FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended June 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from ________ to ___________
Commission file number: 0-24484
Modis Professional Services, Inc.
(Exact name of Registrant as specified in its charter)
Florida 59-3116655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Independent Drive
Jacksonville, Florida
32202
(Address of principal executive offices) (Zip code)
(904) 360-2000
(Registrant's telephone
number including area code)
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 the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. July 25, 1999.
Common Stock, $0.01 par value Outstanding: 95,918,230 (No. of shares)
<PAGE>
FORWARD LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements, including but not
limited to all of the information under Part I, Item 3, under 'Quantitative and
Qualitative Disclosures About Market Risk' (except for historical data). These
forward-looking statements are subject to risks, uncertainties or assumptions
and may be affected by other factors, including but not limited to: the matters
discussed in Part I, Item 2, under 'Three months ended June 30, 1999 compared to
three months ended June 30, 1998 - Revenue,' and under 'Six months ended June
30, 1999 compared to six months ended June 30, 1998 - Revenue,' under Part 1,
Item 2 'Other Matters - Year 2000 Compliance,' under Part 1, Item 2 'Factors
Which May Impact Future Results and Financial Information,' fluctuations in the
economy and financial markets in general and in the Company's industry in
particular, industry trends towards consolidating vendor lists, the demand for
the Company's services, including the impact of changes in utilization rates and
effects of the Year 2000 on spending for non-Year 2000 related items,
consolidation of major customers, the effect of competition, including the
Company's ability to expand into new markets and to maintain profit margins in
the face of pricing pressures and wage inflation, the Company's ability to
retain significant existing customers or obtain new customers, the Company's
ability to recruit, place and retain consultants and professional employees, the
Company's ability to identify and complete acquisition targets and to
successfully integrate acquired operations into the Company, possible changes in
governmental regulations affecting the Company's operations, including possible
changes to regulations relating to benefits for consultants and temporary
personnel, unexpected fluctuations in interest rates or foreign currency
exchange rates, exposure to Year 2000 liability from the Company's Year 2000
remediation and other IT services, loss of key employees, the ability of the
Company to successfully complete its previously announced Integration and
Strategic Repositioning Plan, and other factors discussed in the Company's
previous filings with the Securities and Exchange Commission under the
Securities Exchange Act of 1934. Should one or more of these risks,
uncertainties or other factors materialize, or should underlying assumptions
prove incorrect, actual results, performance or achievements of the Company may
vary materially from any future results, performance or achievements expressed
or implied by the forward-looking statements. Forward-looking statements are
based on beliefs and assumptions of the Company's management and on information
then currently available to management. Forward-looking statements speak only as
of the date they are made, and the Company undertakes no obligation to update
publicly any of them in light of new information or future events. Undue
reliance should not be placed on such forward-looking statements.
Forward-looking statements are not guarantees of performance.
<PAGE>
<TABLE>
<CAPTION>
Modis Professional Services, Inc. and Subsidiaries
Index
<S> <C> <C>
Part I Financial Information
Item 1 Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998........................ 3
Condensed Consolidated Statements of Income for the Three and Six Months ended June 30, 1999 and 1998.. 4
Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 1999 and 1998........ 5
Notes to Condensed Consolidated Financial Statements................................................... 6
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 10
Item 3 Quantitative and Qualitive Disclosure About Market Risks............................................... 18
Part II Other Information
Item 1 Legal Proceedings...................................................................................... 20
Item 2 Changes in Securities and Use of Proceeds.............................................................. 20
Item 3 Defaults Upon Senior Securities........................................................................ 20
Item 4 Submission of Matters to a Vote of Security Holders.................................................... 20
Item 5 Other Information...................................................................................... 20
Item 6 Exhibits and Reports on Form 8-K....................................................................... 20
Signatures............................................................................................. 21
Exhibits
</TABLE>
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Modis Professional Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollar amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------------- -------------------
(unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 26,240 $ 105,816
Accounts receivable, net 358,139 327,185
Prepaid expenses 6,649 11,219
Deferred income taxes 14,613 16,858
Other 30,444 28,460
------------------- -------------------
Total current assets 436,085 489,538
Furniture, equipment and leasehold improvements, net 39,706 37,577
Goodwill, net 1,053,900 1,025,240
Other assets 17,897 19,526
------------------- -------------------
Total assets $ 1,547,588 $ 1,571,881
=================== ===================
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 2,409 $ 15,988
Accounts payable and accrued expenses 91,360 206,681
Accrued payroll and related taxes 68,604 60,844
Income taxes payable 31,845 189,887
------------------- -------------------
Total current liabilities 194,218 473,400
Notes payable, long-term portion 203,759 15,525
Deferred income taxes 16,372 12,846
------------------- -------------------
Total liabilities 414,349 501,771
------------------- -------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized;
no shares issued and outstanding - -
Common stock, $.01 par value; 400,000,000 shares authorized
95,903,815 and 96,306,323 shares issued and outstanding on
June 30, 1999 and December 31, 1998, respectively 959 963
Additional contributed capital 580,852 563,728
Retained earnings 555,088 504,899
Accumulated other comprehensive income (3,660) 520
------------------- -------------------
Total stockholders' equity 1,133,239 1,070,110
------------------- -------------------
Total liabilities and stockholders' equity $ 1,547,588 $ 1,571,881
=================== ===================
See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Modis Professional Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(unaudited)
(dollar amounts in thousands except per share amounts)
Three Months Ended Six Months Ended
------------------------------- -------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenue $ 501,679 $ 425,383 $ 984,545 $ 799,875
Cost of Revenue 366,459 307,573 719,400 577,622
------------- ------------- -------------- -------------
Gross Profit 135,220 117,810 265,145 222,253
------------- ------------- -------------- -------------
Operating expenses:
General and administrative 79,846 64,807 159,198 120,398
Depreciation and amortization 11,007 9,309 21,890 16,872
------------- ------------- -------------- -------------
Total operating expenses 90,853 74,116 181,088 137,270
------------- ------------- -------------- -------------
Income from operations 44,367 43,694 84,057 84,983
------------- ------------- -------------- -------------
Other income (expense):
Interest expense (2,789) (7,352) (4,060) (14,049)
Interest income and other, net 1,332 2,746 2,924 3,509
------------- ------------- -------------- -------------
Total other income (expense) (1,457) (4,606) (1,136) (10,540)
------------- ------------- -------------- -------------
Income from continuing operations before
provision for income taxes 42,910 39,088 82,921 74,443
Provision for income taxes 16,949 14,964 32,732 28,222
------------- ------------- -------------- -------------
Income from continuing operations 25,961 24,124 50,189 46,221
Income from discontinued operations, net of
income taxes - 12,634 - 23,113
------------- ------------- -------------- -------------
Net income $ 25,961 $ 36,758 $ 50,189 $ 69,334
============= ============= ============== =============
Basic income per common share:
from continuing operations $ 0.27 $ 0.22 $ 0.52 $ 0.43
============= ============= ============== =============
from discontinued operations $ - $ 0.11 $ - $ 0.21
============= ============= ============== =============
Basic net income per common share $ 0.27 $ 0.33 $ 0.52 $ 0.64
============= ============= ============== =============
Diluted income per common share:
from continuing operations $ 0.27 $ 0.21 $ 0.52 $ 0.40
============= ============= ============== =============
from discontinued operations $ - $ 0.10 $ - $ 0.19
============= ============= ============== =============
Diluted net income per common share $ 0.27 $ 0.31 $ 0.52 $ 0.59
============= ============= ============== =============
Average common shares outstanding, basic 96,152 110,576 96,221 107,922
============= ============= ============== =============
Average common shares outstanding, diluted 96,653 121,885 96,788 119,444
============= ============= ============== =============
See accompanying notes to consolidated financial statements.
</TABLE>
4
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<TABLE>
<CAPTION>
Modis Professional Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(dollar amounts in thousands except for per share amounts)
Six Months Ended
-------------------------------
June 30, June 30,
1999 1998
(unaudited) (unaudited)
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 50,189 $ 46,221
Adjustments to income from continuing operations to net
cash provided by (used in) operating activities:
Depreciation and amortization 21,890 16,872
Deferred income taxes 5,643 (406)
Changes in certain assets and liabilities:
Accounts receivable (28,359) (61,530)
Prepaid expenses and other assets 6,375 (17,497)
Accounts payable and accrued expenses (27,534) 7,389
Accrued payroll and related taxes 13,331 86
Other, net 1,964 (656)
--------------- ---------------
Net cash provided by (used in) operating
activities 43,499 (9,521)
--------------- ---------------
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold
improvements, net of disposals (7,638) (10,348)
Purchase of businesses, including additional earn-outs on
acquisitions, net of cash acquired (104,086) (87,345)
Income taxes and other cash expenses related to sale of
net assets of discontinued commercial operations (191,409) -
Advances associated with sale of assets of discontinued
health care operations, net of repayments (3,835) (10,216)
--------------- ---------------
Net cash used in investing activities (306,968) (107,909)
--------------- ---------------
Cash flows from financing activities:
Repurchases of common stock, net of refunds 11,871 -
Proceeds from stock options exercised 2,250 39,484
Borrowings on indebtedness 337,000 176,509
Repayments on indebtedness (164,497) (117,074)
Other - (357)
--------------- ---------------
Net cash provided by financing activities 186,624 98,562
--------------- ---------------
Effect of exchange rate changes on cash and cash equivalents (2,731) -
Net decrease in cash and cash equivalents (79,576) (18,868)
Cash provided by discontinued operations - 24,177
Cash and cash equivalents, beginning of period 105,816 23,938
--------------- ---------------
Cash and cash equivalents, end of period $ 26,240 $ 29,247
=============== ===============
Supplemental noncash investing information:
During the first quarter of 1998, the Company issued 4,598,698 shares of its
common stock, with a fair value of $130,000 in exchange for all the outstanding
common stock of Actium, Incorporated.
See accompanying notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
Modis Professional Services, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(unaudited)
(dollar amounts in thousands except for per share amounts)
1. Basis of Presentation.
The accompanying condensed consolidated financial statements are unaudited and
have been prepared by the Company in accordance with the rules and regulations
of the Securities and Exchange Commission. Accordingly, certain information and
footnote disclosures usually found in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
Form 10-K, as filed with the Securities and Exchange Commission (SEC) on March
31, 1999.
The accompanying consolidated financial statements reflect all adjustments
(including normal recurring adjustments) which, in the opinion of management,
are necessary to present fairly the financial position and results of operations
for the interim periods presented. The results of operations for an interim
period are not necessarily indicative of the results of operations for a full
fiscal year.
2. Restructuring of Operations
In December 1998, the Company's Board of Directors approved an Integration and
Strategic Repositioning Plan (the "Plan") to strengthen the overall
profitability of the Company by implementing a back office integration program
and branch repositioning plan in an effort to consolidate or close branches
whose financial performance did not meet the Company's expectations. Pursuant to
the Plan, during the fourth quarter of 1998 the Company recorded a restructuring
and impairment charge of $34,759. The restructuring component of the Plan is
based, in part, on the evaluation of objective evidence of probable obligations
to be incurred by the Company or impairment of specifically identified assets.
The Plan calls for the consolidation or closing of 23 Professional Services
division branches, certain organizational improvements and the consolidation of
15 back office operations. This restructuring, which will result in the
elimination of approximately 290 positions, will be completed over a 12- to
18-month period, which began during the first quarter of 1999.
The major components of the restructuring and impairment charge include:(1)
costs of $7,494 to recognize severance and related benefits for the
approximately 290 employees to be terminated. The severance and related benefit
accruals are based on the Company's severance plan and other contractual
termination provisions. These accruals include amounts to be paid to employees
upon termination of employment. Prior to December 31, 1998, management had
approved and committed the Company to a plan that involved the involuntary
termination of certain employees. The benefit arrangements associated with this
plan were communicated to all employees in December 1998. The plan specifically
identified the number of employees to be terminated and their job
classifications; (2) costs of $2,476 to write down certain furniture, fixtures
and computer equipment to net realizable value at branches not performing up to
the Company's expectations; (3) costs of $9,936 to write down goodwill
associated with the acquisition of Legal Information Technology, Inc. which was
acquired in January 1997, calculated in accordance with Statement of Financial
Accounting Standards (SFAS) No. 121 in the fourth quarter of 1998; (4) costs of
$8,035 to terminate leases and other exit and shutdown costs associated with the
consolidated or closed branches including closing the facilities; and (5) costs
of $6,818 to adjust accounts receivable due to the expected increase in bad
debts which results directly from the termination or change in client
relationships which results when branch and administrative employees, who have
the knowledge to effectively pursue collections, are terminated. These costs are
based upon management's best estimates based upon available information.
6
<PAGE>
The following table summarizes the restructuring activity through June 30, 1999
(in millions):
<TABLE>
<CAPTION>
Payments To Write-Down Of Payments On
Employees Certain Property, Cancelled Write-Down Of
Involuntarily Plant and Facility Certain
Terminated (a) Equipment (b) Leases (a) Receivables (b) Total
----------------- ------------------ ---------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Balances as of
December 31, 1998 $ 7,494 $ 2,476 $ 8,035 $ 6,818 $ 24,823
Charges during the
three months ended
March 31, 1999 (1,959) (125) (308) - (2,392)
Charges during the
three months ended
June 30, 1999 (2,439) (1,876) (573) (990) (5,878)
------- ------- ------- ------- -------
Balances as of
June 30, 1999 $ 3,096 $ 475 $ 7,154 $ 5,828 $ 16,553
======= ======= ======= ======= =======
(a): Cash; (b): Noncash
</TABLE>
As of June 30, 1999, the $16,553 balance in the restructuring accrual was
included in the balance sheet caption 'Accounts payable and accrued expenses'.
3. Segment Reporting
The Company discloses segment information in accordance with SFAS No. 131,
'Disclosure About Segments of an Enterprise and Related Information,' which
requires companies to report selected segment information on a quarterly basis
and to report certain entity-wide disclosures about products and services, major
customers, and the material countries in which the entity holds assets and
reports revenues.
The Company has two reportable segments: information technology and professional
services. The Company's reportable segments are strategic business units that
offer different services and are managed separately as each business unit
requires different resources and marketing strategies. The information
technology segment provides computer related consulting services. The
professional services segment provides personnel who perform specialized
services such as accounting, legal, technical, outplacement and scientific.
Discontinued operations of the Company are not contained within the scope of
this footnote.
The accounting policies of the segments are consistent with those described in
the summary of significant accounting policies in Note 2 to the Consolidated
Financial Statements on Form 10-K filed with the SEC on March 31, 1999 and all
intersegment sales and transfers are eliminated.
No one customer represents more than 5% of the Company's overall revenue.
