of the
Law is 30 November 1998, subject to variation in accordance with section
663(5) of the Law if the Offer Period is extended.
- --------------------------------------------------------------------------------
12. NOTICES
- --------------------------------------------------------------------------------
12.1 Any notice, nomination or other communication to be given by Interim to you
under this Offer will be deemed to be duly given if it is in writing and is
signed or purports to be signed (whether in manuscript, printed or
reproduced in any form) on behalf of Interim by any of its directors,
secretaries or duly appointed agents and is delivered to or sent by post in
a pre-paid envelope to your address as recorded on the register of members
of Computer Power.
12.2 Any notice or other communication given by you to Interim in connection
with this Offer will be deemed to be duly given if it is in writing and is
sent by post to Interim at the following address:
C/- Corporate Registry Services
Level 3, 60 Carrington Street
Sydney NSW 1115
- --------------------------------------------------------------------------------
13. INTERPRETATION
- --------------------------------------------------------------------------------
13.1 In this Offer:
"ACCEPTANCE FORM" means the form of acceptance and transfer enclosed with
this Offer;
"ASX" means Australian Stock Exchange Limited;
"CHESS" means the Clearing House Electronic Subregister System operated by
SCH;
"CHESS HOLDING" means a holding of Computer Power Shares on the CHESS
subregister of Computer Power;
"COMMISSION" means the Australian Securities and Investments Commission;
9
<PAGE>
"COMPUTER POWER" means Computer Power Group Limited ACN 002 956 087 of 1st
Floor, 493 St Kilda Road, Melbourne, Victoria;
"COMPUTER POWER SHARES" means the ordinary shares in Computer Power on
issue at the date the Offers are sent, as well as any ordinary shares in
Computer Power which are issued during the Offer Period on the exercise of
Options;
"CONTROLLING PARTICIPANT" means the Broker or Non-Broker Participant
designated as the controlling participant for Computer Power Shares in
accordance with the SCH Business Rules;
"DISTINCT PORTIONS" has the meaning given to that phrase in the Law in
respect of Computer Power Shares;
"INTERIM" means Interim Services Australia Pty Limited ACN 084 748 827 of
Level 26, 50 Bridge Street, Sydney, New South Wales;
"LAW" means the Corporations Law;
"OFFER" means the offer contained in this document (or if the context so
requires, this document itself) and "Offers" means all like offers sent to
holders of Computer Power Shares (or persons entitled to receive such
Offers);
"OFFER PERIOD" means the period, referred to in clause 3, during which this
Offer remains open for acceptance;
"OPTIONS" means the options to subscribe for unissued shares in Computer
Power which are described in section 8 of the Part A Statement;
"PART A STATEMENT" means the Part A Statement registered in relation to the
Takeover Scheme (a copy of which accompanies this Offer);
"RIGHTS" means all accretions and rights accrued or accruing directly or
indirectly to the Computer Power Shares at the time of and following the
Statement Lodgment Date including, without limitation, all rights to
receive dividends and to receive, convert to or subscribe for Computer
Power Shares (whether under a dividend reinvestment plan, option or
otherwise), notes, options or other marketable securities, whether declared
paid or issued by Computer Power or otherwise;
"SCH" means the Securities Clearing House approved under the Law;
"SCH BUSINESS RULES" means the business rules of SCH from time to time;
"STATEMENT LODGMENT DATE" means the date upon which the Part A Statement is
lodged for registration with the Commission;
"TAKEOVER SCHEME" means the takeover scheme constituted by the Offers for
Computer Power Shares;
10
<PAGE>
"YOUR SHARES" means, subject to clause 4, the fully paid Computer Power
Shares in respect of which you are registered or entitled to be registered
as holder in the register of members of Computer Power; and
unless the context otherwise requires, other words and phrases used in this
Offer have the same meaning as attributed to them by the Law or the SCH
Business Rules, as the case may be.
13.2 Headings are for ease of reference only and do not affect the
interpretation of this Offer.
13.3 References to clauses are references to clauses in this Offer.
13.4 The singular includes the plural and the plural includes the singular. A
reference to a person includes a reference to a corporation.
13.5 Unless otherwise indicated, a reference to "dollars" or "$" means the
lawful currency of the Commonwealth of Australia.
13.6 References to any law are references to that law as amended, consolidated,
supplemented or replaced from time to time.
13.7 References to time are references to Sydney time.
DATED: 8 November 1998
SIGNED for and on behalf of )
INTERIM SERVICES AUSTRALIA PTY )
LIMITED )
by its duly authorised representative )
)
/s/ GEOFFREY E. MCINTYRE
------------------------------------------
Signature of Geoffrey E McIntyre, Director
11
<PAGE>
ANNEXURE
FORM OF CANCELLATION AND TERMINATION DEED
(clause 7.1(c))
12
<PAGE>
CANCELLATION AND TERMINATION DEED
DATE:
COMPUTER POWER GROUP LIMITED
("Computer Power")
[ ]
("Optionholder")
13
<PAGE>
DEED made at on 1998
BETWEEN COMPUTER POWER GROUP LIMITED, ACN 003 956 087 of 493 St Kilda Road,
Melbourne, Victoria ("COMPUTER POWER")
AND [ ], [ ] ("OPTIONHOLDER")
RECITALS
A. The Optionholder holds the Options.
B. The parties have agreed to cancel and terminate the Options on the terms
and conditions set out in this Deed.
THIS DEED PROVIDES
1. DEFINITIONS
In this Deed:
"BIDDER" means [ ].
"EFFECTIVE DATE" means the date on which Bidder gives notice to dissenting
holders of the compulsory acquisition of Shares pursuant to section 701(2)
of the Corporations Law to acquire any Shares held by them following the
close of the offer period under the Takeover Scheme.
"ENCUMBRANCE" includes any mortgage, charge, encumbrance or security
interest.
"EXERCISE PRICE" means, in respect of an Option, the exercise price set out
beside that Option in the Schedule.
"OFFER PRICE" means the highest cash sum paid by the Bidder to acquire
Shares under the Takeover Scheme.
"OPTIONS" means the Options for Optionholder to subscribe for one Share for
each such Option described in the Schedule.
"SHARES" means ordinary shares in Computer Power.
"TAKEOVER SCHEME" means the takeover scheme by Bidder in respect of the
Shares made pursuant to Part 6.3 of the Corporations Law in accordance with
the Bidder's Part A Statement dated [ ] 1998 which was served on
Computer Power on [ ] 1998.
2. CANCELLATION AND TERMINATION OF OPTIONS
Subject to clause 6, on and from the Effective Date:
<PAGE>
(a) the Options are irrevocably and unconditionally cancelled and
terminated; and
(b) the Optionholder irrevocably and unconditionally waives and
releases all rights it may have to the Options, including,
without limitation all rights to subscribe for Shares pursuant to
the exercise of any one or more of the Options.
3. PAYMENT
Subject to clause 6, Computer Power shall pay to the Optionholder within 7
days of the Effective Date an amount equal to the sum of the difference
between the Offer Price and the Exercise Price in respect of each Option
held by the Optionholder on the Effective Date.
4. NO EXERCISE OF OPTIONS
The parties agree that the Optionholder shall not be entitled to exercise
the Options or purport to transfer the Options or to create any Encumbrance
over the Options prior to the earlier of the date this Deed is terminated
under clause 6.
5. WARRANTIES
The Optionholder warrants and represents to Computer Power both on the date
of this Deed and immediately prior to the Effective Date that:
(a) the Optionholder is the legal and beneficial owner of the Options; and
(b) the Options are not subject to any Encumbrance.
6. TERMINATION
The parties agree that if:
(a) the Effective Date has not occurred on or before 31 December 1998 or
such later date as the parties agree; or
(b) i) a third party makes a public announcement of its intention to
make a takeover bid in respect of the Shares at a price higher
than the Offer Price at a time when the Takeover Scheme is
subject to one or more defeating conditions (other than a
defeating condition that no "prescribed occurrences" (as defined
in section 603 of the Corporations Law) occurs to Computer Power
prior to the close of the offer period in respect of the Takeover
Scheme); and
(ii) the Directors of Computer Power recommend that bid in the absence
of a higher offer, then on and from that time this Deed shall be
terminated and of no further force or effect.
<PAGE>
7. STAMP DUTY
Computer Power agrees to pay any stamp duty payable upon this Deed.
8. GOVERNING LAW
This Deed shall be governed by and construed in accordance with the laws of
the State of Victoria and the parties agree to submit to the jurisdiction
to the Courts of that State.
9. COUNTERPARTS
This Deed may be executed in any number of counterparts all of which taken
together will be deemed to constitute one and the same Deed.
SCHEDULE
OPTIONS
NUMBER ISSUE DATE EXERCISE PRICE
EXECUTED as a deed.
THE COMMON SEAL of )
COMPUTER POWER GROUP )
LIMITED was affixed by the authority of )
the Board of Directors in the presence of: )
<TABLE>
<S> <C>
- ------------------------------------- ---------------------------
(Signature of Secretary/Director) (Signature of Director)
- ------------------------------------- ---------------------------
(Name of Secretary/Director in Full) (Name of Director in Full)
SIGNED SEALED AND DELIVERED )
By ) ---------------------------
[ ] in the presence of: ) (Signature)
</TABLE>
<PAGE>
(Signature of Witness)
- -----------------------------
- -----------------------------
(Name of Witness in Full)
<PAGE>
Exhibit 10.17
AMENDMENT AGREEMENT NO. 4
TO THE CREDIT AGREEMENT
THIS AMENDMENT AGREEMENT NO. 4 (the "Amendment Agreement"), dated as of
October 8, 1998 to the CREDIT AGREEMENT dated as of May 1, 1997, as amended
(the "Credit Agreement"), made by and among INTERIM SERVICES INC., a Delaware
corporation (the "Borrower"), the Borrowing Subsidiaries parties hereto both
as of the date hereof or pursuant to SECTION 2.20 to the Credit Agreement
(herein each a "Company" and collectively, the "Companies"), the several
financial institutions from time to time party to the Credit Agreement
(collectively, the "Banks"; individually, a "Bank"), THE FIRST NATIONAL BANK
OF CHICAGO, as documentation agent for the Banks (in such capacity, the
"Documentation Agent"), and NATIONSBANK, N.A., as agent for the Banks (in
such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Companies, the Banks, the Documentation Agent
and the Agent have entered into the Credit Agreement;
WHEREAS, the Borrower has requested that the Documentation Agent, the Agent
and the Required Banks amend the Credit Agreement in the manner described
herein; and
WHEREAS, upon the terms and conditions contained herein the Documentation
Agent, the Agent and the Required Banks are willing to amend the Credit
Agreement;
NOW, THEREFORE, in consideration of the premises and conditions herein set
forth, it is hereby agreed as follows:
1. CREDIT AGREEMENT AMENDMENT. Subject to the conditions hereof, clause
(b) of SECTION 9.5 of the Credit Agreement is hereby amended in its entirety,
effective as of the date set forth below, as follows:
"(b) the Borrower may purchase or redeem or make open market purchases
of any class of common stock in any fiscal year at an aggregate cost not to
exceed 5% of Consolidated Net Worth as at the end of such fiscal year."
2. REPRESENTATIONS AND WARRANTIES; COVENANTS. In order to induce the
Documentation Agent, the Agent and the Required Banks to enter into this
Amendment Agreement, each Company hereby represents and warrants that the Credit
Agreement has been re-examined by such Company and that except as disclosed by
any Company in writing to the Banks as of the date hereof:
(i) The representations and warranties made by the Borrower in
Article VII thereof are true on and as of the date hereof except that
the financial statements
<PAGE>
referred to in SECTION 7.10 shall be those most recently furnished to
the Agent pursuant to SECTION 8.1;
(ii) There has been no material adverse change in the condition,
financial or otherwise, of such Company and its Subsidiaries since the
date of the most recent financial reports of such Company delivered to
the Agent under SECTION 8.1 thereof, other than changes in the
ordinary course of business, none of which has been a material adverse
change;
(iii) The business and properties of such Company and its
Subsidiaries are not, and since the date of the most recent financial
reports of such Company delivered to the Agent under SECTION 8.1
thereof, have not been, adversely affected in any substantial way as
the result of any fire, explosion, earthquake, accident, strike,
lockout, combination of workers, flood, embargo, riot, activities of
armed forces, war or acts of God or the public enemy, or cancellation
or loss of any major contracts; and
(iv) After giving effect to this Amendment Agreement, no
condition exists which, upon the effectiveness of the amendment
contemplated hereby, would constitute a Default or an Event of Default
on the part of such Company under the Credit Agreement or the Notes,
either immediately or with the lapse of time or the giving of notice,
or both.
3. CONDITIONS PRECEDENT. The effectiveness of this Amendment Agreement is
subject to the receipt by the Agent of twenty-two (22) counterparts of this
Amendment Agreement duly executed by all signatories hereto.
All proceedings of the Borrower relating to the matters provided for herein
shall be satisfactory to the Lenders, the Agent and their counsel.
4. ENTIRE AGREEMENT. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. No promise, condition, representation
or warranty, express or implied, not herein set forth shall bind any party
hereto, and no one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that,
except as in this Amendment Agreement otherwise expressly stated, no
representations, warranties or commitments, express or implied, have been made
by any party to the other. None of the terms or conditions of this Amendment
Agreement may be changed, modified, waived or canceled orally or otherwise,
except by writing, signed by all the parties hereto, specifying such change,
modification, waiver or cancellation of such terms or conditions, or of any
proceeding or succeeding breach thereof.
2
<PAGE>
5. CONSENT OF GUARANTORS. The Guarantors have joined in the execution of
this Amendment Agreement for the purposes of consenting hereto and for the
further purpose of confirming their guaranty of Obligations of the Companies as
provided in the Guaranty.
6. FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all other Loan
Documents are hereby confirmed and ratified in all respects and shall remain in
full force and effect according to their respective terms.
7. COUNTERPARTS. This Amendment Agreement may be executed in any number
of counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument.
8. GOVERNING LAW. THIS AMENDMENT AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY THE LAW OF THE STATE OF FLORIDA, WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS. THE BORROWER HEREBY (i) SUBMITS TO
THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS OF FLORIDA FOR THE
PURPOSES OF RESOLVING DISPUTES HEREUNDER OR UNDER ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY OR FOR PURPOSES OF COLLECTION AND (ii) WAIVES
TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION.
9. ENFORCEABILITY. Should any one or more of the provisions of this
Amendment Agreement be determined to be illegal or unenforceable as to one or
more of the parties hereto, all other provisions nevertheless shall remain
effective and binding on the parties hereto.
10. CREDIT AGREEMENT. All references in any of the Loan Documents to the
Credit Agreement shall mean and include the Credit Agreement as amended hereby.
11. SUCCESSORS AND ASSIGNS. This Amendment Agreement shall be binding
upon and inure to the benefit of each of the Borrower, the Lenders, the Agent
and their respective successors, assigns and legal representatives; PROVIDED,
HOWEVER, that the Borrower, without the prior consent of the Lenders, may not
assign any rights, powers, duties or obligations hereunder.
[Remainder of page intentionally left blank.]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Charlotte by their proper and duly authorized
officers as of the day and year first above written.
WITNESS: INTERIM SERVICES INC.
/s/ Jon E. Crouse By: /s/ Roy G. Krause
- --------------------------- --------------------------------
Name: Roy G. Krause
/s/ James E. Japser Title: Executive Vice President/CFO
- ---------------------------
INTERIM SERVICES (EUROPE) INC.
/s/ Jon E. Crouse By: /s/ Roy G. Krause
- --------------------------- --------------------------------
Name: Roy G. Krause
/s/ James E. Japser Title: Executive Vice President/CFO
- ---------------------------
MICHAEL PAGE GROUP PLC
(formerly known as Interim Services (UK) PLC)
/s/ Jon E. Crouse By: /s/ Roy G. Krause
- --------------------------- --------------------------------
Name: Roy Krause
/s/ James E. Japser Title: Director
- ---------------------------
4
<PAGE>
INTERIM ACCOUNTING PERSONNEL INC.
INTERIM FINANCIAL CORPORATION
INTERIM LEGAL SERVICES INC.
INTERIM PERSONNEL INC.
INTERIM TEMPORARY PERSONNEL INC.
RICH FIELD AGENCY, INC.
INTERIM TECHNOLOGY INC.
INTERIM REAL ESTATE SOLUTIONS INC.
CORNELL COMPUTER CORP.
SPECTRUM FINANCIAL CORPORATION
INTERIM CAREER SERVICES INC.
de RECAT ASSOCIATES, INC.
MICHAEL PAGE INTERNATIONAL INC.
WITNESS:
/s/ Jon E. Crouse By: /s/ Roy G. Krause
- --------------------------- --------------------------------
Name: Roy G. Krause
/s/ James E. Japser Title: Executive Vice President/CFO
- ---------------------------
5
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION, as Agent and
Issuing Bank
By: /s/ Andrew M. Airheart
-------------------------------------
Name: Andrew M. Airheart
-----------------------------------
Title: Senior Vice President
----------------------------------
NATIONSBANK, NATIONAL ASSOCIATION, as a Bank
By: /s/ Andrew M. Airheart
-------------------------------------
Name: Andrew M. Airheart
-----------------------------------
Title: Senior Vice President
----------------------------------
6
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
as Documentation Agent and as a Lender
By: /s/ Gaye C. Plunkett
------------------------------------
Name: Gaye C. Plunkett
-----------------------------------
Title: Vice President
---------------------------------
7
<PAGE>
THE CHASE MANHATTAN BANK,
as a Co-Agent and as a Lender
By: /s/ Carol A. Ulmer
------------------------------------
Name: Carol A. Ulmer
----------------------------------
Title: Vice President
---------------------------------
8
<PAGE>
FLEET NATIONAL BANK, as a Co-Agent
and as a Lender
By: /s/ Dianna McCarthy
------------------------------------
Name: Dianna McCarthy
----------------------------------
Title: Assistant Vice President
---------------------------------
9
<PAGE>
ABN AMRO BANK NV
By: /s/ Deborah Day Olorco
------------------------------------
Name: Deborah Day Olorco
----------------------------------
Title: Vice President
---------------------------------
By: /s/ Miguel Cartullo
------------------------------------
Name: Miguel Cartullo
----------------------------------
Title: Corporate Officer
---------------------------------
10
<PAGE>
BANK OF MONTREAL
By: /s/ Brian L. Banke
------------------------------------
Name: Brian L. Banke
----------------------------------
Title: Director
---------------------------------
11
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, ATLANTA AGENCY
By: /s/ Koichi Hasegawa
------------------------------------
Name: Koichi Hasegawa
---------------------------------
Title: Senior Vice President and
Deputy General Manager
-------------------------------
12
<PAGE>
THE SUMITOMO BANK, LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
13
<PAGE>
THE BANK OF NEW YORK
By: /s/ David C. Siegel
------------------------------------
Name: David C. Siegel
----------------------------------
Title: Vice President
---------------------------------
14
<PAGE>
COMERICA BANK
By: /s/ Martin G. Ellis
------------------------------------
Name: Martin G. Ellis
----------------------------------
Title: Vice President
---------------------------------
15
<PAGE>
HIBERNIA NATIONAL BANK
By: /s/ Christopher B. Pitre
------------------------------------
Name: Christopher B. Pitre
----------------------------------
Title: Vice President
---------------------------------
16
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /s/ Peter Stearn
------------------------------------
Name: Peter Stearn
----------------------------------
Title: Assistant Vice President
---------------------------------
17
<PAGE>
WACHOVIA BANK, N.A.
By: /s/ Patrick A. Phelan
------------------------------------
Name: Patrick A. Phelan
----------------------------------
Title: Vice President
---------------------------------
18
<PAGE>
BANK POLSKA KASA OPIEKI
By: /s/ Harvey Winter
------------------------------------
Name: Harvey Winter
----------------------------------
Title: Vice President
---------------------------------
19
<PAGE>
FIRST UNION NATIONAL BANK
By: /s/ Mary A. Morgan
------------------------------------
Name: Mary A. Morgan
----------------------------------
Title: Senior Vice President
---------------------------------
20
<PAGE>
Exhibit 10.18
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of November 18, 1998, is by and between
INTERIM SERVICES INC., a Delaware corporation (hereinafter referred to as the
"Company"), and ROBERT E. LIVONIUS (hereinafter the "Executive").
RECITALS
A. The Executive currently serves as the Company's Executive Vice
President and Chief Operating Officer, and his services and knowledge are
valuable to the Company in connection with the management of its business.
B. The Company desires to continue to employ the Executive and to
enter into a new agreement embodying the terms of such employment.
C. The Executive desires to continue the Executive's employment and
to enter into a new agreement embodying the terms of such employment.
AGREEMENTS
NOW, THEREFORE, to induce the Executive to remain in the employ of
the Company and its subsidiaries, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Executive agree as follows:
1. EMPLOYMENT.
During the Term of Employment (as defined in Section 2 hereof), the
Executive shall serve as Executive Vice President and Chief Operating
Officer. The Executive shall perform and assume all duties and
responsibilities customary to such position and shall devote all of his
business time and energies thereto. In carrying out such duties and
responsibilities, the Executive shall report to, and be subject to the
direction of, the Chief Executive Officer and the Board of Directors of the
Company (the "Board").
2. TERM.
The Term of Employment under this Agreement shall commence as of the
date of this Agreement and shall continue at the will of the Company and the
Executive (the "Term of Employment"). Either party may terminate the
Executive's employment at any time and for any reason.
3. BASE SALARY.
The Company shall pay the Executive, in accordance with the Company's
regular payroll practices applicable to salaried employees, an annualized base
salary at the rate in effect on the date of this Agreement, as the same may from
time to time be increased or decreased at
1
<PAGE>
the sole discretion of the Compensation Committee of the Board (the
"Compensation Committee").
4. INCENTIVE AWARDS.
a) The Executive shall participate in the Company's annual incentive
plan for senior-level executives as in effect from time to time, subject to the
performance standards set by the Compensation Committee. Payment of any annual
incentive award shall be made at the same time that such awards are paid to
other senior-level executives of the Company. The Executive's annual incentive
award target shall be set by the Compensation Committee.
b) The Executive shall be eligible to receive grants under the
Company's long-term incentive plan as in effect from time to time; provided,
however, that the size, type and other terms and conditions of any such grant to
the Executive shall be determined by the Compensation Committee.
5. BENEFITS, FRINGES AND PERQUISITES.
The Executive shall be entitled to participate in all employee pension
and welfare benefit, fringe benefit and perquisite plans and programs made
available to the Company's senior-level executives as in effect from time to
time.
6. VACATION.
The Executive shall be entitled to vacation in accordance with the
Company's vacation policy applicable to its senior-level executives. Vacations
shall be arranged in order that they not materially interfere with the normal
functioning of the Company's business activities or the performance of the
Executive's duties hereunder.
7. BUSINESS EXPENSES.
The Company shall reimburse the Executive for any ordinary, necessary
and reasonable business expenses that the Executive incurs in connection with
the performance of his duties under this Agreement, in accordance with the
Company's policy regarding the reimbursement of business expenses.
8. TERMINATION OF EMPLOYMENT.
a) DEATH OR DISABILITY. The Executive's employment shall terminate
upon the Executive's Death, and Company may terminate the Executive's employment
due to Disability (as defined herein). If, during the Term of Employment, the
Executive's employment is terminated due to Death or Disability, the Executive
(or Executive's estate or legal representative, as the case may be) shall be
entitled to receive:
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
2
<PAGE>
ii) an amount, payable at the same time that annual incentive
awards for the year in which the Executive's employment so terminates are
paid to senior-level executives of the Company, equal to the product of the
Executive's annual incentive award target for such year and a fraction, the
numerator of which is the number of days in such year through the date of
such termination of employment, and the denominator of which is 365;
provided, however, that no such amount shall be paid to the Executive (or
to Executive's estate or legal representative, as the case may be) if
annual incentive awards for such year are not paid to senior-level
executives of the Company generally;
iii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
iv) any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts); and
v) any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
For purposes of this Agreement, "Disability" shall mean the Executive's
inability, by reason of illness or other physical or mental disability, to
perform the principal duties required by the position held by the Executive
at the inception of such illness or disability, for any consecutive 180-day
period. A determination of Disability shall be subject to the certification
of a qualified medical doctor agreed to by the Company and the Executive or,
in the Executive's incapacity to designate a doctor, the Executive's legal
representative. If the Company and the Executive cannot agree on the
designation of a doctor, then each party shall nominate a qualified medical
doctor and the two doctors shall select a third doctor, and the third doctor
shall make the determination as to Disability.
b) FOR CAUSE. The Company may terminate the Executive's employment
for Cause (as defined herein) if the Board determines that Cause exists and
serves written notice of such termination to the Executive. If, during the Term
of Employment, the Company terminates the Executive's employment for Cause, all
of the Executive's annual incentive awards, long-term incentive awards, stock
options and other stock or long-term incentive grants which are not then vested
or not then exercisable shall be canceled as of the date of the Board's written
notice of termination, and the Executive shall be entitled to receive:
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
ii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
3
<PAGE>
iii) any vested deferred base salary and vested annual incentive
awards (including, without limitation, interest or other credits on such
deferred amounts but not including unvested bonuses or amounts payable for
the year in which the Board's written notice of termination for Cause is
made, or unvested bonuses or amounts payable after the Board's written
notice of termination for Cause is made); and
iv) any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
The Executive shall be entitled to receive no other compensation or
benefits, whether pursuant to this Agreement or otherwise, except as and to
the extent required by law.
For purposes of this Agreement, "Cause" shall mean one or more of the
following:
(I) the material violation of any of the terms and conditions of this
Agreement or any written agreements the Executive may from time to time
have with the Company (after 30 days following written notice from the
Board specifying such material violation and Executive's failure to cure or
remedy such material violation within such 30-day period);
(II) inattention to or failure to perform Executive's assigned duties
and responsibilities competently for any reason other than due to
Disability (after 30 days following written notice from the Board
specifying such inattention or failure, and Executive's failure to cure or
remedy such inattention or failure within such 30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without limitation,
engaging in immoral acts which become public information or repeatedly
conveying to one person, or conveying to an assembled public group,
negative information concerning the Company or its affiliates;
(IV) commission of an act of dishonesty, including, but not limited
to, misappropriation of funds or any property of the Company;
(V) commission by the Executive of an act which constitutes a
misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the Policies referred to in
Section 9 hereof (after 30 days following written notice from the Board
specifying such failure, and the Executive's failure to cure or remedy such
inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following written
notice from the Board specifying
4
<PAGE>
such refusal or insubordination, and the Executive's failure to cure or
remedy such refusal or insubordination within such 30-day period); or
(VIII) unsatisfactory performance of duties by the Executive as a
result of alcohol or drug use by the Executive.
c) WITHOUT CAUSE. The Company may terminate the Executive's
employment without Cause. If, during the Term of Employment, the Company
terminates the Executive's employment without Cause, other than due to
Disability, then in lieu of any amount otherwise payable under this Agreement,
or as damages for termination of Executive's employment without Cause, the
Executive shall be entitled to receive:
i) Within thirty (30) days of the date of the Board's written
notice of termination without Cause, a lump sum cash severance payment
(reduced by any applicable payroll or other taxes required to be withheld)
equal to the product of two (2) times the sum of the Executive's annual
salary for the current year plus his target bonus for the current year
(provided that if the notice of termination is given prior to the
determination of the Executive's salary or target bonus for the year in
which the notice of termination is given, then the amounts shall be the
annual salary for the prior year and the greater of the target bonus for
the prior year or the actual bonus earned by the Executive for the prior
year). The current year shall be (A) for purposes of determining annual
salary, the year then generally used by the Company for setting salaries
for senior-level executives (currently April 1 through the following
March 31), and (B) for purposes of determining target bonus, the fiscal
year then generally used by the Company for setting target bonuses for
senior-level executives, in which the Board gives the Executive written
notice of termination, and the prior year shall be the twelve-month period
immediately preceding the current year.
ii) Reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment.
iii) Any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts).
iv) Any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
If the Company terminates Executive's employment without Cause, any
vesting or service requirements with respect to any employee stock options
granted to the Executive and then outstanding shall be deemed satisfied.
d) VOLUNTARY TERMINATION. If, during the Term of Employment, the
Executive terminates his employment other than due to Retirement, the Executive
shall be entitled to receive:
5
<PAGE>
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
ii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
iii) any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts); and
iv) no other compensation or benefits except as and to the
extent required by law.
e) INELIGIBILITY FOR SEVERANCE PLAN PAYMENTS. Anything in this
Agreement to the contrary notwithstanding, Executive shall not be entitled to
any payment under any of the Company's severance plans, programs or
arrangements.
9. COMPANY POLICIES.
The Executive shall strictly follow and adhere to all written policies
of the Company which are not inconsistent with this Agreement or applicable law
including, without limitation, securities laws compliance (including, without
limitation, use or disclosure of material nonpublic information, restrictions on
sales of Company stock, and reporting requirements), conflicts of interest
(including, without limitation, doing business with the Company or its
affiliates without the prior approval of the Board), and employee harassment.
10. CONFIDENTIALITY.
The Executive will not at any time (whether during or after
Executive's employment with the Company) disclose or use for Executive's own
benefit or purposes, or for the benefit or purpose of any other person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise, any trade secrets, information, data, or
other confidential information relating to customers, employees, job applicants,
services, development programs, prices, costs, marketing, trading, investment,
sales activities, promotion, processes, systems, credit and financial data,
financing methods, plans, proprietary computer software, request for proposal
documents, or the business and affairs of the Company generally, or of any
affiliate of the Company; provided, however, that the foregoing shall not apply
to information which is generally known to the industry or the public other than
as a result of the Executive's breach of this covenant. The Executive agrees
that upon termination of his employment with the Company for any reason, he will
return to the Company immediately all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof or therefrom
(whether in written, printed or electronic form), in any way relating to the
business of the Company and its affiliates.
The Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section would
be inadequate and, in recognition of this fact, the Executive agrees that, in
the event of such a breach or threatened
6
<PAGE>
breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
11. COVENANT NOT TO COMPETE.
a) IN GENERAL. The Executive agrees that during Executive's
employment with the Company and for a period of one (1) year after the
termination of such employment for whatever reason (the "Non-Compete Period"),
he shall not, anywhere in the world:
i) engage in any business, whether as an employee, consultant,
partner, principal, agent, representative or stockholder (other than as a
stockholder of less than a one percent (1%) equity interest) or in any
other corporate or representative capacity with any other business, whether
in corporate, proprietorship, or partnership form or otherwise, where such
business is engaged in any activity which competes with the business of the
Company or its affiliates as conducted on the date the Executive's
employment terminated or during the 180 day period prior thereto, or which
will compete with any proposed business activity of the Company in the
planning stage on such date or during such period;
ii) solicit business from, or perform services for, or induce
others to perform services for, any company or other business entity which
at any time during the one (1) year period immediately preceding the
Executive's termination of employment with the Company was a client of the
Company or its affiliates; or
iii) offer, or cause to be offered, employment with any business,
whether in corporate, proprietorship, or partnership form or otherwise,
either on a full-time, part-time or consulting basis, to any person who was
employed by the Company or its affiliates or for whom the Company or its
affiliates performed outplacement services, in either case at any time
during the one (1) year period immediately preceding the date the
Executive's termination of employment with the Company.
For purposes of this Agreement, affiliates of the Company include
subsidiaries 50% or more owned by the Company and the Company's franchisees
and licensees.
b) CONSIDERATION. The consideration for the foregoing covenant not
to compete, the sufficiency of which is hereby acknowledged, is the Company's
agreement to employ the Executive and provide compensation and benefits pursuant
to this Agreement.
c) EQUITABLE RELIEF AND OTHER REMEDIES. The Executive acknowledges
and agrees that the Company's remedies at law for a breach or threatened breach
of any of the provisions of this Section would be inadequate and, in recognition
of this fact, the Executive agrees that, in the event of such a breach or
threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
7
<PAGE>
specific performance, temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
d) REFORMATION. If the foregoing covenant no to compete would
otherwise be determined invalid or unenforceable by a court of competent
jurisdiction, such court shall exercise its discretion in reforming the
provisions of this Section to the end that the Executive be subject to a
covenant not to compete, reasonable under the circumstances, enforceable by the
Company.
12. COMPANY POLICIES, PLANS AND PROGRAMS.
Whenever any rights under this Agreement depend on the terms of a
policy, plan or program established or maintained by the Company, any
determination of these rights shall be made on the basis of the policy, plan or
program in effect at the time as of which the determination is made. No
reference in this Agreement to any policy, plan or program established or
maintained by the Company shall preclude the Company from prospectively or
retroactively changing or amending or terminating that policy, plan or program
or adopting a new policy, plan or program in lieu of the then-existing policy,
plan or program.
13. BINDING AGREEMENT; SUCCESSORS.
a) This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns. The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. For purposes
of this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid.
b) This Agreement shall be binding up and shall inure to the benefit
of the Executive and the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, beneficiaries,
devises and legatees. If the Executive should die while any amounts are payable
to him hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, beneficiary or other designee or, if there be no such designee, to the
Executive's estate.
14. CHANGE IN CONTROL AGREEMENTS.
Simultaneously with the execution and delivery of this Agreement, the
Company and the Executive have executed and delivered a Change In Control
Agreement ("C-I-C Agreement"), which applies under the circumstances and during
the period described therein. If circumstances arise which cause both the C-I-C
Agreement and this Agreement to apply to the Company and the Executive, then, to
the extent of any inconsistency between the provisions of this Agreement and the
C-I-C Agreement, the terms of the C-I-C Agreement alone shall apply. However,
if the C-I-C Agreement does not apply (as, for example, if there is no Change in
8
<PAGE>
Control as described therein, or the C-I-C Agreement has expired, or the C-I-C
Agreement simply does not apply), then the provisions of this Agreement shall
control and be unaffected by the C-I-C Agreement.
15. NOTICES
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii) on
the date of transmission, if delivered by confirmed facsimile, (iii) on the
first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (iv) on the third business day following the date
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Robert E. Livonius
1072 Pine Branch Drive
Fort Lauderdale, FL 33326
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
16. GOVERNING LAW
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Florida, without regard
to principles of conflicts of laws.
17. ENTIRE AGREEMENT; AMENDMENT
This Agreement and the C-I-C Agreement contain the entire agreement
between the parties concerning the subject matter hereof and supersede all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect to the subject matter hereof.
No provisions of this Agreement may be amended, modified, waived or discharged
unless such amendment, waiver, modification or discharge is agreed to in writing
signed by the Executive and the Company. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
9
<PAGE>
18. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which will constitute one and
the same instrument.
19. NON-ASSIGNABILITY
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign, or transfer this Agreement or
any rights or obligations hereunder, except as provided in Section 13. Without
limiting the foregoing, the Executive's right to receive payments hereunder
shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than a transfer by his will or trust or by
the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph the Company shall have no
liability to pay any amount so attempted to be assigned or transferred.
20. RESOLUTION OF DISPUTES.
a) The parties shall submit any claim, demand, dispute, charge or
cause of action (in any such case, a "Claim") arising out of, in connection
with, or relating to this Agreement to binding arbitration in conformance with
the J*A*M*S/ENDISPUTE Streamlined Arbitration Rules and Procedures or the
J*A*M*S/ENDISPUTE Comprehensive Arbitration Rules and Procedures, as applicable,
but expressly excluding Rule 28 of the J*A*M*S/ENDISPUTE Streamlined Rules and
Rule 32 of the J*A*M*S/ENDISPUTE Comprehensive Rules, as the case may be. All
arbitration procedures shall be held in Fort Lauderdale, Florida and shall be
subject to the choice of law provisions set forth in Section 16 of this
Agreement.
b) In the event of any dispute arising out of or relating to this
Agreement for which any party is seeking injunctive relief, specific performance
or other equitable relief, such matter may be resolved by litigation.
Accordingly, the parties shall submit such matter to the exclusive jurisdiction
of the United States District Court for the Southern District of Florida or, if
jurisdiction is not available therein, any other court located in Broward
County, Florida, and hereby waive any and all objections to such jurisdiction or
venue that they may have. Each party agrees that process may be served upon
such party in any manner authorized under the laws of the United States or
Florida, and waives any objections that such party may otherwise have to such
process.
21. NO SETOFF
The Company shall have no right of setoff or counterclaim in respect
of any claim, debt or obligation against any payment provided for in this
Agreement.
22. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its subsidiaries or successors
and for which the Executive may qualify, nor
10
<PAGE>
shall anything herein limit or reduce such rights as the Executive may have
under any other agreements with the Company or any of its subsidiaries or
successors. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company or any
of its subsidiaries shall be payable in accordance with such plan or program,
except as explicitly modified by this Agreement.
23. WITHHOLDING.
The Company may withhold from any amounts payable under this Agreement
such federal, state and local taxes as are required to be withheld (with respect
to amounts payable hereunder or under any benefit plan or arrangement maintained
by the Company) pursuant to any applicable law or regulation.
24. INVALIDITY OF PROVISIONS
In the event that any provision of this Agreement is adjudicated to be
invalid or unenforceable under applicable law in any jurisdiction, the validity
or enforceability of the remaining provisions thereof shall be unaffected as to
such jurisdiction and such adjudication shall not affect the validity or
enforceability of such provision in any other jurisdiction. To the extent that
any provision of this Agreement is adjudicated to be invalid or unenforceable
because it is overbroad, that provision shall not be void but rather shall be
limited to the extent required by applicable law and enforced as so limited.
The parties expressly acknowledge and agree that Sections 11 and 24 are
reasonable in view of the parties' respective interests.
25. NON-WAIVER OF RIGHTS
The failure by the Company or the Executive to enforce at any time any
of the provisions of this Agreement or to require at any time performance by the
other party of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement, or
any part hereof, or the right of the Company or the Executive thereafter to
enforce each and every provision in accordance with the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING THAT
THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY
BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT;
(C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT TO ASK ANY
QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED SATISFACTORY
ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE EXECUTIVE'S RIGHTS AND
OBLIGATIONS UNDER THE AGREEMENT.
11
<PAGE>
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
----------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Robert E. Livonius
----------------------------------------
Robert E. Livonius
12
<PAGE>
Exhibit 10.19
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of November 18, 1998, is by and between
INTERIM SERVICES INC., a Delaware corporation (hereinafter referred to as the
"Company"), and ROY G. KRAUSE (hereinafter the "Executive").
RECITALS
A. The Executive currently serves as the Company's Executive Vice
President and Chief Financial Officer, and his services and knowledge are
valuable to the Company in connection with the management of its business.
B. The Company desires to continue to employ the Executive and to
enter into a new agreement embodying the terms of such employment.
C. The Executive desires to continue the Executive's employment and
to enter into a new agreement embodying the terms of such employment.
AGREEMENTS
NOW, THEREFORE, to induce the Executive to remain in the employ of
the Company and its subsidiaries, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Executive agree as follows:
1. EMPLOYMENT.
During the Term of Employment (as defined in Section 2 hereof), the
Executive shall serve as Executive Vice President and Chief Financial
Officer. The Executive shall perform and assume all duties and
responsibilities customary to such position and shall devote all of his
business time and energies thereto. In carrying out such duties and
responsibilities, the Executive shall report to, and be subject to the
direction of, the Chief Executive Officer and the Board of Directors of the
Company (the "Board").
2. TERM.
The Term of Employment under this Agreement shall commence as of the
date of this Agreement and shall continue at the will of the Company and the
Executive (the "Term of Employment"). Either party may terminate the
Executive's employment at any time and for any reason.
3. BASE SALARY.
The Company shall pay the Executive, in accordance with the Company's
regular payroll practices applicable to salaried employees, an annualized base
salary at the rate in effect
1
<PAGE>
on the date of this Agreement, as the same may from time to time be increased
or decreased at the sole discretion of the Compensation Committee of the
Board (the "Compensation Committee").
4. INCENTIVE AWARDS.
a) The Executive shall participate in the Company's annual incentive
plan for senior-level executives as in effect from time to time, subject to the
performance standards set by the Compensation Committee. Payment of any annual
incentive award shall be made at the same time that such awards are paid to
other senior-level executives of the Company. The Executive's annual incentive
award target shall be set by the Compensation Committee.
b) The Executive shall be eligible to receive grants under the
Company's long-term incentive plan as in effect from time to time; provided,
however, that the size, type and other terms and conditions of any such grant to
the Executive shall be determined by the Compensation Committee.
5. BENEFITS, FRINGES AND PERQUISITES.
The Executive shall be entitled to participate in all employee pension
and welfare benefit, fringe benefit and perquisite plans and programs made
available to the Company's senior-level executives as in effect from time to
time.
6. VACATION.
The Executive shall be entitled to vacation in accordance with the
Company's vacation policy applicable to its senior-level executives. Vacations
shall be arranged in order that they not materially interfere with the normal
functioning of the Company's business activities or the performance of the
Executive's duties hereunder.
7. BUSINESS EXPENSES.
The Company shall reimburse the Executive for any ordinary, necessary
and reasonable business expenses that the Executive incurs in connection with
the performance of his duties under this Agreement, in accordance with the
Company's policy regarding the reimbursement of business expenses.
8. TERMINATION OF EMPLOYMENT.
a) DEATH OR DISABILITY. The Executive's employment shall terminate
upon the Executive's Death, and Company may terminate the Executive's employment
due to Disability (as defined herein). If, during the Term of Employment, the
Executive's employment is terminated due to Death or Disability, the Executive
(or Executive's estate or legal representative, as the case may be) shall be
entitled to receive:
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
2
<PAGE>
ii) an amount, payable at the same time that annual incentive
awards for the year in which the Executive's employment so terminates are
paid to senior-level executives of the Company, equal to the product of the
Executive's annual incentive award target for such year and a fraction, the
numerator of which is the number of days in such year through the date of
such termination of employment, and the denominator of which is 365;
provided, however, that no such amount shall be paid to the Executive (or
to Executive's estate or legal representative, as the case may be) if
annual incentive awards for such year are not paid to senior-level
executives of the Company generally;
iii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
iv) any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts); and
v) any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
For purposes of this Agreement, "Disability" shall mean the Executive's
inability, by reason of illness or other physical or mental disability, to
perform the principal duties required by the position held by the Executive
at the inception of such illness or disability, for any consecutive 180-day
period. A determination of Disability shall be subject to the certification
of a qualified medical doctor agreed to by the Company and the Executive or,
in the Executive's incapacity to designate a doctor, the Executive's legal
representative. If the Company and the Executive cannot agree on the
designation of a doctor, then each party shall nominate a qualified medical
doctor and the two doctors shall select a third doctor, and the third doctor
shall make the determination as to Disability.
b) FOR CAUSE. The Company may terminate the Executive's employment
for Cause (as defined herein) if the Board determines that Cause exists and
serves written notice of such termination to the Executive. If, during the Term
of Employment, the Company terminates the Executive's employment for Cause, all
of the Executive's annual incentive awards, long-term incentive awards, stock
options and other stock or long-term incentive grants which are not then vested
or not then exercisable shall be canceled as of the date of the Board's written
notice of termination, and the Executive shall be entitled to receive:
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
ii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
3
<PAGE>
iii) any vested deferred base salary and vested annual incentive
awards (including, without limitation, interest or other credits on such
deferred amounts but not including unvested bonuses or amounts payable for
the year in which the Board's written notice of termination for Cause is
made, or unvested bonuses or amounts payable after the Board's written
notice of termination for Cause is made); and
iv) any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
The Executive shall be entitled to receive no other compensation or
benefits, whether pursuant to this Agreement or otherwise, except as and to
the extent required by law.
For purposes of this Agreement, "Cause" shall mean one or more of the
following:
(I) the material violation of any of the terms and conditions of this
Agreement or any written agreements the Executive may from time to time
have with the Company (after 30 days following written notice from the
Board specifying such material violation and Executive's failure to cure or
remedy such material violation within such 30-day period);
(II) inattention to or failure to perform Executive's assigned duties
and responsibilities competently for any reason other than due to
Disability (after 30 days following written notice from the Board
specifying such inattention or failure, and Executive's failure to cure or
remedy such inattention or failure within such 30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without limitation,
engaging in immoral acts which become public information or repeatedly
conveying to one person, or conveying to an assembled public group,
negative information concerning the Company or its affiliates;
(IV) commission of an act of dishonesty, including, but not limited
to, misappropriation of funds or any property of the Company;
(V) commission by the Executive of an act which constitutes a
misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the Policies referred to in
Section 9 hereof (after 30 days following written notice from the Board
specifying such failure, and the Executive's failure to cure or remedy such
inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following written
notice from the Board specifying
4
<PAGE>
such refusal or insubordination, and the Executive's failure to cure or
remedy such refusal or insubordination within such 30-day period); or
(VIII) unsatisfactory performance of duties by the Executive as a
result of alcohol or drug use by the Executive.
c) WITHOUT CAUSE. The Company may terminate the Executive's
employment without Cause. If, during the Term of Employment, the Company
terminates the Executive's employment without Cause, other than due to
Disability, then in lieu of any amount otherwise payable under this Agreement,
or as damages for termination of Executive's employment without Cause, the
Executive shall be entitled to receive:
i) Within thirty (30) days of the date of the Board's written
notice of termination without Cause, a lump sum cash severance payment
(reduced by any applicable payroll or other taxes required to be withheld)
equal to the product of two (2) times the sum of the Executive's annual
salary for the current year plus his target bonus for the current year
(provided that if the notice of termination is given prior to the
determination of the Executive's salary or target bonus for the year in
which the notice of termination is given, then the amounts shall be the
annual salary for the prior year and the greater of the target bonus for
the prior year or the actual bonus earned by the Executive for the prior
year). The current year shall be (A) for purposes of determining annual
salary, the year then generally used by the Company for setting salaries
for senior-level executives (currently April 1 through the following
March 31), and (B) for purposes of determining target bonus, the fiscal
year then generally used by the Company for setting target bonuses for
senior-level executives, in which the Board gives the Executive written
notice of termination, and the prior year shall be the twelve-month period
immediately preceding the current year.
ii) Reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment.
iii) Any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts).
iv) Any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
If the Company terminates Executive's employment without Cause, any
vesting or service requirements with respect to any employee stock options
granted to the Executive and then outstanding shall be deemed satisfied.
d) VOLUNTARY TERMINATION. If, during the Term of Employment, the
Executive terminates his employment other than due to Retirement, the Executive
shall be entitled to receive:
5
<PAGE>
i) Executive's base salary through the date of such termination
of employment at the rate in effect at the time thereof;
ii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the date
of such termination of employment;
iii) any vested deferred base salary and annual incentive awards
(including, without limitation, interest or other credits on such deferred
amounts); and
iv) no other compensation or benefits except as and to the
extent required by law.
e) INELIGIBILITY FOR SEVERANCE PLAN PAYMENTS. Anything in this
Agreement to the contrary notwithstanding, Executive shall not be entitled to
any payment under any of the Company's severance plans, programs or
arrangements.
9. COMPANY POLICIES.
The Executive shall strictly follow and adhere to all written
policies of the Company which are not inconsistent with this Agreement or
applicable law including, without limitation, securities laws compliance
(including, without limitation, use or disclosure of material nonpublic
information, restrictions on sales of Company stock, and reporting
requirements), conflicts of interest (including, without limitation, doing
business with the Company or its affiliates without the prior approval of the
Board), and employee harassment.
10. CONFIDENTIALITY.
The Executive will not at any time (whether during or after
Executive's employment with the Company) disclose or use for Executive's own
benefit or purposes, or for the benefit or purpose of any other person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise, any trade secrets, information, data, or
other confidential information relating to customers, employees, job
applicants, services, development programs, prices, costs, marketing,
trading, investment, sales activities, promotion, processes, systems, credit
and financial data, financing methods, plans, proprietary computer software,
request for proposal documents, or the business and affairs of the Company
generally, or of any affiliate of the Company; provided, however, that the
foregoing shall not apply to information which is generally known to the
industry or the public other than as a result of the Executive's breach of
this covenant. The Executive agrees that upon termination of his employment
with the Company for any reason, he will return to the Company immediately
all memoranda, books, papers, plans, information, letters and other data, and
all copies thereof or therefrom (whether in written, printed or electronic
form), in any way relating to the business of the Company and its affiliates.
The Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section
would be inadequate and, in recognition of this fact, the Executive agrees
that, in the event of such a breach or threatened
6
<PAGE>
breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
11. COVENANT NOT TO COMPETE.
a) IN GENERAL. The Executive agrees that during Executive's
employment with the Company and for a period of one (1) year after the
termination of such employment for whatever reason (the "Non-Compete Period"),
he shall not, anywhere in the world:
i) engage in any business, whether as an employee, consultant,
partner, principal, agent, representative or stockholder (other than as a
stockholder of less than a one percent (1%) equity interest) or in any
other corporate or representative capacity with any other business, whether
in corporate, proprietorship, or partnership form or otherwise, where such
business is engaged in any activity which competes with the business of the
Company or its affiliates as conducted on the date the Executive's
employment terminated or during the 180 day period prior thereto, or which
will compete with any proposed business activity of the Company in the
planning stage on such date or during such period;
ii) solicit business from, or perform services for, or induce
others to perform services for, any company or other business entity which
at any time during the one (1) year period immediately preceding the
Executive's termination of employment with the Company was a client of the
Company or its affiliates; or
iii) offer, or cause to be offered, employment with any business,
whether in corporate, proprietorship, or partnership form or otherwise,
either on a full-time, part-time or consulting basis, to any person who was
employed by the Company or its affiliates or for whom the Company or its
affiliates performed outplacement services, in either case at any time
during the one (1) year period immediately preceding the date the
Executive's termination of employment with the Company.
For purposes of this Agreement, affiliates of the Company include
subsidiaries 50% or more owned by the Company and the Company's franchisees
and licensees.
b) CONSIDERATION. The consideration for the foregoing covenant not
to compete, the sufficiency of which is hereby acknowledged, is the Company's
agreement to employ the Executive and provide compensation and benefits pursuant
to this Agreement.
c) EQUITABLE RELIEF AND OTHER REMEDIES. The Executive acknowledges
and agrees that the Company's remedies at law for a breach or threatened breach
of any of the provisions of this Section would be inadequate and, in recognition
of this fact, the Executive agrees that, in the event of such a breach or
threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
7
<PAGE>
specific performance, temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
d) REFORMATION. If the foregoing covenant no to compete would
otherwise be determined invalid or unenforceable by a court of competent
jurisdiction, such court shall exercise its discretion in reforming the
provisions of this Section to the end that the Executive be subject to a
covenant not to compete, reasonable under the circumstances, enforceable by
the Company.
12. COMPANY POLICIES, PLANS AND PROGRAMS.
Whenever any rights under this Agreement depend on the terms of a
policy, plan or program established or maintained by the Company, any
determination of these rights shall be made on the basis of the policy, plan
or program in effect at the time as of which the determination is made. No
reference in this Agreement to any policy, plan or program established or
maintained by the Company shall preclude the Company from prospectively or
retroactively changing or amending or terminating that policy, plan or
program or adopting a new policy, plan or program in lieu of the
then-existing policy, plan or program.
13. BINDING AGREEMENT; SUCCESSORS.
a) This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns. The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. For purposes
of this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid.
b) This Agreement shall be binding up and shall inure to the
benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
beneficiaries, devises and legatees. If the Executive should die while any
amounts are payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to the Executive's devisee, legatee, beneficiary or other designee or, if
there be no such designee, to the Executive's estate.
14. CHANGE IN CONTROL AGREEMENTS.
Simultaneously with the execution and delivery of this Agreement,
the Company and the Executive have executed and delivered a Change In Control
Agreement ("C-I-C Agreement"), which applies under the circumstances and
during the period described therein. If circumstances arise which cause both
the C-I-C Agreement and this Agreement to apply to the Company and the
Executive, then, to the extent of any inconsistency between the provisions of
this Agreement and the C-I-C Agreement, the terms of the C-I-C Agreement
alone shall apply. However, if the C-I-C Agreement does not apply (as, for
example, if there is no Change in
8
<PAGE>
Control as described therein, or the C-I-C Agreement has expired, or the
C-I-C Agreement simply does not apply), then the provisions of this Agreement
shall control and be unaffected by the C-I-C Agreement.
15. NOTICES.
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii)
on the date of transmission, if delivered by confirmed facsimile, (iii) on
the first business day following the date of deposit if delivered by
guaranteed overnight delivery service, or (iv) on the third business day
following the date delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Roy G. Krause
7601 Marblehead Lane
Parkland, FL 33067
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
16. GOVERNING LAW.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Florida, without regard
to principles of conflicts of laws.
17. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the C-I-C Agreement contain the entire agreement
between the parties concerning the subject matter hereof and supersede all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the parties with respect to the subject
matter hereof. No provisions of this Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge
is agreed to in writing signed by the Executive and the Company. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.
9
<PAGE>
18. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which will constitute one and
the same instrument.
19. NON-ASSIGNABILITY.
This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Section 13. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer
by his will or trust or by the laws of descent or distribution, and in the
event of any attempted assignment or transfer contrary to this paragraph the
Company shall have no liability to pay any amount so attempted to be assigned
or transferred.
20. RESOLUTION OF DISPUTES.
a) The parties shall submit any claim, demand, dispute, charge or
cause of action (in any such case, a "Claim") arising out of, in connection
with, or relating to this Agreement to binding arbitration in conformance
with the J*A*M*S/ENDISPUTE Streamlined Arbitration Rules and Procedures or
the J*A*M*S/ENDISPUTE Comprehensive Arbitration Rules and Procedures, as
applicable, but expressly excluding Rule 28 of the J*A*M*S/ ENDISPUTE
Streamlined Rules and Rule 32 of the J*A*M*S/ENDISPUTE Comprehensive Rules,
as the case may be. All arbitration procedures shall be held in Fort
Lauderdale, Florida and shall be subject to the choice of law provisions set
forth in Section 16 of this Agreement.
b) In the event of any dispute arising out of or relating to this
Agreement for which any party is seeking injunctive relief, specific
performance or other equitable relief, such matter may be resolved by
litigation. Accordingly, the parties shall submit such matter to the
exclusive jurisdiction of the United States District Court for the Southern
District of Florida or, if jurisdiction is not available therein, any other
court located in Broward County, Florida, and hereby waive any and all
objections to such jurisdiction or venue that they may have. Each party
agrees that process may be served upon such party in any manner authorized
under the laws of the United States or Florida, and waives any objections
that such party may otherwise have to such process.
21. NO SETOFF.
The Company shall have no right of setoff or counterclaim in respect
of any claim, debt or obligation against any payment provided for in this
Agreement.
22. NON-EXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its subsidiaries or
successors and for which the Executive may qualify, nor
10
<PAGE>
shall anything herein limit or reduce such rights as the Executive may have
under any other agreements with the Company or any of its subsidiaries or
successors. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company or any
of its subsidiaries shall be payable in accordance with such plan or program,
except as explicitly modified by this Agreement.
23. WITHHOLDING.
The Company may withhold from any amounts payable under this
Agreement such federal, state and local taxes as are required to be withheld
(with respect to amounts payable hereunder or under any benefit plan or
arrangement maintained by the Company) pursuant to any applicable law or
regulation.
24. INVALIDITY OF PROVISIONS.
In the event that any provision of this Agreement is adjudicated to
be invalid or unenforceable under applicable law in any jurisdiction, the
validity or enforceability of the remaining provisions thereof shall be
unaffected as to such jurisdiction and such adjudication shall not affect the
validity or enforceability of such provision in any other jurisdiction. To
the extent that any provision of this Agreement is adjudicated to be invalid
or unenforceable because it is overbroad, that provision shall not be void
but rather shall be limited to the extent required by applicable law and
enforced as so limited. The parties expressly acknowledge and agree that
Sections 11 and 24 are reasonable in view of the parties' respective
interests.
25. NON-WAIVER OF RIGHTS.
The failure by the Company or the Executive to enforce at any time
any of the provisions of this Agreement or to require at any time performance
by the other party of any of the provisions hereof shall in no way be
construed to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of the Company or the
Executive thereafter to enforce each and every provision in accordance with
the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING
THAT THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND
STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE
SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT
TO ASK ANY QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED
SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE
EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.
11
<PAGE>
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
-------------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Roy G. Krause
-------------------------------------------
Roy G. Krause
12
<PAGE>
Exhibit 10.20
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of November 18, 1998, is by and
between INTERIM SERVICES INC., a Delaware corporation (hereinafter referred
to as the "Company"), and GARY PECK (hereinafter the "Executive").
RECITALS
A. The Executive currently serves as the Company's
President, Commercial Staffing Group, and his services and knowledge are
valuable to the Company in connection with the management of its business.
B. The Company desires to continue to employ the Executive
and to enter into a new agreement embodying the terms of such employment.
C. The Executive desires to continue the Executive's
employment and to enter into a new agreement embodying the terms of such
employment.
AGREEMENTS
NOW, THEREFORE, to induce the Executive to remain in the
employ of the Company and its subsidiaries, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Executive agree as follows:
1. EMPLOYMENT.
During the Term of Employment (as defined in Section 2
hereof), the Executive shall serve as President, Commercial Staffing Group.
The Executive shall perform and assume all duties and responsibilities
customary to such position and shall devote all of his business time and
energies thereto. In carrying out such duties and responsibilities, the
Executive shall report to, and be subject to the direction of, Chief
Operating Officer and the Board of Directors of the Company (the "Board").
2. TERM.
The Term of Employment under this Agreement shall commence as
of the date of this Agreement and shall continue at the will of the Company
and the Executive (the "Term of Employment"). Either party may terminate the
Executive's employment at any time and for any reason.
3. BASE SALARY.
The Company shall pay the Executive, in accordance with the
Company's regular payroll practices applicable to salaried employees, an
annualized base salary at the rate in effect on the date of this Agreement,
as the same may from time to time be increased or decreased at
1
<PAGE>
the sole discretion of the Compensation Committee of the Board (the
"Compensation Committee").
4. INCENTIVE AWARDS.
a) The Executive shall participate in the Company's annual
incentive plan for senior-level executives as in effect from time to time,
subject to the performance standards set by the Compensation Committee.
Payment of any annual incentive award shall be made at the same time that
such awards are paid to other senior-level executives of the Company. The
Executive's annual incentive award target shall be set by the Compensation
Committee.
b) The Executive shall be eligible to receive grants under
the Company's long-term incentive plan as in effect from time to time;
provided, however, that the size, type and other terms and conditions of any
such grant to the Executive shall be determined by the Compensation Committee.
5. BENEFITS, FRINGES AND PERQUISITES.
The Executive shall be entitled to participate in all employee
pension and welfare benefit, fringe benefit and perquisite plans and programs
made available to the Company's senior-level executives as in effect from
time to time.
6. VACATION.
The Executive shall be entitled to vacation in accordance with
the Company's vacation policy applicable to its senior-level executives.
Vacations shall be arranged in order that they not materially interfere with
the normal functioning of the Company's business activities or the
performance of the Executive's duties hereunder.
7. BUSINESS EXPENSES.
The Company shall reimburse the Executive for any ordinary,
necessary and reasonable business expenses that the Executive incurs in
connection with the performance of his duties under this Agreement, in
accordance with the Company's policy regarding the reimbursement of business
expenses.
8. TERMINATION OF EMPLOYMENT.
a) DEATH OR DISABILITY. The Executive's employment shall
terminate upon the Executive's Death, and Company may terminate the Executive's
employment due to Disability (as defined herein). If, during the Term of
Employment, the Executive's employment is terminated due to Death or Disability,
the Executive (or Executive's estate or legal representative, as the case may
be) shall be entitled to receive:
i) Executive's base salary through the date of such
termination of employment at the rate in effect at the time thereof;
2
<PAGE>
ii) an amount, payable at the same time that annual
incentive awards for the year in which the Executive's employment so
terminates are paid to senior-level executives of the Company, equal
to the product of the Executive's annual incentive award target for
such year and a fraction, the numerator of which is the number of days
in such year through the date of such termination of employment, and
the denominator of which is 365; provided, however, that no such
amount shall be paid to the Executive (or to Executive's estate or
legal representative, as the case may be) if annual incentive awards
for such year are not paid to senior-level executives of the Company
generally;
iii) reimbursement for expenses incurred by the
Executive in accordance with the Company's policy but not reimbursed
prior to the date of such termination of employment;
iv) any vested deferred base salary and annual
incentive awards (including, without limitation, interest or other
credits on such deferred amounts); and
v) any other compensation or benefits that may be
owed or provided to the Executive in accordance with the terms and
conditions of any applicable plans and programs of the Company.
For purposes of this Agreement, "Disability" shall mean the
Executive's inability, by reason of illness or other physical or mental
disability, to perform the principal duties required by the position held by
the Executive at the inception of such illness or disability, for any
consecutive 180-day period. A determination of Disability shall be subject to
the certification of a qualified medical doctor agreed to by the Company and
the Executive or, in the Executive's incapacity to designate a doctor, the
Executive's legal representative. If the Company and the Executive cannot
agree on the designation of a doctor, then each party shall nominate a
qualified medical doctor and the two doctors shall select a third doctor, and
the third doctor shall make the determination as to Disability.
b) FOR CAUSE. The Company may terminate the Executive's
employment for Cause (as defined herein) if the Board determines that Cause
exists and serves written notice of such termination to the Executive. If,
during the Term of Employment, the Company terminates the Executive's
employment for Cause, all of the Executive's annual incentive awards,
long-term incentive awards, stock options and other stock or long-term
incentive grants which are not then vested or not then exercisable shall be
canceled as of the date of the Board's written notice of termination, and the
Executive shall be entitled to receive:
i) Executive's base salary through the date of
such termination of employment at the rate in effect at the time
thereof;
ii) reimbursement for expenses incurred by the
Executive in accordance with the Company's policy but not reimbursed
prior to the date of such termination of employment;
3
<PAGE>
iii) any vested deferred base salary and vested
annual incentive awards (including, without limitation, interest or
other credits on such deferred amounts but not including unvested
bonuses or amounts payable for the year in which the Board's written
notice of termination for Cause is made, or unvested bonuses or
amounts payable after the Board's written notice of termination for
Cause is made); and
iv) any other compensation or benefits that may be
owed or provided to the Executive in accordance with the terms and
conditions of any applicable plans and programs of the Company.
The Executive shall be entitled to receive no other
compensation or benefits, whether pursuant to this Agreement or
otherwise, except as and to the extent required by law.
For purposes of this Agreement, "Cause" shall mean one or more
of the following:
(I) the material violation of any of the terms and
conditions of this Agreement or any written agreements the Executive
may from time to time have with the Company (after 30 days following
written notice from the Board specifying such material violation and
Executive's failure to cure or remedy such material violation within
such 30-day period);
(II) inattention to or failure to perform Executive's
assigned duties and responsibilities competently for any reason other
than due to Disability (after 30 days following written notice from
the Board specifying such inattention or failure, and Executive's
failure to cure or remedy such inattention or failure within such
30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without
limitation, engaging in immoral acts which become public information
or repeatedly conveying to one person, or conveying to an assembled
public group, negative information concerning the Company or its
affiliates;
(IV) commission of an act of dishonesty, including, but not
limited to, misappropriation of funds or any property of the Company;
(V) commission by the Executive of an act which constitutes
a misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the Policies referred
to in Section 9 hereof (after 30 days following written notice from
the Board specifying such failure, and the Executive's failure to cure
or remedy such inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following
written notice from the Board specifying
4
<PAGE>
such refusal or insubordination, and the Executive's failure to cure
or remedy such refusal or insubordination within such 30-day period);
or
(VIII) unsatisfactory performance of duties by the Executive
as a result of alcohol or drug use by the Executive.
c) WITHOUT CAUSE. The Company may terminate the
Executive's employment without Cause. If, during the Term of Employment, the
Company terminates the Executive's employment without Cause, other than due
to Disability, then in lieu of any amount otherwise payable under this
Agreement, or as damages for termination of Executive's employment without
Cause, the Executive shall be entitled to receive:
i) Within thirty (30) days of the date of the
Board's written notice of termination without Cause, a lump sum cash
severance payment (reduced by any applicable payroll or other taxes
required to be withheld) equal to the sum of the Executive's annual
salary for the current year plus his target bonus for the current year
(provided that if the notice of termination is given prior to the
determination of the Executive's salary or target bonus for the year
in which the notice of termination is given, then the amounts shall be
the annual salary for the prior year and the greater of the target
bonus for the prior year or the actual bonus earned by the Executive
for the prior year). The current year shall be (A) for purposes of
determining annual salary, the year then generally used by the Company
for setting salaries for senior-level executives (currently April 1
through the following March 31), and (B) for purposes of determining
target bonus, the fiscal year then generally used by the Company for
setting target bonuses for senior-level executives, in which the Board
gives the Executive written notice of termination, and the prior year
shall be the twelve-month period immediately preceding the current
year.
ii) Reimbursement for expenses incurred by the
Executive in accordance with the Company's policy but not reimbursed
prior to the date of such termination of employment.
iii) Any vested deferred base salary and annual
incentive awards (including, without limitation, interest or other
credits on such deferred amounts).
iv) Any other compensation or benefits that may be
owed or provided to the Executive in accordance with the terms and
conditions of any applicable plans and programs of the Company.
If the Company terminates Executive's employment without
Cause, any vesting or service requirements with respect to any
employee stock options granted to the Executive and then outstanding
shall be deemed satisfied.
d) VOLUNTARY TERMINATION. If, during the Term of
Employment, the Executive terminates his employment other than due to
Retirement, the Executive shall be entitled to receive:
5
<PAGE>
i) Executive's base salary through the date of
such termination of employment at the rate in effect at the time
thereof;
ii) reimbursement for expenses incurred by the
Executive in accordance with the Company's policy but not reimbursed
prior to the date of such termination of employment;
iii) any vested deferred base salary and annual
incentive awards (including, without limitation, interest or other
credits on such deferred amounts); and
iv) no other compensation or benefits except as and
to the extent required by law.
e) INELIGIBILITY FOR SEVERANCE PLAN PAYMENTS. Anything in
this Agreement to the contrary notwithstanding, Executive shall not be
entitled to any payment under any of the Company's severance plans, programs
or arrangements.