Therefore, the Company does not believe it has a material reliance on any one
customer as the Company is able to provide services to numerous Fortune 1000 and
other leading businesses.
The Company evaluates segment performance based on revenues, gross margin and
pre-tax income from continuing operations. The Company does not allocate income
taxes or unusual items to the segments. The following table summarizes segment
and geographic information:
7
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------- --------------------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue
IT $ 354,543 $ 292,700 $ 698,456 $ 545,713
Professional 147,136 132,683 286,089 254,162
------------ ------------ ------------ ------------
Total Revenue $ 501,679 $ 425,383 $ 984,545 $ 799,875
============ ============ ============ ============
Gross Profit
IT $ 86,508 $ 77,330 $ 171,092 $ 143,455
Professional 48,712 40,480 94,053 78,798
------------ ------------ ------------ ------------
Total Gross Profit $ 135,220 $ 117,810 $ 265,145 $ 222,253
============ ============ ============ ============
Pre-tax Income from Continuing Operations
IT $ 29,948 $ 29,138 $ 58,333 $ 53,374
Professional 12,962 9,950 24,588 21,069
------------ ------------ ------------ ------------
Total Pre-tax Income from
Continuing Operations $ 42,910 $ 39,088 $ 82,921 $ 74,443
============ ============ ============ ============
Geographic Areas
Revenues
United States $ 369,141 $ 370,348 $ 761,620 $ 696,981
U.K. 126,831 50,153 211,662 91,945
Other 5,707 4,882 11,263 10,949
------------ ------------ ------------ ------------
Total $ 501,679 $ 425,383 $ 984,545 $ 799,875
============ ============ ============ ============
June 30, December 31,
-------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------
Assets
IT $ 1,077,851 $ 1,043,722
Professional 396,562 394,563
------------ ------------
1,474,413 1,438,285
Corporate 73,175 133,596
------------ ------------
Total Assets $ 1,547,588 $ 1,571,881
============ ============
Geographic Areas
Identifiable Assets
United States $ 1,189,707 $ 1,222,821
U.K. 351,949 345,182
Other 5,932 3,878
------------ ------------
Total $ 1,547,588 $ 1,571,881
============ ============
</TABLE>
8
<PAGE>
4. Comprehensive Income
The Company discloses other comprehensive income in accordance with SFAS No.
130, 'Reporting Comprehensive Income'. A summary of comprehensive income for the
three and six months ended June 30, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
Foreign
Currency Total
Net Translation Comprehensive
Three Months Ended, Income Adjustments Income
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
June 30, 1998 $ 36,758 $ 895 $ 37,653
June 30, 1999 $ 25,961 $ (2,068) 23,893
</TABLE>
<TABLE>
Foreign
Currency Total
Net Translation Comprehensive
Six Months Ended, Income Adjustments Income
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
June 30, 1998 $ 69,334 $ 706 $ 70,040
June 30, 1999 $ 50,189 $ (4,180) $ 46,009
</TABLE>
The currency translation adjustments are not adjusted for income taxes as they
relate to indefinite investments in non-U.S. subsidiaries.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
During fiscal 1998, the Company sold its assets that were unrelated to its
Information Technology and Professional Services divisions. Effective March 30,
1998, the Company sold the Health Care division for consideration of $8.0
million, consisting of $3.0 million in cash and $5.0 million in a note
receivable due March 30, 2000 bearing interest at 2% in excess of the prime
rate. In addition, the Company retained the accounts receivable of the Health
Care division of approximately $28.2 million. On September 27, 1998, the Company
sold its Commercial operations and its Teleservices division for $850 million,
prior to any purchase price adjustments, for cash.
As a result of these transactions, the Company's Consolidated Financial
Statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations have been reclassified to report the results of operations
of its Commercial, Teleservices and Health Care divisions as discontinued
operations for all periods presented.
The following detailed analysis of operations should be read in conjunction with
the 1998 Financial Statements and related notes included in the Company's Form
10-K filed on March 31, 1999.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
Results from Continuing Operations
Revenue. Revenue increased $76.3 million, or 17.9%, to $501.7 million in the
three months ended June 30, 1999, from $425.4 million in the year earlier
period. The increase was attributable by division to: Information Technology,
$61.8 million or an increase of 21.1%, and Professional Services, $14.5 million
or an increase of 10.9%. The increases in the Information Technology and
Professional Services divisions were due to both internal growth and to the
revenues of acquired companies. The revenue for the Company's Information
Technology division is obtained through the modis Solutions and modis Consulting
business units. modis Solutions provided approximately 32.7% and 28.6% of the
division's revenue for the three months ended June 30, 1999 and 1998, as
compared to 67.3% and 71.4% which was provided by the division's modis
Consulting unit during the same respective periods. The Company plans to
continue to expand the percentage of revenue contributed through its modis
Solutions unit as it expands that unit's offerings throughout the offices of the
modis Consulting unit through various cross-selling efforts.
Management has observed a current trend in the industry which may possibly
enhance the effectiveness of its strategy. This trend involves the movement of
large users of IT services to larger national and international providers of IT
services. The Company has seen a trend among large national and international
customers towards scaled-back, preferred vendor lists for supplying IT services.
The Company believes it is well positioned as one of the companies which can
successfully offer services to these customers and achieve selection as a
preferred provider. Approximately 3.3% of the Information Technology division's
total revenue is derived from two United Kingdom customers. If these or other
customers reduce spending on IT services or exclude the Company from their
vendor lists, then the fiscal 1999 IT division revenues may experience a
decrease if the revenue associated with such customers cannot be replaced.
Another trend in the industry that may limit the Company's operating strategy
has been articulated by some industry analysts who have speculated that non Year
2000 related IT spending may be negatively affected in the third and fourth
quarters of calendar 1999. This theory speculates, among other things, that
customers will focus their efforts in the third and fourth quarters of calendar
1999 on testing and implementing legacy systems which have undergone Year 2000
remediation. The theory further speculates that this focus will result in a
curtailment of spending on such IT services as ERP implementation and custom
software development. As the Company's modis Solutions unit provides ERP
implementation and custom software development services, if spending is
curtailed, the Company may possibly experience some weakness in its ERP
practice.
The Company's Professional Services division consists of the accounting and
finance, legal, technical and engineering, career management and consulting and
scientific units which contributed 39.4%, 13.1%, 32.8%, 9.5% and 5.2%,
respectively, of the Professional Services division's revenues by group during
the three months ended June 30, 1999 as compared to 32.0%, 16.1%, 36.3%, 8.7%
and 6.9%, respectively, during the year earlier period.
10
<PAGE>
Gross Profit. Gross profit increased $17.4 million, or 14.8%, to $135.2 million
in the three months ended June 30, 1999, from $117.8 million in the year earlier
period. Gross margin decreased to 27.0% from 27.7% for the same respective
periods. The gross margin in the IT division decreased from 26.4% to 24.4% for
the three months ended June 30, 1998 and 1999, respectively. The overall
decrease in the IT division's gross margin was mainly due to the increased
percentage of the Information Technology division's revenues generated by the
U.K. operations, which generally contribute a lower gross margin percentage. In
addition, as the division's Consulting Unit increases the amount of revenue
generated as a result of Preferred Vendor relationships, certain gross margin
concessions may be made in exchange for an increase in overall gross profit. The
gross margin in the Professional Services division increased to 33.1% in the
three months ended June 30, 1999 from 30.5% in the year earlier period.
Operating Expenses. Operating expenses increased $16.8 million, or 22.7%, to
$90.9 million in the three months ended June 30, 1999, from $74.1 million in the
year earlier period. Operating expenses as a percentage of revenue increased to
18.1% in the three months ended June 30, 1999, from 17.4% in the year earlier
period. The Company's general and administrative ("G&A") expenses increased
$15.0 million or 23.1% to $79.8 million in the three months ended June 30, 1999,
from $64.8 million in the year earlier period. The increase in G&A expenses was
primarily related to the effects of acquisitions made by the Company, internal
growth of operating companies post-acquisition, investments made to improve
infrastructure and to develop technical practices and increased expenses at the
corporate level to support the growth of the Company, including sales, marketing
and brand recognition. Included in G&A expenses during both the three months
ended June 30, 1999 and 1998 are the costs associated with projects underway to
ensure accurate date recognition and data processing with respect to Year 2000
as it relates to the Company's business, operations, customers and vendors.
These costs have been immaterial to date and are not expected to have a material
impact on the Company's results of operations, financial condition or liquidity
in the future. See 'OTHER MATTERS - Year 2000 Compliance' below.
Income from Operations. Income from operations increased $0.7 million, or 1.6%,
to $44.4 million in the three months ended June 30, 1999, from $43.7 million in
the year earlier period. Income from operations as a percentage of revenue
decreased to 8.8% in the three months ended June 30, 1999, from 10.3% in the
year earlier period.
Other Income (Expense). Interest expense decreased $4.6 million, or 62.2%, to
$2.8 million in the three months ended June 30, 1999, from $7.4 million in the
year earlier period. Interest expense was offset in the three months ended June
30, 1999 by interest and other income of $1.3 million from (1) investment income
from certain investments owned by the Company and (2) interest income earned
from cash on hand at certain subsidiaries of the Company.
Income Taxes. The Company's effective tax rate was 39.5% in the three months
ended June 30, 1999, compared to 38.3% in the year earlier period. The increase
in the effective tax rate was due to the increase in certain non-deductible
expense items, the majority of which are non-deductible goodwill amortization
resulting from tax-free mergers accounted for under the purchase method of
accounting.
Income from Continuing Operations. As a result of the foregoing, income from
continuing operations increased $1.9 million, or 7.9%, to $26.0 million in the
three months ended June 30, 1999, from $24.1 million in the year earlier
period. Income from continuing operations as a percentage of revenue decreased
to 5.2% in the three months ended June 30, 1999, from 5.7% in the year earlier
period.
Results from Discontinued Operations
Income from Discontinued Operations. Income from the discontinued commercial
operations, after tax, were $12.6 million for the three months ended June 30,
1998. Additionally, for the three months ended June 30, 1998, reported revenues
from discontinued operations were $312.5 million and operating income for the
discontinued operations were $ 21.5 million. Results of discontinued operations
include allocations of consolidated interest expense totaling $1.3 million for
the three months ended June 30, 1998. The allocations were based on the historic
funding needs of the discontinued operations, including: the purchases of
property, plant and equipment, acquisitions, current income tax liabilities and
fluctuating working capital needs. Due to the sale of the Commercial operations
and Teleservices division on September 27, 1998, and the sale of the Health Care
division on March 30, 1998, the three months ended June 30, 1999 results did not
include any operations of the Commercial, Teleservices or Health Care divisions.
11
<PAGE>
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
From continuing operations
Revenue. Revenue increased $184.6 million, or 23.1%, to $984.5 million in the
six months ended June 30, 1999 from $799.9 million in the year earlier period.
The increase was attributable by division to: Information Technology, $152.7
million or an increase of 28.0%; and Professional Services, $31.9 million, or an
increase of 12.6%. The increases in the Information Technology and Professional
Services divisions were due to both internal growth and to the revenues of
acquired companies. The revenue for the Company's Information Technology
division is obtained through the modis Solutions and modis Consulting business
units. modis Solutions provided approximately 31.9% and 25.1% of the division's
revenue for the six months ended June 30, 1999 and 1998, as compared to 68.1%
and 74.9% which was provided by the division's modis Consulting unit during the
same respective periods. The Company plans to continue to expand the percentage
of revenue contributed through its modis Solutions unit as it expands that
unit's offerings throughout the offices of the modis Consulting unit through
various cross-selling efforts.
Management has observed a current trend in the industry which may possibly
enhance the effectiveness of its strategy. This trend involves the movement of
large users of IT services to larger national and international providers of IT
services. The Company has seen a trend among large national and international
customers towards scaled-back, preferred vendor lists for supplying IT services.
The Company believes it is well positioned as one of the companies which can
successfully offer services to these customers and achieve selection as a
preferred provider. Approximately 3.4% of the Information Technology division's
total revenue is derived from two United Kingdom customers. If these or other
customers reduce spending on IT services or exclude the Company from their
vendor lists, then the fiscal 1999 IT division revenues may experience a
decrease if the revenue associated with such customers cannot be replaced.
Another trend in the industry that may limit the Company's operating strategy
has been articulated by some industry analysts who have speculated that non Year
2000 related IT spending may be negatively affected in the third and fourth
quarters of calendar 1999. This theory speculates, among other things, that
customers will focus their efforts in the third and fourth quarters of calendar
1999 on testing and implementing legacy systems which have undergone Year 2000
remediation. The theory further speculates that this focus will result in a
curtailment of spending on such IT services as ERP implementation and custom
software development. As the Company's modis Solutions unit provides ERP
implementation and custom software development services, if spending is
curtailed, the Company may possibly experience some weakness in its ERP
practice.
The Company's Professional Services division consists of the accounting and
finance, legal, technical and engineering, career management and consulting and
scientific units which contributed 38.1%, 13.9%, 32.3%, 10.4% and 5.3%,
respectively, of the Professional Services division's revenues by group during
the six months ended June 30, 1999 as compared to 32.3%, 16.2%, 35.9%, 9.0% and
6.6%, respectively, during the year earlier period.
During the first quarter of 1999, the Company created and filled the position of
President and COO of the Professional Services division. This position will be
responsible for the operations of all business units of the Professional
Services division. The Company believes this position will create inertia to
improve the platform for better operational results throughout the entire
Professional Services division. Additionally, the Special Counsel unit of the
Professional Services division formed strategic alliances with International
Paper and The Document Company Xerox in the six months ended June 30, 1999.
Gross Profit. Gross profit increased $42.8 million or 19.3% to $265.1 million in
the six months ended June 30, 1999 from $222.3 million in the year earlier
period. Gross margin decreased to 26.9% in the six months ended June 30, 1999
from 27.8% in the year earlier period. The gross margin in the IT division
decreased from 26.3% to 24.5% for the six months ended June 30, 1998 and 1999,
respectively. The overall decrease in the IT division's gross margin was mainly
due to the increased percentage of the Information Technology division's
revenues generated by the U.K. operations, which generally contribute a lower
gross margin percentage. In addition, as the division's Consulting Unit
increases the amount of revenue generated as a result of Preferred Vendor
relationships, certain gross margin concessions may be made in exchange for an
increase in overall gross profit. The gross margin in the Professional division
increased to 32.9% in the six months ended June 30, 1999 from 31.0% in the year
earlier period.
12
<PAGE>
Operating Expenses. Operating expenses increased $43.8 million, or 31.9%, to
$181.1 million in the six months ended June 30, 1999 from $137.3 million in the
year earlier period. Operating expenses as a percentage of revenue increased to
18.4% in the six months ended June 30, 1999 from 17.2% in the year earlier
period. The Company's general and administrative ("G&A") expenses increased
$38.8 million or 32.2% to $159.2 million in the six months ended June 30, 1999,
from $120.4 million in the year earlier period. The increase in G&A expenses was
primarily related to the effects of acquisitions made by the Company, internal
growth of operating companies post-acquisition, investments made to improve
infrastructure and to develop technical practices and increased expenses at the
corporate level to support the growth of the Company, including sales, marketing
and brand recognition. Included in G&A expenses during both the six months ended
June 30, 1999 and 1998 are the costs associated with projects underway to ensure
accurate date recognition and data processing with respect to Year 2000 as it
relates to the Company's business, operations, customers and vendors. These
costs have been immaterial to date and are not expected to have a material
impact on the Company's results of operations, financial condition or liquidity
in the future. See 'OTHER MATTERS - Year 2000 Compliance' below.
Income from Operations. Income from operations decreased $0.9 million, or 1.1%
to $84.1 million in the six months ended June 30, 1999 from $85.0 million in the
year earlier period. Income from operations as a percentage of revenue decreased
to 8.5% in the six months ended June 30, 1999 from 10.6% in the year earlier
period.
Other Income (Expense). Interest expense decreased $9.9 million, or 70.7%, to
$4.1 million in the six months ended June 30, 1999, from $14.0 million in the
year earlier period. Interest expense was offset in the six months ended June
30, 1999 by interest and other income of $2.9 million from (1) investment income
from certain investments owned by the Company and (2) interest income earned
from cash on hand at certain subsidiaries of the Company. Immediately subsequent
to the sale of the Company's Commercial operations and Teleservices divisions in
September 1998, the Company paid off and terminated the Company's then existing
credit facility. The new and currently existing facility did not have a balance
at December 31, 1998 and the Company did not begin borrowing on the facility
until late in the first quarter of 1999.
Income Taxes. The Company's effective tax rate was 39.5% in the six months ended
June 30, 1999, compared to 37.9% in the year earlier period. The increase in the
effective tax rate was due to the increase in certain non-deductible expense
items, the majority of which are non-deductible goodwill amortization resulting
from tax-free mergers accounted for under the purchase method of accounting.
Income from continuing operations. As a result of the foregoing, income from
continuing operations increased $4.0 million, or 8.7%, to $50.2 million in the
six months ended June 30, 1999 from $46.2 million in the year earlier period.
Income from continuing operations as a percentage of revenue decreased to 5.1%
in the six months ended June 30, 1999 from 5.8% in the year earlier period.
From discontinued operations
Income from Discontinued Operations. Income from the discontinued commercial
operations, after tax, were $23.1 million for the six months ended June 30,
1998. Additionally, for the six months ended June 30, 1998, reported revenues
from discontinued operations were $589.7 million and operating income for the
discontinued operations were $ 39.6 million. Results of discontinued operations
include allocations of consolidated interest expense totaling $2.7 million for
the six months ended June 30, 1998. The allocations were based on the historic
funding needs of the discontinued operations, including: the purchases of
property, plant and equipment, acquisitions, current income tax liabilities and
fluctuating working capital needs. Due to the sale of the Commercial operations
and Teleservices division on September 27, 1998, and the sale of the Health Care
division on March 30, 1998, the six months ended June 30, 1999 results did not
include any operations of the Commercial, Teleservices or Health Care divisions.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements have principally related to the acquisition
of businesses, working capital needs and capital expenditures. These
requirements have been met through a combination of bank debt, issuances of
Common Stock and internally generated funds. The Company's operating cash flows
and working capital requirements are affected significantly by the timing of
payroll and by the receipt of payment from the customer. Generally, the Company
pays its Information Technology and Professional Services consultants
semi-monthly, and receives payments from customers within 30 to 80 days from the
date of invoice.
The Company had working capital of $241.9 million and $16.1 million as of June
30, 1999 and December 31, 1998, respectively. The Company had cash and cash
equivalents of $26.2 million and $105.8 million as of June 30, 1999 and December
31, 1998, respectively. The principal reasons for the increase in the Company's
working capital is that included in current liabilities at December 31, 1998
were (1) amounts related to earn-out payments due to the former owners of
acquired companies and (2) a $175 million current tax liability relating to the
sale of its Commercial operations and Teleservices division. The majority of
these amounts were paid in the first quarter of fiscal 1999. The Company
generated $43.5 million of cash flows from operations during the six months
ended June 30, 1999 versus using $9.5 million during the same period in fiscal
1998. The increase in cash flow from operations in the six months ended June 30,
1999 is due to the reduction in cash needed to fund accounts receivable and cash
flows provided from acquired companies.
The Company used $307.0 million for investing activities in the six months ended
June 30, 1999 mainly as a result of the payment of the current tax liability,
net worth adjustment and certain transaction expenses relating to the sale of
the Company's Commercial operations and Teleservices division. Additionally, the
Company used $104.1 million for acquisitions and earn-out payments and $7.6
million for capital expenditures. In the six months ended June 30, 1998, the
Company used $107.9 million for investing activities, of which $87.3 million was
used for acquisitions and earn-out payments and $10.3 million was used for
capital expenditures. For the six months ended June 30, 1999, the Company did
not pay any indemnification claims resulting from the sale of the Company's
Commercial, Teleservices and Health Care divisions in 1998. Although the Company
has received certain claims for indemnification or notices of possible claims
pursuant to such obligations, the Company believes that it has meritorious
defenses against such claims and does not believe that such claims, if
successful, would have a material adverse effect on the Company's financial
condition or results of operations.
For the six months ended June 30, 1999 and 1998, the Company generated $186.6
million and $98.6 million of cash flows from financing activities, respectively.
For both the six months ended June 30, 1999 and 1998, these amounts primarily
represent net borrowings from the Company's credit facility. For the six months
ended June 30, 1999, these net borrowings were used primarily to satisfy the
current tax liability, net worth adjustment, and certain transaction expenses
relating to the sale of the Company's Commercial operations and Teleservices
division while for the six months ended June 30, 1998 these net borrowings were
used primarily to fund acquisitions and earn-out payments.
On October 31, 1998, the Company's Board of Directors authorized the repurchase
of up to $200.0 million of the Company's Common Stock pursuant to a share
buyback program. On December 4, 1998, the Company's Board of Directors increased
the authorized share buyback program by an additional $110.0 million, bringing
the total authorized repurchase amount to $310.0 million. As of December 31,
1998, the Company had repurchased approximately 21,751,000 shares under the
share buyback program. Included in the shares repurchased as of December 31,
1998 were approximately 6,150,000 shares repurchased under an accelerated stock
acquisition plan ("ASAP"). The Company entered into the ASAP with a certain
brokerage firm which agreed to sell to the Company shares of its Common Stock at
a certain cost. The brokerage firm borrowed these shares from its customers and
was required to enter into market transactions, subject to Company approval, and
purchase shares of Company Common Stock to return to its customers. The Company,
pursuant to the ASAP, agreed to compensate the brokerage firm for any increases
in the Company's stock price that would cause the brokerage firm to pay an
amount to purchase the stock over the ASAP price. Conversely, the Company would
receive a refund in the purchase price if the Company's stock price fell below
the ASAP price. Subsequent to December 31, 1998, the Company used refunded
proceeds from the ASAP to complete the program during January and February 1999,
with the repurchase of approximately 597,000 shares, bringing the total shares
repurchased under the program to approximately 22,348,000 shares. All of these
shares were retired upon purchase.
The Company is also obligated under various acquisition agreements to make
earn-out payments to former stockholders of acquired companies over the next
four years. The Company estimates that the amount of these payments will total
$8.4 million for the remainder of 1999, and $26.2 million, $10.1 million and
$2.9 million annually, for the next three years. The Company anticipates that
the cash generated by the operations of the acquired companies will provide a
substantial part of the capital required to fund these payments.
14
<PAGE>
The Company anticipates that capital expenditures for furniture and equipment,
including improvements to its management information and operating systems
during the remainder of 1999 will be approximately $6.0 million. The Company
anticipates recurring expenditures in future years to be approximately $15.0
million per year.
In connection with the Company's sale of its health care operations, the Company
entered into an agreement with the purchaser of the health care assets whereby
the Company agreed to make advances to the purchaser to fund its working capital
requirements not to exceed the lesser of $25.0 million or 85% of accounts
receivable through September 30, 1999. These advances are collateralized by all
the assets of the sold operations. As of June 30, 1999, the Company had advanced
approximately $19.7 million under this agreement. Additionally, the Company has
$5.0 million in notes receivable from the sale of the health care operations,
which is offset by a reserve of $1.5 million.
The Company believes that funds provided by operations, available borrowings
under the credit facility, and current amounts of cash will be sufficient to
meet its presently anticipated needs for working capital, capital expenditures
and acquisitions for at least the next 12 months.
Indebtedness of the Company
On October 30, 1998, the Company entered into a $500 million revolving credit
facility which is syndicated to a group of 13 banks with NationsBank, N.A., as
principal agent. The facility expires on October 21, 2003. Outstanding amounts
under the credit facility bear interest at certain floating rates as specified
by the credit facility. The credit facility contains certain financial and
non-financial covenants relating to the Company's operations, including
maintaining certain financial ratios. Repayment of the credit facility is
guaranteed by the material subsidiaries of the Company. In addition, approval is
required by the majority of the lenders when the cash consideration of an
individual acquisition exceeds 10% of consolidated stockholders' equity of the
Company.
As of July 25, 1999, the Company had a balance of $192.0 million outstanding
under the credit facility. The Company also had outstanding letters of credit in
the amount of $1.5 million, reducing the amount of funds available under the
credit facility to $306.5 million, as of July 25, 1999.
The Company also has certain notes payable to shareholders of acquired
companies. The notes payable bear interest at rates ranging from 4.3% to 8.0%
and have repayment terms from January 1999 to November 2004. As of July 25, the
Company owed approximately $12.8 million in such acquisition indebtedness.
SEASONALITY
The company's quarterly operating results are affected primarily by the number
of billing days in the quarter and the seasonality of its customers' businesses.
Demand for services in the information technology and professional services
businesses is typically lower during the first quarter until customers'
operating budgets are finalized and the profitability of the Company's
consultants is generally lower in the fourth quarter due to fewer billing days
because of the higher number of holidays and vacation days.
15
<PAGE>
OTHER MATTERS
Year 2000 Compliance
During 1997 the Company began projects to address potential problems within the
Company's operations which could result from the century change in the Year
2000. In 1998, the Company created a Year 2000 Project Office to oversee Year
2000 related projects and to address potential problems within the Company's
operations, which could result from the century change in the Year 2000. The
Project Office reports to the Company's Board of Directors, is staffed primarily
with representatives of the Company's Information Systems Department and has
access to key associates in all areas of the Company's operations. The Project
Office also uses outside consultants on an as-needed basis.
A four-phase approach has been utilized to address the Year 2000 issues: (1) an
inventory phase to identify all computer-based systems and applications
(including embedded systems) which might not be Year 2000 compliant; (2) an
assessment phase to determine what revisions or replacements would be necessary
to achieve Year 2000 compliance and identification of remediation priorities
which would best serve the Company's business interests; (3) a conversion phase
to implement the actions necessary to achieve compliance and to conduct the
tests necessary to verify that the systems are operational; and (4) an
implementation phase to transition the compliant systems into the everyday
operations of the Company. Management believes that the four phases are
approximately 100%, 100%, 85%, and 80% complete, respectively.
The Company's corporate accounting, payroll and human resources systems are
recent implementations (installed since June 1997) of mainstream computer
products from vendors such as PeopleSoft, Informix, Microsoft, Digital Equipment
Corporation and Compaq. The Company has completed Year 2000 required upgrades
for corporate hardware systems, operating systems, network systems, database
systems and applications systems with the exception of the project to upgrade
the Company's PeopleSoft financial applications from version 6.1 to Year 2000
compliant version 7.5. This project is in process and on schedule, with an
anticipated completion date of early September 1999.
The Company operates approximately 263 branches, primarily in the U.S., Canada
and the United Kingdom. The branch network relies on a variety of front office
automation systems to provide sales support for resume tracking and client
contact management. Because of the diverse architectural nature of these systems
together with the relative ease with which backup/contingency procedures can be
implemented in the event of an individual branch system outage, the Company does
not believe that these systems pose a material Year 2000 risk. Nevertheless, the
Company has completed inventory and assessment phases for all branch locations.
In conjunction with other business related integration projects, the Company is
actively replacing noncompliant Year 2000 branch hardware and software with Year
2000 compliant products. The Company expects that this replacement process will
be complete in North America in early September 1999. The company expects this
replacement process will be complete for United Kingdom offices in October 1999.
To date, the Company has found that less than 10% of branch workstations require
hardware or software upgrades for Year 2000 purposes.
Milestones and implementation dates and the cost of the Company's Year 2000
readiness program are subject to change based on new circumstances that may
arise or new information becoming available, that may change underlying
assumptions or requirements. Further, there are no assurances that the Company
will identify all data handling problems in its business systems or that the
Company will be able to successfully remedy Year 2000 items that are discovered.
Non-IT systems have also been assessed and inventoried. Potential Year 2000
risks in these systems include landlord-controlled systems, such as heating and
cooling systems, automated security systems, elevators, and office equipment,
phone systems, facsimile machines and copiers. The Company has requested
assessments of non-IT systems for Year 2000 compliance from landlords and office
equipment vendors. Based on these responses that the Company has received, the
Company believes that the Year 2000 risk of non-IT systems failure is not
material.
The Company budgeted $2.0 million to address the Year 2000 issues to, which
includes the estimated cost of the salaries of associates and the fees of
consultants addressing the issue. This cost represents approximately 12% of the
Company's total MIS budget. Approximately $1.9 has been incurred to date for
outside consultants, software and hardware applications, and dedicated
personnel. The Company does not separately track the internal costs incurred for
portions of the Year 2000 compliance project that are completed as a part of
other business related projects. Such costs are principally the related payroll
costs for the Company's information systems group. The Company believes that
cash flows from operations and funds available under the Company's credit
facility as well as cash on hand are sufficient to fund these costs.
16
<PAGE>
As a part of the Year 2000 review, the Company is examining its relationships
with certain key outside vendors and others with whom it has significant
business relationships to determine to the extent practical the degree of such
parties' Year 2000 compliance and to develop strategies and alternatives for
working with them through the century change. Other than its banking
relationships, which include only large, federally insured institutions, and
utilities (electrical power, telecommunications, water and related items), the
Company does not have a relationship with any third-party which is material to
the operations of the Company and, therefore, believes that the failure of any
such party to be Year 2000 compliant would not have a material adverse effect on
the Company. However, banking or utility failures at the Company's branches or
with its customers could have a material effect on the Company's revenue sources
and could disrupt the payment cycle of certain of the Company's customers.