9. COMPANY POLICIES.
The Executive shall strictly follow and adhere to all written
policies of the Company which are not inconsistent with this Agreement or
applicable law including, without limitation, securities laws compliance
(including, without limitation, use or disclosure of material nonpublic
information, restrictions on sales of Company stock, and reporting
requirements), conflicts of interest (including, without limitation, doing
business with the Company or its affiliates without the prior approval of the
Board), and employee harassment.
10. CONFIDENTIALITY.
The Executive will not at any time (whether during or after
Executive's employment with the Company) disclose or use for Executive's own
benefit or purposes, or for the benefit or purpose of any other person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise, any trade secrets, information, data, or
other confidential information relating to customers, employees, job
applicants, services, development programs, prices, costs, marketing,
trading, investment, sales activities, promotion, processes, systems, credit
and financial data, financing methods, plans, proprietary computer software,
request for proposal documents, or the business and affairs of the Company
generally, or of any affiliate of the Company; provided, however, that the
foregoing shall not apply to information which is generally known to the
industry or the public other than as a result of the Executive's breach of
this covenant. The Executive agrees that upon termination of his employment
with the Company for any reason, he will return to the Company immediately
all memoranda, books, papers, plans, information, letters and other data, and
all copies thereof or therefrom (whether in written, printed or electronic
form), in any way relating to the business of the Company and its affiliates.
6
<PAGE>
The Executive acknowledges and agrees that the Company's remedies at
law for a breach or threatened breach of any of the provisions of this
Section would be inadequate and, in recognition of this fact, the Executive
agrees that, in the event of such a breach or threatened breach, in addition
to any remedies at law, the Company, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
11. COVENANT NOT TO COMPETE.
a) IN GENERAL. The Executive agrees that during
Executive's employment with the Company and for a period of one (1) year
after the termination of such employment for whatever reason (the
"Non-Compete Period"), he shall not, anywhere in the world:
i) engage in any business, whether as an employee,
consultant, partner, principal, agent, representative or stockholder
(other than as a stockholder of less than a one percent (1%) equity
interest) or in any other corporate or representative capacity with
any other business, whether in corporate, proprietorship, or
partnership form or otherwise, where such business is engaged in any
activity which competes with the business of the Company or its
affiliates as conducted on the date the Executive's employment
terminated or during the 180 day period prior thereto, or which will
compete with any proposed business activity of the Company in the
planning stage on such date or during such period;
ii) solicit business from, or perform services for,
or induce others to perform services for, any company or other
business entity which at any time during the one (1) year period
immediately preceding the Executive's termination of employment with
the Company was a client of the Company or its affiliates; or
iii) offer, or cause to be offered, employment with
any business, whether in corporate, proprietorship, or partnership
form or otherwise, either on a full-time, part-time or consulting
basis, to any person who was employed by the Company or its affiliates
or for whom the Company or its affiliates performed outplacement
services, in either case at any time during the one (1) year period
immediately preceding the date the Executive's termination of
employment with the Company.
For purposes of this Agreement, affiliates of the Company
include subsidiaries 50% or more owned by the Company and the
Company's franchisees and licensees.
b) CONSIDERATION. The consideration for the foregoing
covenant not to compete, the sufficiency of which is hereby acknowledged, is
the Company's agreement to employ the Executive and provide compensation and
benefits pursuant to this Agreement.
c) EQUITABLE RELIEF AND OTHER REMEDIES. The Executive
acknowledges and agrees that the Company's remedies at law for a breach or
threatened breach of any of the provisions of this Section would be
inadequate and, in recognition of this fact, the Executive
7
<PAGE>
agrees that, in the event of such a breach or threatened breach, in addition
to any remedies at law, the Company, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance,
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
d) REFORMATION. If the foregoing covenant no to compete
would otherwise be determined invalid or unenforceable by a court of
competent jurisdiction, such court shall exercise its discretion in reforming
the provisions of this Section to the end that the Executive be subject to a
covenant not to compete, reasonable under the circumstances, enforceable by
the Company.
12. COMPANY POLICIES, PLANS AND PROGRAMS.
Whenever any rights under this Agreement depend on the terms
of a policy, plan or program established or maintained by the Company, any
determination of these rights shall be made on the basis of the policy, plan
or program in effect at the time as of which the determination is made. No
reference in this Agreement to any policy, plan or program established or
maintained by the Company shall preclude the Company from prospectively or
retroactively changing or amending or terminating that policy, plan or
program or adopting a new policy, plan or program in lieu of the
then-existing policy, plan or program.
13. BINDING AGREEMENT; SUCCESSORS.
a) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns. The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place. For purposes of this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid.
b) This Agreement shall be binding up and shall inure to
the benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
beneficiaries, devises and legatees. If the Executive should die while any
amounts are payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to the Executive's devisee, legatee, beneficiary or other designee or, if
there be no such designee, to the Executive's estate.
14. CHANGE IN CONTROL AGREEMENTS.
Simultaneously with the execution and delivery of this
Agreement, the Company and the Executive have executed and delivered a Change
In Control Agreement ("C-I-C Agreement"), which applies under the
circumstances and during the period described therein. If circumstances
arise which cause both the C-I-C Agreement and this Agreement to apply to the
Company and the Executive, then, to the extent of any inconsistency between
the provisions of
8
<PAGE>
this Agreement and the C-I-C Agreement, the terms of the C-I-C Agreement
alone shall apply. However, if the C-I-C Agreement does not apply (as, for
example, if there is no Change in Control as described therein, or the C-I-C
Agreement has expired, or the C-I-C Agreement simply does not apply), then
the provisions of this Agreement shall control and be unaffected by the C-I-C
Agreement.
15. NOTICES.
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii)
on the date of transmission, if delivered by confirmed facsimile, (iii) on
the first business day following the date of deposit if delivered by
guaranteed overnight delivery service, or (iv) on the third business day
following the date delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Gary Peck
6290 N.W. 96 Terrace
Parkland, FL 33067
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
16. GOVERNING LAW.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Florida, without
regard to principles of conflicts of laws.
17. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the C-I-C Agreement contain the entire
agreement between the parties concerning the subject matter hereof and
supersede all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect to
the subject matter hereof. No provisions of this Agreement may be amended,
modified, waived or discharged unless such amendment, waiver, modification or
discharge is agreed to in writing signed by the Executive and the Company.
No agreements or
9
<PAGE>
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
18. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which will
constitute one and the same instrument.
19. NON-ASSIGNABILITY.
This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, or transfer
this Agreement or any rights or obligations hereunder, except as provided in
Section 13. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer
by his will or trust or by the laws of descent or distribution, and in the
event of any attempted assignment or transfer contrary to this paragraph the
Company shall have no liability to pay any amount so attempted to be assigned
or transferred.
20. RESOLUTION OF DISPUTES.
a) The parties shall submit any claim, demand, dispute,
charge or cause of action (in any such case, a "Claim") arising out of, in
connection with, or relating to this Agreement to binding arbitration in
conformance with the J*A*M*S/ENDISPUTE Streamlined Arbitration Rules and
Procedures or the J*A*M*S/ENDISPUTE Comprehensive Arbitration Rules and
Procedures, as applicable, but expressly excluding Rule 28 of the J*A*M*S/
ENDISPUTE Streamlined Rules and Rule 32 of the J*A*M*S/ENDISPUTE
Comprehensive Rules, as the case may be. All arbitration procedures shall be
held in Fort Lauderdale, Florida and shall be subject to the choice of law
provisions set forth in Section 16 of this Agreement.
b) In the event of any dispute arising out of or relating
to this Agreement for which any party is seeking injunctive relief, specific
performance or other equitable relief, such matter may be resolved by
litigation. Accordingly, the parties shall submit such matter to the
exclusive jurisdiction of the United States District Court for the Southern
District of Florida or, if jurisdiction is not available therein, any other
court located in Broward County, Florida, and hereby waive any and all
objections to such jurisdiction or venue that they may have. Each party
agrees that process may be served upon such party in any manner authorized
under the laws of the United States or Florida, and waives any objections
that such party may otherwise have to such process.
21. NO SETOFF.
The Company shall have no right of setoff or counterclaim in
respect of any claim, debt or obligation against any payment provided for in
this Agreement.
10
<PAGE>
22. NON-EXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
subsidiaries or successors and for which the Executive may qualify, nor shall
anything herein limit or reduce such rights as the Executive may have under
any other agreements with the Company or any of its subsidiaries or
successors. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company or any
of its subsidiaries shall be payable in accordance with such plan or program,
except as explicitly modified by this Agreement.
23. WITHHOLDING.
The Company may withhold from any amounts payable under this
Agreement such federal, state and local taxes as are required to be withheld
(with respect to amounts payable hereunder or under any benefit plan or
arrangement maintained by the Company) pursuant to any applicable law or
regulation.
24. INVALIDITY OF PROVISIONS.
In the event that any provision of this Agreement is
adjudicated to be invalid or unenforceable under applicable law in any
jurisdiction, the validity or enforceability of the remaining provisions
thereof shall be unaffected as to such jurisdiction and such adjudication
shall not affect the validity or enforceability of such provision in any
other jurisdiction. To the extent that any provision of this Agreement is
adjudicated to be invalid or unenforceable because it is overbroad, that
provision shall not be void but rather shall be limited to the extent
required by applicable law and enforced as so limited. The parties expressly
acknowledge and agree that Sections 11 and 24 are reasonable in view of the
parties' respective interests.
25. NON-WAIVER OF RIGHTS.
The failure by the Company or the Executive to enforce at any
time any of the provisions of this Agreement or to require at any time
performance by the other party of any of the provisions hereof shall in no
way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement, or any part hereof, or the right of the Company
or the Executive thereafter to enforce each and every provision in accordance
with the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING
THAT THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND
STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE
SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT
TO ASK ANY QUESTIONS
11
<PAGE>
THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED SATISFACTORY ANSWERS
TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE EXECUTIVE'S RIGHTS AND
OBLIGATIONS UNDER THE AGREEMENT.
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Gary Peck
------------------------------------
Gary Peck
12
<PAGE>
Exhibit 10.21
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of November 18, 1998, is by and between
INTERIM SERVICES INC., a Delaware corporation (hereinafter referred to as the
"Company"), and ROBERT EVANS (hereinafter the "Executive").
RECITALS
A. The Executive currently serves as the Company's Vice President
and Chief Information Officer, and his services and knowledge are valuable to
the Company in connection with the management of its business.
B. The Company desires to continue to employ the Executive and to
enter into a new agreement embodying the terms of such employment.
C. The Executive desires to continue the Executive's employment
and to enter into a new agreement embodying the terms of such employment.
AGREEMENTS
NOW, THEREFORE, to induce the Executive to remain in the employ of
the Company and its subsidiaries, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Executive agree as follows:
1. EMPLOYMENT.
During the Term of Employment (as defined in Section 2 hereof), the
Executive shall serve as Vice President and Chief Information Officer. The
Executive shall perform and assume all duties and responsibilities customary
to such position and shall devote all of his business time and energies
thereto. In carrying out such duties and responsibilities, the Executive
shall report to, and be subject to the direction of, the Chief Executive
Officer and the Board of Directors of the Company (the "Board").
2. TERM.
The Term of Employment under this Agreement shall commence as of
the date of this Agreement and shall continue at the will of the Company and
the Executive (the "Term of Employment"). Either party may terminate the
Executive's employment at any time and for any reason.
3. BASE SALARY.
The Company shall pay the Executive, in accordance with the
Company's regular payroll practices applicable to salaried employees, an
annualized base salary at the rate in effect on the date of this Agreement,
as the same may from time to time be increased or decreased at
1
<PAGE>
the sole discretion of the Compensation Committee of the Board (the
"Compensation Committee").
4. INCENTIVE AWARDS.
a) The Executive shall participate in the Company's annual
incentive plan for senior-level executives as in effect from time to time,
subject to the performance standards set by the Compensation Committee.
Payment of any annual incentive award shall be made at the same time that
such awards are paid to other senior-level executives of the Company. The
Executive's annual incentive award target shall be set by the Compensation
Committee.
b) The Executive shall be eligible to receive grants under the
Company's long-term incentive plan as in effect from time to time; provided,
however, that the size, type and other terms and conditions of any such grant
to the Executive shall be determined by the Compensation Committee.
5. BENEFITS, FRINGES AND PERQUISITES.
The Executive shall be entitled to participate in all employee
pension and welfare benefit, fringe benefit and perquisite plans and programs
made available to the Company's senior-level executives as in effect from
time to time.
6. VACATION.
The Executive shall be entitled to vacation in accordance with the
Company's vacation policy applicable to its senior-level executives.
Vacations shall be arranged in order that they not materially interfere with
the normal functioning of the Company's business activities or the
performance of the Executive's duties hereunder.
7. BUSINESS EXPENSES.
The Company shall reimburse the Executive for any ordinary,
necessary and reasonable business expenses that the Executive incurs in
connection with the performance of his duties under this Agreement, in
accordance with the Company's policy regarding the reimbursement of business
expenses.
8. TERMINATION OF EMPLOYMENT.
a) DEATH OR DISABILITY. The Executive's employment shall
terminate upon the Executive's Death, and Company may terminate the
Executive's employment due to Disability (as defined herein). If, during the
Term of Employment, the Executive's employment is terminated due to Death or
Disability, the Executive (or Executive's estate or legal representative, as
the case may be) shall be entitled to receive:
i) Executive's base salary through the date of such
termination of employment at the rate in effect at the time thereof;
2
<PAGE>
ii) an amount, payable at the same time that annual incentive
awards for the year in which the Executive's employment so terminates
are paid to senior-level executives of the Company, equal to the product
of the Executive's annual incentive award target for such year and a
fraction, the numerator of which is the number of days in such year
through the date of such termination of employment, and the denominator
of which is 365; provided, however, that no such amount shall be paid to
the Executive (or to Executive's estate or legal representative, as the
case may be) if annual incentive awards for such year are not paid to
senior-level executives of the Company generally;
iii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the
date of such termination of employment;
iv) any vested deferred base salary and annual incentive
awards (including, without limitation, interest or other credits on such
deferred amounts); and
v) any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
For purposes of this Agreement, "Disability" shall mean the Executive's
inability, by reason of illness or other physical or mental disability, to
perform the principal duties required by the position held by the Executive
at the inception of such illness or disability, for any consecutive 180-day
period. A determination of Disability shall be subject to the certification
of a qualified medical doctor agreed to by the Company and the Executive or,
in the Executive's incapacity to designate a doctor, the Executive's legal
representative. If the Company and the Executive cannot agree on the
designation of a doctor, then each party shall nominate a qualified medical
doctor and the two doctors shall select a third doctor, and the third doctor
shall make the determination as to Disability.
b) FOR CAUSE. The Company may terminate the Executive's
employment for Cause (as defined herein) if the Board determines that Cause
exists and serves written notice of such termination to the Executive. If,
during the Term of Employment, the Company terminates the Executive's
employment for Cause, all of the Executive's annual incentive awards,
long-term incentive awards, stock options and other stock or long-term
incentive grants which are not then vested or not then exercisable shall be
canceled as of the date of the Board's written notice of termination, and the
Executive shall be entitled to receive:
i) Executive's base salary through the date of such
termination of employment at the rate in effect at the time thereof;
ii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the
date of such termination of employment;
iii) any vested deferred base salary and vested annual
incentive awards (including, without limitation, interest or other
credits on such deferred amounts but not
3
<PAGE>
including unvested bonuses or amounts payable for the year in which the
Board's written notice of termination for Cause is made, or unvested
bonuses or amounts payable after the Board's written notice of
termination for Cause is made); and
iv) any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
The Executive shall be entitled to receive no other compensation or
benefits, whether pursuant to this Agreement or otherwise, except as and
to the extent required by law.
For purposes of this Agreement, "Cause" shall mean one or more of
the following:
(I) the material violation of any of the terms and conditions of
this Agreement or any written agreements the Executive may from time to
time have with the Company (after 30 days following written notice from
the Board specifying such material violation and Executive's failure to
cure or remedy such material violation within such 30-day period);
(II) inattention to or failure to perform Executive's assigned
duties and responsibilities competently for any reason other than due to
Disability (after 30 days following written notice from the Board
specifying such inattention or failure, and Executive's failure to cure
or remedy such inattention or failure within such 30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without
limitation, engaging in immoral acts which become public information or
repeatedly conveying to one person, or conveying to an assembled public
group, negative information concerning the Company or its affiliates;
(IV) commission of an act of dishonesty, including, but not limited
to, misappropriation of funds or any property of the Company;
(V) commission by the Executive of an act which constitutes a
misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the Policies referred to in
Section 9 hereof (after 30 days following written notice from the Board
specifying such failure, and the Executive's failure to cure or remedy
such inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following
written notice from the Board specifying such refusal or
insubordination, and the Executive's failure to cure or remedy such
refusal or insubordination within such 30-day period); or
4
<PAGE>
(VIII) unsatisfactory performance of duties by the Executive as
a result of alcohol or drug use by the Executive.
c) WITHOUT CAUSE. The Company may terminate the Executive's
employment without Cause. If, during the Term of Employment, the Company
terminates the Executive's employment without Cause, other than due to
Disability, then in lieu of any amount otherwise payable under this
Agreement, or as damages for termination of Executive's employment without
Cause, the Executive shall be entitled to receive:
i) Within thirty (30) days of the date of the Board's
written notice of termination without Cause, a lump sum cash severance
payment (reduced by any applicable payroll or other taxes required to be
withheld) equal to the sum of the Executive's annual salary for the
current year plus his target bonus for the current year (provided that
if the notice of termination is given prior to the determination of the
Executive's salary or target bonus for the year in which the notice of
termination is given, then the amounts shall be the annual salary for
the prior year and the greater of the target bonus for the prior year or
the actual bonus earned by the Executive for the prior year). The
current year shall be (A) for purposes of determining annual salary, the
year then generally used by the Company for setting salaries for
senior-level executives (currently April 1 through the following March
31), and (B) for purposes of determining target bonus, the fiscal year
then generally used by the Company for setting target bonuses for
senior-level executives, in which the Board gives the Executive written
notice of termination, and the prior year shall be the twelve-month
period immediately preceding the current year.
ii) Reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the
date of such termination of employment.
iii) Any vested deferred base salary and annual incentive
awards (including, without limitation, interest or other credits on such
deferred amounts).
iv) Any other compensation or benefits that may be owed or
provided to the Executive in accordance with the terms and conditions of
any applicable plans and programs of the Company.
If the Company terminates Executive's employment without Cause, any
vesting or service requirements with respect to any employee stock
options granted to the Executive and then outstanding shall be deemed
satisfied.
d) VOLUNTARY TERMINATION. If, during the Term of Employment, the
Executive terminates his employment other than due to Retirement, the Executive
shall be entitled to receive:
i) Executive's base salary through the date of such
termination of employment at the rate in effect at the time thereof;
5
<PAGE>
ii) reimbursement for expenses incurred by the Executive in
accordance with the Company's policy but not reimbursed prior to the
date of such termination of employment;
iii) any vested deferred base salary and annual incentive
awards (including, without limitation, interest or other credits on such
deferred amounts); and
iv) no other compensation or benefits except as and to the
extent required by law.
e) INELIGIBILITY FOR SEVERANCE PLAN PAYMENTS. Anything in this
Agreement to the contrary notwithstanding, Executive shall not be entitled to
any payment under any of the Company's severance plans, programs or
arrangements.
9. COMPANY POLICIES.
The Executive shall strictly follow and adhere to all written
policies of the Company which are not inconsistent with this Agreement or
applicable law including, without limitation, securities laws compliance
(including, without limitation, use or disclosure of material nonpublic
information, restrictions on sales of Company stock, and reporting
requirements), conflicts of interest (including, without limitation, doing
business with the Company or its affiliates without the prior approval of the
Board), and employee harassment.
10. CONFIDENTIALITY.
The Executive will not at any time (whether during or after
Executive's employment with the Company) disclose or use for Executive's own
benefit or purposes, or for the benefit or purpose of any other person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise, any trade secrets, information, data, or
other confidential information relating to customers, employees, job
applicants, services, development programs, prices, costs, marketing,
trading, investment, sales activities, promotion, processes, systems, credit
and financial data, financing methods, plans, proprietary computer software,
request for proposal documents, or the business and affairs of the Company
generally, or of any affiliate of the Company; provided, however, that the
foregoing shall not apply to information which is generally known to the
industry or the public other than as a result of the Executive's breach of
this covenant. The Executive agrees that upon termination of his employment
with the Company for any reason, he will return to the Company immediately
all memoranda, books, papers, plans, information, letters and other data, and
all copies thereof or therefrom (whether in written, printed or electronic
form), in any way relating to the business of the Company and its affiliates.
The Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section
would be inadequate and, in recognition of this fact, the Executive agrees
that, in the event of such a breach or threatened breach, in addition to any
remedies at law, the Company, without posting any bond, shall be
6
<PAGE>
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
11. COVENANT NOT TO COMPETE.
a) IN GENERAL. The Executive agrees that during Executive's
employment with the Company and for a period of one (1) year after the
termination of such employment for whatever reason (the "Non-Compete
Period"), he shall not, anywhere in the world:
i) engage in any business, whether as an employee,
consultant, partner, principal, agent, representative or stockholder
(other than as a stockholder of less than a one percent (1%) equity
interest) or in any other corporate or representative capacity with any
other business, whether in corporate, proprietorship, or partnership
form or otherwise, where such business is engaged in any activity which
competes with the business of the Company or its affiliates as conducted
on the date the Executive's employment terminated or during the 180 day
period prior thereto, or which will compete with any proposed business
activity of the Company in the planning stage on such date or during
such period;
ii) solicit business from, or perform services for, or induce
others to perform services for, any company or other business entity
which at any time during the one (1) year period immediately preceding
the Executive's termination of employment with the Company was a client
of the Company or its affiliates; or
iii) offer, or cause to be offered, employment with any
business, whether in corporate, proprietorship, or partnership form or
otherwise, either on a full-time, part-time or consulting basis, to any
person who was employed by the Company or its affiliates or for whom the
Company or its affiliates performed outplacement services, in either
case at any time during the one (1) year period immediately preceding
the date the Executive's termination of employment with the Company.
For purposes of this Agreement, affiliates of the Company include
subsidiaries 50% or more owned by the Company and the Company's
franchisees and licensees.
b) CONSIDERATION. The consideration for the foregoing covenant
not to compete, the sufficiency of which is hereby acknowledged, is the
Company's agreement to employ the Executive and provide compensation and
benefits pursuant to this Agreement.
c) EQUITABLE RELIEF AND OTHER REMEDIES. The Executive
acknowledges and agrees that the Company's remedies at law for a breach or
threatened breach of any of the provisions of this Section would be
inadequate and, in recognition of this fact, the Executive agrees that, in
the event of such a breach or threatened breach, in addition to any remedies
at law, the Company, without posting any bond, shall be entitled to obtain
equitable relief in the form of specific performance, temporary restraining
order, a temporary or permanent injunction or any other equitable remedy
which may then be available.
7
<PAGE>
d) REFORMATION. If the foregoing covenant not to compete would
otherwise be determined invalid or unenforceable by a court of competent
jurisdiction, such court shall exercise its discretion in reforming the
provisions of this Section to the end that the Executive be subject to a
covenant not to compete, reasonable under the circumstances, enforceable by
the Company.
12. COMPANY POLICIES, PLANS AND PROGRAMS.
Whenever any rights under this Agreement depend on the terms of a
policy, plan or program established or maintained by the Company, any
determination of these rights shall be made on the basis of the policy, plan
or program in effect at the time as of which the determination is made. No
reference in this Agreement to any policy, plan or program established or
maintained by the Company shall preclude the Company from prospectively or
retroactively changing or amending or terminating that policy, plan or
program or adopting a new policy, plan or program in lieu of the
then-existing policy, plan or program.
13. BINDING AGREEMENT; SUCCESSORS.
a) This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns. The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to agree to all or substantially all of the
business and/or assets of the Company, by agreement to assume expressly and
agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place. For purposes of this Agreement, "Company" shall mean the Company
as hereinbefore defined and any successor to its business and/or assets as
aforesaid.
b) This Agreement shall be binding up and shall inure to the
benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
beneficiaries, devises and legatees. If the Executive should die while any
amounts are payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to the Executive's devisee, legatee, beneficiary or other designee or, if
there be no such designee, to the Executive's estate.
14. CHANGE IN CONTROL AGREEMENTS. Simultaneously with the
execution and delivery of this Agreement, the Company and the Executive have
executed and delivered a Change In Control Agreement ("C-I-C Agreement"),
which applies under the circumstances and during the period described
therein. If circumstances arise which cause both the C-I-C Agreement and
this Agreement to apply to the Company and the Executive, then, to the extent
of any inconsistency between the provisions of this Agreement and the C-I-C
Agreement, the terms of the C-I-C Agreement alone shall apply. However, if
the C-I-C Agreement does not apply (as, for example, if there is no Change in
Control as described therein, or the C-I-C Agreement has expired, or the
C-I-C Agreement simply does not apply), then the provisions of this Agreement
shall control and be unaffected by the C-I-C Agreement.
8
<PAGE>
15. NOTICES.
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii)
on the date of transmission, if delivered by confirmed facsimile, (iii) on
the first business day following the date of deposit if delivered by
guaranteed overnight delivery service, or (iv) on the third business day
following the date delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Robert Evans
210 SE Mizner Boulevard, #112
Boca Raton, FL 33432
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
16. GOVERNING LAW.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Florida, without
regard to principles of conflicts of laws.
17. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the C-I-C Agreement contain the entire agreement
between the parties concerning the subject matter hereof and supersede all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the parties with respect to the subject
matter hereof. No provisions of this Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge
is agreed to in writing signed by the Executive and the Company. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.
18. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which will constitute one
and the same instrument.
9
<PAGE>
19. NON-ASSIGNABILITY.
This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Section 13. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer
by his will or trust or by the laws of descent or distribution, and in the
event of any attempted assignment or transfer contrary to this paragraph the
Company shall have no liability to pay any amount so attempted to be assigned
or transferred.
20. RESOLUTION OF DISPUTES.
a) The parties shall submit any claim, demand, dispute, charge or
cause of action (in any such case, a "Claim") arising out of, in connection
with, or relating to this Agreement to binding arbitration in conformance
with the J*A*M*S/ENDISPUTE Streamlined Arbitration Rules and Procedures or
the J*A*M*S/ENDISPUTE Comprehensive Arbitration Rules and Procedures, as
applicable, but expressly excluding Rule 28 of the J*A*M*S/ ENDISPUTE
Streamlined Rules and Rule 32 of the J*A*M*S/ENDISPUTE Comprehensive Rules,
as the case may be. All arbitration procedures shall be held in Fort
Lauderdale, Florida and shall be subject to the choice of law provisions set
forth in Section 16 of this Agreement.
b) In the event of any dispute arising out of or relating to this
Agreement for which any party is seeking injunctive relief, specific
performance or other equitable relief, such matter may be resolved by
litigation. Accordingly, the parties shall submit such matter to the
exclusive jurisdiction of the United States District Court for the Southern
District of Florida or, if jurisdiction is not available therein, any other
court located in Broward County, Florida, and hereby waive any and all
objections to such jurisdiction or venue that they may have. Each party
agrees that process may be served upon such party in any manner authorized
under the laws of the United States or Florida, and waives any objections
that such party may otherwise have to such process.
21. NO SETOFF.
The Company shall have no right of setoff or counterclaim in
respect of any claim, debt or obligation against any payment provided for in
this Agreement.
22. NON-EXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its subsidiaries or
successors and for which the Executive may qualify, nor shall anything herein
limit or reduce such rights as the Executive may have under any other
agreements with the Company or any of its subsidiaries or successors.
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Company or any of its
subsidiaries shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.
10
<PAGE>
23. WITHHOLDING.
The Company may withhold from any amounts payable under this
Agreement such federal, state and local taxes as are required to be withheld
(with respect to amounts payable hereunder or under any benefit plan or
arrangement maintained by the Company) pursuant to any applicable law or
regulation.
24. INVALIDITY OF PROVISIONS.
In the event that any provision of this Agreement is adjudicated to
be invalid or unenforceable under applicable law in any jurisdiction, the
validity or enforceability of the remaining provisions thereof shall be
unaffected as to such jurisdiction and such adjudication shall not affect the
validity or enforceability of such provision in any other jurisdiction. To
the extent that any provision of this Agreement is adjudicated to be invalid
or unenforceable because it is overbroad, that provision shall not be void
but rather shall be limited to the extent required by applicable law and
enforced as so limited. The parties expressly acknowledge and agree that
Sections 11 and 24 are reasonable in view of the parties' respective
interests.
25. NON-WAIVER OF RIGHTS.
The failure by the Company or the Executive to enforce at any time
any of the provisions of this Agreement or to require at any time performance
by the other party of any of the provisions hereof shall in no way be
construed to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of the Company or the
Executive thereafter to enforce each and every provision in accordance with
the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING
THAT THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND
STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE
SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT
TO ASK ANY QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED
SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE
EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.
11
<PAGE>
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Robert Evans
------------------------------------
Robert Evans
12
<PAGE>
Exhibit 10.22
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, dated as of the 18th day of November, 1998, is
by and between INTERIM SERVICES INC., a Delaware corporation (hereinafter
referred to as the "Company"), and RAYMOND MARCY (hereinafter the
"Executive").
RECITALS
A. The Board of Directors of the Company (the "Board")
considers it essential to the best interests of the Company and its
stockholders that its key management personnel be encouraged to remain with
the Company and its subsidiaries and to continue to devote full attention to
the Company's business in the event that any third person expresses its
intention to complete a possible business combination with the Company, or in
taking any other action which could result in a "Change in Control" (as
defined herein) of the Company. In this connection, the Board recognizes that
the possibility of a Change in Control and the uncertainty and questions
which it may raise among management may result in the departure or
distraction of key management personnel to the detriment of the Company and
its stockholders. The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
key members of the Company's management to their assigned duties without
distraction in the face of the potentially disturbing circumstances arising
from the possibility of a Change in Control of the Company.
B. The Executive currently serves as the Company's
Chairman of the Board, President and Chief Executive Officer and his services
and knowledge are valuable to the Company in connection with the management
of its business.
C. The Board believes the Executive has made and is
expected to continue to make valuable contributions to the productivity and
profitability of the Company and its subsidiaries. Should the Company
receive a proposal from a third person concerning a possible business
combination or any other action which could result in a Change in Control, in
addition to the Executive's regular duties, the Executive may be called upon
to assist in the assessment of such proposal, advise management and the Board
as to whether such proposal would be in the best interests of the Company and
its stockholders, and to take such other actions as the Board might determine
to be necessary or appropriate.
D. Should the Company receive any proposal from a third
person concerning a possible business combination or any other action which
could result in a change in control of the Company, the Board believes it
imperative that the Company and the Board be able to rely upon the Executive
to continue in his position, and that the Company and the Board be able to
receive and rely upon his advice, if so requested, as to the best interests
of the Company and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by such a
proposal, and to encourage Executive's full attention and dedication to the
Company.
1
<PAGE>
TERMS AND CONDITIONS
NOW, THEREFORE, to assure the Company and its subsidiaries
that it will have the continued, undivided attention, dedication and services
of the Executive and the availability of the Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a Change in Control
of the Company, and to induce the Executive to remain in the employ of the
Company and its subsidiaries, and for other good and valuable consideration,
the adequacy and sufficiency of which are hereby acknowledged, the Company
and the Executive agree as follows.
1. CHANGE IN CONTROL
(a) The definition of a "Change in Control" of the Company
for purposes of this Agreement shall be as determined, prospectively,
from time to time, by the Board, pursuant to the affirmative vote of
at least two-thirds of those members of the Board (i) who have served
on the Board for at least two years prior to such determination, and
(ii) whose election, or nomination for election, during such two-year
period was approved by a vote of at least two-thirds of the directors
then in office who were directors at the beginning of such two-year
period. Written notice of any such determination, or modification of
a previous determination, shall be provided promptly to the Executive.
(b) In the event that at any time during the term of this
Agreement the Board has not established a definition of "Change of
Control" pursuant to Section 1(a), for purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have occurred
upon (i) the acquisition at any time by a "person" or "group" (as that
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (excluding, for this
purpose, the Company or any of its subsidiaries, any employee benefit
plan of the Company or any of its subsidiaries, an underwriter
temporarily holding securities pursuant to such securities, or a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company) of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) directly or indirectly, of securities
representing 25% or more of the combined voting power in the election
of directors of the then-outstanding securities of the Company or any
successor of the Company; (ii) the termination of service as
directors, for any reason other than death, disability or retirement
from the Board, during any period of two consecutive years or less, of
individuals who at the beginning of such period constituted a majority
of the Board, unless the election of or nomination for election of
each new director during such period was approved by a vote of at
least two-thirds of the directors still in office who were directors
at the beginning of the period; (iii) approval by the stockholders of
the Company of liquidation of the Company; (iv) approval by the
stockholders of the Company and consummation of any sale or
disposition, or series of related sales or dispositions, of 50% or
more of the assets or earning power of the Company; or (v) approval by
the stockholders of the Company and consummation of any merger or
consolidation or statutory share exchange to which the Company is a
party as a result of which the persons who were stockholders of the
Company immediately prior to the effective date of the merger or
consolidation or statutory share exchange shall have beneficial
ownership of less than 50% of the combined voting power in the
election of
2
<PAGE>
directors of the surviving corporation following the effective date of
such merger or consolidation or statutory share exchange.