Should the Company or a third party with whom the Company deals have a systems
failure due to the century change, the Company does not expect any such effect
to be material. The Company is developing contingency plans for alternative
methods of transaction processing and estimates that such plans will be
finalized by August 1999.
17
<PAGE>
Item 3. Quantitative And Qualitative Disclosures About Market Risk
The following assessment of the Company's market risks does not include
uncertainties that are either nonfinancial or nonquantifiable, such as
political, economic, tax and other credit risks.
Interest Rates. The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's short-term and long-term debt
obligations and to the Company's investments.
The Company's investment portfolio consists of cash and cash equivalents
including deposits in banks, government securities, money market funds, and
short-term investments with maturities, when acquired, of 90 days or less. The
Company is adverse to principal loss and ensures the safety and preservation of
its invested funds by placing these funds with high credit quality issuers. The
Company constantly evaluates its invested funds to respond appropriately to a
reduction in the credit rating of any investment issuer or guarantor.
The Company's short-term and long-term debt obligations totaled approximately
$206.2 million as of June 30, 1999 and the Company had $301.2 million available
under its current credit facility. The debt obligations consist of (1) notes
payable to former shareholders of acquired corporations, are at a fixed rate of
interest, and extend through 2004 and (2) amounts outstanding under the credit
facility which expires in 2003. The interest rate risk on the note obligations
is immaterial due to the dollar amount and fixed nature of these obligations.
The interest rate on the credit facility is variable, with the rate on
borrowings outstanding at June 30, 1999 at 5.6%. As of June 30, 1999, the
Company has not entered into any interest rate instruments to reduce its
exposure to interest rate risk.
Foreign Currency Exchange Rates. Foreign currency exchange rate changes impact
translations of foreign denominated assets and liabilities into U.S. dollars and
future earnings and cash flows from transactions denominated in different
currencies. The Company generated approximately 26.4% and 22.6% of its
consolidated revenues for the three and six months ended June 30, 1999
consolidated revenues from international operations, respectively, 95.7% and
94.9%of which were from the United Kingdom and 4.3% and 5.1% of which were from
other countries, respectively. Thus, 95.7% and 94.9%of international revenues
for the three and six months ended June 30, 1999 were derived from the United
Kingdom, whose currency, has not fluctuated materially against the United States
dollar since the Company began operating in the United Kingdom. The Company
recorded unrealized cumulative foreign exchange translation losses of $3,660 as
of June 30, 1999, and unrealized cumulative foreign exchange translation gains
of $520 as of December 31, 1998. The cumulative amounts are recorded as a
separate component of stockholders' equity under the caption 'Accumulated other
comprehensive income'. The Company did not hold and has not entered into any
foreign currency derivative instruments as of June 30, 1999.
18
<PAGE>
FACTORS WHICH MAY IMPACT FUTURE RESULTS AND FINANCIAL CONDITION
Effect of Fluctuations in the General Economy
Demand for the Company's information technology and professional business
services is significantly affected by the general level of economic activity in
the markets served by the Company. During periods of slowing economic activity,
companies may reduce the use of outside consultants and staff augmentation
services prior to undertaking layoffs of full-time employees. Also during such
periods, companies may elect to defer installation of new information technology
systems and platforms (such as Enterprise Resource Planning systems) or upgrades
to existing systems and platforms. Year 2000 remediation and testing for
existing information technology systems may have a similar effect. As a result,
any significant economic downturn or Year 2000 impact could have a material
adverse effect on the Company's results of operations or financial condition.
The Company may also be adversely effected by consolidations through mergers and
otherwise of main customers or between major customers with non-customers. These
consolidations as well as corporate downsizings may result in redundant
functions or services and a resulting reduction in demand by such customers for
the Company's services. Also, spending for outsourced business services may be
put on hold until the consolidations are completed.
Competition
The Company's industry segments are intensely competitive and highly fragmented,
with few barriers to entry by potential competitors. The Company faces
significant competition in the markets that it serves and will face significant
competition in any geographic market that it may enter. In each market and
industry segment in which the Company operates, it competes for both clients and
qualified professionals with other firms offering similar services. Competition
creates an aggressive pricing environment and higher wage costs, which puts
pressure on gross margins.
Ability to Recruit and Retain Professional Employees
The Company depends on its ability to recruit and retain employees who possess
the skills, experience and/or professional certifications necessary to meet the
requirements of the Company's clients. Competition for individuals possessing
the requisite criteria is intense, particularly in certain specialized IT and
professional skill areas. The Company often competes with its own clients in
attracting and retaining qualified personnel. There can be no assurance that
qualified personnel will be available and recruited in sufficient numbers on
economic terms acceptable to the Company.
The continuing shortage of qualified IT consultants may adversely affect the
Company's ability to increase revenue. This shortage may be exacerbated by the
difficulties of utilizing the services of qualified foreign nationals working in
the United States under H-1B visas. The use of these consultants requires both
the Company and these foreign nationals to comply with United States immigration
laws.
Ability to Continue Acquisition Strategy; Ability to Integrate Acquired
Operations
The Company has experienced significant growth in the past through acquisitions.
Although the Company continues to seek acquisition opportunities, there can be
no assurance that the Company will be able to negotiate acquisitions on economic
terms acceptable to the Company or that the Company will be able to successfully
identify acquisition candidates and integrate all acquired operations into the
Company.
Possible Changes in Governmental Regulations
From time to time, legislation is proposed in the United States Congress, state
legislative bodies and by foreign governments that would have the effect of
requiring employers to provide the same or similar employee benefits to
consultants and other temporary personnel as those provided to full-time
employees. The enactment of such legislation would eliminate one of the key
economic reasons for outsourcing certain human resources and could significantly
adversely impact the Company's staff augmentation business. In addition, the
Company's costs could increase as a result of future laws or regulations that
address insurance, benefits or other employment-related matters. There can be no
assurance that the Company could successfully pass any such increased costs to
its clients.
Possible Year 2000 Exposure
The IT division performs both Year 2000 remediation services as well as system
upgrades and enhancements for clients. There is some possibility that customers
who experience system failures related to Year 2000 may institute actions
against their IT vendors, including the Company. There is no ability to quantify
the likelihood or merit of any such claims; but if a significant number of such
claims are asserted against the Company or if one or more customers assert
meritorious claims, such claims may result in material adverse effects on the
Company's results of operations and financial condition.
19
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
No disclosure required.
Item 2. Changes in Securities
No disclosure required.
Item 3. Defaults Upon Senior Securities
No disclosure required.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of the Company's shareholders was held on May 26, 1999.
Proxies were solicited from shareholders of record on the close of business on
March 24, 1999. On March 24, 1999, there were 95,798,567 shares outstanding and
entitled to vote at the Annual Meeting. The shareholder vote on the issues
presented at the Annual Meeting was as follows:
ELECTION OF DIRECTORS
All of the following persons nominated were elected to serve as directors and
received the number of votes set opposite their names:
<TABLE>
<CAPTION>
Name For Withhold Authority
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Derek E. Dewan 81,392,294 548,130
Daniel M. Doyle 81,537,064 403,360
Peter J. Tanous 81,545,213 395,211
T. Wayne Davis 81,538,574 401,850
John K. Anderson, Jr. 81,538,824 401,600
Michael D. Abney 81,491,143 449,281
</TABLE>
Item 5. Other Information
No disclosure required.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
10.2 Modis Professional Services, Inc. amended and restated
Non-Employee Director Stock Plan.
10.10 Executive Employment Agreement with Derek E. Dewan.
10.11 Executive Employment Agreement with Michael D. Abney.
10.12 Executive Employment Agreement with Marc M. Mayo.
10.13 Executive Employment Agreement with Timothy D. Payne.
10.14 Executive Employment Agreement with George Bajalia.
10.15 Executive Employment Agreement with Robert P. Crouch.
11 Calculation of Per Share Earnings.
27 Financial Data Schedule.
B. Reports on Form 8-K
No disclosure required
20
<PAGE>
SIGNATURES
Pursuant to the requirements of 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 dates indicated.
Signatures Title Date
/s/ DEREK E. DEWAN President, Chairman August 16, 1999
- ---------------------- of the Board and Chief
Derek E. Dewan Executive Officer
/s/ MICHAEL D. ABNEY Senior Vice President, August 16, 1999
- ---------------------- Chief Financial Officer,
Michael D. Abney Treasurer, and Director
/s/ ROBERT P. CROUCH Vice President and August 16, 1999
- ---------------------- Chief Accounting Officer
Robert P. Crouch
21
MODIS PROFESSIONAL SERVICES, INC.
(FORMERLY ACCUSTAFF INCORPORATED)
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR STOCK PLAN
<PAGE>
AMENDED AND RESTATED
MODIS PROFESSIONAL SERVICES, INC.
NON-EMPLOYEE DIRECTOR STOCK PLAN
1. PURPOSES
The purposes of the Modis Professional Services, Inc. Non-Employee Director
Stock Option Plan are to provide an incentive and reward to the Company's
non-employee directors.
2. DEFINITIONS
2.1 For purposes of the Plan the following terms shall have the definition which
is attributed to them unless another definition is clearly indicated by a
particular usage and context.
(a) 'Agreement' means the written document issued by the Board to a
Participant whereby an Award is made to that Participant.
(b) 'Award' means the issuance pursuant to the Plan of an Option.
(c) 'Awarded Shares' means Shares subject to outstanding Awards.
(d) 'Board' means the Company's Board of Directors.
(e) 'Change in Control' shall mean the occurrence of either of the
following events:
(i) A change in the composition of the Board of Directors as a result
of which fewer than one-half of the incumbent directors are directors
who either:
(1) Had been directors of the Company 24 months prior to such
change; or
(2) Were elected, or nominated for election, to the Board of
Directors with the affirmative votes of at least a majority of
the directors who had been directors of the Company 24 months
prior to such change and who were still in office at the time of
the election or nomination; or
(ii) Any "person" (as such term is used in sections 13(d) and 14(d) of
the Exchange Act), other than any person who is a shareholder of the
Company on or before the effective date of the Plan, by the
acquisition or aggregation of Securities is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 50 percent or more of the combined voting power of the
Company's then outstanding securities ordinarily (and apart from
rights accruing under special circumstances) having the right to vote
at elections of directors (the "Base Capital Stock"); except that any
change in the relative beneficial ownership of the Company's
securities by any person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital Stock, and any
decrease thereafter in such person's ownership of securities, shall be
disregarded until such person increases in any manner, directly or
indirectly, such person's beneficial ownership of any securities of
the Company.
(f) 'Code' means the Internal Revenue Code of 1986, as amended.
(g) 'Company' means Modis Professional Services, Inc., a corporation
incorporated under the laws of the state of Florida, and any successor
thereto.
(h) 'Director' means a member of the Board.
(i) 'Effective Date of Grant' means the effective date of grant for each
Option established by Section 5.1 of the Plan.
(j) 'Employee' means any individual who performs services as a common law
employee for the Company, a Parent or Subsidiary, and is included on the
regular payroll of the Company, a Parent or Subsidiary.
(k) 'Fair Market Value' means the value established by the Board based upon
such factors as the Board in its sole discretion shall decide including,
but not limited to, a valuation prepared by an independent third party
appraiser selected, or approved, by the Board. If at any time the Stock is
traded on an established trading system, it means the last sale price
reported on any stock exchange or over-the-counter trading system on which
Shares are trading on a specified date or, if not so trading, the average
of the closing bid and asked prices for a Share on a specified date. If no
sale has been made on the specified date, then prices on the last preceding
day on which any such sale shall have been made shall be used in
determining fair market value under either method prescribed in the
previous sentence.
(l) 'Option' means the right to purchase from the Company a stated number
of Shares at a specified price.
(m) 'Option Price' means the purchase price per Share subject to an Option.
(n) 'Parent' means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, at the time of a granting
of an option, each of the corporations (other than the Company) in the
unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain within the meaning of Code Section 424(e) and any regulations or
rulings promulgated thereunder.
(o) 'Participant' means a Director who has received an Award under the
Plan.
(p) 'Permanent and Total Disability' shall have the same meaning as given
to that term by Code Section 22(e)(3) and any regulations or rulings
promulgated thereunder.
(q) 'Plan' means the AccuStaff Incorporated Non-Employee Director Stock
Plan, as evidenced herein and as amended from time to time.
(r) 'Rule 16b-3' means Rule 16b-3 as promulgated by the Securities and
Exchange Commission under the 1934 Act, or any successor rule or regulation
thereto.
(s) 'Share' means one share of the common stock, $.01 par value, of the
Company.
(t) 'Subsidiary' means any corporation in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the Award,
each of the corporations (other than the last corporation) in the unbroken
chain owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain,
within the meaning of Code Section 424(f) and any regulations or rulings
promulgated thereunder.
(u) '1933 Act' means the Securities Act of 1933, as amended.
(v) '1934 Act' means the Securities Exchange Act of 1934, as amended.
3. ADMINISTRATION
3.1 The Plan is intended to meet the requirements of Rule 16b-3 adopted under
the 1934 Act and accordingly is intended to be self-governing. To this end, the
Plan requires no discretionary action by any administrative body with regard to
any transaction under the Plan.
3.2 The Plan shall be administered by the full Board.
3.3 The action of a majority of the Board at which a quorum is present, or an
action approved in writing by a majority of the Board, shall be the valid
actions of the Board.
3.4 The Board shall have the authority to interpret and construe the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each Agreement and make all other determinations
necessary or advisable for the administration of the Plan, including, without
limitation, the amending or modifying of outstanding Options or Awards, provided
that the Participant consents to such action. The Board shall also have the
discretion and authority to specify, with respect to Options or Awards of a
particular Participant, the effect upon such Participant's right to exercise an
Option or Award upon death, which effect might include acceleration of the date
at which an Option or Award may be exercised in full; provided, however, that in
no event may an Option or Award be exercised after the expiration of ten (10)
years from the Effective Date of Grant. The interpretation and construction by
the Board of any provisions of the Plan or any Option or Award granted under it
and all actions of the Board shall be binding on all parties hereto. No member
of the Board shall be liable for any action or determination made in good faith
with respect to the Plan or any Option or Award granted under it.
4. ELIGIBILITY
4.1 Each Director who is not an Employee shall be a Participant.
5. AWARD OF OPTION
5.1 (a) On the date on which a Participant is first elected or appointed as a
Director of the Company during the existence of the Plan, such Participant
shall automatically be granted a non-qualified Option to purchase 60,000
Shares (an 'Initial Grant').
(b) Each year on the date on which a Participant is reelected as a Director
of the Company during the existence of the Plan, such Participant shall
automatically be granted a non-qualified Option to purchase 20,000 Shares
(an 'Annual Grant').
(c) The maximum number of Shares (underlying Options granted pursuant to
Sections 5.1(a) and 5.1(b)) granted to a Participant serving as a Director
of the Company prior to the Company's 1996 annual meeting of stockholders
shall not exceedm 160,000 during the lifetime of his service to the
Company. The maximum number of Shares (underlying Options granted pursuant
to Sections 5.1(a) and 5.1(b)) granted to a Participant first elected a
Director of the Company on or after the Company's 1996 annual meeting of
stockholders shall not exceed 100,000 during the lifetime of his service to
the Company.
(d) The Board shall have the authority to grant additional Options, in
excess of those described in Sections 5.1(a) and 5.1(b), to a Participant
as the Board may determine in its discretion.
5.2 The Option Price per share shall be the Fair Market Value of a Share on the
Effective Date of Grant.
6. STOCK
6.1 The aggregate number of Shares which may be issued under the Plan shall be
1,600,000 Shares.
6.2 In the event that any outstanding Award under the Plan expires or is
terminated for any reason, the Awarded Shares subject to that Award may again be
the subject of an Award under the Plan.
7. TERMS AND CONDITIONS
7.1 Awards granted pursuant to the Plan shall be evidenced by Agreements, which
Agreements shall contain or shall be subject to the following terms and
conditions, whether or not such terms and conditions are specifically included
therein:
(a) Number of Shares. Each Initial Grant Agreement shall state that it
pertains to 60,000 Shares. Each Annual Grant Agreement shall state that is
pertains to 20,000 Shares.
(b) Date. Each Agreement shall state the Effective Date of Grant.
(c) Price. Each Agreement shall state the Option Price.
(d) Method and Time of Payment. With respect to any Award, or portion
thereof, the Option Price shall be payable on the exercise of the Award and
shall be paid in cash, in Shares (including Shares acquired pursuant to the
Plan), or a combination of both. Shares transferred in payment of the
Option Price shall be valued as of date of transfer based on their then
Fair Market Value.
(e) Transfer of Option or Stock. No Award shall be transferable by the
Participant, except by will or the laws of descent and distribution or to
the extent such transfer is to a member of the Optionee's immediate family
or to a trust for the benefit of such an immediate family member. If an
option is transferred to any member of the Optionee's immediate family or
to a trust for the benefit of such an immediate family member, it shall be
exercisable solely by the transferee.
(f) Recapitalization. Appropriate adjustments shall be made in the number
of Awarded Shares and in the aggregate number of Shares which may be issued
under the Plan in order to give effect to changes made in the number of
outstanding Shares as a result of a merger, consolidation,
recapitalization, reclassification, combination, stock dividend, stock
split, or other relevant change. Notwithstanding the foregoing, (i) Options
subject to grant or previously granted under the Plan at the time of any
event described above shall be subject to only such adjustment as shall be
necessary to maintain the proportionate interest of the Participant and
preserve, without exceeding, the value of such Options, and (ii) the number
of Shares subject to award under the Plan at the time of any event
described above shall be subject to only such adjustment as shall be
necessary to maintain the relative proportionate interest represented by
such Shares immediately prior to any such event.
(g) Investment Purpose.
(i) The Company shall not be obligated to sell or issue any Shares
pursuant to any Award unless such Shares are at the time effectively
registered or exempt from registration under the 1933 Act. The
determination of whether a Share is exempt from registration shall be
made by the Company's legal counsel and its determination shall be
conclusive and binding on all parties hereto.
(ii) Notwithstanding anything in the Plan to the contrary, each Award
under the Plan shall be granted on the condition that the purchases of
Shares thereunder shall be for investment purposes and not with a view
for resale or distribution except that in the event the Shares subject
to such Award are registered under the 1933 Act, or in the event of a
resale of such Shares without such registration that would otherwise
be permissible, such condition shall be inoperative if in the opinion
of counsel for the Company such condition is not required under the
1933 Act or any other applicable law, regulation, or rule of any
governmental agency.
(h) Vesting Schedule. An Option may not be exercised prior to the date it
is vested. Each Initial Grant shall be subject to a vesting schedule which
will provide that 20% of the total Shares subject to the Option shall vest
on each of the first five (5) anniversaries of the Effective Grant Date.
Each Annual Grant shall be subject to a vesting schedule which will provide
that 33 1/3% of the total Shares subject to the Option shall vest on each
of the first three (3) anniversaries of the Effective Grant Date. The
Board, at its discretion, may amend the vesting schedule of any particular
Option or Award, including the acceleration of the date which an Option may
be exercised in full.
(i) Duration of Award. Options granted pursuant to the Plan will have a
term of ten (10) years from the Effective Date of Grant. An Option granted
pursuant to an Award shall terminate when it has been fully exercised,
unless terminated sooner pursuant to the provisions of this paragraph
7.1(i).
If for any reason a Participant ceases to be a Director of the Company one
year or more after the Director's initial election or appointment to the
Board while holding an Option granted under the Plan, such Options as have
vested on or prior to such time shall continue to be exercisable for a
period of three (3) years after such termination or the remainder of the
term of the Option, whichever is shorter. If for any reason a Participant
ceases to be a Director of the Company within one year after the Director's
initial election or appointment to the Board, such Option shall be canceled
as of the date of such termination.
(j) Effect of Death or Disability. The Committee may determine, at the time
of granting an Option or thereafter, the affect upon an individual's right
to exercise such Option of the individual's death or Disability, which
affect may include immediate or deferred termination of such individual's
rights under the Option, or acceleration of the date at which an Option may
be exercised in full.
(k) Effect of Change in Control. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become
exercisable on an accelerated basis in the event that a Change in Control
occurs with respect to the Company (and the Committee shall have the
discretion to modify the definition of a Change in Control in a particular
Option Agreement). If the Committee finds that there is a reasonable
possibility that, within the succeeding six months, a Change in Control
will occur with respect to the Company, then the Committee may determine
that all outstanding Options shall be exercisable on an accelerated basis.
7.2 The Company may place such legends on stock certificates representing the
Shares as the Company, in its sole discretion, deems necessary or appropriate to
reflect restrictions under the Plan, the Agreement, the Code, the securities
laws or otherwise.
7.3 Notwithstanding any provision herein to the contrary, service as a Director
shall be at the pleasure of the shareholders of the Company. Nothing contained
in the Plan or in any Award granted pursuant to it shall confer upon any
Participant a right to continue as a Director.
7.4 Any person entitled to exercise an Option may do so in whole or in part by
delivering to the Company at its principal office, attention Corporate
Secretary, a written notice of exercise. The written notice shall specify the
number of Shares for which an option is being exercised. The notice shall be
accompanied by full payment of the option Price for the Shares being purchased.
During the Participant's lifetime, an option may be exercised only by the
Participant, or on the Participant's behalf by the Participant's legal guardian.
7.5 A Participant shall have no rights as a stockholder with respect to any
Shares subject to an Option until the date of the issuance of a stock
certificate to him for such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Plan Section 7.1(f).
8. AMENDMENT OR DISCONTINUANCE OF PLAN
8.1 The Board may at any time amend, suspend or discontinue the Plan; provided,
however, that without further approval of the shareholders of the Company no
amendments by the Board shall:
(a) Change the class of persons eligible to participate;
(b) Increase the aggregate number of Shares which may be issued under the
Plan, except as provided in Section 6.1 of the Plan; or
(c) Otherwise be made if shareholder approval is required to satisfy the
requirements of Rule 16(b)(3) promulgated under the 1934 Act.
8.2 No amendment to the Plan shall alter or impair any Award granted under the
Plan without the consent of the holders thereof.
8.3 Articles 4, 5 and 7 of the Plan, in the aggregate, may not be amended more
than once every six months, unless such amendment is permitted by Rule
16b-3(c)(2)(ii)(B) under the 1934 Act.
9. INDEMNIFICATION OF BOARD
In addition to such other rights of indemnification as they may have as
Directors, the members of the Board shall be indemnified by the Company against
the reasonable expenses, including attorneys' fees, actually incurred in
connection with the defense of any pending, threatened or possible action, suit
or proceeding, or in connection with any pending, threatened or possible appeal
therein, to which they or any of them may be a party by reason of any actual or
alleged action taken or failure to act under or in connection with the Plan or
any option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by the Company) or paid
by them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Board member is liable for gross negligence or
willful misconduct in the performance of his duties; provided that within sixty
days after institution of anysuch action, suit or proceeding a Board member
shall in writing offer the Company the opportunity, at its own expense, to
handle and defend the same.
10. NO OBLIGATION TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon the Participant to
exercise such Option.
11. EFFECTIVE DATE; DURATION OF THE PLAN
11.1 The Plan shall become effective as of December 29, 1993.
11.2 No Award may be made after the tenth anniversary of the effective date of
the Plan.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of January, 1999, by and
between MODIS PROFESSIONAL SERVICES, INC., a Florida corporation, and its
successors ("Employer"), and DEREK E. DEWAN, a resident of the State of Florida
("Executive").
WHEREAS, the Employer and the Executive entered into an employment agreement
dated December 31, 1993 which has subsequently been amended; and
WHEREAS, the Employer and the Executive desire to enter into an amended and
restated employment agreement (the "Agreement"), which Agreement shall replace
and thereby supersede all prior employment agreements and amendments thereto
previously executed between the Employer and the Executive;
NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants, and subject to the terms and conditions contained in this Agreement,
the Employer and Executive, intending to be legally bound, hereby agree as
follows:
1. Employment. Employer hereby employs Executive as President and Chief
Executive Officer, and Executive hereby accepts employment by Employer, in
accordance with and subject to the terms and conditions of this Agreement.
2. Duties and Authority. During the Employment Period (as hereinafter
defined), Executive will occupy the position of President, Chief Executive
Officer, and member of the Board of Directors of Employer (the 'Board'). As
President and Chief Executive Officer, Executive shall be in charge of the
operations of Employer and shall have full authority and responsibility,
subject to the general direction and control of the Board, for formulating
policies and administering the affairs of Employer in all respects, and
otherwise performing such duties as are customarily performed by the
President, Chief Executive Officer and member of the board of directors of
a company of similar size and structure to Employer. In the absence of the
Chairman of the Board, Executive will preside over meetings of the
shareholders and the Board. Executive agrees to devote his full time,
attention and best efforts to the performance of his duties hereunder;
provided, however, it shall not be considered a violation of the foregoing
for the Executive to serve on corporate, industry, civic, or charitable
boards or committees, so long as such activities do not materially
interfere with the performance of the Executive's responsibilities as an
employee of the Employer in accordance with this Agreement.
3. Initial Term; Employment Period. The initial term of employment shall
begin on January 1, 1999, and end on December 31, 2000 (the "Term of this
Agreement"). The Term of this Agreement shall be extended automatically for
one year on December 31, 2000, and each annual anniversary thereof (the
'Extension Date') unless, and until, at least 90 days prior to the
applicable Extension Date either the Employer or the Executive provides
written notice to the other party that this Agreement is not to be extended
(the later of December 31, 2000 or the last date to which the Term is
extended shall be the 'End of Term'). For purposes of this Agreement, the
period beginning on January 1, 1999, and ending on the Date of Termination
(as hereinafter defined) shall be referred to herein as the "Employment
Period."
4. Compensation. During the Employment Period which is in the Term of this
Agreement, Executive shall receive the following compensation:
a) Base Salary. A base annual salary of $500,000, payable in
accordance with the Employer's standard practice for other senior
executives. Executive's base salary shall be subject to annual review
by the Board for discretionary periodic increases in accordance with
the Employer's compensation policies. References to 'Base Salary' in
this Agreement shall be to the base salary set forth in this Paragraph
4.a and shall include any increases to such base salary made hereby.
b) Incentive Compensation. The Executive shall be entitled to a target
incentive compensation opportunity expressed as a percentage of Base
Salary of not less than 100% under the Modis Annual Incentive Plan
('Incentive Plan').
5. Stock Options.
a) Grant of Options. Employer shall grant to Executive stock options
from time to time during the Employment Period at the discretion of
the Compensation Committee of the Board of Directors. These may be
made pursuant to the Modis Professional Services, Inc. Amended and
Restated 1995 Stock Option Plan, as amended from time to time, or
pursuant to a newly established, a successor plan or other plan
approved by the Board of Directors. Other forms of equity compensation
such as restricted stock, stock appreciation rights or phantom stock
may be granted from time to time at the discretion of the Compensation
Committee of the Board of Directors (the 'Compensation Committee').
b) Investment Representation. Executive agrees that he will not sell
or otherwise dispose of all or any part of the common stock of
Employer acquired hereunder unless he shall have received an opinion
of counsel, in form and substance satisfactory to counsel for Employer
(each party to bear the expense of its own counsel), to the effect
that registration of the shares to be sold or disposed of is not
required under the Securities Act of 1933, as amended (the 'Act'), or
unless there shall be in effect a registration statement under said
Act with respect to the proposed sale or disposition of the shares to
be sold or disposed of, and Executive shall have complied with all
applicable provisions of the Act and the rules and regulations
thereunder.
c) Registration. If the Employer has not already done so, prior to the
exercise of any stock option granted pursuant to this Paragraph 5 or
granted pursuant to the Stock Option Agreement between the Company and
the Executive dated January 1, 1999, at the Executive's request, the
Employer shall as soon as reasonably possible register Executive's
shares pursuant to the appropriate form of registration statement
under the Act and shall thereafter maintain such registration
statement's effectiveness at all required times.
d) Exercise. Any existing stock option(s) and any stock options
granted after the effective date of this Agreement shall provide for:
(i) exercisability of vested options (including those vested
under paragraph 5.d)(ii) below) for at least two years following
the Executive's termination of employment with the Employer (or
if sooner, 10 years from date of grant of the option);
(ii) full vesting of options upon a Change in Control (as
hereafter defined) or termination of the Executive's employment
with the Employer for reasons other than (A) by the Employer for
Cause (as hereafter defined), or (B) by the Executive without
Good Reason (as hereafter defined); and
(iii) exercisability only to the extent vested on the date of the
Executive's termination of employment with the Employer, in the
event of termination (A) by the Employer for Cause, or (B) by the
Executive without Good Reason.
e) For purposes of this Agreement, 'Change in Control' shall mean:
(i) the acquisition by any person or persons (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934) not
a shareholder of Employer on June 1, 1998, of legal or beneficial
ownership of 35% or more of either (A) the then outstanding
shares of common stock of the Employer, or (B) the combined
voting power of the then outstanding voting securities of the
Employer entitled to vote generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the Board
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Board
shall be considered as though such individual were a member of
the Board as of the date hereof;
(iii) approval by the shareholders of the Employer of a
reorganization, merger, or consolidation, in each case unless the
shareholders of the Employer immediately before such
reorganization, merger, or consolidation own, directly or
indirectly, immediately following such reorganization, merger, or
consolidation at least a majority of the combined voting power of
the outstanding voting securities of the corporation resulting
from such reorganization, merger, or consolidation in
substantially the same proportion as their ownership of the
voting securities immediately before such reorganization, merger
or consolidation; or
(iv) approval by the shareholders of the Employer of (A) a
complete liquidation or dissolution of the Employer, or (B) the
sale or other disposition of more than 50% of the assets of the
Employer within a twelve month period.