(c) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction constitutes
a "Management Approved Transaction." For purposes of this Agreement,
a "Management Approved Transaction" shall be any transaction, which
would otherwise result in a Change in Control for purposes of this
Agreement in which the acquiring "person", "group" or other entity is
either beneficially owned by, or comprised of, in whole or in part,
three or more members of the Company's executive management, as such
was constituted twelve months prior to such transaction, or is
majority owned by, or comprised of, any employee benefit plan of the
Company.
(d) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction is approved
by the affirmative vote of at least two-thirds of those members of the
Board (i) who have served on the Board for at least two years prior to
such approval, and (ii) whose election, or nomination for election,
during such two-year period was approved by a vote of at least
two-thirds of the directors then in office who were directors at the
beginning of such two-year period.
2. ADJUSTMENT OF BENEFITS UPON CHANGE IN CONTROL
(a) The Company agrees that the Compensation Committee of
the Board, or such other committee succeeding to such committee's
responsibilities with respect to executive compensation (collectively,
the "Compensation Committee") may make such equitable adjustments to
any performance targets contained in any awards under the Company's
current incentive compensation plans, or any additional or successor
plan in which the Executive is a participant (collectively, the
"Incentive Plans"), as the Compensation Committee determines may be
appropriate to eliminate any negative effects from any transactions
relating to a Change in Control (such as costs or expenses associated
with the transaction or any related transaction, including, without
limitation, any reorganizations, divestitures, recapitalizations or
borrowings, or changes in targets or measures to reflect the
disruption of the business, etc.), in order to preserve reward
opportunities and performance objectives.
(b) In the case of a Change in Control, all restrictions
and conditions applicable to any awards of restricted stock or the
vesting of stock options or other awards granted to the Executive
under the Company's 1998 Incentive Stock Plan, 1997 Long-Term
Executive Compensation and Outside Director Stock Option Plan, any
similar or successor plan, or otherwise shall be deemed to have been
satisfied as of the date the Change in Control occurs, and this
Agreement shall be deemed to amend any agreements evidencing such
awards to reflect this provision.
3
<PAGE>
3. TERMINATION FOLLOWING CHANGE IN CONTROL
(a) The Executive's employment may be terminated for any
reason by the Company within two years following a Change in Control
of the Company. If the Executive's employment is terminated for any
reason other than the reasons set forth below, then the Executive
shall be entitled to the benefits set forth in this Agreement in lieu
of any termination, separation, severance or similar benefits under
the Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if
any. If the Executive's employment is terminated for any of the
reasons set forth below, then the Executive shall not be entitled to
any termination, separation, severance or similar benefits under this
Agreement, and the Executive shall be entitled to benefits under the
Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if
any, only in accordance with the terms of such Employment Agreement,
or such plans or policies.
(i) termination by reason of the Executive's death,
PROVIDED the Executive has not previously given a "Notice of
Termination" pursuant to Section 4;
(ii) termination by reason of the Executive's
"disability," PROVIDED the Executive has not previously given a
"Notice of Termination" pursuant to Section 4;
(iii) termination by reason of "retirement" at or
after age 65, PROVIDED the Executive has not previously given "Notice
of Termination" pursuant to Section 4; or
(iv) termination by the Company for "Cause."
For the purposes of this Agreement, "disability" shall
be defined as the Executive's inability by reason of illness or other
physical or mental disability to perform the principal duties required
by the position held by the Executive at the inception of such illness
or disability for any consecutive 180-day period. A determination of
disability shall be subject to the certification of a qualified
medical doctor agreed to by the Company and the Executive or, in the
Executive's incapacity to designate a doctor, the Executive's legal
representative. If the Company and the Executive cannot agree on the
designation of a doctor, each party shall nominate a qualified medical
doctor and the two doctors shall select a third doctor and the third
doctor shall make the determination as to disability.
For purposes of this Agreement, "retirement" shall mean
the Company's termination of the Executive's employment at or after
the date on which the Executive attains age 65.
For purposes of this Agreement, "Cause" shall mean one
ore more of the following:
(I) the material violation of any of the terms and
conditions of this Agreement or any written agreements the Executive
may from time to time have with the Company (after 30 days following
written notice from the Board specifying such material violation and
Executive's failure to cure or remedy such material violation within
such 30-day period);
4
<PAGE>
(II) inattention to or failure to perform Executive's
assigned duties and responsibilities competently for any reason other
than due to Disability (after 30 days following written notice from
the Board specifying such inattention or failure, and Executive's
failure to cure or remedy such inattention or failure within such
30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without
limitation, engaging in immoral acts which become public information
or repeatedly conveying to one person, or conveying to an assembled
public group, negative information concerning the Company or its
affiliates;
(IV) commission of an act of dishonesty, including, but not
limited to, misappropriation of funds or any property of the Company;
or
(V) commission by the Executive of an act which constitutes
a misdemeanor (involving an act of moral turpitude) or a felony.
(b) The Executive may terminate his employment with the
Company following a Change in Control of the Company (i) for any
reason by giving Notice of Termination during either of the
"Termination Periods" or (ii) for "Good Reason" by giving Notice of
Termination at any time within two years after the Change in Control.
Any failure by the Executive to give such immediate notice of
termination for Good Reason shall not be deemed to constitute a waiver
or otherwise to affect adversely the rights of the Executive
hereunder, PROVIDED the Executive gives notice to receive such
benefits prior to the expiration of such two year period. If the
Executive terminates his employment as provided in this Section 3(b),
then the Executive shall be entitled to the benefits set forth in this
Agreement in lieu of any termination, separation, severance or similar
benefits under the Executive's Employment Agreement, if any, or under
the Company's termination, separation, severance or similar plans or
policies, if any.
For purposes of this Agreement, there shall be two
"Termination Periods" during which the Executive may give Notice of
Termination and receive the benefits set forth in this Agreement:
(i) the first of which shall be the sixty (60) day
period commencing on the date of the Change of Control, and;
(ii) the second of which shall be the thirty (30)
day period commencing on the first anniversary of the date of the
Change of Control
For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any one or more of the following events:
(I) The assignment to the Executive of any duties
inconsistent in any material adverse respect with his position,
authority or responsibilities with the Company and its subsidiaries
immediately prior to the Change in Control, or any other material
adverse change in such position, including titles, authority, or
responsibilities, as compared with the Executive's position
immediately prior to the Change in Control;
5
<PAGE>
(II) A reduction by the Company in the amount of the
Executive's base salary or annual or long term incentive compensation
paid or payable as compared to that which was paid or made available
to Executive immediately prior to the Change in Control; or the
failure of the Company to increase Executive's compensation each year
by an amount which is substantially the same, on a percentage basis,
as the average annual percentage increase in the base salaries of
other executives of comparable status with the Company;
(III) The failure by the Company to continue to
provide the Executive with substantially similar perquisites or
benefits the Executive in the aggregate enjoyed under the Company's
benefit programs, such as any of the Company's pension, savings,
vacation, life insurance, medical, health and accident, or disability
plans in which he was participating at the time of the Change in
Control (or, alternatively, if such plans are amended, modified or
discontinued, substantially similar equivalent benefits thereto, when
considered in the aggregate), or the taking of any action by the
Company which would directly or indirectly cause such benefits to be
no longer substantially equivalent, when considered in the aggregate,
to the benefits in effect at the time of the Change in Control;
(IV) The Company's requiring the Executive to be
based at any office or location more than 50 miles from that location
at which he performed his services immediately prior to the Change in
Control, except for a relocation consented to in writing by the
Executive, or travel reasonably required in the performance of the
Executive's responsibilities to the extent substantially consistent
with the Executive's business travel obligations prior to the Change
in Control;
(V) Any failure of the Company to obtain the
assumption of the obligation to perform this Agreement by any
successor as contemplated in Section 11 herein; or
(VI) Any breach by the Company of any of the
material provisions of this Agreement or any failure by the Company to
carry out any of its obligations hereunder, in either case, for a
period of thirty business days after receipt of written notice from
the Executive and the failure by the Company to cure such breach or
failure during such thirty business day period.
4. NOTICE OF TERMINATION
Any termination of the Executive's employment following a
Change in Control, other than a termination as contemplated by Sections
3(a)(i) or 3(a)(iii) shall be communicated by written "Notice of Termination"
by the party affecting the termination to the other party hereto. Any
"Notice of Termination" shall set forth (a) the effective date of
termination, which shall not be less than 15 or more than 30 days after the
date the Notice of Termination is delivered (the "Termination Date"); (b) the
specific provision in this Agreement relied upon; and (c) in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination and the entitlement, or lack of entitlement, to the benefits set
forth in this Agreement. Notwithstanding the foregoing, if within fifteen
(15) days after any Notice of Termination is given, the party receiving such
Notice of Termination notifies the other party that a good faith dispute
exists concerning the termination, the actual Termination Date shall be the
date on which the dispute is finally
6
<PAGE>
determined in accordance with the provisions of Section 18 hereof. In the
case of any good faith dispute as to the Executive's entitlement to benefits
under this Agreement resulting from any termination by the Company for which
the Company does not deliver a Notice of Termination, the actual Termination
Date shall be the date on which the dispute is finally determined in
accordance with the provisions of Section 18 hereof. Notwithstanding the
pendency of any such dispute referred to in the two preceding sentences, the
Company shall continue to pay the Executive his full compensation then in
effect and continue the Executive as a participant in all compensation,
benefits and perquisites in which he was then participating, until the
dispute is finally resolved, PROVIDED the Executive is willing to continue to
provide full time services to the Company and its subsidiaries in
substantially the same position, if so requested by the Company. Amounts
paid under this Section 4 shall be in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts
due under this Agreement. If a final determination is made, pursuant to
Section 18, that Good Reason did not exist in the case of a Notice of
Termination by the Executive, the Executive shall have the sole right to
nullify and void his Notice of Termination by delivering written notice of
same to the Company within three (3) business days of the date of such final
determination. If the parties do not dispute the Executive's entitlement to
benefits hereunder, the Termination Date shall be as set forth in the Notice
of Termination.
5. TERMINATION BENEFITS
(a) SEVERANCE PAYMENT. Subject to the conditions set forth
in this Agreement, on the Termination Date the Company shall pay the
Executive (reduced by any applicable payroll or other taxes required
to be withheld) a lump sum severance payment, in cash, equal to the
product of three (3) times the sum of the Executive's annual salary
for the current year plus his target bonus for the current year
(provided that if the Notice of Termination is given prior to the
determination of the Executive's salary or target bonus for the year
in which the Termination Date occurs, the amounts shall be the annual
salary for the prior year and the greater of the target bonus for the
prior year or the actual bonus earned by the Executive for the prior
year). The current year shall be (A) for the purposes of determining
annual salary, the year then generally used by the Company for setting
salaries for senior-level executives (currently April 1 through the
following March 31), and (B) for purposes of determining target bonus,
the fiscal year then generally used by the Company for setting target
bonuses for senior-level executives, in which the Termination Date
occurs, and the prior year shall be the twelve-month period
immediately preceding the current year.
(b) PAYMENT OF DEFERRED COMPENSATION. Any compensation
that has been earned by the Executive but is unpaid as of the
Termination Date, including any compensation that has been earned but
deferred pursuant to the Company's Deferred Compensation Plan or
otherwise, shall be paid in full to the Executive on the Termination
Date.
7
<PAGE>
6. OTHER BENEFITS
Subject to the conditions set forth in this Agreement hereof,
the following benefits (subject to any applicable payroll or other taxes
required to be withheld) shall be paid or provided to the Executive:
(a) HEALTH/WELFARE BENEFITS
(i) During the thirty-six (36) months following the
Termination Date (the "Continuation Period"), the Company shall
continue to keep in full force and effect all programs of medical,
dental, vision, accident, disability, life insurance, including
optional term life insurance, and other similar health or welfare
programs with respect to the Executive and his dependents with the
same level of coverage, upon the same terms and otherwise to the same
extent as such programs shall have been in effect immediately prior to
the Termination Date (or, if more favorable to the Executive,
immediately prior to the Change in Control), and the Company and the
Executive shall share the costs of the continuation of such insurance
coverage in the same proportion as such costs were shared immediately
prior to the Termination Date (or, if more favorable to the Executive,
immediately prior to the Change in Control) or, if the terms of such
programs do not permit continued participation by the Executive (or if
the Company otherwise determines it advisable to amend, modify or
discontinue such programs for employees generally), the Company shall
otherwise provide benefits substantially similar to and no less
favorable to the Executive in terms of cost or benefits ("Equivalent
Benefits") than he was entitled to receive at the end of the period of
coverage, for the duration of the Continuation Period.
(ii) All benefits which the Company is required by
this Section 6(a) to provide, which will not be provided by the
Company's programs described herein, shall be provided through the
purchase of insurance unless the Executive is uninsurable. If the
Executive is uninsurable, the Company will provide the benefits out of
its general assets.
(iii) If the Executive obtains other employment
during the Continuation Period which provides health or welfare
benefits of the type described in Section 6(a)(i) hereof ("Other
Coverage"), then Executive shall notify the Company promptly of such
other employment and Other Coverage and the Company shall thereafter
not provide the Executive and his dependents the benefits described in
Section 6(a)(i) hereof to the extent that such benefits are provided
under the Other Coverage. Under such circumstances, the Executive
shall make all claims first under the Other Coverage and then, only to
the extent not paid or reimbursed by the Other Coverage, under the
plans and programs described in Section 6(a)(i) hereof.
(b) RETIREMENT BENEFITS
(i) For purposes of this Agreement, "Retirement"
shall mean the Company's termination of the Executive's employment
within two years following a Change in control of the Company and at
or after the date on which the Executive attains age 65; provided,
however, that any termination for Cause or due to Death or Disability
shall not constitute Retirement.
8
<PAGE>
(ii) Subject to Section 6(b)(ii), the Executive
shall be deemed to be completely vested under the Company's 401(k)
Plan, Deferred Compensation Plan or other similar or successor plans
which are in effect as of the date of the Change in Control
(collectively, the "Plans"), regardless of the Executive's actual
vesting service credit thereunder.
(iii) Any part of the foregoing retirement benefits
which are otherwise required to be paid by a tax-qualified Plan but
which cannot be paid through such Plan by reason of the laws and
regulations applicable to such Plan, shall be paid by one or more
supplemental non-qualified Plans or by the Company.
(iv) The payments calculated hereunder which are not
actually paid by a Plan shall be paid thirty (30) days following the
Date of Termination in a single lump sum cash payment (of equivalent
actuarial value to the payment calculated hereunder using the same
actuarial assumptions as are used in calculating benefits under the
Plan but using the discount rate that would be used by the Company on
the Date of Termination to determine the actuarial present value of
projected benefit obligations).
(c) EXECUTIVE OUTPLACEMENT COUNSELING. During the
Continuation Period, unless the Executive shall reach normal
retirement age during the Continuation Period, the Executive may
request in writing and the Company shall at its expense engage within
a reasonable time following such written request an outplacement
counseling service to assist the Executive in obtaining employment.
7. PAYMENT OF CERTAIN COSTS
Except as otherwise provided in Section 18, if a dispute
arises regarding a termination of the Executive or the interpretation or
enforcement of this Agreement, subsequent to a Change in Control, all of the
reasonable legal fees and expenses incurred by the Executive and all
Arbitration Costs (as hereafter defined) in contesting any such termination
or obtaining or enforcing all or part of any right or benefit provided for in
this Agreement or in otherwise pursuing all or part of his claim will be paid
by the Company, unless prohibited by law. The Company further agrees to pay
pre-judgment interest on any money judgment obtained by the Executive
calculated at the prime interest rate reported in THE WALL STREET JOURNAL in
effect from time to time from the date that payment to him should have been
made under this Agreement.
8. EXCISE TAX PAYMENTS
(a) Notwithstanding anything contained in this Agreement to
the contrary, in the event that any payment (within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended or
replaced (the "Code")), or distribution to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, his employment with the Company (a "Payment"
or "Payments"), would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, interest
and penalties collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a
9
<PAGE>
"Gross-Up Payment") in an amount such that after payment by the
Executive of all such taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments;
PROVIDED, that the Executive shall not be entitled to receive any
additional payment relating to any interest or penalties attributable
to any action or omission by the Executive in bad faith.
(b) An initial determination shall be made by an accounting
firm mutually agreeable to the Company and the Executive and, if not
agreed to within three days after the Date of Termination, a national
independent accounting firm selected by the Executive (the "Accounting
Firm"), as to whether a Gross-Up Payment is required pursuant to this
Section 8 and the amount of such Gross-Up Payment. To permit the
Accounting Firm to make the initial determination, the Company shall
furnish the Accounting Firm with all information reasonably required
for such firm to complete such determination as soon as practicable
after the Date of Termination, but in no event more than fifteen (15)
days thereafter. All fees, costs and expenses (including, but not
limited to, the cost of retaining experts) of the Accounting Firm
shall be borne by the Company and the Company shall pay such fees,
costs and expenses as they become due. The Accounting Firm shall
provide detailed supporting calculations, reasonably acceptable both
to the Company and the Executive within thirty (30) days of the Date
of Termination, if applicable, or such other time as requested by the
Company or by the Executive (provided the Executive reasonably
believes that any of the Payments may be subject to the Excise Tax).
The Gross-Up Payment, if any, as determined pursuant to this Section
8(b) shall be paid by the Company to the Executive within five (5)
business days of the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive with respect to a Payment or Payments, it shall furnish the
Executive with an opinion reasonably satisfactory to the Executive
that no Excise Tax will be imposed with respect to any such Payment or
Payments. Any such initial determination by the Accounting Firm of
the Gross-Up Payment shall be binding upon the Company and the
Executive subject to the application of Section 8(c).
(c) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that a Gross-Up
Payment (or a portion thereof) will be paid which should not have been
paid (an "Overpayment") or a Gross-Up Payment (or a portion thereof)
which should have been paid will not have been paid (an
"Underpayment"). An Underpayment shall be deemed to have occurred upon
a "Final Determination" (as hereinafter defined) that the tax
liability of the Executive (whether in respect of the then current
taxable year of the Executive or in respect of any prior taxable year
of the Executive) will be increased by reason of the imposition of the
Excise Tax on a Payment or Payments with respect to which the Company
has failed to make a sufficient Gross-Up Payment. An Overpayment
shall be deemed to have occurred upon a "Final Determination" (as
hereinafter defined) that the Excise Tax shall not be imposed (or
shall be reduced) upon a Payment or Payments with respect to which the
Executive had previously received a Gross-Up Payment. A Final
Determination shall be deemed to have occurred when (i) in the case of
an Overpayment, the Executive has received from the applicable
governmental taxing authority a refund of taxes or other reduction in
his tax liability imposed as a result of a Payment or, in the case of
an Underpayment, the Executive receives notice from a
10
<PAGE>
competent governmental authority that his tax liability imposed as a
result of a Payment will be increased, and (ii) in the case of an
Overpayment or an Underpayment, upon either (x) the date a
determination is made by, or an agreement is entered into with, the
applicable governmental taxing authority which finally and
conclusively binds the Executive and such taxing authority, or in the
event that a claim is brought before a court of competent
jurisdiction, the date upon which a final determination has been made
by such court and either all appeals have been taken and finally
resolved or the time for all appeals has expired or (y) the statute of
limitations with respect to the Executive's applicable tax return has
expired. If an Underpayment occurs, the Executive shall promptly
notify the Company and the Company shall promptly pay to the Executive
an additional Gross-Up Payment equal to the amount of the Underpayment
plus any interest and penalties imposed on the Underpayment (other
than interest and penalties attributable to any action or omission by
the Executive in bad faith). If an Overpayment occurs, the amount of
the Overpayment shall be treated as a loan by the Company to the
Executive and the Executive shall, within ten (10) business days of
the occurrence of such Overpayment, pay the Company the amount of the
Overpayment, with interest computed in the same manner as for an
Underpayment.
(d) Notwithstanding anything contained in this Agreement to
the contrary, in the event it is determined that an Excise Tax will be
imposed on any Payment or Payments, the Company shall pay to the
applicable governmental taxing authorities as Excise Tax withholding,
the amount of the Excise Tax that the Company has actually withheld
from the Payment or Payments.
9. MITIGATION
The Executive is not required to seek other employment or
otherwise mitigate the amount of any payments to be made by the Company
pursuant to this Agreement, and employment by the Executive will not reduce
or otherwise affect any amounts or benefits due the Executive pursuant to
this Agreement, except as otherwise provided in Section 6(a)(iii).
10. CONTINUING OBLIGATIONS REGARDING CONFIDENTIAL INFORMATION
(a) ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive hereby
recognizes and acknowledges the following:
(i) In connection with the Business, the Company
has expended a great deal of time, money and effort to develop and
maintain the secrecy and confidentiality of substantial proprietary
trade secret information and other confidential business information
which, if misused or disclosed, could be very harmful to the Company's
business.
(ii) The Executive desires to become entitled to
receive the benefits contemplated by this Agreement but which the
Company would not make available to the Executive but for the
Executive's signing and agreeing to abide by the terms of this Section
10.
11
<PAGE>
(iii) The Executive's position with the Company
provides the Executive with access to certain of the Company's
confidential and proprietary trade secret information and other
confidential business information.
(iv) The Company compensates its employees to, among
other things, develop and preserve business information for the
Company's ownership and use.
(v) If the Executive were to leave the Company, the
Company in all fairness would need certain protection in order to
ensure that the Executive does not appropriate and misuse any
confidential information entrusted to the Executive during the course
of the Executive's employment with the Company.
(b) CONFIDENTIAL INFORMATION
(i) The Executive agrees to keep secret and
confidential, and not to use or disclose to any third parties, except
as directly required for the Executive to perform the Executive's
employment responsibilities for the Company, or except as required by
law, any of the Company's confidential and proprietary trade secret
information or other confidential business information concerning the
Company's business acquired by the Executive during the course of, or
in connection with, the Executive's employment with the Company (and
which was not known by the Executive prior to the Executive's being
hired by the Company). Confidential information means information
which would constitute material, nonpublic information under the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, regardless of whether the
Executive's use or disclosure of such information is in connection
with or related to a securities transaction.
(ii) The Executive acknowledges that any and all
notes, records, reports, written information or documents of any kind,
computer files and diskettes and other documents obtained by or
provided to the Executive, or otherwise made, produced or compiled
during the course of the Executive's employment with the Company,
regardless of the type of medium in which it is preserved, are the
sole and exclusive property of the Company and shall be surrendered to
the Company upon the Executive's termination of employment and on
demand at any time by the Company.
(c) ACKNOWLEDGMENT REGARDING RESTRICTIONS. The Executive
recognizes and agrees that the provisions of this Section 10 are
reasonable and enforceable because, among other things, (i) the
Executive is receiving compensation under this Agreement and (ii)
this Section 10 therefore does not impose any undue hardship on the
Executive. The Executive further recognizes and agrees that the
provisions of this Section 10 are reasonable and enforceable in view
of the Company's legitimate interests in protecting its confidential
information.
(d) BREACH. In the event of a breach of Section 10(b), the
Company's sole remedy shall be the discontinuation of the payment,
allocation, accrual or provision of any amounts or benefits as
provided in Sections 5 or 6. The Executive recognizes and agrees,
however, that it is the intent of the parties that neither this
Agreement nor any of its provisions shall be construed to adversely
affect any rights or remedies that Company would have had, including,
without limitation, the amount of any damages for which it
12
<PAGE>
could have sought recovery, had this Agreement not been entered into.
Accordingly, the parties hereby agree that nothing stated in this
Section 10 shall limit or otherwise affect the Company's right to seek
legal or equitable remedies it may otherwise have, or the amount of
damages for which it may seek recovery, in connection with matters
covered by this Section 10 but which are not based on breach or
violation of this Section 10 (including, without limitation, claims
based on the breach of fiduciary or other duties of the Executive or
any obligations of the Executive arising under any other contracts,
agreements or understandings). Without limiting the generality of the
foregoing, nothing in this Section 10 or any other provision of this
Agreement shall limit or otherwise affect the Company's right to seek
legal or equitable remedies it may otherwise have, or the amount of
damages for which it may seek recovery, resulting from or arising out
of statutory or common law or any Company policies relating to
fiduciary duties, confidential information or trade secrets. Further,
the Executive acknowledges and agrees that the fact that Section 10(c)
is limited to the Continuation Period, and that the sole remedy of the
Company hereunder is the discontinuation of benefits, shall not reduce
or otherwise alter any other contractual or other legal obligations of
the Executive during any period or circumstance, and shall not be
construed as establishing a maximum limit on damages for which the
Company may seek recovery.
11. BINDING AGREEMENT; SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns. The
Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company, by agreement to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. For purposes of
this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, beneficiaries, devises and legatees. If the Executive
should die while any amounts are payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee,
beneficiary or other designee or, if there be no such designee, to the
Executive's estate.
12. NOTICES
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be
deemed to have been duly given (i) on the date of delivery if
delivered by hand, (ii) on the date of transmission, if delivered by
confirmed facsimile, (iii) on the first business day following the
date of deposit if delivered by guaranteed overnight delivery service,
or (iv) on the third business day following the date delivered or
mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
13
<PAGE>
If to the Executive:
Raymond Marcy
7911 N. Upper Ridge Drive
Parkland, Florida 33067; and
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
13. GOVERNING LAW
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Florida, without
regard to principles of conflicts of laws.
14. MISCELLANEOUS
No provisions of this Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge
is agreed to in writing signed by the Executive and the Company. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. Section headings contained herein
are for convenience of reference only and shall not affect the interpretation
of this Agreement.
15. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which will
constitute one and the same instrument.
16. NON-ASSIGNABILITY
This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, or transfer
this Agreement or any rights or obligations hereunder, except as provided in
Section 11. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer
by his will or trust or by the laws of descent or distribution, and in the
event of any attempted assignment or transfer contrary to this paragraph the
Company shall have no liability to pay any amount so attempted to be assigned
or transferred.
14
<PAGE>
17. TERM OF AGREEMENT
This Agreement shall commence on the date hereof and shall
continue in effect through May 7, 2001; PROVIDED, however, if a Change in
Control of the Company shall have occurred during the original or any
extended term of this Agreement, this Agreement shall continue in effect for
a period of twenty-four (24) months beyond the month in which such Change in
Control occurred; and, PROVIDED FURTHER, that if the Company shall become
obligated to make any payments or provide any benefits pursuant to Section 5
or 6 hereof, this Agreement shall continue for the period necessary to make
such payments or provide such benefits.
18. RESOLUTION OF DISPUTES
(a) The parties hereby agree to submit any claim, demand,
dispute, charge or cause of action (in any such case, a "Claim")
arising out of, in connection with, or relating to this Stock Option
Agreement to binding arbitration in conformance with the
J*A*M*S/ENDISPUTE Streamlined Arbitration Rules and Procedures or the
J*A*M*S/ ENDISPUTE Comprehensive Arbitration Rules and Procedures, as
applicable, but expressly excluding Rule 28 of the J*A*M*S/ENDISPUTE
Streamlined Rules and Rule 32 of the J*A*M*S/ENDISPUTE Comprehensive
Rules, as the case may be. All arbitration procedures shall be held
in Fort Lauderdale, Florida and shall be subject to the choice of law
provisions set forth in Section 13 of this Agreement.
(b) In the event of any dispute arising out of or relating
to this Agreement for which any party is seeking injunctive relief,
specific performance or other equitable relief, such matter may be
resolved by litigation. Accordingly, the parties shall submit such
matter to the exclusive jurisdiction of the United States District
Court for the Southern District of Florida or, if jurisdiction is not
available therein, any other court located in Broward County, Florida,
and hereby waive any and all objections to such jurisdiction or venue
that they may have. Each party agrees that process may be served upon
such party in any manner authorized under the laws of the United States
or Florida, and waives any objections that such party may otherwise have
to such process.
19. NO SETOFF
The Company shall have no right of setoff or counterclaim in
respect of any claim, debt or obligation against any payment provided for in
this Agreement.
20. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
subsidiaries or successors and for which the Executive may qualify, nor shall
anything herein limit or reduce such rights as the Executive may have under
any other agreements with the Company or any of its subsidiaries or
successors, except to the extent payments are made pursuant to Section 5,
they shall be in lieu of any termination, separation, severance or similar
payments pursuant to the Executive's Employment Agreement, if any, and the
Company's then existing termination, separation, severance or similar plans
or policies, if any. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of
15
<PAGE>
the Company or any of its subsidiaries shall be payable in accordance with
such plan or program, except as explicitly modified by this Agreement.
21. NO GUARANTEED EMPLOYMENT
The Executive and the Company acknowledge that this Agreement
shall not confer upon the Executive any right to continued employment and
shall not interfere with the right of the Company to terminate the employment
of the Executive at any time.
22. INVALIDITY OF PROVISIONS
In the event that any provision of this Agreement is
adjudicated to be invalid or unenforceable under applicable law in any
jurisdiction, the validity or enforceability of the remaining provisions
thereof shall be unaffected as to such jurisdiction and such adjudication
shall not affect the validity or enforceability of such provision in any
other jurisdiction. To the extent that any provision of this Agreement,
including, without limitation, Section 10 hereof, is adjudicated to be
invalid or unenforceable because it is overbroad, that provision shall not be
void but rather shall be limited to the extent required by applicable law and
enforced as so limited. The parties expressly acknowledge and agree that
this Section 22 is reasonable in view of the parties' respective interests.
23. NON-WAIVER OF RIGHTS
The failure by the Company or the Executive to enforce at any
time any of the provisions of this Agreement or to require at any time
performance by the other party of any of the provisions hereof shall in no
way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement, or any part hereof, or the right of the Company
or the Executive thereafter to enforce each and every provision in accordance
with the terms of this Agreement.
24. EMPLOYMENT AGREEMENT.
Simultaneously with the execution and delivery to this
Agreement, the Company and the Executive have executed and delivered an
Employment Agreement. If circumstances arise which cause both the Employment
Agreement and this Agreement to apply to the Company and the Executive, then,
to the extent of any inconsistency between the provisions of this Agreement
and the Employment Agreement, the terms of this Agreement alone shall apply.
However, if this Agreement does not apply, then the provisions of the
Employment Agreement shall control and be unaffected by this Agreement.
25. UNFUNDED PLAN.
The Company's obligations under this Agreement shall be
entirely unfunded until payments are made hereunder from the general assets
of the Company, and no provision shall be made to segregate assets of the
Company for payments to be made under this Agreement. The Executive shall
have no interest in any particular assets of the Company but rather shall
have only the rights of a general unsecured creditor of the Company.
16
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING
THAT THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND
STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE
SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT
TO ASK ANY QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED
SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE
EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Raymond Marcy
------------------------------------
Raymond Marcy
17
<PAGE>
Exhibit 10.23
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, dated as of the 18th day of November, 1998, is by and
between INTERIM SERVICES INC., a Delaware corporation (hereinafter referred
to as the "Company"), and ROBERT E. LIVONIUS (hereinafter the "Executive").
RECITALS
A. The Board of Directors of the Company (the "Board") considers it
essential to the best interests of the Company and its stockholders that its
key management personnel be encouraged to remain with the Company and its
subsidiaries and to continue to devote full attention to the Company's
business in the event that any third person expresses its intention to
complete a possible business combination with the Company, or in taking any
other action which could result in a "Change in Control" (as defined herein)
of the Company. In this connection, the Board recognizes that the possibility
of a Change in Control and the uncertainty and questions which it may raise
among management may result in the departure or distraction of key management
personnel to the detriment of the Company and its stockholders. The Board
has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of key members of the
Company's management to their assigned duties without distraction in the face
of the potentially disturbing circumstances arising from the possibility of a
Change in Control of the Company.
B. The Executive currently serves as the Company's Executive Vice
President and Chief Operating Officer, and his services and knowledge are
valuable to the Company in connection with the management of its business.
C. The Board believes the Executive has made and is expected to
continue to make valuable contributions to the productivity and profitability
of the Company and its subsidiaries. Should the Company receive a proposal
from a third person concerning a possible business combination or any other
action which could result in a Change in Control, in addition to the
Executive's regular duties, the Executive may be called upon to assist in the
assessment of such proposal, advise management and the Board as to whether
such proposal would be in the best interests of the Company and its
stockholders, and to take such other actions as the Board might determine to
be necessary or appropriate.