6. Benefits. During the term of this Agreement, Executive shall receive the
following additional benefits at no cost to the Executive:
a) Life Insurance. Employer shall provide and pay for a whole life
insurance policy insuring the life of Executive in the amount of
$1,000,000, the beneficiary or beneficiaries of which shall be
designated by Executive, and which shall be transferable to Executive
without cost upon the termination of Executive's employment for any
reason and upon Executive's assumption of the obligation to make
future premium payments with respect thereto.
b) Disability Insurance. Employer shall provide and pay for disability
insurance for Executive in the maximum available amount (but not more
than sixty percent (60%) of the Executive's Base Salary), with a
maximum monthly benefit payable until the earlier to occur of the
Executive's death or attaining age 65 and with a waiting period of no
more than six (6) months, the beneficiary or beneficiaries of which
shall be designated by Executive. Employer shall pay 100% of Base
Salary for each month during the disability waiting period and until
the insurance provided hereunder begins to make disability payments.
For purposes of this Agreement, 'Disability' shall have the meaning
set forth in the Employer's long-term disability plan or policy and
shall not be considered to have occurred until after the waiting
period as required by such plan or policy.
c) Medical and Group Insurance. Employer shall include Executive and
his dependents in any group medical, dental and hospital or similar
plan of Employer in existence from time to time. Employer will
purchase individual medical, dental and hospital insurance for
Executive if group coverage is not in existence or is unavailable.
Post-employment medical, dental and hospital insurance, either as
group coverage or an individual policy, will be provided to executive
and his dependents at Employer's expense at the same level as other
senior executive officers for a period of two years following the Date
of Termination.
d) Vacation. Executive shall be entitled to five (5) weeks of paid
vacation during each calendar year. Unused vacation time will be paid
to Executive at calendar year end.
e) Automobile. Executive shall receive an automobile allowance of $750
per month.
f) Club Dues. Employer shall pay Executive's membership dues for the
Gate Governor's Club, the River Club and Sawgrass Country Club (not
greater than a total of $10,000 per annum). Upon Compensation
Committee approval, Employer shall pay for such other club dues and
membership fees for Executive as are reasonable and customary from
time to time.
g) Communications and Other Equipment. Employer shall provide
Executive with, and shall pay all costs of operating and maintaining,
cellular telephones, pagers, telephone and cable lines, notebook and
desk top computers, facsimile machines, hand-held organizers/palm
tops, and such other equipment necessary for Executive to perform his
duties at Executive's offices or residences as deemed necessary by
Executive.
h) Expense Reimbursement. Executive shall be entitled to reimbursement
for all reasonable expenses, including meals, telephone, travel, and
entertainment, incurred by Executive in the performance of his duties.
Executive will maintain records and written receipts as required by
federal and state tax authorities to substantiate expenses as an
income tax deduction for Employer and shall submit vouchers for
expenses for which reimbursement is made. Credit card receipts
(American Express, etc.) and other receipts are acceptable along with
other corroborative evidence.
i) Other Benefits. To the extent not otherwise provided herein (it
being the intent not to duplicate benefits), Employer shall provide
Executive with no less than the same type and level of other benefits
provided by the Employer from time to time to its other executive
officers, senior management personnel and Board members. These
include, but are not limited to, life and health insurance benefits,
participation in pension and profit sharing plans, stock option and
stock purchase plans, stock appreciation rights, and stock warrants.
7. Non-Compete and Non-Solicitation; Confidentiality. In consideration of
the employment of Executive by Employer, Executive agrees as follows:
a) Non-Compete and Non-Solicitation. During the Employment Period and
for a period of two years after the Date of Termination, Executive
will not, directly or indirectly, within a one hundred fifty mile
radius of any office of Employer (or a consolidated subsidiary) in
existence on the Date of Termination, own, manage, be employed by,
work for, consult for, be an officer or director of, advise,
represent, engage in or carry on any business which competes with the
business of the Employer at that time. Nothing herein shall be
construed to prohibit Executive from rendering professional services
subsequent to the Date of Termination as an independent certified
public accountant to a business that competes with Employer. During
the Employment Period and for a period of two years after the Date of
Termination, Executive will not, directly or indirectly, solicit or
induce, or attempt to solicit or induce, any employee of the Company
(or a consolidated subsidiary) to leave the Company (or a consolidated
subsidiary) for any reason whatsoever, or solicit the services of any
employee of the Company (or a consolidated subsidiary).
b) Non-Disclosure of Information. Executive will not at any time,
during or after the term of this Agreement, in any fashion, form, or
manner, either directly or indirectly, divulge, disclose, or
communicate to any person, firm, or corporation, in any manner
whatsoever, any information of any kind, nature, or description
concerning any matters affecting or relating to the business of the
Employer, including, but not limited to, the names of any of its
customers or prospective customers or any other information concerning
the business of the Employer, its manner of operation, its plans, its
vendors, its suppliers, its advertising, its marketing, its methods,
its practices, or any other information of any kind, nature, or
description, without regard to whether any or all of the foregoing
matters would otherwise be deemed confidential, material, or
important; provided, however, that this provision shall not prevent
disclosures by Executive to the extent such disclosures are (i)
believed by the Executive, in good faith and acting reasonably, to be
in the best interest of the Employer, (ii) of information that is
public at the time of the disclosure (other than as a result of the
Executive's violation of this Paragraph 7(b)), or (iii) as required by
law or legal process (and, if the Executive is so required to
disclose, Executive shall provide the Employer notice of such to allow
the Company the opportunity to contest such disclosure).
8. Termination of Employment.
a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
Additionally, if the Employer determines in good faith that the
Executive has incurred a Disability, it may give the Executive written
notice of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Employer shall
terminate effective on the later of (i) the date in the notice, (ii)
the day after receipt of such notice by the Executive, or (iii) the
date the Disability has been considered to occur (the "Disability
Effective Date"), provided that, prior to such date, the Executive
shall not have returned to full-time performance of the Executive's
duties.
b) Cause. The Employer may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean (i) a breach by the Executive of the Executive's
obligations under paragraph 2 above (other than as a result of
temporary incapacity due to physical or mental illness, or Disability)
which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Employer and which is not
remedied in a reasonable period of time after receipt of written
notice from the Employer specifying such breach; (ii) the conviction
of the Executive of a felony; or (iii) a breach of the Executive's
fiduciary duty to the Employer or willful violation in the course of
performing his duties for the Employer of any law, rule or regulation
(other than traffic violation or other minor offenses). (No act or
failure to act on the Executive's part shall be considered willful
unless done or omitted in bad faith and without reasonable belief that
the action or omission was in the best interest of the Employer.)
c) Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent
with the Executive's position (including status, offices, titles
and reporting requirement), authority, duties or responsibilities
as contemplated by Paragraph 2 or any other action by the
Employer which results in a diminution in such position,
authority, duties or responsibilities (including the Executive no
longer being the Chief Executive Officer of a publicly held
company);
(ii) a reduction in the Executive's Base Salary, target bonus or
incentive compensation which is more than de minimis;
(iii) any failure by the Employer to comply with any of the
provisions of this Agreement;
(iv) the Employer's requiring the Executive to be based at any
office or location other than Jacksonville, Florida; or
(v) the Employer's providing notice to the Executive pursuant to
Paragraph 3 that the Agreement will not be extended, unless the
purpose of such notice is to negotiate the terms of a new
agreement between the Employer and the Executive and the notice
provides that the Agreement continues in effect until such new
agreement is entered into.
Notwithstanding paragraph 6(c)(i) above, the Executive shall not
have Good Reason if he is involved in a group which acquires a
substantial portion of the Company's assets or stock. For
purposes of this subparagraph c, any good faith determination of
"Good Reason" made by the Executive shall be conclusive. However,
no such event described hereunder shall constitute Good Reason
unless the Executive has given written notice to the Employer
specifying the event relied upon for such termination within one
year after the occurrence of such event and the Employer has not
remedied such within 60 days of receipt of such notice. The
Employer and the Executive, upon mutual written agreement, may
waive any of the foregoing provisions which would otherwise
constitute Good Reason.
d) Notice of Termination. Any termination by the Employer for Cause,
or by the Executive for Good Reason, shall be communicated to the
other party by Notice of Termination. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon; (ii)
to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment; and (iii) specifies the Date of Termination
(as defined below). Notice of intent to terminate employment for Good
Reason must be provided pursuant to Paragraph 8.c of this Agreement.
The failure by the Executive or the Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Employer hereunder or preclude the Executive or the
Employer from asserting such fact or circumstance in enforcing the
Executive's or the Employer's rights hereunder.
e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Employer for Cause, or by
the Executive for Good Reason, the date specified in the Notice of
Termination as the Date of Termination; (ii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be; and (iii) if the
Executive's employment is terminated by either party other than for
death, Disability, Cause or Good Reason, the date set forth in the
notice required under subparagraph d above as the date the termination
is to be effective.
9. Obligations of the Employer upon Termination. Upon termination of the
Executive's employment for any reason during the Term of this Agreement,
Executive shall be entitled to Base Salary and all benefits through the
Date of Termination, and to exercise then vested stock options in
accordance with Paragraph 5.d.(i) above. Upon the termination of the
Executive's employment during the Term of this Agreement by the Executive
for Good Reason, or by the Employer for any reason other than Cause,
Executive shall in addition be entitled to exercise the option(s) with
accelerated vesting pursuant to Paragraph 5.d.(ii) above. In addition, upon
the termination of the Executive's employment during the Term of this
Agreement by the Executive for Good Reason, or by the Employer for any
reason other the Cause, Disability or death, the Executive shall be
entitled to receive a lump sum payment equal to three (3) times the sum of
(i) Executive's Base Salary as of the Date of Termination, and (ii) the
Executive's target bonus opportunity under the Incentive Plan based on the
target bonus opportunity for the year of termination; plus (iii) Employee
and dependent medical, dental and hospital benefits would continue to be
provided at Employer expense (either group or individual policy) for a
period of two years following the Date of Termination. The lump sum payment
shall be paid no later than thirty days after the Date of Termination in
immediately available United States funds. Notwithstanding the preceding
provisions, at the Employer's sole discretion, the Employer may pay the
amount determined as a lump sum in this Paragraph 9 in 36 equal monthly
payments beginning on the first day of the month first following the Date
of Termination.
10. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise. Except as otherwise provided above
with respect to certain welfare benefits, the amount of any payment
provided for under this Agreement shall not be reduced by any compensation
earned by the Executive as the result of self-employment or employment by
another employer or otherwise.
11. Tax Effect. If Independent Tax Counsel shall determine that the
aggregate payments made and benefits provided to the Executive pursuant to
this Agreement and any other payments and benefits provided to the
Executive from the Employer, its affiliates and plans which constitute
"parachute payments" as defined in Section 280G of the Code (or any
successor provision thereto) ("Parachute Payments") would be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount (determined by Independent Tax Counsel) such that
after payment by the Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the Gross-Up Payment
an amount equal to the Excise Tax imposed upon the payments. For purposes
of this Paragraph, "Independent Tax Counsel" shall mean a lawyer, a
certified public accountant with a nationally recognized accounting firm,
or a compensation consultant with a nationally recognized actuarial and
benefits consulting firm with expertise in the area of executive
compensation tax law, who shall be selected by the Employer and shall be
reasonably acceptable to the Executive, and whose fees and disbursements
shall be paid by the Employer.
a) If Independent Tax Counsel shall determine that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a
written opinion that the Executive has substantial authority not to
report any Excise Tax on the Executive's Federal income tax return. If
the Executive is subsequently required to make a payment of any Excise
Tax, then the Independent Tax Counsel shall determine the amount of
such additional payment ('Gross-Up Underpayment'), and any such
Gross-Up Underpayment shall be promptly paid by the Employer to or for
the benefit of the Executive. The fees and disbursements of the
Independent Tax Counsel shall be paid by the Employer.
b) The Executive shall notify the Employer in writing within 15 days
of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Employer of a Gross-Up Payment. If
the Employer notifies the Executive in writing that it desires to
contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, the Executive shall:
(i) give the Employer any information reasonably requested by the
Employer relating to such claim;
(ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Employer;
(iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
(iv) permit the Employer to participate in any proceedings
relating to such claim; provided, however, that the Employer
shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as
a result of such representation and payment of costs and
expenses. The Employer shall control all proceedings taken in
connection with such contest; provided, however, that if the
Employer directs the Executive to pay such claim and sue for a
refund, the Employer shall advance the amount of such payment to
the Executive, on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance.
c) If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to this Paragraph 11, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall,
within 10 days, pay to the Employer the amount of such refund,
together with any interest paid or credited thereon after taxes
applicable thereto.
12. Notices. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of receipt if delivered
personally to the party to whom notice is to be given, or on the second day
after mailing if mailed by first class mail, postage prepaid. Notices shall
be properly addressed to the parties at their respective addresses set
forth below or to such other address as either party may later specify by
notice to the other:
If to Employer:
Modis Professional Services, Inc.
Attn: Corporate Secretary
One Independent Drive
Jacksonville, Florida 32202
If to Executive:
Derek E. Dewan
7003 Gaines Court
Jacksonville, Florida 32217
13. Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof, including, but not limited to, any
and all prior employment agreements and related amendments entered into
between the Employer and the Executive. This Agreement may be changed only
by an agreement in writing signed by the party against whom any waiver,
change, amendment or modification is sought.
14. Waiver. The waiver by one party of a breach of any of the provisions of
this Agreement by the other shall not be construed as a waiver of any
subsequent breach.
15. Attorney's Fees. In the event of litigation or other dispute resolution
proceeding involving the interpretation or enforcement of this Agreement,
the prevailing party shall be entitled to recover from the other all fees,
costs and expenses incurred in connection therewith, including attorney's
fees through appeal.
16. Tax Withholding. The Employer shall have the right to deduct from all
benefits and/or payments under the Agreement any taxes required by law to
be paid or withheld with respect to such benefits or payments.