D. Should the Company receive any proposal from a third person
concerning a possible business combination or any other action which could
result in a change in control of the Company, the Board believes it
imperative that the Company and the Board be able to rely upon the Executive
to continue in his position, and that the Company and the Board be able to
receive and rely upon his advice, if so requested, as to the best interests
of the Company and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by such a
proposal, and to encourage Executive's full attention and dedication to the
Company.
1
<PAGE>
TERMS AND CONDITIONS
NOW, THEREFORE, to assure the Company and its subsidiaries that it will
have the continued, undivided attention, dedication and services of the
Executive and the availability of the Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a Change in Control
of the Company, and to induce the Executive to remain in the employ of the
Company and its subsidiaries, and for other good and valuable consideration,
the adequacy and sufficiency of which are hereby acknowledged, the Company
and the Executive agree as follows.
1. CHANGE IN CONTROL
(a) The definition of a "Change in Control" of the Company
for purposes of this Agreement shall be as determined, prospectively,
from time to time, by the Board, pursuant to the affirmative vote of at
least two-thirds of those members of the Board (i) who have served on
the Board for at least two years prior to such determination, and
(ii) whose election, or nomination for election, during such two-year
period was approved by a vote of at least two-thirds of the directors
then in office who were directors at the beginning of such two-year
period. Written notice of any such determination, or modification of a
previous determination, shall be provided promptly to the Executive.
(b) In the event that at any time during the term of this
Agreement the Board has not established a definition of "Change of
Control" pursuant to Section 1(a), for purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have occurred upon
(i) the acquisition at any time by a "person" or "group" (as that term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (excluding, for this purpose, the
Company or any of its subsidiaries, any employee benefit plan of the
Company or any of its subsidiaries, an underwriter temporarily holding
securities pursuant to such securities, or a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company) of
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly, of securities representing 25% or more of the
combined voting power in the election of directors of the
then-outstanding securities of the Company or any successor of the
Company; (ii) the termination of service as directors, for any reason
other than death, disability or retirement from the Board, during any
period of two consecutive years or less, of individuals who at the
beginning of such period constituted a majority of the Board, unless the
election of or nomination for election of each new director during such
period was approved by a vote of at least two-thirds of the directors
still in office who were directors at the beginning of the period;
(iii) approval by the stockholders of the Company of liquidation of the
Company; (iv) approval by the stockholders of the Company and
consummation of any sale or disposition, or series of related sales or
dispositions, of 50% or more of the assets or earning power of the
Company; or (v) approval by the stockholders of the Company and
consummation of any merger or consolidation or statutory share exchange
to which the Company is a party as a result of which the persons who
were stockholders of the Company immediately prior to the effective date
of the merger or consolidation or statutory share exchange shall have
beneficial ownership of less than 50% of the combined voting power in
the election of
2
<PAGE>
directors of the surviving corporation following the effective date of
such merger or consolidation or statutory share exchange.
(c) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction constitutes a
"Management Approved Transaction." For purposes of this Agreement, a
"Management Approved Transaction" shall be any transaction, which would
otherwise result in a Change in Control for purposes of this Agreement
in which the acquiring "person", "group" or other entity is either
beneficially owned by, or comprised of, in whole or in part, three or
more members of the Company's executive management, as such was
constituted twelve months prior to such transaction, or is majority
owned by, or comprised of, any employee benefit plan of the Company.
(d) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction is approved
by the affirmative vote of at least two-thirds of those members of the
Board (i) who have served on the Board for at least two years prior to
such approval, and (ii) whose election, or nomination for election,
during such two-year period was approved by a vote of at least
two-thirds of the directors then in office who were directors at the
beginning of such two-year period.
2. ADJUSTMENT OF BENEFITS UPON CHANGE IN CONTROL
(a) The Company agrees that the Compensation Committee of the
Board, or such other committee succeeding to such committee's
responsibilities with respect to executive compensation (collectively,
the "Compensation Committee") may make such equitable adjustments to any
performance targets contained in any awards under the Company's current
incentive compensation plans, or any additional or successor plan in
which the Executive is a participant (collectively, the "Incentive
Plans"), as the Compensation Committee determines may be appropriate to
eliminate any negative effects from any transactions relating to a
Change in Control (such as costs or expenses associated with the
transaction or any related transaction, including, without limitation,
any reorganizations, divestitures, recapitalizations or borrowings, or
changes in targets or measures to reflect the disruption of the
business, etc.), in order to preserve reward opportunities and
performance objectives.
(b) In the case of a Change in Control, all restrictions and
conditions applicable to any awards of restricted stock or the vesting
of stock options or other awards granted to the Executive under the
Company's 1998 Incentive Stock Plan, 1997 Long-Term Executive
Compensation and Outside Director Stock Option Plan, any similar or
successor plan, or otherwise shall be deemed to have been satisfied as
of the date the Change in Control occurs, and this Agreement shall be
deemed to amend any agreements evidencing such awards to reflect this
provision.
3
<PAGE>
3. TERMINATION FOLLOWING CHANGE IN CONTROL
(a) The Executive's employment may be terminated for any
reason by the Company within two years following a Change in Control of
the Company. If the Executive's employment is terminated for any reason
other than the reasons set forth below, then the Executive shall be
entitled to the benefits set forth in this Agreement in lieu of any
termination, separation, severance or similar benefits under the
Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if any.
If the Executive's employment is terminated for any of the reasons set
forth below, then the Executive shall not be entitled to any
termination, separation, severance or similar benefits under this
Agreement, and the Executive shall be entitled to benefits under the
Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if any,
only in accordance with the terms of such Employment Agreement, or such
plans or policies.
(i) termination by reason of the Executive's death, PROVIDED
the Executive has not previously given a "Notice of Termination"
pursuant to Section 4;
(ii) termination by reason of the Executive's "disability,"
PROVIDED the Executive has not previously given a "Notice of
Termination" pursuant to Section 4;
(iii) termination by reason of "retirement" at or after age
65, PROVIDED the Executive has not previously given "Notice of
Termination" pursuant to Section 4; or
(iv) termination by the Company for "Cause."
For the purposes of this Agreement, "disability" shall be
defined as the Executive's inability by reason of illness or other
physical or mental disability to perform the principal duties required
by the position held by the Executive at the inception of such illness
or disability for any consecutive 180-day period. A determination of
disability shall be subject to the certification of a qualified medical
doctor agreed to by the Company and the Executive or, in the Executive's
incapacity to designate a doctor, the Executive's legal representative.
If the Company and the Executive cannot agree on the designation of a
doctor, each party shall nominate a qualified medical doctor and the two
doctors shall select a third doctor and the third doctor shall make the
determination as to disability.
For purposes of this Agreement, "retirement" shall mean the
Company's termination of the Executive's employment at or after the
date on which the Executive attains age 65.
For purposes of this Agreement, "Cause" shall mean one or more
of the following:
(I) the material violation of any of the terms and conditions
of this Agreement or any written agreements the Executive may from time
to time have with the Company (after 30 days following written notice
from the Board specifying such material violation and Executive's
failure to cure or remedy such material violation within such 30-day
period);
4
<PAGE>
(II) inattention to or failure to perform Executive's assigned
duties and responsibilities competently for any reason other than due to
Disability (after 30 days following written notice from the Board
specifying such inattention or failure, and Executive's failure to cure
or remedy such inattention or failure within such 30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without
limitation, engaging in immoral acts which become public information or
repeatedly conveying to one person, or conveying to an assembled public
group, negative information concerning the Company or its affiliates;
(IV) commission of an act of dishonesty, including, but not
limited to, misappropriation of funds or any property of the Company;
(V) commission by the Executive of an act which constitutes a
misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the written Policies of
the Company which are not inconsistent with this Agreement or applicable
law (after 30 days following written notice from the Board specifying
such failure, and the Executive's failure to cure or remedy such
inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following
written notice from the Board specifying such refusal or
insubordination, and the Executive's failure to cure or remedy such
refusal or insubordination within such 30-day period); or
(VIII) unsatisfactory performance of duties by the Executive as
a result of alcohol or drug use by the Executive.
(b) The Executive may terminate his employment with the Company
following a Change in Control of the Company (i) for any reason
by giving Notice of Termination during either of the "Termination
Periods" or (ii) for "Good Reason" by giving Notice of Termination at
any time within two years after the Change in Control. Any failure by
the Executive to give such immediate notice of termination for Good
Reason shall not be deemed to constitute a waiver or otherwise to affect
adversely the rights of the Executive hereunder, PROVIDED the Executive
gives notice to receive such benefits prior to the expiration of such
two year period. If the Executive terminates his employment as provided
in this Section 3(b), then the Executive shall be entitled to the
benefits set forth in this Agreement in lieu of any termination,
separation, severance or similar benefits under the Executive's
Employment Agreement, if any, or under the Company's termination,
separation, severance or similar plans or policies, if any.
For purposes of this Agreement, there shall be two "Termination
Periods" during which the Executive may give Notice of Termination and
receive the benefits set forth in this Agreement:
5
<PAGE>
(i) the first of which shall be the sixty (60) day
period commencing on the date of the Change of Control, and;
(ii) the second of which shall be the thirty (30) day
period commencing on the first anniversary of the date of the Change of
Control
For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any one or more of the following events:
(I) The assignment to the Executive of any duties
inconsistent in any material adverse respect with his position,
authority or responsibilities with the Company and its subsidiaries
immediately prior to the Change in Control, or any other material
adverse change in such position, including titles, authority, or
responsibilities, as compared with the Executive's position immediately
prior to the Change in Control;
(II) A reduction by the Company in the amount of the
Executive's base salary or annual or long term incentive compensation
paid or payable as compared to that which was paid or made available to
Executive immediately prior to the Change in Control; or the failure of
the Company to increase Executive's compensation each year by an amount
which is substantially the same, on a percentage basis, as the average
annual percentage increase in the base salaries of other executives of
comparable status with the Company;
(III) The failure by the Company to continue to provide
the Executive with substantially similar perquisites or benefits the
Executive in the aggregate enjoyed under the Company's benefit programs,
such as any of the Company's pension, savings, vacation, life insurance,
medical, health and accident, or disability plans in which he was
participating at the time of the Change in Control (or, alternatively,
if such plans are amended, modified or discontinued, substantially
similar equivalent benefits thereto, when considered in the aggregate),
or the taking of any action by the Company which would directly or
indirectly cause such benefits to be no longer substantially equivalent,
when considered in the aggregate, to the benefits in effect at the time
of the Change in Control;
(IV) The Company's requiring the Executive to be based
at any office or location more than 50 miles from that location at which
he performed his services immediately prior to the Change in Control,
except for a relocation consented to in writing by the Executive, or
travel reasonably required in the performance of the Executive's
responsibilities to the extent substantially consistent with the
Executive's business travel obligations prior to the Change in Control;
(V) Any failure of the Company to obtain the
assumption of the obligation to perform this Agreement by any successor
as contemplated in Section 11 herein; or
(VI) Any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its obligations hereunder, in either case, for a period of thirty
business days after receipt of written notice from the Executive and the
failure by the Company to cure such breach or failure during such thirty
business day period.
6
<PAGE>
4. NOTICE OF TERMINATION
Any termination of the Executive's employment following a Change in
Control, other than a termination as contemplated by Sections 3(a)(i) or
3(a)(iii) shall be communicated by written "Notice of Termination" by the
party affecting the termination to the other party hereto. Any "Notice of
Termination" shall set forth (a) the effective date of termination, which
shall not be less than 15 or more than 30 days after the date the Notice of
Termination is delivered (the "Termination Date"); (b) the specific provision
in this Agreement relied upon; and (c) in reasonable detail the facts and
circumstances claimed to provide a basis for such termination and the
entitlement, or lack of entitlement, to the benefits set forth in this
Agreement. Notwithstanding the foregoing, if within fifteen (15) days after
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a good faith dispute exists
concerning the termination, the actual Termination Date shall be the date on
which the dispute is finally determined in accordance with the provisions of
Section 18 hereof. In the case of any good faith dispute as to the
Executive's entitlement to benefits under this Agreement resulting from any
termination by the Company for which the Company does not deliver a Notice of
Termination, the actual Termination Date shall be the date on which the
dispute is finally determined in accordance with the provisions of Section 18
hereof. Notwithstanding the pendency of any such dispute referred to in the
two preceding sentences, the Company shall continue to pay the Executive his
full compensation then in effect and continue the Executive as a participant
in all compensation, benefits and perquisites in which he was then
participating, until the dispute is finally resolved, PROVIDED the Executive
is willing to continue to provide full time services to the Company and its
subsidiaries in substantially the same position, if so requested by the
Company. Amounts paid under this Section 4 shall be in addition to all other
amounts due under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement. If a final determination is
made, pursuant to Section 18, that Good Reason did not exist in the case of a
Notice of Termination by the Executive, the Executive shall have the sole
right to nullify and void his Notice of Termination by delivering written
notice of same to the Company within three (3) business days of the date of
such final determination. If the parties do not dispute the Executive's
entitlement to benefits hereunder, the Termination Date shall be as set forth
in the Notice of Termination.
5. TERMINATION BENEFITS
(a) SEVERANCE PAYMENT. Subject to the conditions set forth
in this Agreement, on the Termination Date the Company shall pay the
Executive (reduced by any applicable payroll or other taxes required to
be withheld) a lump sum severance payment, in cash, equal to the product
of two (2) times the sum of the Executive's annual salary for the
current year plus his target bonus for the current year (provided that
if the Notice of Termination is given prior to the determination of the
Executive's salary or target bonus for the year in which the Termination
Date occurs, the amounts shall be the annual salary for the prior year
and the greater of the target bonus for the prior year or the actual
bonus earned by the Executive for the prior year). The current year
shall be (A) for the purposes of determining annual salary, the year
then generally used by the Company for setting salaries for senior-level
executives (currently April 1 through the following March 31), and (B)
for
7
<PAGE>
purposes of determining target bonus, the fiscal year then generally
used by the Company for setting target bonuses for senior-level
executives, in which the Termination Date occurs, and the prior year
shall be the twelve-month period immediately preceding the current year.
(b) PAYMENT OF DEFERRED COMPENSATION. Any compensation that
has been earned by the Executive but is unpaid as of the Termination
Date, including any compensation that has been earned but deferred
pursuant to the Company's Deferred Compensation Plan or otherwise,
shall be paid in full to the Executive on the Termination Date.
6. OTHER BENEFITS
Subject to the conditions set forth in this Agreement hereof, the
following benefits (subject to any applicable payroll or other taxes required
to be withheld) shall be paid or provided to the Executive:
(a) HEALTH/WELFARE BENEFITS
(i) During the twenty-four (24) months following the
Termination Date (the "Continuation Period"), the Company shall continue
to keep in full force and effect all programs of medical, dental,
vision, accident, disability, life insurance, including optional term
life insurance, and other similar health or welfare programs with
respect to the Executive and his dependents with the same level of
coverage, upon the same terms and otherwise to the same extent as such
programs shall have been in effect immediately prior to the Termination
Date (or, if more favorable to the Executive, immediately prior to the
Change in Control), and the Company and the Executive shall share the
costs of the continuation of such insurance coverage in the same
proportion as such costs were shared immediately prior to the
Termination Date (or, if more favorable to the Executive, immediately
prior to the Change in Control) or, if the terms of such programs do not
permit continued participation by the Executive (or if the Company
otherwise determines it advisable to amend, modify or discontinue such
programs for employees generally), the Company shall otherwise provide
benefits substantially similar to and no less favorable to the Executive
in terms of cost or benefits ("Equivalent Benefits") than he was
entitled to receive at the end of the period of coverage, for the
duration of the Continuation Period.
(ii) All benefits which the Company is required by this
Section 6(a) to provide, which will not be provided by the Company's
programs described herein, shall be provided through the purchase of
insurance unless the Executive is uninsurable. If the Executive is
uninsurable, the Company will provide the benefits out of its general
assets.
(iii) If the Executive obtains other employment during
the Continuation Period which provides health or welfare benefits of the
type described in Section 6(a)(i) hereof ("Other Coverage"), then
Executive shall notify the Company promptly of such other employment and
Other Coverage and the Company shall thereafter not provide the
Executive and his dependents the benefits described in Section 6(a)(i)
hereof to the extent that such benefits are provided under the Other
Coverage. Under such circumstances, the
8
<PAGE>
Executive shall make all claims first under the Other Coverage and
then, only to the extent not paid or reimbursed by the Other Coverage,
under the plans and programs described in Section 6(a)(i) hereof.
(b) RETIREMENT BENEFITS
(i) For purposes of this Agreement, "Retirement" shall mean
the Company's termination of the Executive's employment within two years
following a Change in Control of the Company and at or after the date on
which the Executive attains age 65; provided, however, that any
termination for Cause or due to Death or Disability shall not constitute
Retirement.
(ii) Subject to Section 6(b)(ii), the Executive shall be
deemed to be completely vested under the Company's 401(k) Plan, Deferred
Compensation Plan or other similar or successor plans which are in
effect as of the date of the Change in Control (collectively, the
"Plans"), regardless of the Executive's actual vesting service credit
thereunder.
(iii) Any part of the foregoing retirement benefits which are
otherwise required to be paid by a tax-qualified Plan but which cannot
be paid through such Plan by reason of the laws and regulations
applicable to such Plan, shall be paid by one or more supplemental
non-qualified Plans or by the Company.
(iv) The payments calculated hereunder which are not actually
paid by a Plan shall be paid thirty (30) days following the Date of
Termination in a single lump sum cash payment (of equivalent actuarial
value to the payment calculated hereunder using the same actuarial
assumptions as are used in calculating benefits under the Plan but using
the discount rate that would be used by the Company on the Date of
Termination to determine the actuarial present value of projected
benefit obligations).
(c) EXECUTIVE OUTPLACEMENT COUNSELING. During the
Continuation Period, unless the Executive shall reach normal retirement
age during the Continuation Period, the Executive may request in writing
and the Company shall at its expense engage within a reasonable time
following such written request an outplacement counseling service to
assist the Executive in obtaining employment.
7. PAYMENT OF CERTAIN COSTS
Except as otherwise provided in Section 18, if a dispute arises
regarding a termination of the Executive or the interpretation or enforcement
of this Agreement, subsequent to a Change in Control, all of the reasonable
legal fees and expenses incurred by the Executive and all Arbitration Costs
(as hereafter defined) in contesting any such termination or obtaining or
enforcing all or part of any right or benefit provided for in this Agreement
or in otherwise pursuing all or part of his claim will be paid by the
Company, unless prohibited by law. The Company further agrees to pay
pre-judgment interest on any money judgment obtained by the Executive
calculated at the prime interest rate reported in THE WALL STREET JOURNAL in
effect from time to time from the date that payment to him should have been
made under this Agreement.
9
<PAGE>
8. EXCISE TAX PAYMENTS
(a) Notwithstanding anything contained in this Agreement to
the contrary, in the event that any payment (within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended or
replaced (the "Code")), or distribution to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise in connection with,
or arising out of, his employment with the Company (a "Payment" or
"Payments"), would be subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, interest and penalties
collectively referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Executive of all such taxes
(including any interest or penalties imposed with respect to such
taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments; PROVIDED, that the Executive shall not be
entitled to receive any additional payment relating to any interest or
penalties attributable to any action or omission by the Executive in bad
faith.
(b) An initial determination shall be made by an accounting
firm mutually agreeable to the Company and the Executive and, if not
agreed to within three days after the Date of Termination, a national
independent accounting firm selected by the Executive (the "Accounting
Firm"), as to whether a Gross-Up Payment is required pursuant to this
Section 8 and the amount of such Gross-Up Payment. To permit the
Accounting Firm to make the initial determination, the Company shall
furnish the Accounting Firm with all information reasonably required for
such firm to complete such determination as soon as practicable after
the Date of Termination, but in no event more than fifteen (15) days
thereafter. All fees, costs and expenses (including, but not limited
to, the cost of retaining experts) of the Accounting Firm shall be borne
by the Company and the Company shall pay such fees, costs and expenses
as they become due. The Accounting Firm shall provide detailed
supporting calculations, reasonably acceptable both to the Company and
the Executive within thirty (30) days of the Date of Termination, if
applicable, or such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax). The Gross-Up Payment, if
any, as determined pursuant to this Section 8(b) shall be paid by the
Company to the Executive within five (5) business days of the receipt of
the Accounting Firm's determination. If the Accounting Firm determines
that no Excise Tax is payable by the Executive with respect to a Payment
or Payments, it shall furnish the Executive with an opinion reasonably
satisfactory to the Executive that no Excise Tax will be imposed with
respect to any such Payment or Payments. Any such initial determination
by the Accounting Firm of the Gross-Up Payment shall be binding upon the
Company and the Executive subject to the application of Section 8(c).
(c) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that a Gross-Up
Payment (or a portion thereof) will be paid which should not have been
paid (an "Overpayment") or a Gross-Up Payment (or a portion thereof)
which should have been paid will not have been paid (an "Underpayment").
An
10
<PAGE>
Underpayment shall be deemed to have occurred upon a "Final
Determination" (as hereinafter defined) that the tax liability of the
Executive (whether in respect of the then current taxable year of the
Executive or in respect of any prior taxable year of the Executive) will
be increased by reason of the imposition of the Excise Tax on a Payment
or Payments with respect to which the Company has failed to make a
sufficient Gross-Up Payment. An Overpayment shall be deemed to have
occurred upon a "Final Determination" (as hereinafter defined) that the
Excise Tax shall not be imposed (or shall be reduced) upon a Payment or
Payments with respect to which the Executive had previously received a
Gross-Up Payment. A Final Determination shall be deemed to have
occurred when (i) in the case of an Overpayment, the Executive has
received from the applicable governmental taxing authority a refund of
taxes or other reduction in his tax liability imposed as a result of a
Payment or, in the case of an Underpayment, the Executive receives
notice from a competent governmental authority that his tax liability
imposed as a result of a Payment will be increased, and (ii) in the case
of an Overpayment or an Underpayment, upon either (x) the date a
determination is made by, or an agreement is entered into with, the
applicable governmental taxing authority which finally and conclusively
binds the Executive and such taxing authority, or in the event that a
claim is brought before a court of competent jurisdiction, the date upon
which a final determination has been made by such court and either all
appeals have been taken and finally resolved or the time for all appeals
has expired or (y) the statute of limitations with respect to the
Executive's applicable tax return has expired. If an Underpayment
occurs, the Executive shall promptly notify the Company and the Company
shall promptly pay to the Executive an additional Gross-Up Payment equal
to the amount of the Underpayment plus any interest and penalties
imposed on the Underpayment (other than interest and penalties
attributable to any action or omission by the Executive in bad faith).
If an Overpayment occurs, the amount of the Overpayment shall be treated
as a loan by the Company to the Executive and the Executive shall,
within ten (10) business days of the occurrence of such Overpayment, pay
the Company the amount of the Overpayment, with interest computed in the
same manner as for an Underpayment.
(d) Notwithstanding anything contained in this Agreement to
the contrary, in the event it is determined that an Excise Tax will be
imposed on any Payment or Payments, the Company shall pay to the
applicable governmental taxing authorities as Excise Tax withholding,
the amount of the Excise Tax that the Company has actually withheld from
the Payment or Payments.
9. MITIGATION
The Executive is not required to seek other employment or otherwise
mitigate the amount of any payments to be made by the Company pursuant to
this Agreement, and employment by the Executive will not reduce or otherwise
affect any amounts or benefits due the Executive pursuant to this Agreement,
except as otherwise provided in Section 6(a)(iii).
11
<PAGE>
10. CONTINUING OBLIGATIONS REGARDING CONFIDENTIAL INFORMATION
(a) ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive hereby
recognizes and acknowledges the following:
(i) In connection with the Business, the Company has
expended a great deal of time, money and effort to develop and maintain
the secrecy and confidentiality of substantial proprietary trade secret
information and other confidential business information which, if
misused or disclosed, could be very harmful to the Company's business.
(ii) The Executive desires to become entitled to receive
the benefits contemplated by this Agreement but which the Company
would not make available to the Executive but for the Executive's
signing and agreeing to abide by the terms of this Section 10.
(iii) The Executive's position with the Company provides
the Executive with access to certain of the Company's confidential and
proprietary trade secret information and other confidential business
information.
(iv) The Company compensates its employees to, among other
things, develop and preserve business information for the Company's
ownership and use.
(v) If the Executive were to leave the Company, the Company
in all fairness would need certain protection in order to ensure
that the Executive does not appropriate and misuse any confidential
information entrusted to the Executive during the course of the
Executive's employment with the Company.
(b) CONFIDENTIAL INFORMATION
(i) The Executive agrees to keep secret and confidential,
and not to use or disclose to any third parties, except as directly
required for the Executive to perform the Executive's employment
responsibilities for the Company, or except as required by law,
any of the Company's confidential and proprietary trade secret
information or other confidential business information concerning the
Company's business acquired by the Executive during the course of, or in
connection with, the Executive's employment with the Company (and which
was not known by the Executive prior to the Executive's being hired by
the Company). Confidential information means information which would
constitute material, nonpublic information under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder, regardless of whether the Executive's use or disclosure of
such information is in connection with or related to a securities
transaction.
(ii) The Executive acknowledges that any and all notes,
records, reports, written information or documents of any kind, computer
files or diskettes and other documents obtained by or provided to the
Executive, or otherwise made, produced or compiled during the course of
the Executive's employment with the Company, regardless of the type of
medium in which it is preserved, are the sole and exclusive property of
the Company and shall be surrendered to the Company upon the Executive's
termination of employment and on demand at any time by the Company.
12
<PAGE>
(c) ACKNOWLEDGMENT REGARDING RESTRICTIONS. The Executive
recognizes and agrees that the provisions of this Section 10 are
reasonable and enforceable because, among other things, (i) the
Executive is receiving compensation under this Agreement and (ii) this
Section 10 therefore does not impose any undue hardship on the
Executive. The Executive further recognizes and agrees that the
provisions of this Section 10 are reasonable and enforceable in view of
the Company's legitimate interests in protecting its confidential
information.
(d) BREACH. In the event of a breach of Section 10(b), the
Company's sole remedy shall be the discontinuation of the payment,
allocation, accrual or provision of any amounts or benefits as provided
in Sections 5 or 6. The Executive recognizes and agrees, however, that
it is the intent of the parties that neither this Agreement nor any of
its provisions shall be construed to adversely affect any rights or
remedies that Company would have had, including, without limitation, the
amount of any damages for which it could have sought recovery, had this
Agreement not been entered into. Accordingly, the parties hereby agree
that nothing stated in this Section 10 shall limit or otherwise affect
the Company's right to seek legal or equitable remedies it may otherwise
have, or the amount of damages for which it may seek recovery, in
connection with matters covered by this Section 10 but which are not
based on breach or violation of this Section 10 (including, without
limitation, claims based on the breach of fiduciary or other duties of
the Executive or any obligations of the Executive arising under any
other contracts, agreements or understandings). Without limiting the
generality of the foregoing, nothing in this Section 10 or any other
provision of this Agreement shall limit or otherwise affect the
Company's right to seek legal or equitable remedies it may otherwise
have, or the amount of damages for which it may seek recovery, resulting
from or arising out of statutory or common law or any Company policies
relating to fiduciary duties, confidential information or trade secrets.
Further, the Executive acknowledges and agrees that the fact that
Section 10(c) is limited to the Continuation Period, and that the sole
remedy of the Company hereunder is the discontinuation of benefits,
shall not reduce or otherwise alter any other contractual or other legal
obligations of the Executive during any period or circumstance, and
shall not be construed as establishing a maximum limit on damages for
which the Company may seek recovery.
11. BINDING AGREEMENT; SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns. The Company
shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. For purposes of this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, beneficiaries, devises and legatees. If the Executive
should
13
<PAGE>
die while any amounts are payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee,
beneficiary or other designee or, if there be no such designee, to the
Executive's estate.
12. NOTICES
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii)
on the date of transmission, if delivered by confirmed facsimile, (iii) on
the first business day following the date of deposit if delivered by
guaranteed overnight delivery service, or (iv) on the third business day
following the date delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Robert E. Livonius
1072 Pine Branch Drive
Fort Lauderdale, FL 33326
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
13. GOVERNING LAW
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Florida, without
regard to principles of conflicts of laws.
14. MISCELLANEOUS
No provisions of this Agreement may be amended, modified, waived or
discharged unless such amendment, waiver, modification or discharge is agreed
to in writing signed by the Executive and the Company. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. Section headings contained herein are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
15. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which will constitute one
and the same instrument.
14
<PAGE>
16. NON-ASSIGNABILITY
This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Section 11. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer
by his will or trust or by the laws of descent or distribution, and in the
event of any attempted assignment or transfer contrary to this paragraph the
Company shall have no liability to pay any amount so attempted to be assigned
or transferred.
17. TERM OF AGREEMENT
This Agreement shall commence on the date hereof and shall continue
in effect through May 7, 2001; PROVIDED, however, if a Change in Control of
the Company shall have occurred during the original or any extended term of
this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such Change in Control
occurred; and, PROVIDED FURTHER, that if the Company shall become obligated
to make any payments or provide any benefits pursuant to Section 5 or 6
hereof, this Agreement shall continue for the period necessary to make such
payments or provide such benefits.
18. RESOLUTION OF DISPUTES
(a) The parties hereby agree to submit any claim, demand, dispute,
charge or cause of action (in any such case, a "Claim") arising out of,
in connection with, or relating to this Stock Option Agreement to
binding arbitration in conformance with the J*A*M*S/ENDISPUTE
Streamlined Arbitration Rules and Procedures or the J*A*M*S/ ENDISPUTE
Comprehensive Arbitration Rules and Procedures, as applicable, but
expressly excluding Rule 28 of the J*A*M*S/ENDISPUTE Streamlined Rules
and Rule 32 of the J*A*M*S/ENDISPUTE Comprehensive Rules, as the case
may be. All arbitration procedures shall be held in Fort Lauderdale,
Florida and shall be subject to the choice of law provisions set forth
in Section 13 of this Agreement.
(b) In the event of any dispute arising out of or relating to
this Agreement for which any party is seeking injunctive relief,
specific performance or other equitable relief, such matter may be
resolved by litigation. Accordingly, the parties shall submit such
matter to the exclusive jurisdiction of the United States District Court
for the Southern District of Florida or, if jurisdiction is not
available therein, any other court located in Broward County, Florida,
and hereby waive any and all objections to such jurisdiction or venue
that they may have. Each party agrees that process may be served upon
such party in any manner authorized under the laws of the United States
or Florida, and waives any objections that such party may otherwise have
to such process.
19. NO SETOFF
The Company shall have no right of setoff or counterclaim in
respect of any claim, debt or obligation against any payment provided for in
this Agreement.
15
<PAGE>
20. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its subsidiaries or
successors and for which the Executive may qualify, nor shall anything herein
limit or reduce such rights as the Executive may have under any other
agreements with the Company or any of its subsidiaries or successors, except
to the extent payments are made pursuant to Section 5, they shall be in lieu
of any termination, separation, severance or similar payments pursuant to the
Executive's Employment Agreement, if any, and the Company's then existing
termination, separation, severance or similar plans or policies, if any.
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Company or any of its
subsidiaries shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.
21. NO GUARANTEED EMPLOYMENT
The Executive and the Company acknowledge that this Agreement shall
not confer upon the Executive any right to continued employment and shall not
interfere with the right of the Company to terminate the employment of the
Executive at any time.
22. INVALIDITY OF PROVISIONS
In the event that any provision of this Agreement is adjudicated to
be invalid or unenforceable under applicable law in any jurisdiction, the
validity or enforceability of the remaining provisions thereof shall be
unaffected as to such jurisdiction and such adjudication shall not affect the
validity or enforceability of such provision in any other jurisdiction. To
the extent that any provision of this Agreement, including, without
limitation, Section 10 hereof, is adjudicated to be invalid or unenforceable
because it is overbroad, that provision shall not be void but rather shall be
limited to the extent required by applicable law and enforced as so limited.
The parties expressly acknowledge and agree that this Section 22 is
reasonable in view of the parties' respective interests.
23. NON-WAIVER OF RIGHTS
The failure by the Company or the Executive to enforce at any time
any of the provisions of this Agreement or to require at any time performance
by the other party of any of the provisions hereof shall in no way be
construed to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of the Company or the
Executive thereafter to enforce each and every provision in accordance with
the terms of this Agreement.
24. EMPLOYMENT AGREEMENT.
Simultaneously with the execution and delivery to this Agreement,
the Company and the Executive have executed and delivered an Employment
Agreement. If circumstances arise which cause both the Employment Agreement
and this Agreement to apply to the Company and the Executive, then, to the
extent of any inconsistency between the provisions of this Agreement and the
Employment Agreement, the terms of this Agreement alone shall apply.
However, if this
16
<PAGE>
Agreement does not apply, then the provisions of the Employment Agreement
shall control and be unaffected by this Agreement.