17. Governing Law; Venue. The Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Duval County, Florida,
shall be proper venue for any litigation arising out of this Agreement.
18. Paragraph Headings. Paragraph headings are for convenience only and are
not intended to expand or restrict the scope or substance of the provisions
of this Agreement.
19. Assignability. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer. This Agreement is a personal
employment agreement and the rights, obligations and interests of the
Executive hereunder may not be sold, assigned, transferred, pledged or
hypothecated.
20. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and shall in no way be impaired.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to account for more than one
such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
30 day of July, 1999.
EXECUTIVE
/s/ Tyra Tutor /s/ Derek E. Dewan
__________________________ ___________________________
Witnesses Derek E. Dewan
EMPLOYER
/s/ Marc Mayo
___________________________ /s/ T. Wayne Davis
Witnesses By:___________________________
Chairman of Compensation
Committee, Board of Directors
Witnesses
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of January, 1999, by and
between MODIS PROFESSIONAL SERVICES, INC., a Florida corporation, and its
successors ("Employer"), and MICHAEL D. ABNEY, a resident of the State of
Florida ("Executive").
WHEREAS, the Employer and the Executive entered into an employment agreement
effective January 1, 1996; and
WHEREAS, the Employer and the Executive desire to enter into an amended and
restated employment agreement (the "Agreement"), which Agreement shall replace
and thereby supersede all prior employment agreements and any amendments thereto
previously executed between the Employer and the Executive;
NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants, and subject to the terms and conditions contained in this Agreement,
the Employer and Executive, intending to be legally bound, hereby agree as
follows:
1. Employment. Employer hereby employs Executive as Senior Vice President
and Chief Financial Officer, and Executive hereby accepts employment by
Employer, in accordance with and subject to the terms and conditions of
this Agreement.
2. Duties and Authority. During the Employment Period (as hereinafter
defined), Executive will occupy the position of Senior Vice President and
Chief Financial Officer of the Employer. As Senior Vice President and Chief
Financial Officer, Executive shall have the responsibility of administering
the affairs of the Employer to the extent, and otherwise performing such
duties as are, customarily performed by the Senior Vice President and Chief
Financial Officer of a company of similar size and structure to the
Employer. Executive agrees to devote his full time, attention and best
efforts to the performance of his duties hereunder; provided, however, it
shall not be considered a violation of the foregoing for the Executive to
serve on corporate, industry, civic, or charitable boards or committees, so
long as such activities do not materially interfere with the performance of
the Executive's responsibilities as an employee of the Employer in
accordance with this Agreement.
3. Initial Term; Employment Period. The initial term of employment shall
begin on January 1, 1999, and end on December 31, 1999 (the "Term of this
Agreement"). For purposes of this Agreement, the period beginning on
January 1, 1999, and ending on the Date of Termination (as hereinafter
defined) shall be referred to herein as the "Employment Period."
4. Compensation. During the Employment Period which is in the Term of this
Agreement, Executive shall receive the following compensation:
a) Base Salary. A base annual salary of $250,000, payable in
accordance with the Employer's standard practice for other comparable
executives. Executive's base salary shall be subject to annual review
by the Board of Directors of the Employer (the 'Board') for
discretionary periodic increases in accordance with the Employer's
compensation policies. References to 'base salary' in this Agreement
shall be to the base salary set forth in this Paragraph 4.a and shall
include any increases to such base salary made hereby.
b) Incentive Compensation. The Executive shall be entitled to a target
incentive compensation opportunity expressed as a percentage of Base
Salary of not less than 100% under the Modis Annual Incentive Plan
('Incentive Plan').
5. Stock Options.
a) Grant of Options. Employer shall grant to Executive stock options
from time to time in a manner consistent with that to which it grants
to other senior executive officers of the Employer pursuant to the
Modis Professional Services, Inc., Amended and Restated, 1995 Stock
Option Plan, as amended from time to time, or pursuant to a newly
established or successor plan.
b) Exercise. Any existing stock option(s) and any stock options
granted after the effective date of this Agreement shall provide for:
(i) exercisability of vested options (including those vested
under paragraph 5.b.(ii) below) for at least two years (two
months if for Cause (as hereafter defined) following the
Executive's termination of employment with the Employer (or if
sooner, 10 years from date of grant of the option);
(ii) full vesting of options upon a Change in Control (as
hereafter defined) or termination of the Executive's employment
with the Employer for reasons other than (i) by the Employer for
Cause, or (ii) by the Executive without Good Reason (as hereafter
defined), and
(iii) exercisability only to the extent vested on the date of the
Executive's termination of employment with the Employer, in the
event of termination (i) by the Employer for Cause, or (ii) by
the Executive without Good Reason.
c) Change in Control.
(i) the acquisition by any person or persons (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934) not
a shareholder of Employer on June 1, 1998, of legal or beneficial
ownership of 35% or more of either (A) the then outstanding
shares of common stock of the Employer, or (B) the combined
voting power of the then outstanding voting securities of the
Employer entitled to vote generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the Board
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Board
shall be considered as though such individual were a member of
the Board as of the date hereof;
(iii) approval by the shareholders of the Employer of a
reorganization, merger, or consolidation, in each case unless the
shareholders of the Employer immediately before such
reorganization, merger, or consolidation own, directly or
indirectly, immediately following such reorganization, merger, or
consolidation at least a majority of the combined voting power of
the outstanding voting securities of the corporation resulting
from such reorganization, merger, or consolidation in
substantially the same proportion as their ownership of the
voting securities immediately before such reorganization, merger
or consolidation; or
(iv) approval by the shareholders of the Employer of (A) a
complete liquidation or dissolution of the Employer or (B) the
sale or other disposition of more than 50% of the assets of the
Employer within a twelve month period.
6. Benefits. To the extent not otherwise provided herein (it being the
intent not to duplicate benefits), during the Term of this Agreement,
Employer shall provide the Executive with all retirement, welfare, deferred
compensation, disability and other benefits generally provided to all of
the Employer's other senior executive officers. Executive shall be entitled
to four (4) weeks of paid vacation per calendar year. Unused vacation shall
be paid out at calendar year end. The Employer shall reimburse the
Executive for all reasonable and necessary expenses incurred while
conducting business in accordance with policies adopted by the Employer
from time to time. Furthermore, the Employer shall pay the Executive or a
leasing company, at the Executive's option, $750 per month for an
automobile used by the Executive for business purposes. The Executive
acknowledges that pursuant to the Internal Revenue Code and the regulations
promulgated thereunder, the Employer may be required to report for tax
purposes all or a portion of certain of the benefits and reimbursements
provided in this Agreement as income in respect of the Executive.
7. Non-Compete; Confidentiality. In consideration of the employment of
Executive by Employer, Executive agrees as follows:
a) Non-Compete and Non-Solicitation. During the Employment Period and
for a period of two years after the Date of Termination, Executive
will not, directly or indirectly, within a fifty mile radius of any
office of Employer (or a consolidated subsidiary) in existence on the
Date of Termination, own, manage, be employed by, work for, consult
for, be an officer or director of, advise, represent, engage in or
carry on any business which competes with the business of the Employer
at that time. Nothing herein shall be construed to prohibit Executive
from rendering professional services subsequent to the Date of
Termination as an independent certified public accountant to a
business that competes with Employer. During the Employment Period and
for a period of two years after the Date of Termination, Executive
will not, directly or indirectly, solicit or induce, or attempt to
solicit or induce, any employee of the Employer (or a consolidated
subsidiary) to leave the Employer (or a consolidated subsidiary) for
any reason whatsoever, or solicit the services of any employee of the
Employer (or a consolidated subsidiary).
b) Non-Disclosure of Information. Executive will not at any time,
during or after the term of this Agreement, in any fashion, form, or
manner, either directly or indirectly, divulge, disclose, or
communicate to any person, firm, or corporation, in any manner
whatsoever, any information of any kind, nature, or description
concerning any matters affecting or relating to the business of the
Employer, including, but not limited to, the names of any of its
customers or prospective customers or any other information concerning
the business of the Employer, its manner of operation, its plans, its
vendors, its suppliers, its advertising, its marketing, its methods,
its practices, or any other information of any kind, nature, or
description, without regard to whether any or all of the foregoing
matters would otherwise be deemed confidential material, or important;
provided, however, that this provision shall not prevent disclosures
by Executive to the extent such disclosures are (i) believed by the
Executive, in good faith and acting reasonably, to be in the best
interest of the Employer, (ii) of information that is public at the
time of the disclosure (other than as a result of the Executive's
violation of this Paragraph 7(b), or (iii) as required by law or legal
process (and, if the Executive is so required to disclose, Executive
shall provide the Employer notice of such to allow the Company the
opportunity to contest such disclosure).
8. Termination of Employment.
a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
Additionally, if the Employer determines in good faith that the
Executive has incurred a Disability, it may give the Executive written
notice of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Employer shall
terminate effective on the later of (i) the date in the notice, (ii)
the day after receipt of such notice by the Executive, (iii) or the
date the Disability has been considered to occur (the 'Disability
Effective Date'), provided that, prior to such date, the Executive
shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall have the
meaning set forth in the Employee's long term disability plan or
policy covering the Executive and shall not be considered to have
occurred until after the waiting period as required by such plan or
policy.
b) Cause. The Employer may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean (i) a breach by the Executive of the Executive's
obligations under paragraph 2 above (other than as a result of
temporary incapacity due to physical or mental illness, or Disability)
which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Employer and which is not
remedied in a reasonable period of time after receipt of written
notice from the Employer specifying such breach or (ii) the conviction
of the Executive of a felony; or (iii) a breach of the Executive's
fiduciary duty to the Employer or willful violation in the course of
performing his duties for the Employer of any law, rule or regulation
(other than traffic violation or other minor offenses). No act or
failure to act on the Executive's part shall be considered willful
unless done or omitted in bad faith and without reasonable belief that
the action or omission was in the best interest of the Employer.
c) Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status,
offices, titles and reporting requirement), authority, duties or
responsibilities as contemplated by Paragraph 2 or any other
action by the Employer which results in a diminution in such
position, authority, duties or responsibilities;
(ii) a reduction in the Executive's Base Salary or target bonus
opportunity which is more than de minimis;
(iii) a reduction which is more than de minimis (except if such
reduction is a part of a reduction for all executive officers of
the Employer) in the level of incentive compensation (including
stock options, restricted stock awards, stock appreciation
rights, retirement plan accruals and/or welfare plan benefits
(within the meaning of Section 3(1) of ERISA) accruing or
provided to the Executive;
(iv) any failure by the Employer to comply with any of the
provisions of this Agreement; or
(v) the Employer's requiring the Executive to be based at any
office or location other than Jacksonville, Florida.
For purposes of this subparagraph c, any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
However, no such event described hereunder shall constitute Good
Reason unless the Executive has given written notice to the
Employer specifying the event relied upon for such termination
within one year after the occurrence of such event and the
Employer has not remedied such within 30 days of receipt of such
notice. The Employer and the Executive, upon mutual written
agreement, may waive any of the foregoing provisions which would
otherwise constitute Good Reason.
d) Without Cause or Good Reason. Either Employer or Executive may
terminate this Agreement without Cause or Good Reason upon not less
than 30 days written notice to the other, setting forth the effective
date of employment termination.
e) Notice of Termination. Any termination by the Employer for Cause,
or by the Executive for Good Reason, shall be communicated to the
other party by Notice of Termination. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment and (iii) specifies the Date of Termination (as
defined below). Notice of intent to terminate employment for Good
Reason must be provided pursuant to Paragraph 8.c of this Agreement.
The failure by the Executive or the Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Employer hereunder or preclude the Executive or the
Employer from asserting such fact or circumstance in enforcing the
Executive's or the Employer's rights hereunder.
f) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Employer for Cause, or by
the Executive for Good Reason, the date specified in the Notice of
Termination as the Date of Termination; (ii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be; and (iii) if the
Executive's employment is terminated by either party other than for
death, Disability, Cause or Good Reason, the date set forth in the
notice required under subparagraph d above as the date the termination
is to be effective.
9. Obligations of the Employer upon Termination. Upon termination of the
Executive's employment for any reason during the Term of this Agreement,
Executive shall be entitled to Base Salary and all benefits through the Date of
Termination, and to exercise then vested stock options in accordance with
Paragraph 5.b)(i) above. Upon the termination of the Executive's employment
during the term of this Agreement by the Executive for Good Reason, or upon
retirement at or after age 58, or by the Employer for any reason other than
Cause, the Executive shall in addition be entitled to exercise the option(s)
with accelerated vesting pursuant to Paragraph 5.b)(ii) above. In addition, upon
termination of the Executive's employment prior to December 31, 1999 by the
Executive for Good Reason or by the Employer for any reason other than Cause,
Disability or death, the Executive shall receive a lump sum payment equal to the
sum of the Executive's Base Salary as of the Date of Termination and the
Executive's threshold bonus opportunity under the Incentive Plan based on the
threshold bonus opportunity for the year of termination. The lump sum payment
shall be paid no later than thirty days after the Date of Termination in
immediately available United States funds. Notwithstanding the preceding
provisions, at the Employer's sole discretion, the Employer may pay the amount
determined as a lump sum in this Paragraph 9 in 24 equal monthly payments
beginning on the first day of the month first following the Date of Termination.
10. Mitigation of Damages. Executive shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise. The amount of any payment provided for under this
Agreement shall not be reduced by any compensation earned or benefits received
by the Executive as the result of self-employment or employment by another
employer or otherwise.
11. Tax Effect. If Independent Tax Counsel shall determine that the aggregate
payments made and benefits provided to the Executive pursuant to this Agreement
and any other payments and benefits provided to the Executive from the Employer,
its affiliates and plans which constitute "parachute payments" as defined in
Section 280G of the Code (or any successor provision thereto) ("Parachute
Payments") would be subject to the excise tax imposed by Section 4999 of the
Code (the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount (determined by
Independent Tax Counsel) such that after payment by the Executive of all taxes
(including any Excise Tax) imposed upon the Gross-Up Payment and any interest or
penalties imposed with respect to such taxes, the Executive retains from the
Gross-Up Payment an amount equal to the Excise Tax imposed upon the payments.