25. UNFUNDED PLAN.
The Company's obligations under this Agreement shall be entirely
unfunded until payments are made hereunder from the general assets of the
Company, and no provision shall be made to segregate assets of the Company
for payments to be made under this Agreement. The Executive shall have no
interest in any particular assets of the Company but rather shall have only
the rights of a general unsecured creditor of the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING
THAT THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND
STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE
SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT
TO ASK ANY QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED
SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE
EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Robert E. Livonius
------------------------------------
Robert E. Livonius
17
<PAGE>
Exhibit 10.24
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, dated as of the 18th day of November, 1998, is by
and between INTERIM SERVICES INC., a Delaware corporation (hereinafter referred
to as the "Company"), and ROY G. KRAUSE (hereinafter the "Executive").
RECITALS
A. The Board of Directors of the Company (the "Board")
considers it essential to the best interests of the Company and its
stockholders that its key management personnel be encouraged to remain with
the Company and its subsidiaries and to continue to devote full attention to
the Company's business in the event that any third person expresses its
intention to complete a possible business combination with the Company, or in
taking any other action which could result in a "Change in Control" (as
defined herein) of the Company. In this connection, the Board recognizes that
the possibility of a Change in Control and the uncertainty and questions
which it may raise among management may result in the departure or
distraction of key management personnel to the detriment of the Company and
its stockholders. The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
key members of the Company's management to their assigned duties without
distraction in the face of the potentially disturbing circumstances arising
from the possibility of a Change in Control of the Company.
B. The Executive currently serves as the Company's
Executive Vice President and Chief Financial Officer, and his services and
knowledge are valuable to the Company in connection with the management of
its business.
C. The Board believes the Executive has made and is
expected to continue to make valuable contributions to the productivity and
profitability of the Company and its subsidiaries. Should the Company
receive a proposal from a third person concerning a possible business
combination or any other action which could result in a Change in Control, in
addition to the Executive's regular duties, the Executive may be called upon
to assist in the assessment of such proposal, advise management and the Board
as to whether such proposal would be in the best interests of the Company and
its stockholders, and to take such other actions as the Board might determine
to be necessary or appropriate.
D. Should the Company receive any proposal from a third
person concerning a possible business combination or any other action which
could result in a change in control of the Company, the Board believes it
imperative that the Company and the Board be able to rely upon the Executive
to continue in his position, and that the Company and the Board be able to
receive and rely upon his advice, if so requested, as to the best interests
of the Company and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by such a
proposal, and to encourage Executive's full attention and dedication to the
Company.
1
<PAGE>
TERMS AND CONDITIONS
NOW, THEREFORE, to assure the Company and its subsidiaries that
it will have the continued, undivided attention, dedication and services of the
Executive and the availability of the Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a Change in Control of
the Company, and to induce the Executive to remain in the employ of the Company
and its subsidiaries, and for other good and valuable consideration, the
adequacy and sufficiency of which are hereby acknowledged, the Company and the
Executive agree as follows.
1. CHANGE IN CONTROL
(a) The definition of a "Change in Control" of the Company
for purposes of this Agreement shall be as determined, prospectively,
from time to time, by the Board, pursuant to the affirmative vote of at
least two-thirds of those members of the Board (i) who have served on
the Board for at least two years prior to such determination, and
(ii) whose election, or nomination for election, during such two-year
period was approved by a vote of at least two-thirds of the directors
then in office who were directors at the beginning of such two-year
period. Written notice of any such determination, or modification of a
previous determination, shall be provided promptly to the Executive.
(b) In the event that at any time during the term of this
Agreement the Board has not established a definition of "Change of
Control" pursuant to Section 1(a), for purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have occurred upon
(i) the acquisition at any time by a "person" or "group" (as that term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (excluding, for this purpose, the
Company or any of its subsidiaries, any employee benefit plan of the
Company or any of its subsidiaries, an underwriter temporarily holding
securities pursuant to such securities, or a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company) of
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly, of securities representing 25% or more of the
combined voting power in the election of directors of the
then-outstanding securities of the Company or any successor of the
Company; (ii) the termination of service as directors, for any reason
other than death, disability or retirement from the Board, during any
period of two consecutive years or less, of individuals who at the
beginning of such period constituted a majority of the Board, unless the
election of or nomination for election of each new director during such
period was approved by a vote of at least two-thirds of the directors
still in office who were directors at the beginning of the period;
(iii) approval by the stockholders of the Company of liquidation of the
Company; (iv) approval by the stockholders of the Company and
consummation of any sale or disposition, or series of related sales or
dispositions, of 50% or more of the assets or earning power of the
Company; or (v) approval by the stockholders of the Company and
consummation of any merger or consolidation or statutory share exchange
to which the Company is a party as a result of which the persons who
were stockholders of the Company immediately prior to the effective date
of the merger or consolidation or statutory share exchange shall have
beneficial ownership of less than 50% of the combined voting power in
the election of
2
<PAGE>
directors of the surviving corporation following the effective date of
such merger or consolidation or statutory share exchange.
(c) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction constitutes a
"Management Approved Transaction." For purposes of this Agreement, a
"Management Approved Transaction" shall be any transaction, which would
otherwise result in a Change in Control for purposes of this Agreement
in which the acquiring "person", "group" or other entity is either
beneficially owned by, or comprised of, in whole or in part, three or
more members of the Company's executive management, as such was
constituted twelve months prior to such transaction, or is majority
owned by, or comprised of, any employee benefit plan of the Company.
(d) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction is approved
by the affirmative vote of at least two-thirds of those members of the
Board (i) who have served on the Board for at least two years prior to
such approval, and (ii) whose election, or nomination for election,
during such two-year period was approved by a vote of at least
two-thirds of the directors then in office who were directors at the
beginning of such two-year period.
2. ADJUSTMENT OF BENEFITS UPON CHANGE IN CONTROL
(a) The Company agrees that the Compensation Committee of the
Board, or such other committee succeeding to such committee's
responsibilities with respect to executive compensation (collectively,
the "Compensation Committee") may make such equitable adjustments to any
performance targets contained in any awards under the Company's current
incentive compensation plans, or any additional or successor plan in
which the Executive is a participant (collectively, the "Incentive
Plans"), as the Compensation Committee determines may be appropriate to
eliminate any negative effects from any transactions relating to a
Change in Control (such as costs or expenses associated with the
transaction or any related transaction, including, without limitation,
any reorganizations, divestitures, recapitalizations or borrowings, or
changes in targets or measures to reflect the disruption of the
business, etc.), in order to preserve reward opportunities and
performance objectives.
(b) In the case of a Change in Control, all restrictions and
conditions applicable to any awards of restricted stock or the vesting
of stock options or other awards granted to the Executive under the
Company's 1998 Incentive Stock Plan, 1997 Long-Term Executive
Compensation and Outside Director Stock Option Plan, any similar or
successor plan, or otherwise shall be deemed to have been satisfied as
of the date the Change in Control occurs, and this Agreement shall be
deemed to amend any agreements evidencing such awards to reflect this
provision.
3
<PAGE>
3. TERMINATION FOLLOWING CHANGE IN CONTROL
(a) The Executive's employment may be terminated for any
reason by the Company within two years following a Change in Control of
the Company. If the Executive's employment is terminated for any reason
other than the reasons set forth below, then the Executive shall be
entitled to the benefits set forth in this Agreement in lieu of any
termination, separation, severance or similar benefits under the
Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if any.
If the Executive's employment is terminated for any of the reasons set
forth below, then the Executive shall not be entitled to any
termination, separation, severance or similar benefits under this
Agreement, and the Executive shall be entitled to benefits under the
Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if any,
only in accordance with the terms of such Employment Agreement, or such
plans or policies.
(i) termination by reason of the Executive's death,
PROVIDED the Executive has not previously given a "Notice of
Termination" pursuant to Section 4;
(ii) termination by reason of the Executive's
"disability," PROVIDED the Executive has not previously given a "Notice
of Termination" pursuant to Section 4;
(iii) termination by reason of "retirement" at or after
age 65, PROVIDED the Executive has not previously given "Notice of
Termination" pursuant to Section 4; or
(iv) termination by the Company for "Cause."
For the purposes of this Agreement, "disability" shall be
defined as the Executive's inability by reason of illness or other
physical or mental disability to perform the principal duties required
by the position held by the Executive at the inception of such illness
or disability for any consecutive 180-day period. A determination of
disability shall be subject to the certification of a qualified medical
doctor agreed to by the Company and the Executive or, in the Executive's
incapacity to designate a doctor, the Executive's legal representative.
If the Company and the Executive cannot agree on the designation of a
doctor, each party shall nominate a qualified medical doctor and the two
doctors shall select a third doctor and the third doctor shall make the
determination as to disability.
For purposes of this Agreement, "retirement" shall mean
the Company's termination of the Executive's employment at or after the
date on which the Executive attains age 65.
For purposes of this Agreement, "Cause" shall mean one or more of
the following:
(I) the material violation of any of the terms and conditions
of this Agreement or any written agreements the Executive may from time
to time have with the Company (after 30 days following written notice
from the Board specifying such material violation and Executive's
failure to cure or remedy such material violation within such 30-day
period);
4
<PAGE>
(II) inattention to or failure to perform Executive's assigned
duties and responsibilities competently for any reason other than due to
Disability (after 30 days following written notice from the Board
specifying such inattention or failure, and Executive's failure to cure
or remedy such inattention or failure within such 30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without
limitation, engaging in immoral acts which become public information or
repeatedly conveying to one person, or conveying to an assembled public
group, negative information concerning the Company or its affiliates;
(IV) commission of an act of dishonesty, including, but not
limited to, misappropriation of funds or any property of the Company;
(V) commission by the Executive of an act which constitutes a
misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the written Policies of
the Company which are not inconsistent with this Agreement or applicable
law (after 30 days following written notice from the Board specifying
such failure, and the Executive's failure to cure or remedy such
inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following
written notice from the Board specifying such refusal or
insubordination, and the Executive's failure to cure or remedy such
refusal or insubordination within such 30-day period); or
(VIII) unsatisfactory performance of duties by the Executive as
a result of alcohol or drug use by the Executive.
(b) The Executive may terminate his employment with the
Company following a Change in Control of the Company (i) for any reason
by giving Notice of Termination during either of the "Termination
Periods" or (ii) for "Good Reason" by giving Notice of Termination at
any time within two years after the Change in Control. Any failure by
the Executive to give such immediate notice of termination for Good
Reason shall not be deemed to constitute a waiver or otherwise to affect
adversely the rights of the Executive hereunder, PROVIDED the Executive
gives notice to receive such benefits prior to the expiration of such
two year period. If the Executive terminates his employment as provided
in this Section 3(b), then the Executive shall be entitled to the
benefits set forth in this Agreement in lieu of any termination,
separation, severance or similar benefits under the Executive's
Employment Agreement, if any, or under the Company's termination,
separation, severance or similar plans or policies, if any.
For purposes of this Agreement, there shall be two "Termination
Periods" during which the Executive may give Notice of Termination and
receive the benefits set forth in this Agreement:
5
<PAGE>
(i) the first of which shall be the sixty (60) day
period commencing on the date of the Change of Control, and;
(ii) the second of which shall be the thirty (30) day
period commencing on the first anniversary of the date of the Change of
Control
For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any one or more of the following events:
(I) The assignment to the Executive of any duties
inconsistent in any material adverse respect with his position,
authority or responsibilities with the Company and its subsidiaries
immediately prior to the Change in Control, or any other material
adverse change in such position, including titles, authority, or
responsibilities, as compared with the Executive's position immediately
prior to the Change in Control;
(II) A reduction by the Company in the amount of the
Executive's base salary or annual or long term incentive compensation
paid or payable as compared to that which was paid or made available to
Executive immediately prior to the Change in Control; or the failure of
the Company to increase Executive's compensation each year by an amount
which is substantially the same, on a percentage basis, as the average
annual percentage increase in the base salaries of other executives of
comparable status with the Company;
(III) The failure by the Company to continue to provide
the Executive with substantially similar perquisites or benefits the
Executive in the aggregate enjoyed under the Company's benefit programs,
such as any of the Company's pension, savings, vacation, life insurance,
medical, health and accident, or disability plans in which he was
participating at the time of the Change in Control (or, alternatively,
if such plans are amended, modified or discontinued, substantially
similar equivalent benefits thereto, when considered in the aggregate),
or the taking of any action by the Company which would directly or
indirectly cause such benefits to be no longer substantially equivalent,
when considered in the aggregate, to the benefits in effect at the time
of the Change in Control;
(IV) The Company's requiring the Executive to be based
at any office or location more than 50 miles from that location at which
he performed his services immediately prior to the Change in Control,
except for a relocation consented to in writing by the Executive, or
travel reasonably required in the performance of the Executive's
responsibilities to the extent substantially consistent with the
Executive's business travel obligations prior to the Change in Control;
(V) Any failure of the Company to obtain the
assumption of the obligation to perform this Agreement by any successor
as contemplated in Section 11 herein; or
(VI) Any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its obligations hereunder, in either case, for a period of thirty
business days after receipt of written notice from the Executive and the
failure by the Company to cure such breach or failure during such thirty
business day period.
6
<PAGE>
4. NOTICE OF TERMINATION
Any termination of the Executive's employment following a
Change in Control, other than a termination as contemplated by Sections
3(a)(i) or 3(a)(iii) shall be communicated by written "Notice of Termination"
by the party affecting the termination to the other party hereto. Any
"Notice of Termination" shall set forth (a) the effective date of
termination, which shall not be less than 15 or more than 30 days after the
date the Notice of Termination is delivered (the "Termination Date"); (b) the
specific provision in this Agreement relied upon; and (c) in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination and the entitlement, or lack of entitlement, to the benefits set
forth in this Agreement. Notwithstanding the foregoing, if within fifteen
(15) days after any Notice of Termination is given, the party receiving such
Notice of Termination notifies the other party that a good faith dispute
exists concerning the termination, the actual Termination Date shall be the
date on which the dispute is finally determined in accordance with the
provisions of Section 18 hereof. In the case of any good faith dispute as to
the Executive's entitlement to benefits under this Agreement resulting from
any termination by the Company for which the Company does not deliver a
Notice of Termination, the actual Termination Date shall be the date on which
the dispute is finally determined in accordance with the provisions of
Section 18 hereof. Notwithstanding the pendency of any such dispute referred
to in the two preceding sentences, the Company shall continue to pay the
Executive his full compensation then in effect and continue the Executive as
a participant in all compensation, benefits and perquisites in which he was
then participating, until the dispute is finally resolved, PROVIDED the
Executive is willing to continue to provide full time services to the Company
and its subsidiaries in substantially the same position, if so requested by
the Company. Amounts paid under this Section 4 shall be in addition to all
other amounts due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement. If a final determination
is made, pursuant to Section 18, that Good Reason did not exist in the case
of a Notice of Termination by the Executive, the Executive shall have the
sole right to nullify and void his Notice of Termination by delivering
written notice of same to the Company within three (3) business days of the
date of such final determination. If the parties do not dispute the
Executive's entitlement to benefits hereunder, the Termination Date shall be
as set forth in the Notice of Termination.
5. TERMINATION BENEFITS
(a) SEVERANCE PAYMENT. Subject to the conditions set forth
in this Agreement, on the Termination Date the Company shall pay the
Executive (reduced by any applicable payroll or other taxes required to
be withheld) a lump sum severance payment, in cash, equal to the product
of two (2) times the sum of the Executive's annual salary for the
current year plus his target bonus for the current year (provided that
if the Notice of Termination is given prior to the determination of the
Executive's salary or target bonus for the year in which the Termination
Date occurs, the amounts shall be the annual salary for the prior year
and the greater of the target bonus for the prior year or the actual
bonus earned by the Executive for the prior year). The current year
shall be (A) for the purposes of determining annual salary, the year
then generally used by the Company for setting salaries for senior-level
executives (currently April 1 through the following March 31), and (B)
for
7
<PAGE>
purposes of determining target bonus, the fiscal year then generally
used by the Company for setting target bonuses for senior-level
executives, in which the Termination Date occurs, and the prior year
shall be the twelve-month period immediately preceding the current year.
(b) PAYMENT OF DEFERRED COMPENSATION. Any compensation that
has been earned by the Executive but is unpaid as of the Termination
Date, including any compensation that has been earned but deferred
pursuant to the Company's Deferred Compensation Plan or otherwise, shall
be paid in full to the Executive on the Termination Date.
6. OTHER BENEFITS
Subject to the conditions set forth in this Agreement hereof, the
following benefits (subject to any applicable payroll or other taxes required to
be withheld) shall be paid or provided to the Executive:
(a) HEALTH/WELFARE BENEFITS
(i) During the twenty-four (24) months following the
Termination Date (the "Continuation Period"), the Company shall continue
to keep in full force and effect all programs of medical, dental,
vision, accident, disability, life insurance, including optional term
life insurance, and other similar health or welfare programs with
respect to the Executive and his dependents with the same level of
coverage, upon the same terms and otherwise to the same extent as such
programs shall have been in effect immediately prior to the Termination
Date (or, if more favorable to the Executive, immediately prior to the
Change in Control), and the Company and the Executive shall share the
costs of the continuation of such insurance coverage in the same
proportion as such costs were shared immediately prior to the
Termination Date (or, if more favorable to the Executive, immediately
prior to the Change in Control) or, if the terms of such programs do not
permit continued participation by the Executive (or if the Company
otherwise determines it advisable to amend, modify or discontinue such
programs for employees generally), the Company shall otherwise provide
benefits substantially similar to and no less favorable to the Executive
in terms of cost or benefits ("Equivalent Benefits") than he was
entitled to receive at the end of the period of coverage, for the
duration of the Continuation Period.
(ii) All benefits which the Company is required by this
Section 6(a) to provide, which will not be provided by the Company's
programs described herein, shall be provided through the purchase of
insurance unless the Executive is uninsurable. If the Executive is
uninsurable, the Company will provide the benefits out of its general
assets.
(iii) If the Executive obtains other employment during
the Continuation Period which provides health or welfare benefits of the
type described in Section 6(a)(i) hereof ("Other Coverage"), then
Executive shall notify the Company promptly of such other employment and
Other Coverage and the Company shall thereafter not provide the
Executive and his dependents the benefits described in Section 6(a)(i)
hereof to the extent that such benefits are provided under the Other
Coverage. Under such circumstances, the
8
<PAGE>
Executive shall make all claims first under the Other Coverage and
then, only to the extent not paid or reimbursed by the Other Coverage,
under the plans and programs described in Section 6(a)(i) hereof.
(b) RETIREMENT BENEFITS
(i) For purposes of this Agreement, "Retirement" shall mean
the Company's termination of the Executive's employment within two years
following a Change in Control of the Company and at or after the date on
which the Executive attains age 65; provided, however, that any
termination for Cause or due to Death or Disability shall not constitute
Retirement.
(ii) Subject to Section 6(b)(ii), the Executive shall be
deemed to be completely vested under the Company's 401(k) Plan, Deferred
Compensation Plan or other similar or successor plans which are in
effect as of the date of the Change in Control (collectively, the
"Plans"), regardless of the Executive's actual vesting service credit
thereunder.
(iii) Any part of the foregoing retirement benefits which
are otherwise required to be paid by a tax-qualified Plan but which
cannot be paid through such Plan by reason of the laws and regulations
applicable to such Plan, shall be paid by one or more supplemental
non-qualified Plans or by the Company.
(iv) The payments calculated hereunder which are not
actually paid by a Plan shall be paid thirty (30) days following the
Date of Termination in a single lump sum cash payment (of equivalent
actuarial value to the payment calculated hereunder using the same
actuarial assumptions as are used in calculating benefits under the Plan
but using the discount rate that would be used by the Company on the Date
of Termination to determine the actuarial present value of projected
benefit obligations).
(c) EXECUTIVE OUTPLACEMENT COUNSELING. During the
Continuation Period, unless the Executive shall reach normal retirement
age during the Continuation Period, the Executive may request in writing
and the Company shall at its expense engage within a reasonable time
following such written request an outplacement counseling service to
assist the Executive in obtaining employment.
7. PAYMENT OF CERTAIN COSTS
Except as otherwise provided in Section 18, if a dispute arises
regarding a termination of the Executive or the interpretation or enforcement of
this Agreement, subsequent to a Change in Control, all of the reasonable legal
fees and expenses incurred by the Executive and all Arbitration Costs (as
hereafter defined) in contesting any such termination or obtaining or enforcing
all or part of any right or benefit provided for in this Agreement or in
otherwise pursuing all or part of his claim will be paid by the Company, unless
prohibited by law. The Company further agrees to pay pre-judgment interest on
any money judgment obtained by the Executive calculated at the prime interest
rate reported in THE WALL STREET JOURNAL in effect from time to time from the
date that payment to him should have been made under this Agreement.
9
<PAGE>
8. EXCISE TAX PAYMENTS
(a) Notwithstanding anything contained in this Agreement to
the contrary, in the event that any payment (within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended or
replaced (the "Code")), or distribution to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise in connection with,
or arising out of, his employment with the Company (a "Payment" or
"Payments"), would be subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, interest and penalties
collectively referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Executive of all such taxes
(including any interest or penalties imposed with respect to such
taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments; PROVIDED, that the Executive shall not be
entitled to receive any additional payment relating to any interest or
penalties attributable to any action or omission by the Executive in bad
faith.
(b) An initial determination shall be made by an accounting
firm mutually agreeable to the Company and the Executive and, if not
agreed to within three days after the Date of Termination, a national
independent accounting firm selected by the Executive (the "Accounting
Firm"), as to whether a Gross-Up Payment is required pursuant to this
Section 8 and the amount of such Gross-Up Payment. To permit the
Accounting Firm to make the initial determination, the Company shall
furnish the Accounting Firm with all information reasonably required for
such firm to complete such determination as soon as practicable after
the Date of Termination, but in no event more than fifteen (15) days
thereafter. All fees, costs and expenses (including, but not limited
to, the cost of retaining experts) of the Accounting Firm shall be borne
by the Company and the Company shall pay such fees, costs and expenses
as they become due. The Accounting Firm shall provide detailed
supporting calculations, reasonably acceptable both to the Company and
the Executive within thirty (30) days of the Date of Termination, if
applicable, or such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax). The Gross-Up Payment, if
any, as determined pursuant to this Section 8(b) shall be paid by the
Company to the Executive within five (5) business days of the receipt of
the Accounting Firm's determination. If the Accounting Firm determines
that no Excise Tax is payable by the Executive with respect to a Payment
or Payments, it shall furnish the Executive with an opinion reasonably
satisfactory to the Executive that no Excise Tax will be imposed with
respect to any such Payment or Payments. Any such initial determination
by the Accounting Firm of the Gross-Up Payment shall be binding upon the
Company and the Executive subject to the application of Section 8(c).
(c) As a result of the uncertainty in the application of
Sections 4999 and 280G of the Code, it is possible that a Gross-Up
Payment (or a portion thereof) will be paid which should not have been
paid (an "Overpayment") or a Gross-Up Payment (or a portion thereof)
which should have been paid will not have been paid (an "Underpayment").
An
10
<PAGE>
Underpayment shall be deemed to have occurred upon a "Final
Determination" (as hereinafter defined) that the tax liability of the
Executive (whether in respect of the then current taxable year of the
Executive or in respect of any prior taxable year of the Executive) will
be increased by reason of the imposition of the Excise Tax on a Payment
or Payments with respect to which the Company has failed to make a
sufficient Gross-Up Payment. An Overpayment shall be deemed to have
occurred upon a "Final Determination" (as hereinafter defined) that the
Excise Tax shall not be imposed (or shall be reduced) upon a Payment or
Payments with respect to which the Executive had previously received a
Gross-Up Payment. A Final Determination shall be deemed to have
occurred when (i) in the case of an Overpayment, the Executive has
received from the applicable governmental taxing authority a refund of
taxes or other reduction in his tax liability imposed as a result of a
Payment or, in the case of an Underpayment, the Executive receives
notice from a competent governmental authority that his tax liability
imposed as a result of a Payment will be increased, and (ii) in the case
of an Overpayment or an Underpayment, upon either (x) the date a
determination is made by, or an agreement is entered into with, the
applicable governmental taxing authority which finally and conclusively
binds the Executive and such taxing authority, or in the event that a
claim is brought before a court of competent jurisdiction, the date upon
which a final determination has been made by such court and either all
appeals have been taken and finally resolved or the time for all appeals
has expired or (y) the statute of limitations with respect to the
Executive's applicable tax return has expired. If an Underpayment
occurs, the Executive shall promptly notify the Company and the Company
shall promptly pay to the Executive an additional Gross-Up Payment equal
to the amount of the Underpayment plus any interest and penalties
imposed on the Underpayment (other than interest and penalties
attributable to any action or omission by the Executive in bad faith).
If an Overpayment occurs, the amount of the Overpayment shall be treated
as a loan by the Company to the Executive and the Executive shall,
within ten (10) business days of the occurrence of such Overpayment, pay
the Company the amount of the Overpayment, with interest computed in the
same manner as for an Underpayment.
(d) Notwithstanding anything contained in this Agreement to
the contrary, in the event it is determined that an Excise Tax will be
imposed on any Payment or Payments, the Company shall pay to the
applicable governmental taxing authorities as Excise Tax withholding,
the amount of the Excise Tax that the Company has actually withheld from
the Payment or Payments.
9. MITIGATION
The Executive is not required to seek other employment or
otherwise mitigate the amount of any payments to be made by the Company pursuant
to this Agreement, and employment by the Executive will not reduce or otherwise
affect any amounts or benefits due the Executive pursuant to this Agreement,
except as otherwise provided in Section 6(a)(iii).
10. CONTINUING OBLIGATIONS REGARDING CONFIDENTIAL INFORMATION
(a) ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive hereby
recognizes and acknowledges the following:
11
<PAGE>
(i) In connection with the Business, the Company has
expended a great deal of time, money and effort to develop and maintain
the secrecy and confidentiality of substantial proprietary trade secret
information and other confidential business information which, if
misused or disclosed, could be very harmful to the Company's business.
(ii) The Executive desires to become entitled to
receive the benefits contemplated by this Agreement but which the
Company would not make available to the Executive but for the
Executive's signing and agreeing to abide by the terms of this
Section 10.
(iii) The Executive's position with the Company provides
the Executive with access to certain of the Company's confidential and
proprietary trade secret information and other confidential business
information.
(iv) The Company compensates its employees to, among
other things, develop and preserve business information for the
Company's ownership and use.
(v) If the Executive were to leave the Company, the
Company in all fairness would need certain protection in order to ensure
that the Executive does not appropriate and misuse any confidential
information entrusted to the Executive during the course of the
Executive's employment with the Company.
(b) CONFIDENTIAL INFORMATION
(i) The Executive agrees to keep secret and
confidential, and not to use or disclose to any third parties, except as
directly required for the Executive to perform the Executive's
employment responsibilities for the Company, or except as required by
law, any of the Company's confidential and proprietary trade secret
information or other confidential business information concerning the
Company's business acquired by the Executive during the course of, or in
connection with, the Executive's employment with the Company (and which
was not known by the Executive prior to the Executive's being hired by
the Company). Confidential information means information which would
constitute material, nonpublic information under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder, regardless of whether the Executive's use or disclosure of
such information is in connection with or related to a securities
transaction.
(ii) The Executive acknowledges that any and all notes,
records, reports, written information or documents of any kind, computer
files or diskettes and other documents obtained by or provided to the
Executive, or otherwise made, produced or compiled during the course of
the Executive's employment with the Company, regardless of the type of
medium in which it is preserved, are the sole and exclusive property of
the Company and shall be surrendered to the Company upon the Executive's
termination of employment and on demand at any time by the Company.
(c) ACKNOWLEDGMENT REGARDING RESTRICTIONS. The Executive
recognizes and agrees that the provisions of this Section 10 are
reasonable and enforceable because, among other things, (i) the
Executive is receiving compensation under this Agreement and (ii) this
Section 10 therefore does not impose any undue hardship on the
Executive. The Executive
12
<PAGE>
further recognizes and agrees that the provisions of this Section 10
are reasonable and enforceable in view of the Company's legitimate
interests in protecting its confidential information.
(d) BREACH. In the event of a breach of Section 10(b), the
Company's sole remedy shall be the discontinuation of the payment,
allocation, accrual or provision of any amounts or benefits as provided
in Sections 5 or 6. The Executive recognizes and agrees, however, that
it is the intent of the parties that neither this Agreement nor any of
its provisions shall be construed to adversely affect any rights or
remedies that Company would have had, including, without limitation, the
amount of any damages for which it could have sought recovery, had this
Agreement not been entered into. Accordingly, the parties hereby agree
that nothing stated in this Section 10 shall limit or otherwise affect
the Company's right to seek legal or equitable remedies it may otherwise
have, or the amount of damages for which it may seek recovery, in
connection with matters covered by this Section 10 but which are not
based on breach or violation of this Section 10 (including, without
limitation, claims based on the breach of fiduciary or other duties of
the Executive or any obligations of the Executive arising under any
other contracts, agreements or understandings). Without limiting the
generality of the foregoing, nothing in this Section 10 or any other
provision of this Agreement shall limit or otherwise affect the
Company's right to seek legal or equitable remedies it may otherwise
have, or the amount of damages for which it may seek recovery, resulting
from or arising out of statutory or common law or any Company policies
relating to fiduciary duties, confidential information or trade secrets.
Further, the Executive acknowledges and agrees that the fact that
Section 10(c) is limited to the Continuation Period, and that the sole
remedy of the Company hereunder is the discontinuation of benefits,
shall not reduce or otherwise alter any other contractual or other legal
obligations of the Executive during any period or circumstance, and
shall not be construed as establishing a maximum limit on damages for
which the Company may seek recovery.
11. BINDING AGREEMENT; SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns. The Company
shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. For purposes of this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, beneficiaries, devises and legatees. If the Executive
should die while any amounts are payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee,
beneficiary or other designee or, if there be no such designee, to the
Executive's estate.
13
<PAGE>
12. NOTICES
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii) on
the date of transmission, if delivered by confirmed facsimile, (iii) on the
first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (iv) on the third business day following the date
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Roy G. Krause
7601 Marblehead Lane
Parkland, FL 33067
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. GOVERNING LAW
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Florida, without
regard to principles of conflicts of laws.
14. MISCELLANEOUS
No provisions of this Agreement may be amended, modified, waived
or discharged unless such amendment, waiver, modification or discharge is agreed
to in writing signed by the Executive and the Company. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. Section headings contained herein are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
15. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which will constitute one
and the same instrument.
14
<PAGE>
16. NON-ASSIGNABILITY
This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Section 11. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or trust or by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this paragraph the Company shall
have no liability to pay any amount so attempted to be assigned or transferred.
17. TERM OF AGREEMENT
This Agreement shall commence on the date hereof and shall
continue in effect through May 7, 2001; PROVIDED, however, if a Change in
Control of the Company shall have occurred during the original or any extended
term of this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such Change in Control
occurred; and, PROVIDED FURTHER, that if the Company shall become obligated to
make any payments or provide any benefits pursuant to Section 5 or 6 hereof,
this Agreement shall continue for the period necessary to make such payments or
provide such benefits.
18. RESOLUTION OF DISPUTES
(a) The parties hereby agree to submit any claim, demand,
dispute, charge or cause of action (in any such case, a "Claim") arising
out of, in connection with, or relating to this Stock Option Agreement
to binding arbitration in conformance with the J*A*M*S/ENDISPUTE
Streamlined Arbitration Rules and Procedures or the J*A*M*S/ ENDISPUTE
Comprehensive Arbitration Rules and Procedures, as applicable, but
expressly excluding Rule 28 of the J*A*M*S/ENDISPUTE Streamlined Rules
and Rule 32 of the J*A*M*S/ENDISPUTE Comprehensive Rules, as the case
may be. All arbitration procedures shall be held in Fort Lauderdale,
Florida and shall be subject to the choice of law provisions set forth
in Section 13 of this Agreement.
(b) In the event of any dispute arising out of or relating to
this Agreement for which any party is seeking injunctive relief,
specific performance or other equitable relief, such matter may be
resolved by litigation. Accordingly, the parties shall submit such
matter to the exclusive jurisdiction of the United States District Court
for the Southern District of Florida or, if jurisdiction is not
available therein, any other court located in Broward County, Florida,
and hereby waive any and all objections to such jurisdiction or venue
that they may have. Each party agrees that process may be served upon
such party in any manner authorized under the laws of the United States
or Florida, and waives any objections that such party may otherwise have
to such process.
19. NO SETOFF
The Company shall have no right of setoff or counterclaim in
respect of any claim, debt or obligation against any payment provided for in
this Agreement.
15
<PAGE>
20. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its subsidiaries or successors
and for which the Executive may qualify, nor shall anything herein limit or
reduce such rights as the Executive may have under any other agreements with the
Company or any of its subsidiaries or successors, except to the extent payments
are made pursuant to Section 5, they shall be in lieu of any termination,
separation, severance or similar payments pursuant to the Executive's Employment
Agreement, if any, and the Company's then existing termination, separation,
severance or similar plans or policies, if any. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company or any of its subsidiaries shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement.
21. NO GUARANTEED EMPLOYMENT
The Executive and the Company acknowledge that this Agreement
shall not confer upon the Executive any right to continued employment and shall
not interfere with the right of the Company to terminate the employment of the
Executive at any time.
22. INVALIDITY OF PROVISIONS
In the event that any provision of this Agreement is adjudicated
to be invalid or unenforceable under applicable law in any jurisdiction, the
validity or enforceability of the remaining provisions thereof shall be
unaffected as to such jurisdiction and such adjudication shall not affect the
validity or enforceability of such provision in any other jurisdiction. To the
extent that any provision of this Agreement, including, without limitation,
Section 10 hereof, is adjudicated to be invalid or unenforceable because it is
overbroad, that provision shall not be void but rather shall be limited to the
extent required by applicable law and enforced as so limited. The parties
expressly acknowledge and agree that this Section 22 is reasonable in view of
the parties' respective interests.
23. NON-WAIVER OF RIGHTS
The failure by the Company or the Executive to enforce at any
time any of the provisions of this Agreement or to require at any time
performance by the other party of any of the provisions hereof shall in no way
be construed to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of the Company or the
Executive thereafter to enforce each and every provision in accordance with the
terms of this Agreement.
24. EMPLOYMENT AGREEMENT.
Simultaneously with the execution and delivery to this Agreement,
the Company and the Executive have executed and delivered an Employment
Agreement. If circumstances arise which cause both the Employment Agreement and
this Agreement to apply to the Company and the Executive, then, to the extent of
any inconsistency between the provisions of this Agreement and the Employment
Agreement, the terms of this Agreement alone shall apply. However, if this
16
<PAGE>
Agreement does not apply, then the provisions of the Employment Agreement shall
control and be unaffected by this Agreement.
25. UNFUNDED PLAN.
The Company's obligations under this Agreement shall be entirely
unfunded until payments are made hereunder from the general assets of the
Company, and no provision shall be made to segregate assets of the Company for
payments to be made under this Agreement. The Executive shall have no interest
in any particular assets of the Company but rather shall have only the rights of
a general unsecured creditor of the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING THAT
THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY
BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT;
(C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT TO ASK ANY
QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED SATISFACTORY
ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE EXECUTIVE'S RIGHTS AND
OBLIGATIONS UNDER THE AGREEMENT.
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
------------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Roy G. Krause
------------------------------------------
Roy G. Krause
17
<PAGE>
Exhibit 10.25
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, dated as of the 18th day of November, 1998, is
by and between INTERIM SERVICES INC., a Delaware corporation (hereinafter
referred to as the "Company"), and GARY PECK (hereinafter the "Executive").
RECITALS
A. The Board of Directors of the Company (the "Board")
considers it essential to the best interests of the Company and its
stockholders that its key management personnel be encouraged to remain with
the Company and its subsidiaries and to continue to devote full attention to
the Company's business in the event that any third person expresses its
intention to complete a possible business combination with the Company, or in
taking any other action which could result in a "Change in Control" (as
defined herein) of the Company. In this connection, the Board recognizes that
the possibility of a Change in Control and the uncertainty and questions
which it may raise among management may result in the departure or
distraction of key management personnel to the detriment of the Company and
its stockholders. The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
key members of the Company's management to their assigned duties without
distraction in the face of the potentially disturbing circumstances arising
from the possibility of a Change in Control of the Company.
B. The Executive currently serves as the Company's President,
Commercial Staffing Group, and his services and knowledge are valuable to the
Company in connection with the management of its business.
C. The Board believes the Executive has made and is expected
to continue to make valuable contributions to the productivity and
profitability of the Company and its subsidiaries. Should the Company
receive a proposal from a third person concerning a possible business
combination or any other action which could result in a Change in Control, in
addition to the Executive's regular duties, the Executive may be called upon
to assist in the assessment of such proposal, advise management and the Board
as to whether such proposal would be in the best interests of the Company and
its stockholders, and to take such other actions as the Board might determine
to be necessary or appropriate.
D. Should the Company receive any proposal from a third
person concerning a possible business combination or any other action which
could result in a change in control of the Company, the Board believes it
imperative that the Company and the Board be able to rely upon the Executive
to continue in his position, and that the Company and the Board be able to
receive and rely upon his advice, if so requested, as to the best interests
of the Company and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by such a
proposal, and to encourage Executive's full attention and dedication to the
Company.
1
<PAGE>
TERMS AND CONDITIONS
NOW, THEREFORE, to assure the Company and its subsidiaries
that it will have the continued, undivided attention, dedication and services
of the Executive and the availability of the Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a Change in Control
of the Company, and to induce the Executive to remain in the employ of the
Company and its subsidiaries, and for other good and valuable consideration,
the adequacy and sufficiency of which are hereby acknowledged, the Company
and the Executive agree as follows.
1. CHANGE IN CONTROL
(a) The definition of a "Change in Control" of the Company
for purposes of this Agreement shall be as determined, prospectively,
from time to time, by the Board, pursuant to the affirmative vote of at
least two-thirds of those members of the Board (i) who have served on
the Board for at least two years prior to such determination, and
(ii) whose election, or nomination for election, during such two-year
period was approved by a vote of at least two-thirds of the directors
then in office who were directors at the beginning of such two-year
period. Written notice of any such determination, or modification of a
previous determination, shall be provided promptly to the Executive.
(b) In the event that at any time during the term of this
Agreement the Board has not established a definition of "Change of
Control" pursuant to Section 1(a), for purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have occurred upon
(i) the acquisition at any time by a "person" or "group" (as that term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (excluding, for this purpose, the
Company or any of its subsidiaries, any employee benefit plan of the
Company or any of its subsidiaries, an underwriter temporarily holding
securities pursuant to such securities, or a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company) of
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly, of securities representing 25% or more of the
combined voting power in the election of directors of the
then-outstanding securities of the Company or any successor of the
Company; (ii) the termination of service as directors, for any reason
other than death, disability or retirement from the Board, during any
period of two consecutive years or less, of individuals who at the
beginning of such period constituted a majority of the Board, unless the
election of or nomination for election of each new director during such
period was approved by a vote of at least two-thirds of the directors
still in office who were directors at the beginning of the period;
(iii) approval by the stockholders of the Company of liquidation of the
Company; (iv) approval by the stockholders of the Company and
consummation of any sale or disposition, or series of related sales or
dispositions, of 50% or more of the assets or earning power of the
Company; or (v) approval by the stockholders of the Company and
consummation of any merger or consolidation or statutory share exchange
to which the Company is a party as a result of which the persons who
were stockholders of the Company immediately prior to the effective date
of the merger or consolidation or statutory share exchange shall have
beneficial ownership of less than 50% of the combined voting power in
the election of
2
<PAGE>
directors of the surviving corporation following the effective date of
such merger or consolidation or statutory share exchange.
(c) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction constitutes a
"Management Approved Transaction." For purposes of this Agreement, a
"Management Approved Transaction" shall be any transaction, which would
otherwise result in a Change in Control for purposes of this Agreement
in which the acquiring "person", "group" or other entity is either
beneficially owned by, or comprised of, in whole or in part, three or
more members of the Company's executive management, as such was
constituted twelve months prior to such transaction, or is majority
owned by, or comprised of, any employee benefit plan of the Company.
(d) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction is approved
by the affirmative vote of at least two-thirds of those members of the
Board (i) who have served on the Board for at least two years prior to
such approval, and (ii) whose election, or nomination for election,
during such two-year period was approved by a vote of at least
two-thirds of the directors then in office who were directors at the
beginning of such two-year period.
2. ADJUSTMENT OF BENEFITS UPON CHANGE IN CONTROL
(a) The Company agrees that the Compensation Committee of the
Board, or such other committee succeeding to such committee's
responsibilities with respect to executive compensation (collectively,
the "Compensation Committee") may make such equitable adjustments to any
performance targets contained in any awards under the Company's current
incentive compensation plans, or any additional or successor plan in
which the Executive is a participant (collectively, the "Incentive
Plans"), as the Compensation Committee determines may be appropriate to
eliminate any negative effects from any transactions relating to a
Change in Control (such as costs or expenses associated with the
transaction or any related transaction, including, without limitation,
any reorganizations, divestitures, recapitalizations or borrowings, or
changes in targets or measures to reflect the disruption of the
business, etc.), in order to preserve reward opportunities and
performance objectives.
(b) In the case of a Change in Control, all restrictions and
conditions applicable to any awards of restricted stock or the vesting
of stock options or other awards granted to the Executive under the
Company's 1998 Incentive Stock Plan, 1997 Long-Term Executive
Compensation and Outside Director Stock Option Plan, any similar or
successor plan, or otherwise shall be deemed to have been satisfied as
of the date the Change in Control occurs, and this Agreement shall be
deemed to amend any agreements evidencing such awards to reflect this
provision.
3
<PAGE>
3. TERMINATION FOLLOWING CHANGE IN CONTROL
(a) The Executive's employment may be terminated for any
reason by the Company within two years following a Change in Control of
the Company. If the Executive's employment is terminated for any reason
other than the reasons set forth below, then the Executive shall be
entitled to the benefits set forth in this Agreement in lieu of any
termination, separation, severance or similar benefits under the
Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if any.
If the Executive's employment is terminated for any of the reasons set
forth below, then the Executive shall not be entitled to any
termination, separation, severance or similar benefits under this
Agreement, and the Executive shall be entitled to benefits under the
Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if any,
only in accordance with the terms of such Employment Agreement, or such
plans or policies.
(i) termination by reason of the Executive's death,
PROVIDED the Executive has not previously given a "Notice of
Termination" pursuant to Section 4;
(ii) termination by reason of the Executive's
"disability," PROVIDED the Executive has not previously given a "Notice
of Termination" pursuant to Section 4;
(iii) termination by reason of "retirement" at or after
age 65, PROVIDED the Executive has not previously given "Notice of
Termination" pursuant to Section 4; or
(iv) termination by the Company for "Cause."
For the purposes of this Agreement, "disability" shall be
defined as the Executive's inability by reason of illness or other
physical or mental disability to perform the principal duties required
by the position held by the Executive at the inception of such illness
or disability for any consecutive 180-day period. A determination of
disability shall be subject to the certification of a qualified medical
doctor agreed to by the Company and the Executive or, in the Executive's
incapacity to designate a doctor, the Executive's legal representative.
If the Company and the Executive cannot agree on the designation of a
doctor, each party shall nominate a qualified medical doctor and the two
doctors shall select a third doctor and the third doctor shall make the
determination as to disability.
For purposes of this Agreement, "retirement" shall mean
the Company's termination of the Executive's employment at or after the
date on which the Executive attains age 65.
For purposes of this Agreement, "Cause" shall mean one
ore more of the following:
(I) the material violation of any of the terms and conditions
of this Agreement or any written agreements the Executive may from time
to time have with the Company (after 30 days following written notice
from the Board specifying such material violation and Executive's
failure to cure or remedy such material violation within such 30-day
period);
4
<PAGE>
(II) inattention to or failure to perform Executive's assigned
duties and responsibilities competently for any reason other than due to
Disability (after 30 days following written notice from the Board
specifying such inattention or failure, and Executive's failure to cure
or remedy such inattention or failure within such 30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without
limitation, engaging in immoral acts which become public information or
repeatedly conveying to one person, or conveying to an assembled public
group, negative information concerning the Company or its affiliates;
(IV) commission of an act of dishonesty, including, but not
limited to, misappropriation of funds or any property of the Company;
(V) commission by the Executive of an act which constitutes a
misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the written Policies of
the Company which are not inconsistent with this Agreement or applicable
law (after 30 days following written notice from the Board specifying
such failure, and the Executive's failure to cure or remedy such
inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following
written notice from the Board specifying such refusal or
insubordination, and the Executive's failure to cure or remedy such
refusal or insubordination within such 30-day period); or
(VIII) unsatisfactory performance of duties by the Executive as
a result of alcohol or drug use by the Executive.
(b) The Executive may terminate his employment with the
Company following a Change in Control of the Company (i) for any reason
by giving Notice of Termination during either of the "Termination
Periods" or (ii) for "Good Reason" by giving Notice of Termination at
any time within two years after the Change in Control. Any failure by
the Executive to give such immediate notice of termination for Good
Reason shall not be deemed to constitute a waiver or otherwise to affect
adversely the rights of the Executive hereunder, PROVIDED the Executive
gives notice to receive such benefits prior to the expiration of such
two year period. If the Executive terminates his employment as provided
in this Section 3(b), then the Executive shall be entitled to the
benefits set forth in this Agreement in lieu of any termination,
separation, severance or similar benefits under the Executive's
Employment Agreement, if any, or under the Company's termination,
separation, severance or similar plans or policies, if any.
For purposes of this Agreement, there shall be two "Termination
Periods" during which the Executive may give Notice of Termination and
receive the benefits set forth in this Agreement:
5
<PAGE>
(i) the first of which shall be the sixty (60) day
period commencing on the date of the Change of Control, and;
(ii) the second of which shall be the thirty (30) day
period commencing on the first anniversary of the date of the Change of
Control
For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any one or more of the following events:
(I) The assignment to the Executive of any duties
inconsistent in any material adverse respect with his position,
authority or responsibilities with the Company and its subsidiaries
immediately prior to the Change in Control, or any other material
adverse change in such position, including titles, authority, or
responsibilities, as compared with the Executive's position immediately
prior to the Change in Control;
(II) A reduction by the Company in the amount of the
Executive's base salary or annual or long term incentive compensation
paid or payable as compared to that which was paid or made available to
Executive immediately prior to the Change in Control; or the failure of
the Company to increase Executive's compensation each year by an amount
which is substantially the same, on a percentage basis, as the average
annual percentage increase in the base salaries of other executives of
comparable status with the Company;
(III) The failure by the Company to continue to provide
the Executive with substantially similar perquisites or benefits the
Executive in the aggregate enjoyed under the Company's benefit programs,
such as any of the Company's pension, savings, vacation, life insurance,
medical, health and accident, or disability plans in which he was
participating at the time of the Change in Control (or, alternatively,
if such plans are amended, modified or discontinued, substantially
similar equivalent benefits thereto, when considered in the aggregate),
or the taking of any action by the Company which would directly or
indirectly cause such benefits to be no longer substantially equivalent,
when considered in the aggregate, to the benefits in effect at the time
of the Change in Control;
(IV) The Company's requiring the Executive to be based
at any office or location more than 50 miles from that location at which
he performed his services immediately prior to the Change in Control,
except for a relocation consented to in writing by the Executive, or
travel reasonably required in the performance of the Executive's
responsibilities to the extent substantially consistent with the
Executive's business travel obligations prior to the Change in Control;
(V) Any failure of the Company to obtain the
assumption of the obligation to perform this Agreement by any successor
as contemplated in Section 11 herein; or
(VI) Any breach by the Company of any of the material
provisions of this Agreement or any failure by the Company to carry out
any of its obligations hereunder, in either case, for a period of thirty
business days after receipt of written notice from the Executive and the
failure by the Company to cure such breach or failure during such thirty
business day period.
6
<PAGE>
4. NOTICE OF TERMINATION
Any termination of the Executive's employment following a Change
in Control, other than a termination as contemplated by Sections 3(a)(i) or
3(a)(iii) shall be communicated by written "Notice of Termination" by the party
affecting the termination to the other party hereto. Any "Notice of
Termination" shall set forth (a) the effective date of termination, which shall
not be less than 15 or more than 30 days after the date the Notice of
Termination is delivered (the "Termination Date"); (b) the specific provision in
this Agreement relied upon; and (c) in reasonable detail the facts and
circumstances claimed to provide a basis for such termination and the
entitlement, or lack of entitlement, to the benefits set forth in this
Agreement. Notwithstanding the foregoing, if within fifteen (15) days after any
Notice of Termination is given, the party receiving such Notice of Termination
notifies the other party that a good faith dispute exists concerning the
termination, the actual Termination Date shall be the date on which the dispute
is finally determined in accordance with the provisions of Section 18 hereof.
In the case of any good faith dispute as to the Executive's entitlement to
benefits under this Agreement resulting from any termination by the Company for
which the Company does not deliver a Notice of Termination, the actual
Termination Date shall be the date on which the dispute is finally determined in
accordance with the provisions of Section 18 hereof. Notwithstanding the
pendency of any such dispute referred to in the two preceding sentences, the
Company shall continue to pay the Executive his full compensation then in effect
and continue the Executive as a participant in all compensation, benefits and
perquisites in which he was then participating, until the dispute is finally
resolved, PROVIDED the Executive is willing to continue to provide full time
services to the Company and its subsidiaries in substantially the same position,
if so requested by the Company. Amounts paid under this Section 4 shall be in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement. If a final
determination is made, pursuant to Section 18, that Good Reason did not exist in
the case of a Notice of Termination by the Executive, the Executive shall have
the sole right to nullify and void his Notice of Termination by delivering
written notice of same to the Company within three (3) business days of the date
of such final determination. If the parties do not dispute the Executive's
entitlement to benefits hereunder, the Termination Date shall be as set forth in
the Notice of Termination.
5. TERMINATION BENEFITS
(a) SEVERANCE PAYMENT. Subject to the conditions set forth
in this Agreement, on the Termination Date the Company shall pay the
Executive (reduced by any applicable payroll or other taxes required to
be withheld) a lump sum severance payment, in cash, equal to the sum of
the Executive's annual salary for the current year plus his target bonus
for the current year (provided that if the Notice of Termination is
given prior to the determination of the Executive's salary or target
bonus for the year in which the Termination Date occurs, the amounts
shall be the annual salary for the prior year and the greater of the
target bonus for the prior year or the actual bonus earned by the
Executive for the prior year). The current year shall be (A) for the
purposes of determining annual salary, the year then generally used by
the Company for setting salaries for senior-level executives (currently
April 1 through the following March 31), and (B) for purposes of
determining
7
<PAGE>
target bonus, the fiscal year then generally used by the Company for
setting target bonuses for senior-level executives, in which the
Termination Date occurs, and the prior year shall be the twelve-month
period immediately preceding the current year.
(b) PAYMENT OF DEFERRED COMPENSATION. Any compensation that
has been earned by the Executive but is unpaid as of the Termination
Date, including any compensation that has been earned but deferred
pursuant to the Company's Deferred Compensation Plan or otherwise, shall
be paid in full to the Executive on the Termination Date.
6. OTHER BENEFITS
Subject to the conditions set forth in this Agreement hereof, the
following benefits (subject to any applicable payroll or other taxes required to
be withheld) shall be paid or provided to the Executive:
(a) HEALTH/WELFARE BENEFITS
(i) During the eighteen (18) months following the
Termination Date (the "Continuation Period"), the Company shall continue
to keep in full force and effect all programs of medical, dental,
vision, accident, disability, life insurance, including optional term
life insurance, and other similar health or welfare programs with
respect to the Executive and his dependents with the same level of
coverage, upon the same terms and otherwise to the same extent as such
programs shall have been in effect immediately prior to the Termination
Date (or, if more favorable to the Executive, immediately prior to the
Change in Control), and the Company and the Executive shall share the
costs of the continuation of such insurance coverage in the same
proportion as such costs were shared immediately prior to the
Termination Date (or, if more favorable to the Executive, immediately
prior to the Change in Control) or, if the terms of such programs do not
permit continued participation by the Executive (or if the Company
otherwise determines it advisable to amend, modify or discontinue such
programs for employees generally), the Company shall otherwise provide
benefits substantially similar to and no less favorable to the Executive
in terms of cost or benefits ("Equivalent Benefits") than he was
entitled to receive at the end of the period of coverage, for the
duration of the Continuation Period.
(ii) All benefits which the Company is required by this
Section 6(a) to provide, which will not be provided by the Company's
programs described herein, shall be provided through the purchase of
insurance unless the Executive is uninsurable. If the Executive is
uninsurable, the Company will provide the benefits out of its general
assets.
(iii) If the Executive obtains other employment during
the Continuation Period which provides health or welfare benefits of the
type described in Section 6(a)(i) hereof ("Other Coverage"), then
Executive shall notify the Company promptly of such other employment and
Other Coverage and the Company shall thereafter not provide the
Executive and his dependents the benefits described in Section 6(a)(i)
hereof to the extent that such benefits are provided under the Other
Coverage. Under such circumstances, the
8
<PAGE>
Executive shall make all claims first under the Other Coverage and then,
only to the extent not paid or reimbursed by the Other Coverage, under
the plans and programs described in Section 6(a)(i) hereof.
(b) RETIREMENT BENEFITS
(i) For purposes of this Agreement, "Retirement" shall
mean the Company's termination of the Executive's employment within
two years following a Change in Control of the Company and at or after
the date on which the Executive attains age 65; provided, however,
that any termination for Cause or due to Death or Disability shall not
constitute Retirement.
(ii) Subject to Section 6(b)(ii), the Executive shall
be deemed to be completely vested under the Company's 401(k) Plan,
Deferred Compensation Plan or other similar or successor plans which
are in effect as of the date of the Change in Control (collectively,
the "Plans"), regardless of the Executive's actual vesting service
credit thereunder.
(iii) Any part of the foregoing retirement benefits
which are otherwise required to be paid by a tax-qualified Plan but
which cannot be paid through such Plan by reason of the laws and
regulations applicable to such Plan, shall be paid by one or more
supplemental non-qualified Plans or by the Company.
(iv) The payments calculated hereunder which are not
actually paid by a Plan shall be paid thirty (30) days following the
Date of Termination in a single lump sum cash payment (of equivalent
actuarial value to the payment calculated hereunder using the same
actuarial assumptions as are used in calculating benefits under the
Plan but using the discount rate that would be used by the Company on
the Date of Termination to determine the actuarial present value of
projected benefit obligations).
(c) EXECUTIVE OUTPLACEMENT COUNSELING. During the
Continuation Period, unless the Executive shall reach normal retirement
age during the Continuation Period, the Executive may request in writing
and the Company shall at its expense engage within a reasonable time
following such written request an outplacement counseling service to
assist the Executive in obtaining employment.
7. PAYMENT OF CERTAIN COSTS
Except as otherwise provided in Section 18, if a dispute arises
regarding a termination of the Executive or the interpretation or enforcement of
this Agreement, subsequent to a Change in Control, all of the reasonable legal
fees and expenses incurred by the Executive and all Arbitration Costs (as
hereafter defined) in contesting any such termination or obtaining or enforcing
all or part of any right or benefit provided for in this Agreement or in
otherwise pursuing all or part of his claim will be paid by the Company, unless
prohibited by law. The Company further agrees to
9
<PAGE>
pay pre-judgment interest on any money judgment obtained by the Executive
calculated at the prime interest rate reported in THE WALL STREET JOURNAL in
effect from time to time from the date that payment to him should have been made
under this Agreement.
8. This Section 8 is intentionally omitted.
9. MITIGATION
The Executive is not required to seek other employment or
otherwise mitigate the amount of any payments to be made by the Company pursuant
to this Agreement, and employment by the Executive will not reduce or otherwise
affect any amounts or benefits due the Executive pursuant to this Agreement,
except as otherwise provided in Section 6(a)(iii).
10. CONTINUING OBLIGATIONS REGARDING CONFIDENTIAL INFORMATION
(a) ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive hereby
recognizes and acknowledges the following:
(i) In connection with the Business, the Company has
expended a great deal of time, money and effort to develop and maintain
the secrecy and confidentiality of substantial proprietary trade secret
information and other confidential business information which, if
misused or disclosed, could be very harmful to the Company's business.
(ii) The Executive desires to become entitled to
receive the benefits contemplated by this Agreement but which the
Company would not make available to the Executive but for the
Executive's signing and agreeing to abide by the terms of this
Section 10.
(iii) The Executive's position with the Company provides
the Executive with access to certain of the Company's confidential and
proprietary trade secret information and other confidential business
information.
(iv) The Company compensates its employees to, among
other things, develop and preserve business information for the
Company's ownership and use.
(v) If the Executive were to leave the Company, the
Company in all fairness would need certain protection in order to ensure
that the Executive does not appropriate and misuse any confidential
information entrusted to the Executive during the course of the
Executive's employment with the Company.
(b) CONFIDENTIAL INFORMATION
(i) The Executive agrees to keep secret and
confidential, and not to use or disclose to any third parties, except as
directly required for the Executive to perform the Executive's
employment responsibilities for the Company, or except as required by
law, any of the Company's confidential and proprietary trade secret
information or other confidential business information concerning the
Company's business acquired by the Executive during the course of, or in
connection with, the Executive's employment with the Company (and
10
<PAGE>
which was not known by the Executive prior to the Executive's being
hired by the Company). Confidential information means information
which would constitute material, nonpublic information under the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, regardless of whether the
Executive's use or disclosure of such information is in connection
with or related to a securities transaction.
(ii) The Executive acknowledges that any and all notes,
records, reports, written information or documents of any kind, computer
files and diskettes and other documents obtained by or provided to the
Executive, or otherwise made, produced or compiled during the course of
the Executive's employment with the Company, regardless of the type of
medium in which it is preserved, are the sole and exclusive property of
the Company and shall be surrendered to the Company upon the Executive's
termination of employment and on demand at any time by the Company.
(c) ACKNOWLEDGMENT REGARDING RESTRICTIONS. The Executive
recognizes and agrees that the provisions of this Section 10 are
reasonable and enforceable because, among other things, (i) the
Executive is receiving compensation under this Agreement and (ii) this
Section 10 therefore does not impose any undue hardship on the
Executive. The Executive further recognizes and agrees that the
provisions of this Section 10 are reasonable and enforceable in view of
the Company's legitimate interests in protecting its confidential
information.
(d) BREACH. In the event of a breach of Section 10(b), the
Company's sole remedy shall be the discontinuation of the payment,
allocation, accrual or provision of any amounts or benefits as provided
in Sections 5 or 6. The Executive recognizes and agrees, however, that
it is the intent of the parties that neither this Agreement nor any of
its provisions shall be construed to adversely affect any rights or
remedies that Company would have had, including, without limitation, the
amount of any damages for which it could have sought recovery, had this
Agreement not been entered into. Accordingly, the parties hereby agree
that nothing stated in this Section 10 shall limit or otherwise affect
the Company's right to seek legal or equitable remedies it may otherwise
have, or the amount of damages for which it may seek recovery, in
connection with matters covered by this Section 10 but which are not
based on breach or violation of this Section 10 (including, without
limitation, claims based on the breach of fiduciary or other duties of
the Executive or any obligations of the Executive arising under any
other contracts, agreements or understandings). Without limiting the
generality of the foregoing, nothing in this Section 10 or any other
provision of this Agreement shall limit or otherwise affect the
Company's right to seek legal or equitable remedies it may otherwise
have, or the amount of damages for which it may seek recovery, resulting
from or arising out of statutory or common law or any Company policies
relating to fiduciary duties, confidential information or trade secrets.
Further, the Executive acknowledges and agrees that the fact that
Section 10(c) is limited to the Continuation Period, and that the sole
remedy of the Company hereunder is the discontinuation of benefits,
shall not reduce or otherwise alter any other contractual or other legal
obligations of the Executive during any period or circumstance, and
shall not be construed as establishing a maximum limit on damages for
which the Company may seek recovery.
11
<PAGE>
11. BINDING AGREEMENT; SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns. The Company
shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. For purposes of this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, beneficiaries, devises and legatees. If the Executive
should die while any amounts are payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee,
beneficiary or other designee or, if there be no such designee, to the
Executive's estate.
12. NOTICES
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii) on
the date of transmission, if delivered by confirmed facsimile, (iii) on the
first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (iv) on the third business day following the date
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Gary Peck
6290 N.W. 96 Terrace
Parkland, FL 33067
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
12
<PAGE>
13. GOVERNING LAW
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Florida, without
regard to principles of conflicts of laws.
14. MISCELLANEOUS
No provisions of this Agreement may be amended, modified, waived
or discharged unless such amendment, waiver, modification or discharge is agreed
to in writing signed by the Executive and the Company. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. Section headings contained herein are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
15. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which will constitute one
and the same instrument.
16. NON-ASSIGNABILITY
This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Section 11. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or trust or by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this paragraph the Company shall
have no liability to pay any amount so attempted to be assigned or transferred.
17. TERM OF AGREEMENT
This Agreement shall commence on the date hereof and shall
continue in effect through May 7, 2001; PROVIDED, however, if a Change in
Control of the Company shall have occurred during the original or any extended
term of this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such Change in Control
occurred; and, PROVIDED FURTHER, that if the Company shall become obligated to
make any payments or provide any benefits pursuant to Section 5 or 6 hereof,
this Agreement shall continue for the period necessary to make such payments or
provide such benefits.
18. RESOLUTION OF DISPUTES
(a) The parties hereby agree to submit any claim, demand,
dispute, charge or cause of action (in any such case, a "Claim") arising
out of, in connection with, or relating to this Stock Option Agreement
to binding arbitration in conformance with the J*A*M*S/ENDISPUTE
Streamlined Arbitration Rules and Procedures or the J*A*M*S/ ENDISPUTE
Comprehensive Arbitration Rules and Procedures, as applicable, but
expressly excluding Rule 28 of the J*A*M*S/ENDISPUTE Streamlined Rules
and Rule
13
<PAGE>
32 of the J*A*M*S/ENDISPUTE Comprehensive Rules, as the case may be.
All arbitration procedures shall be held in Fort Lauderdale, Florida and
shall be subject to the choice of law provisions set forth in Section 13
of this Agreement.
(b) In the event of any dispute arising out of or relating to
this Agreement for which any party is seeking injunctive relief,
specific performance or other equitable relief, such matter may be
resolved by litigation. Accordingly, the parties shall submit such
matter to the exclusive jurisdiction of the United States District Court
for the Southern District of Florida or, if jurisdiction is not
available therein, any other court located in Broward County, Florida,
and hereby waive any and all objections to such jurisdiction or venue
that they may have. Each party agrees that process may be served upon
such party in any manner authorized under the laws of the United States
or Florida, and waives any objections that such party may otherwise have
to such process.
19. NO SETOFF
The Company shall have no right of setoff or counterclaim in
respect of any claim, debt or obligation against any payment provided for in
this Agreement.
20. NON-EXCLUSIVITY OF RIGHTS
Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any of its subsidiaries or successors
and for which the Executive may qualify, nor shall anything herein limit or
reduce such rights as the Executive may have under any other agreements with the
Company or any of its subsidiaries or successors, except to the extent payments
are made pursuant to Section 5, they shall be in lieu of any termination,
separation, severance or similar payments pursuant to the Executive's Employment
Agreement, if any, and the Company's then existing termination, separation,
severance or similar plans or policies, if any. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company or any of its subsidiaries shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement.
21. NO GUARANTEED EMPLOYMENT
The Executive and the Company acknowledge that this Agreement
shall not confer upon the Executive any right to continued employment and shall
not interfere with the right of the Company to terminate the employment of the
Executive at any time.
22. INVALIDITY OF PROVISIONS
In the event that any provision of this Agreement is adjudicated
to be invalid or unenforceable under applicable law in any jurisdiction, the
validity or enforceability of the remaining provisions thereof shall be
unaffected as to such jurisdiction and such adjudication shall not affect the
validity or enforceability of such provision in any other jurisdiction. To the
extent that any provision of this Agreement, including, without limitation,
Section 10 hereof, is adjudicated to be invalid or unenforceable because it is
overbroad, that provision shall not be void
14
<PAGE>
but rather shall be limited to the extent required by applicable law and
enforced as so limited. The parties expressly acknowledge and agree that this
Section 22 is reasonable in view of the parties' respective interests.
23. NON-WAIVER OF RIGHTS
The failure by the Company or the Executive to enforce at any
time any of the provisions of this Agreement or to require at any time
performance by the other party of any of the provisions hereof shall in no way
be construed to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of the Company or the
Executive thereafter to enforce each and every provision in accordance with the
terms of this Agreement.
24. EMPLOYMENT AGREEMENT.
If the Executive has an Employment Agreement with the Company,
and if circumstances arise which cause both the Employment Agreement and this
Agreement to apply to the Company and the Executive, then, to the extent of any
inconsistency between the provisions of this Agreement and the Employment
Agreement, the terms of this Agreement alone shall apply. However, if this
Agreement does not apply, then the provisions of the Employment Agreement shall
control and be unaffected by this Agreement.
25. UNFUNDED PLAN.
The Company's obligations under this Agreement shall be entirely
unfunded until payments are made hereunder from the general assets of the
Company, and no provision shall be made to segregate assets of the Company for
payments to be made under this Agreement. The Executive shall have no interest
in any particular assets of the Company but rather shall have only the rights of
a general unsecured creditor of the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING THAT
THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY
BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT;
(C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT TO ASK ANY
QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED SATISFACTORY
ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE EXECUTIVE'S RIGHTS AND
OBLIGATIONS UNDER THE AGREEMENT.
15
<PAGE>
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
-----------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Gary Peck
-----------------------------------
Gary Peck
16
<PAGE>
Exhibit 10.26
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, dated as of the 18th day of November, 1998, is
by and between INTERIM SERVICES INC., a Delaware corporation (hereinafter
referred to as the "Company"), and ROBERT EVANS (hereinafter the "Executive").
RECITALS
A. The Board of Directors of the Company (the "Board")
considers it essential to the best interests of the Company and its
stockholders that its key management personnel be encouraged to remain with
the Company and its subsidiaries and to continue to devote full attention to
the Company's business in the event that any third person expresses its
intention to complete a possible business combination with the Company, or in
taking any other action which could result in a "Change in Control" (as
defined herein) of the Company. In this connection, the Board recognizes that
the possibility of a Change in Control and the uncertainty and questions
which it may raise among management may result in the departure or
distraction of key management personnel to the detriment of the Company and
its stockholders. The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
key members of the Company's management to their assigned duties without
distraction in the face of the potentially disturbing circumstances arising
from the possibility of a Change in Control of the Company.
B. The Executive currently serves as the Company's Vice
President and Chief Information Officer, and his services and knowledge are
valuable to the Company in connection with the management of its business.
C. The Board believes the Executive has made and is
expected to continue to make valuable contributions to the productivity and
profitability of the Company and its subsidiaries. Should the Company
receive a proposal from a third person concerning a possible business
combination or any other action which could result in a Change in Control, in
addition to the Executive's regular duties, the Executive may be called upon
to assist in the assessment of such proposal, advise management and the Board
as to whether such proposal would be in the best interests of the Company and
its stockholders, and to take such other actions as the Board might determine
to be necessary or appropriate.
D. Should the Company receive any proposal from a third
person concerning a possible business combination or any other action which
could result in a change in control of the Company, the Board believes it
imperative that the Company and the Board be able to rely upon the Executive
to continue in his position, and that the Company and the Board be able to
receive and rely upon his advice, if so requested, as to the best interests
of the Company and its stockholders without concern that he might be
distracted by the personal uncertainties and risks created by such a
proposal, and to encourage Executive's full attention and dedication to the
Company.
1
<PAGE>
TERMS AND CONDITIONS
NOW, THEREFORE, to assure the Company and its subsidiaries
that it will have the continued, undivided attention, dedication and services
of the Executive and the availability of the Executive's advice and counsel
notwithstanding the possibility, threat or occurrence of a Change in Control
of the Company, and to induce the Executive to remain in the employ of the
Company and its subsidiaries, and for other good and valuable consideration,
the adequacy and sufficiency of which are hereby acknowledged, the Company
and the Executive agree as follows.
1. CHANGE IN CONTROL
(a) The definition of a "Change in Control" of the Company
for purposes of this Agreement shall be as determined, prospectively,
from time to time, by the Board, pursuant to the affirmative vote of
at least two-thirds of those members of the Board (i) who have served
on the Board for at least two years prior to such determination, and
(ii) whose election, or nomination for election, during such two-year
period was approved by a vote of at least two-thirds of the directors
then in office who were directors at the beginning of such two-year
period. Written notice of any such determination, or modification of
a previous determination, shall be provided promptly to the Executive.
(b) In the event that at any time during the term of this
Agreement the Board has not established a definition of "Change of
Control" pursuant to Section 1(a), for purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have occurred
upon (i) the acquisition at any time by a "person" or "group" (as that
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (excluding, for this
purpose, the Company or any of its subsidiaries, any employee benefit
plan of the Company or any of its subsidiaries, an underwriter
temporarily holding securities pursuant to such securities, or a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company) of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) directly or indirectly, of securities
representing 25% or more of the combined voting power in the election
of directors of the then-outstanding securities of the Company or any
successor of the Company; (ii) the termination of service as
directors, for any reason other than death, disability or retirement
from the Board, during any period of two consecutive years or less, of
individuals who at the beginning of such period constituted a majority
of the Board, unless the election of or nomination for election of
each new director during such period was approved by a vote of at
least two-thirds of the directors still in office who were directors
at the beginning of the period; (iii) approval by the stockholders of
the Company of liquidation of the Company; (iv) approval by the
stockholders of the Company and consummation of any sale or
disposition, or series of related sales or dispositions, of 50% or
more of the assets or earning power of the Company; or (v) approval by
the stockholders of the Company and consummation of any merger or
consolidation or statutory share exchange to which the Company is a
party as a result of which the persons who were stockholders of the
Company immediately prior to the effective date of the merger or
consolidation or statutory share exchange shall have beneficial
ownership of less than 50% of the combined voting power in the
election of
2
<PAGE>
directors of the surviving corporation following the effective date of
such merger or consolidation or statutory share exchange.
(c) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction constitutes
a "Management Approved Transaction." For purposes of this Agreement,
a "Management Approved Transaction" shall be any transaction, which
would otherwise result in a Change in Control for purposes of this
Agreement in which the acquiring "person", "group" or other entity is
either beneficially owned by, or comprised of, in whole or in part,
three or more members of the Company's executive management, as such
was constituted twelve months prior to such transaction, or is
majority owned by, or comprised of, any employee benefit plan of the
Company.
(d) Notwithstanding anything herein, no acquisition of
beneficial ownership of securities of the Company, merger, sale of
assets or other transaction shall be deemed to constitute a Change in
Control for purposes of this Agreement if such transaction is approved
by the affirmative vote of at least two-thirds of those members of the
Board (i) who have served on the Board for at least two years prior to
such approval, and (ii) whose election, or nomination for election,
during such two-year period was approved by a vote of at least
two-thirds of the directors then in office who were directors at the
beginning of such two-year period.
2. ADJUSTMENT OF BENEFITS UPON CHANGE IN CONTROL
(a) The Company agrees that the Compensation Committee of
the Board, or such other committee succeeding to such committee's
responsibilities with respect to executive compensation (collectively,
the "Compensation Committee") may make such equitable adjustments to
any performance targets contained in any awards under the Company's
current incentive compensation plans, or any additional or successor
plan in which the Executive is a participant (collectively, the
"Incentive Plans"), as the Compensation Committee determines may be
appropriate to eliminate any negative effects from any transactions
relating to a Change in Control (such as costs or expenses associated
with the transaction or any related transaction, including, without
limitation, any reorganizations, divestitures, recapitalizations or
borrowings, or changes in targets or measures to reflect the
disruption of the business, etc.), in order to preserve reward
opportunities and performance objectives.
(b) In the case of a Change in Control, all restrictions
and conditions applicable to any awards of restricted stock or the
vesting of stock options or other awards granted to the Executive
under the Company's 1998 Incentive Stock Plan, 1997 Long-Term
Executive Compensation and Outside Director Stock Option Plan, any
similar or successor plan, or otherwise shall be deemed to have been
satisfied as of the date the Change in Control occurs, and this
Agreement shall be deemed to amend any agreements evidencing such
awards to reflect this provision.
3
<PAGE>
3. TERMINATION FOLLOWING CHANGE IN CONTROL
(a) The Executive's employment may be terminated for any
reason by the Company within two years following a Change in Control
of the Company. If the Executive's employment is terminated for any
reason other than the reasons set forth below, then the Executive
shall be entitled to the benefits set forth in this Agreement in lieu
of any termination, separation, severance or similar benefits under
the Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if
any. If the Executive's employment is terminated for any of the
reasons set forth below, then the Executive shall not be entitled to
any termination, separation, severance or similar benefits under this
Agreement, and the Executive shall be entitled to benefits under the
Executive's Employment Agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if
any, only in accordance with the terms of such Employment Agreement,
or such plans or policies.
(i) termination by reason of the Executive's death,
PROVIDED the Executive has not previously given a "Notice of
Termination" pursuant to Section 4;
(ii) termination by reason of the Executive's
"disability," PROVIDED the Executive has not previously given a
"Notice of Termination" pursuant to Section 4;
(iii) termination by reason of "retirement" at or
after age 65, PROVIDED the Executive has not previously given "Notice
of Termination" pursuant to Section 4; or
(iv) termination by the Company for "Cause."
For the purposes of this Agreement, "disability" shall
be defined as the Executive's inability by reason of illness or other
physical or mental disability to perform the principal duties required
by the position held by the Executive at the inception of such illness
or disability for any consecutive 180-day period. A determination of
disability shall be subject to the certification of a qualified
medical doctor agreed to by the Company and the Executive or, in the
Executive's incapacity to designate a doctor, the Executive's legal
representative. If the Company and the Executive cannot agree on the
designation of a doctor, each party shall nominate a qualified medical
doctor and the two doctors shall select a third doctor and the third
doctor shall make the determination as to disability.
For purposes of this Agreement, "retirement" shall mean
the Company's termination of the Executive's employment at or after
the date on which the Executive attains age 65.
For purposes of this Agreement, "Cause" shall mean one
ore more of the following:
(I) the material violation of any of the terms and
conditions of this Agreement or any written agreements the Executive
may from time to time have with the Company (after 30 days following
written notice from the Board specifying such material violation and
Executive's failure to cure or remedy such material violation within
such 30-day period);
4
<PAGE>
(II) inattention to or failure to perform Executive's
assigned duties and responsibilities competently for any reason other
than due to Disability (after 30 days following written notice from
the Board specifying such inattention or failure, and Executive's
failure to cure or remedy such inattention or failure within such
30-day period);
(III) engaging in activities or conduct injurious to the
reputation of the Company or its affiliates including, without
limitation, engaging in immoral acts which become public information
or repeatedly conveying to one person, or conveying to an assembled
public group, negative information concerning the Company or its
affiliates;
(IV) commission of an act of dishonesty, including, but not
limited to, misappropriation of funds or any property of the Company;
(V) commission by the Executive of an act which constitutes
a misdemeanor (involving an act of moral turpitude) or a felony;
(VI) the material violation of any of the written Policies
of the Company which are not inconsistent with this Agreement or
applicable law (after 30 days following written notice from the Board
specifying such failure, and the Executive's failure to cure or remedy
such inattention or failure within such 30-day period);
(VII) refusal to perform the Executive's assigned duties and
responsibilities or other insubordination (after 30 days following
written notice from the Board specifying such refusal or
insubordination, and the Executive's failure to cure or remedy such
refusal or insubordination within such 30-day period); or
(VIII) unsatisfactory performance of duties by the Executive
as a result of alcohol or drug use by the Executive.
(b) The Executive may terminate his employment with the
Company following a Change in Control of the Company for "Good Reason"
by giving Notice of Termination at any time within two years after the
Change in Control. Any failure by the Executive to give such
immediate notice of termination for Good Reason shall not be deemed to
constitute a waiver or otherwise to affect adversely the rights of the
Executive hereunder, PROVIDED the Executive gives notice to receive
such benefits prior to the expiration of such two year period. If the
Executive terminates his employment as provided in this Section 3(b),
then the Executive shall be entitled to the benefits set forth in this
Agreement in lieu of any termination, separation, severance or similar
benefits under the Executive's Employment Agreement, if any, or under
the Company's termination, separation, severance or similar plans or
policies, if any.
For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any one or more of the following events:
(I) The assignment to the Executive of any duties
inconsistent in any material adverse respect with his position,
authority or responsibilities with the Company and its subsidiaries
immediately prior to the Change in Control, or any other material
5
<PAGE>
adverse change in such position, including titles, authority, or
responsibilities, as compared with the Executive's position
immediately prior to the Change in Control;
(II) A reduction by the Company in the amount of the
Executive's base salary or annual or long term incentive compensation
paid or payable as compared to that which was paid or made available
to Executive immediately prior to the Change in Control; or the
failure of the Company to increase Executive's compensation each year
by an amount which is substantially the same, on a percentage basis,
as the average annual percentage increase in the base salaries of
other executives of comparable status with the Company;
(III) The failure by the Company to continue to
provide the Executive with substantially similar perquisites or
benefits the Executive in the aggregate enjoyed under the Company's
benefit programs, such as any of the Company's pension, savings,
vacation, life insurance, medical, health and accident, or disability
plans in which he was participating at the time of the Change in
Control (or, alternatively, if such plans are amended, modified or
discontinued, substantially similar equivalent benefits thereto, when
considered in the aggregate), or the taking of any action by the
Company which would directly or indirectly cause such benefits to be
no longer substantially equivalent, when considered in the aggregate,
to the benefits in effect at the time of the Change in Control;
(IV) The Company's requiring the Executive to be
based at any office or location more than 50 miles from that location
at which he performed his services immediately prior to the Change in
Control, except for a relocation consented to in writing by the
Executive, or travel reasonably required in the performance of the
Executive's responsibilities to the extent substantially consistent
with the Executive's business travel obligations prior to the Change
in Control;
(V) Any failure of the Company to obtain the
assumption of the obligation to perform this Agreement by any
successor as contemplated in Section 11 herein; or
(VI) Any breach by the Company of any of the
material provisions of this Agreement or any failure by the Company to
carry out any of its obligations hereunder, in either case, for a
period of thirty business days after receipt of written notice from
the Executive and the failure by the Company to cure such breach or
failure during such thirty business day period.
4. NOTICE OF TERMINATION
Any termination of the Executive's employment following a
Change in Control, other than a termination as contemplated by Sections
3(a)(i) or 3(a)(iii) shall be communicated by written "Notice of Termination"
by the party affecting the termination to the other party hereto. Any
"Notice of Termination" shall set forth (a) the effective date of
termination, which shall not be less than 15 or more than 30 days after the
date the Notice of Termination is delivered (the "Termination Date"); (b) the
specific provision in this Agreement relied upon; and (c) in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination and the entitlement, or lack of entitlement, to the benefits set
forth in this Agreement. Notwithstanding the foregoing, if within fifteen
(15) days after any Notice of Termination is given, the party receiving
6
<PAGE>
such Notice of Termination notifies the other party that a good faith dispute
exists concerning the termination, the actual Termination Date shall be the
date on which the dispute is finally determined in accordance with the
provisions of Section 18 hereof. In the case of any good faith dispute as to
the Executive's entitlement to benefits under this Agreement resulting from
any termination by the Company for which the Company does not deliver a
Notice of Termination, the actual Termination Date shall be the date on which
the dispute is finally determined in accordance with the provisions of
Section 18 hereof. Notwithstanding the pendency of any such dispute referred
to in the two preceding sentences, the Company shall continue to pay the
Executive his full compensation then in effect and continue the Executive as
a participant in all compensation, benefits and perquisites in which he was
then participating, until the dispute is finally resolved, PROVIDED the
Executive is willing to continue to provide full time services to the Company
and its subsidiaries in substantially the same position, if so requested by
the Company. Amounts paid under this Section 4 shall be in addition to all
other amounts due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement. If a final determination
is made, pursuant to Section 18, that Good Reason did not exist in the case
of a Notice of Termination by the Executive, the Executive shall have the
sole right to nullify and void his Notice of Termination by delivering
written notice of same to the Company within three (3) business days of the
date of such final determination. If the parties do not dispute the
Executive's entitlement to benefits hereunder, the Termination Date shall be
as set forth in the Notice of Termination.
5. TERMINATION BENEFITS
(a) SEVERANCE PAYMENT. Subject to the conditions set forth
in this Agreement, on the Termination Date the Company shall pay the
Executive (reduced by any applicable payroll or other taxes required
to be withheld) a lump sum severance payment, in cash, equal to the
sum of the Executive's annual salary for the current year plus his
target bonus for the current year (provided that if the Notice of
Termination is given prior to the determination of the Executive's
salary or target bonus for the year in which the Termination Date
occurs, the amounts shall be the annual salary for the prior year and
the greater of the target bonus for the prior year or the actual bonus
earned by the Executive for the prior year). the current year shall
be (A) for the purposes of determining annual salary, the year then
generally used by the Company for setting salaries for senior-level
executives (currently April 1 through the following March 31), and (B)
for purposes of determining target bonus, the fiscal year then
generally used by the Company for setting target bonuses for
senior-level executives, in which the Termination Date occurs, and the
prior year shall be the twelve-month period immediately preceding the
current year.
(b) PAYMENT OF DEFERRED COMPENSATION. Any compensation
that has been earned by the Executive but is unpaid as of the
Termination Date, including any compensation that has been earned but
deferred pursuant to the Company's Deferred Compensation Plan or
otherwise, shall be paid in full to the Executive on the Termination
Date.
7
<PAGE>
6. OTHER BENEFITS
Subject to the conditions set forth in this Agreement hereof,
the following benefits (subject to any applicable payroll or other taxes
required to be withheld) shall be paid or provided to the Executive:
(a) HEALTH/WELFARE BENEFITS
(i) During the eighteen (18) months following the
Termination Date (the "Continuation Period"), the Company shall
continue to keep in full force and effect all programs of medical,
dental, vision, accident, disability, life insurance, including
optional term life insurance, and other similar health or welfare
programs with respect to the Executive and his dependents with the
same level of coverage, upon the same terms and otherwise to the same
extent as such programs shall have been in effect immediately prior to
the Termination Date (or, if more favorable to the Executive,
immediately prior to the Change in Control), and the Company and the
Executive shall share the costs of the continuation of such insurance
coverage in the same proportion as such costs were shared immediately
prior to the Termination Date (or, if more favorable to the Executive,
immediately prior to the Change in Control) or, if the terms of such
programs do not permit continued participation by the Executive (or if
the Company otherwise determines it advisable to amend, modify or
discontinue such programs for employees generally), the Company shall
otherwise provide benefits substantially similar to and no less
favorable to the Executive in terms of cost or benefits ("Equivalent
Benefits") than he was entitled to receive at the end of the period of
coverage, for the duration of the Continuation Period.
(ii) All benefits which the Company is required by
this Section 6(a) to provide, which will not be provided by the
Company's programs described herein, shall be provided through the
purchase of insurance unless the Executive is uninsurable. If the
Executive is uninsurable, the Company will provide the benefits out of
its general assets.
(iii) If the Executive obtains other employment
during the Continuation Period which provides health or welfare
benefits of the type described in Section 6(a)(i) hereof ("Other
Coverage"), then Executive shall notify the Company promptly of such
other employment and Other Coverage and the Company shall thereafter
not provide the Executive and his dependents the benefits described in
Section 6(a)(i) hereof to the extent that such benefits are provided
under the Other Coverage. Under such circumstances, the Executive
shall make all claims first under the Other Coverage and then, only to
the extent not paid or reimbursed by the Other Coverage, under the
plans and programs described in Section 6(a)(i) hereof.
(b) RETIREMENT BENEFITS
(i) For purposes of this Agreement, "Retirement" shall mean the
Company's termination of the Executive's employment within two years
following a Change in Control of the Company and at or after the date
on which the Executive attains age 65; provided, however, that any
termination for Cause or due to Death or Disability shall not
constitute Retirement.
8
<PAGE>
(ii) Subject to Section 6(b)(ii), the Executive shall
be deemed to be completely vested under the Company's 401(k) Plan,
Deferred Compensation Plan or other similar or successor plans which
are in effect as of the date of the Change in Control (collectively,
the "Plans"), regardless of the Executive's actual vesting service
credit thereunder.
(iii) Any part of the foregoing retirement benefits which
are otherwise required to be paid by a tax-qualified Plan but which
cannot be paid through such Plan by reason of the laws and regulations
applicable to such Plan, shall be paid by one or more supplemental
non-qualified Plans or by the Company.
(iv) The payments calculated hereunder which are not
actually paid by a Plan shall be paid thirty (30) days following the
Date of Termination in a single lump sum cash payment (of equivalent
actuarial value to the payment calculated hereunder using the same
actuarial assumptions as are used in calculating benefits under the
Plan but using the discount rate that would be used by the Company on
the Date of Termination to determine the actuarial present value of
projected benefit obligations).
(c) EXECUTIVE OUTPLACEMENT COUNSELING. During the
Continuation Period, unless the Executive shall reach normal
retirement age during the Continuation Period, the Executive may
request in writing and the Company shall at its expense engage within
a reasonable time following such written request an outplacement
counseling service to assist the Executive in obtaining employment.
7. PAYMENT OF CERTAIN COSTS
Except as otherwise provided in Section 18, if a dispute
arises regarding a termination of the Executive or the interpretation or
enforcement of this Agreement, subsequent to a Change in Control, all of the
reasonable legal fees and expenses incurred by the Executive and all
Arbitration Costs (as hereafter defined) in contesting any such termination
or obtaining or enforcing all or part of any right or benefit provided for in
this Agreement or in otherwise pursuing all or part of his claim will be paid
by the Company, unless prohibited by law. The Company further agrees to pay
pre-judgment interest on any money judgment obtained by the Executive
calculated at the prime interest rate reported in THE WALL STREET JOURNAL in
effect from time to time from the date that payment to him should have been
made under this Agreement.
8. This Section 8 is intentionally omitted.
9. MITIGATION
The Executive is not required to seek other employment or
otherwise mitigate the amount of any payments to be made by the Company
pursuant to this Agreement, and employment by the Executive will not reduce
or otherwise affect any amounts or benefits due the Executive pursuant to
this Agreement, except as otherwise provided in Section 6(a)(iii).
10. CONTINUING OBLIGATIONS REGARDING CONFIDENTIAL INFORMATION
9
<PAGE>
(a) ACKNOWLEDGMENTS BY THE EXECUTIVE. The Executive hereby
recognizes and acknowledges the following:
(i) In connection with the Business, the Company
has expended a great deal of time, money and effort to develop and
maintain the secrecy and confidentiality of substantial proprietary
trade secret information and other confidential business information
which, if misused or disclosed, could be very harmful to the Company's
business.
(ii) The Executive desires to become entitled to
receive the benefits contemplated by this Agreement but which the
Company would not make available to the Executive but for the
Executive's signing and agreeing to abide by the terms of this Section
10.
(iii) The Executive's position with the Company
provides the Executive with access to certain of the Company's
confidential and proprietary trade secret information and other
confidential business information.
(iv) The Company compensates its employees to, among
other things, develop and preserve business information for the
Company's ownership and use.
(v) If the Executive were to leave the Company, the
Company in all fairness would need certain protection in order
to ensure that the Executive does not appropriate and misuse any
confidential information entrusted to the Executive during the course
of the Executive's employment with the Company.(b) CONFIDENTIAL
INFORMATION(i) The Executive agrees to keep secret and confidential,
and not to use or disclose to any third parties, except as directly
required for the Executive to perform the Executive's employment
responsibilities for the Company, or except as required by law, any of
the Company's confidential and proprietary trade secret information or
other confidential business information concerning the Company's
business acquired by the Executive during the course of, or in
connection with, the Executive's employment with the Company (and
which was not known by the Executive prior to the Executive's being
hired by the Company). Confidential information means information
which would constitute material, nonpublic information under the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, regardless of whether the
Executive's use or disclosure of such information is in connection
with or related to a securities transaction.
(ii) The Executive acknowledges that any and all
notes, records, reports, written information or documents of any kind,
computer files and diskettes and other documents obtained by or
provided to the Executive, or otherwise made, produced or compiled
during the course of the Executive's employment with the Company,
regardless of the type of medium in which it is preserved, are the
sole and exclusive property of the Company and shall be surrendered to
the Company upon the Executive's termination of employment and on
demand at any time by the Company.
(c) ACKNOWLEDGMENT REGARDING RESTRICTIONS. The Executive
recognizes and agrees that the provisions of this Section 10 are
reasonable and enforceable because, among other things, (i) the
Executive is receiving compensation under this Agreement and (ii)
this Section 10 therefore does not impose any undue hardship on the
Executive. The Executive
10
<PAGE>
further recognizes and agrees that the provisions of this Section 10
are reasonable and enforceable in view of the Company's legitimate
interests in protecting its confidential information.
(d) BREACH. In the event of a breach of Section 10(b), the
Company's sole remedy shall be the discontinuation of the payment,
allocation, accrual or provision of any amounts or benefits as
provided in Sections 5 or 6. The Executive recognizes and agrees,
however, that it is the intent of the parties that neither this
Agreement nor any of its provisions shall be construed to adversely
affect any rights or remedies that Company would have had, including,
without limitation, the amount of any damages for which it could have
sought recovery, had this Agreement not been entered into.
Accordingly, the parties hereby agree that nothing stated in this
Section 10 shall limit or otherwise affect the Company's right to seek
legal or equitable remedies it may otherwise have, or the amount of
damages for which it may seek recovery, in connection with matters
covered by this Section 10 but which are not based on breach or
violation of this Section 10 (including, without limitation, claims
based on the breach of fiduciary or other duties of the Executive or
any obligations of the Executive arising under any other contracts,
agreements or understandings). Without limiting the generality of the
foregoing, nothing in this Section 10 or any other provision of this
Agreement shall limit or otherwise affect the Company's right to seek
legal or equitable remedies it may otherwise have, or the amount of
damages for which it may seek recovery, resulting from or arising out
of statutory or common law or any Company policies relating to
fiduciary duties, confidential information or trade secrets. Further,
the Executive acknowledges and agrees that the fact that Section 10(c)
is limited to the Continuation Period, and that the sole remedy of the
Company hereunder is the discontinuation of benefits, shall not reduce
or otherwise alter any other contractual or other legal obligations of
the Executive during any period or circumstance, and shall not be
construed as establishing a maximum limit on damages for which the
Company may seek recovery.
11. BINDING AGREEMENT; SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns. The
Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company, by agreement to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. For purposes of
this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, beneficiaries, devises and legatees. If the Executive
should die while any amounts are payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee,
beneficiary or other designee or, if there be no such designee, to the
Executive's estate.
11
<PAGE>
12. NOTICES
For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by hand, (ii)
on the date of transmission, if delivered by confirmed facsimile, (iii) on
the first business day following the date of deposit if delivered by
guaranteed overnight delivery service, or (iv) on the third business day
following the date delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Robert Evans
210 SE Mizner Boulevard, #112
Boca Raton, FL 33432
If to the Company:
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
Attention: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
13. GOVERNING LAW
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Florida, without
regard to principles of conflicts of laws.
14. MISCELLANEOUS
No provisions of this Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge
is agreed to in writing signed by the Executive and the Company. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. Section headings contained herein
are for convenience of reference only and shall not affect the interpretation
of this Agreement.
15. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which will
constitute one and the same instrument.
16. NON-ASSIGNABILITY
12
<PAGE>
This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, or transfer
this Agreement or any rights or obligations hereunder, except as provided in
Section 11. Without limiting the foregoing, the Executive's right to receive
payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer
by his will or trust or by the laws of descent or distribution, and in the
event of any attempted assignment or transfer contrary to this paragraph the
Company shall have no liability to pay any amount so attempted to be assigned
or transferred.
17. TERM OF AGREEMENT
This Agreement shall commence on the date hereof and shall
continue in effect through May 7, 2001; PROVIDED, however, if a Change in
Control of the Company shall have occurred during the original or any
extended term of this Agreement, this Agreement shall continue in effect for
a period of twenty-four (24) months beyond the month in which such Change in
Control occurred; and, PROVIDED FURTHER, that if the Company shall become
obligated to make any payments or provide any benefits pursuant to Section 5
or 6 hereof, this Agreement shall continue for the period necessary to make
such payments or provide such benefits.
18. RESOLUTION OF DISPUTES
(a) The parties hereby agree to submit any claim, demand,
dispute, charge or cause of action (in any such case, a "Claim")
arising out of, in connection with, or relating to this Stock Option
Agreement to binding arbitration in conformance with the
J*A*M*S/ENDISPUTE Streamlined Arbitration Rules and Procedures or the
J*A*M*S/ ENDISPUTE Comprehensive Arbitration Rules and Procedures, as
applicable, but expressly excluding Rule 28 of the J*A*M*S/ENDISPUTE
Streamlined Rules and Rule 32 of the J*A*M*S/ENDISPUTE Comprehensive
Rules, as the case may be. All arbitration procedures shall be held
in Fort Lauderdale, Florida and shall be subject to the choice of law
provisions set forth in Section 13 of this Agreement.
(b) In the event of any dispute arising out of or relating
to this Agreement for which any party is seeking injunctive relief,
specific performance or other equitable relief, such matter may be
resolved by litigation. Accordingly, the parties shall submit such
matter to the exclusive jurisdiction of the United States District
Court for the Southern District of Florida or, if jurisdiction is not
available therein, any other court located in Broward County, Florida,
and hereby waive any and all objections to such jurisdiction or venue
that they may have. Each party agrees that process may be served upon
such party in any manner authorized under the laws of the United
States or Florida, and waives any objections that such party may
otherwise have to such process.
19. NO SETOFF
The Company shall have no right of setoff or counterclaim in
respect of any claim, debt or obligation against any payment provided for in
this Agreement.
20. NON-EXCLUSIVITY OF RIGHTS
13
<PAGE>
Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
subsidiaries or successors and for which the Executive may qualify, nor shall
anything herein limit or reduce such rights as the Executive may have under
any other agreements with the Company or any of its subsidiaries or
successors, except to the extent payments are made pursuant to Section 5,
they shall be in lieu of any termination, separation, severance or similar
payments pursuant to the Executive's Employment Agreement, if any, and the
Company's then existing termination, separation, severance or similar plans
or policies, if any. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of the
Company or any of its subsidiaries shall be payable in accordance with such
plan or program, except as explicitly modified by this Agreement.
21. NO GUARANTEED EMPLOYMENT
The Executive and the Company acknowledge that this Agreement
shall not confer upon the Executive any right to continued employment and
shall not interfere with the right of the Company to terminate the employment
of the Executive at any time.
22. INVALIDITY OF PROVISIONS
In the event that any provision of this Agreement is
adjudicated to be invalid or unenforceable under applicable law in any
jurisdiction, the validity or enforceability of the remaining provisions
thereof shall be unaffected as to such jurisdiction and such adjudication
shall not affect the validity or enforceability of such provision in any
other jurisdiction. To the extent that any provision of this Agreement,
including, without limitation, Section 10 hereof, is adjudicated to be
invalid or unenforceable because it is overbroad, that provision shall not be
void but rather shall be limited to the extent required by applicable law and
enforced as so limited. The parties expressly acknowledge and agree that
this Section 22 is reasonable in view of the parties' respective interests.
23. NON-WAIVER OF RIGHTS
The failure by the Company or the Executive to enforce at any
time any of the provisions of this Agreement or to require at any time
performance by the other party of any of the provisions hereof shall in no
way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement, or any part hereof, or the right of the Company
or the Executive thereafter to enforce each and every provision in accordance
with the terms of this Agreement.
24. EMPLOYMENT AGREEMENT.
If the Executive has an Employment Agreement with the Company,
and if circumstances arise which cause both the Employment Agreement and this
Agreement to apply to the Company and the Executive, then, to the extent of
any inconsistency between the provisions of this Agreement and the Employment
Agreement, the terms of this Agreement alone shall apply. However, if this
Agreement does not apply, then the provisions of the Employment Agreement
shall control and be unaffected by this Agreement.
14
<PAGE>
25. UNFUNDED PLAN.
The Company's obligations under this Agreement shall be
entirely unfunded until payments are made hereunder from the general assets
of the Company, and no provision shall be made to segregate assets of the
Company for payments to be made under this Agreement. The Executive shall
have no interest in any particular assets of the Company but rather shall
have only the rights of a general unsecured creditor of the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the day and year first above set forth.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY CERTIFYING
THAT THE EXECUTIVE (A) HAS RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND
STUDY BEFORE EXECUTING IT; (B) HAS READ THIS AGREEMENT CAREFULLY BEFORE
SIGNING IT; (C) HAS HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THE AGREEMENT
TO ASK ANY QUESTIONS THE EXECUTIVE HAS ABOUT THE AGREEMENT AND HAS RECEIVED
SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (D) UNDERSTANDS THE
EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT.
THIS AGREEMENT IN SECTION 18 CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
INTERIM SERVICES INC.
By: /s/ John B. Smith
------------------------------------
Senior Vice President and Secretary
EXECUTIVE
By: /s/ Robert Evans
------------------------------------
Robert Evans
15
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-05873, 33-76120, 333-05959, 33-76122, 333-05957, 333-18935, 333-18883,
333-18885, 333-30841, 333-30211, 333-31901, 333-31895, 333-43757 and
333-60365 on Form S-8 and Registration Statement No. 33-94532 on Form S-3 of
Interim Services Inc. of our report dated February 4, 1999, appearing in this
Annual Report on Form 10-K of Interim Services Inc. for the year ended
December 25, 1998.
/s/ Deloitte & Touche LLP
- -------------------------
Fort Lauderdale, Florida
March 12, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-25-1998
<PERIOD-START> DEC-27-1997
<PERIOD-END> DEC-25-1998
<CASH> 153,314
<SECURITIES> 0
<RECEIVABLES> 327,296
<ALLOWANCES> 8,937
<INVENTORY> 0
<CURRENT-ASSETS> 544,774
<PP&E> 157,187
<DEPRECIATION> 66,565
<TOTAL-ASSETS> 1,613,444
<CURRENT-LIABILITIES> 418,489
<BONDS> 0
0
0
<COMMON> 473
<OTHER-SE> 737,467
<TOTAL-LIABILITY-AND-EQUITY> 1,613,444
<SALES> 0
<TOTAL-REVENUES> 1,890,113
<CGS> 0
<TOTAL-COSTS> 1,255,319
<OTHER-EXPENSES> 50,791
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,157
<INCOME-PRETAX> 105,353
<INCOME-TAX> 46,776
<INCOME-CONTINUING> 58,577
<DISCONTINUED> 0
<EXTRAORDINARY> 2,773
<CHANGES> 0
<NET-INCOME> 55,804
<EPS-PRIMARY> 1.32<F1>
<EPS-DILUTED> 1.29<F2>
<FN>
<F1>EPS before extraordinary item.
<F2>EPS before extraordinary item.
</FN>
</TABLE>