For purposes of this Paragraph, "Independent Tax Counsel" shall mean a lawyer, a
certified public accountant with a nationally recognized accounting firm, or a
compensation consultant with a nationally recognized actuarial and benefits
consulting firm with expertise in the area of executive compensation tax law,
who shall be selected by the Employer and shall be reasonably acceptable to the
Executive, and whose fees and disbursements shall be paid by the Employer.
a) If Independent Tax Counsel shall determine that no Excise Tax is payable
by the Executive, it shall furnish the Executive with a written opinion
that the Executive has substantial authority not to report any Excise Tax
on the Executive's Federal income tax return. If the Executive is
subsequently required to make a payment of any Excise Tax, then the
Independent Tax Counsel shall determine the amount of such additional
payment ('Gross-Up Underpayment'), and any such Gross-Up Underpayment shall
be promptly paid by the Employer to or for the benefit of the Executive.
The fees and disbursements of the Independent Tax Counsel shall be paid by
the Employer.
b) The Executive shall notify the Employer in writing within 15 days of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Employer of a Gross-Up Payment. If the Employer notifies
the Executive in writing that it desires to contest such claim and that it
will bear the costs and provide the indemnification as required by this
sentence, the Executive shall:
(i) give the Employer any information reasonably requested by the
Employer relating to such claim;
(ii) take such action in connection with contesting such claim as the
Employer shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Employer;
(iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
(iv) permit the Employer to participate in any proceedings relating to
such claim; provided, however, that the Employer shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and
payment of costs and expenses. The Employer shall control all
proceedings taken in connection with such contest; provided, however,
that if the Employer directs the Executive to pay such claim and sue
for a refund, the Employer shall advance the amount of such payment to
the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed
income with respect to such advance.
c) If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to this Paragraph 11, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall, within
10 days, pay to the Employer the amount of such refund, together with any
interest paid or credited thereon after taxes applicable thereto.
12. Notices. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of receipt if delivered
personally to the party to whom notice is to be given, or on the second day
after mailing if mailed by first class mail, postage prepaid. Notices shall be
properly addressed to the parties at their respective addresses set forth below
or to such other address as either party may later specify by notice to the
other:
If to Employer:
Modis Professional Services, Inc.
Attn: Corporate Secretary
One Independent Drive
Jacksonville, Florida 32202
If to Executive:
Michael D. Abney
4830 Maid Marion Lane
Jacksonville, Florida 32210
13. Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof, including, but not limited to, any and all
prior employment agreements and related amendments entered into between the
Employer and the Executive. This Agreement may be changed only by an agreement
in writing signed by the party against whom any waiver, change, amendment or
modification is sought.
14. Waiver. The waiver by one party of a breach of any of the provisions of this
Agreement by the other shall not be construed as a waiver of any subsequent
breach.
15. Attorney's Fees. In the event of litigation or other dispute resolution
proceeding involving the interpretation or enforcement of this Agreement, the
prevailing party shall be entitled to recover from the other all fees, costs and
expenses incurred in connection therewith, including attorney's fees through
appeal.
16. Tax Withholding. The Employer shall have the right to deduct from all
benefits and/or payments under the Agreement any taxes required by law to be
paid or withheld with respect to such benefits or payments.
17. Governing Law; Venue. The Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Duval County, Florida, shall
be proper venue for any litigation arising out of this Agreement.
18. Paragraph Headings. Paragraph headings are for convenience only and are not
intended to expand or restrict the scope or substance of the provisions of this
Agreement.
19. Assignability. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer. This Agreement is a personal employment agreement
and the rights, obligations and interests of the Executive hereunder may not be
sold, assigned, transferred, pledged or hypothecated.
20. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and shall in no way be impaired.
21. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to account for more than one such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 30th day
of July, 1999.
EXECUTIVE
/s/ Tyra Tutor /s/ Michael D. Abney
__________________________ ___________________________
Witness Michael D. Abney
EMPLOYER
/s/ Marc Mayo
___________________________ /s/ Derek E. Dewan
Witness By:___________________________
President, Chairman of the Board
and Chief Executive Officer
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of January 1999, by and
between MODIS PROFESSIONAL SERVICES, INC. a Florida corporation, and its
successors ("Employer"), and MARC M. MAYO, a resident of the State of Florida
("Executive").
WHEREAS, the Employer and the Executive entered into an employment agreement on
January 14, 1997; and
WHEREAS, the Employer and the Executive desire to enter into an amended and
restated employment agreement, which agreement shall replace and thereby
supersede all prior employment agreements and any amendments thereto previously
executed between the Employer and the Executive;
NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants, and subject to the terms and conditions contained in this Agreement,
the Employer and Executive, intending to be legally bound, hereby agree as
follows:
1. Employment. Employer hereby employs Executive as Senior Vice President
and General Counsel, and Executive hereby accepts employment by Employer,
in accordance with and subject to the terms and conditions of this
Agreement.
2. Duties and Authority. As Senior Vice President and General Counsel,
Executive shall be responsible for administering all legal affairs of the
Employer and shall perform such other duties as are assigned to the
Executive by the Chief Executive Officer of the Employer. Executive agrees
to devote his full time, attention and best efforts to the performance of
his duties hereunder, provided, however, it shall not be considered a
violation of the foregoing for the Executive to serve on corporate,
industry, civic or charitable boards or committees, so long as such
activities do not materially interfere with the performance of the
Executive's responsibility as an employee of the Employer in accordance
with this Agreement.
3. Initial Term; Employment Period. The initial term of employment shall
begin on January 1, 1999 and end on December 31, 2000 (the 'Term of this
Agreement'). The Term of this Agreement shall be extended automatically for
one year on December 31, 2000, and each annual anniversary thereof (the
'Extension Date') unless, and until, at least 90 days prior to the
applicable Extension Date either the Employer or the Executive provides
written notice to the other party that this Agreement is not to be extended
(the later of December 31, 2000 or the last Date to which the Term is
extended shall be the 'End of Term'). For purposes of this Agreement, the
period beginning on January 1, 1999, and ending on the Date of Termination
(as hereafter defined) shall be referred to herein as the "Employment
Period."
4. Compensation. During the Employment Period which is in the Term of this
Agreement, Executive shall receive the following compensation:
A. Base Salary. A base annual salary of $250,000.00, payable in
accordance with the Employer's standard practice for other comparable
executives. Executive's base salary shall be subject to annual review
by the Board of Directors of the Employer (the 'Board') for
discretionary periodic increases in accordance with the Employer's
compensation policies. References to 'Base Salary' in this Agreement
shall be to the base salary set forth in this Section 4.A. and shall
include any increases to such base salary made hereby.
B. Incentive Compensation. The Executive shall be entitled to a target
incentive compensation opportunity expressed as a percentage of Base
Salary of not less than 80% under the Modis Annual Incentive Plan
('Incentive Plan').
5. Stock Options. Employer shall continue to grant to Executive stock
options from time to time in a manner consistent with that to which it
grants to other senior executive officers of the Employer to purchase
shares of the common stock of the Employer pursuant to the Modis
Professional Services, Inc. Amended and Restated 1995 Stock Option Plan, as
amended from time to time, or pursuant to a newly established or successor
plan.
A. Exercise. Any existing stock option(s) and any stock options
granted after the effective date of this Agreement shall provide for:
(i) exercisability of vested options (including those vested
under paragraph 5.A.(ii) below) for at least two years following
the Executive's termination of employment with the Employer (or
if sooner, 10 years from date of grant of the option);
(ii) full vesting of options upon a Change in Control (as
hereafter defined) or termination of the Executive's employment
with the Employer for reasons other than (i) by the Employer for
Cause (as hereafter defined) or (ii) by the Executive without
Good Reason (as hereafter defined); and
(iii) exercisability only to the extent vested on the date of the
Executive's termination of employment with the Employer, in the
event of termination (i) by the Employer for Cause or (ii) by the
Executive without Good Reason.
B. For purposes of this Agreement, 'Change in Control' shall mean:
(i) the acquisition by any person or persons (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934) not
a shareholder of Employer on June 1, 1998, of legal or beneficial
ownership of 35% or more of either (a) the then outstanding
shares of common stock of the Employer or (b) the combined voting
power of the then outstanding voting securities of the Employer
entitled to vote generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the Board
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Board
shall be considered as though such individual were a member of
the Board as of the date hereof;
(iii) approval by the shareholders of the Employer of a
reorganization, merger, or consolidation, in each case unless the
shareholders of the Employer immediately before such
reorganization, merger, or consolidation own, directly or
indirectly, immediately following such reorganization, merger, or
consolidation at least a majority of the combined voting power of
the outstanding voting securities of the corporation resulting
from such reorganization, merger, or consolidation in
substantially the same proportion as their ownership of the
voting securities immediately before such reorganization, merger
or consolidation; or
(iv) approval by the shareholders of the Employer of (a) a
complete liquidation or dissolution of the Employer or (b) the
sale or other disposition of more than 50% of the assets of the
Employer within a twelve month period.
6. Benefits. To the extent not otherwise provided herein (it being the
intent not to duplicate benefits), during the term of this Agreement,
Employer shall provide the Executive with all retirement, welfare, deferred
compensation, disability and other benefits generally provided to all of
the Employer's other senior executive officers. Executive shall be entitled
to four (4) weeks of paid vacation per calendar year. Unused vacation shall
be paid to Executive at each calendar year end. The Employer shall
reimburse the Executive for all reasonable and necessary expenses incurred
while conducting business in accordance with policies adopted by the
Employer from time to time. The Employer shall also provide the Executive
with term life insurance coverage in the amount of $500,000, but such
premium shall be limited to an amount not to exceed a standard rating. The
Employer shall reimburse the Executive for all reasonable and necessary
expenses incurred while conducting the Employer's business in accordance
with policies adopted by the Employer from time to time. The Employer shall
pay the membership dues for the Executive for the Gate Governor's Club and
the River Club. The Employer shall also pay up to $1,000 annually for
professional membership dues and will also pay all seminar expenses
incurred by the Executive sufficient to meet Executive's continuing legal
education obligations. Furthermore, the Employer shall pay the Executive or
a leasing company, at the Executive's option, $750 per month for an
automobile used by the Executive for business purposes. The Executive
acknowledges that pursuant to the Internal Revenue Code, and the
regulations promulgated thereunder, the Employer may be required to report
for tax purposes all or a portion of certain of the benefits and
reimbursements provided in this Agreement as income in respect of the
Executive.
7. Non-Compete; Confidentiality. In consideration of the employment of
Executive by Employer, Executive agrees as follows:
A. Non-Compete and Non-Solicitation. During the Employment Period and
for a period of two years after the Date of Termination, Executive
will not, directly or indirectly, within a fifty mile radius of any
office of Employer (or a consolidated subsidiary) in existence on the
Date of Termination, own, manage, be employed by, work for, consult
for, be an officer or director of, advise, represent, engage in or
carry on any business which competes with the business of the Employer
at that time; provided, however, that nothing herein shall prohibit
the Executive from engaging in the private practice of law. During the
Employment Period and for a period of two years after the Date of
Termination, Executive will not, directly or indirectly, solicit or
induce, or attempt to solicit or induce, any employee of the Employer
(or a consolidated subsidiary) to leave the Employer (or a
consolidated subsidiary) for any reason whatsoever, or solicit the
services of any employee of the Company (or a consolidated
subsidiary).
B. Non-Disclosure of Information. Executive will not at any time,
during or after the term of this Agreement in any fashion, form, or
manner, either directly or indirectly, divulge, disclose, or
communicate to any person, firm, or corporation, in any manner
whatsoever, any information of any kind, nature, or description
concerning any matters affecting or relating to the business of the
Employer, including, but not limited to, the names of any of its
customers or prospective customers or any other information concerning
the business of the Employer, its manner of operation, its plans, its
vendors, its suppliers, its advertising, its marketing, its methods,
its practices, or any other information of any kind, nature, or
description, without regard to whether any or all of the foregoing
matters would otherwise be deemed confidential, material, or
important; provided, however, that this provision shall not prevent
disclosures by Executive to the extent such disclosures are (i)
believed by the Executive, in good faith and acting reasonably, to be
in the best interest of the Employer, (ii) of information that is
public at the time of the disclosure (other than as a result of the
Executive's violation of this Paragraph 7(b)), or (iii) as required by
law or legal process (and, if the Executive is so required to
disclose, Executive shall provide the Employer notice of such to allow
the Company the opportunity to contest such disclosure).
8. Termination of Employment.
A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
Additionally, if the Employer determines in good faith that the
Executive has incurred a Disability, it may give the Executive written
notice of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Employer shall
terminate effective on the later of (i) the date in the notice, (ii)
the day after receipt of such notice by the Executive, or (iii) the
date the Disability has been considered to occur (the 'Disability
Effective Date'), provided that, prior to such date, the Executive
shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall have the
meaning set forth in the Employee's long term disability plan or
policy covering the Executive and shall not be considered to have
occurred until after the waiting period as required by such plan or
policy.
B. Cause. The Employer may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean (i) a breach by the Executive of the Executive's
obligations under paragraph 2 above (other than as a result of
temporary incapacity due to physical or mental illness, or Disability)
which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Employer and which is not
remedied in a reasonable period of time (to be not less than 15 days)
after receipt of written notice from the Employer specifying such
breach or (ii) the conviction of the Executive of a felony; or (iii) a
breach of the Executive's fiduciary duty. No act or failure to act on
the Executive's part shall be considered willful unless done or
omitted in bad faith and without reasonable belief that the action or
omission was in the best interest of the Employer.
C. Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
(i) the assignment of the Executive of any duties inconsistent in
any respect with the Executive's position (including status,
offices, titles and reporting requirement), authority, duties or
responsibilities as contemplated by paragraph 2 or any other
action by the Employer which results in a diminution in such
position, authority, duties or responsibilities.
(ii) a reduction in the Executive's Base Salary or maximum bonus
opportunity which is more than de minimis;
(iii) a reduction which is more than de minimis (except if such
reduction is a part of a reduction for all executive officers of
the Employer) in the level of incentive compensation (including
stock options, restricted stock awards, stock appreciation
rights, retirement plan accruals and/or welfare plan benefits
(within the meaning of Section 3(1) of ERISA) accruing or
provided to the Executive;
(iv) any failure by the Employer to comply with any of the
provisions of this Agreement;
(v) Employer's requiring the Executive to be based at any office
or location other than Jacksonville, Florida; or
(vi) the Employer's providing notice to the Executive pursuant to
Paragraph 3 that the Agreement will not be extended, unless the
purpose of such notice is to negotiate the terms of a new
agreement between the Employer and the Executive and the notice
provides that the Agreement continues in effect until such new
agreement is entered into.
For purposes of this subparagraph C, any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
However, no such event described hereunder shall constitute Good
Reason unless the Executive has given written notice to the
Employer specifying the event relied upon for such termination
within one year after the occurrence of such event and the
Employer has not remedied such within 60 days of receipt of such
notice. The Employer and the Executive, upon mutual written
agreement, may waive any of the foregoing provisions which would
otherwise constitute Good Reason.
D. Notice of Termination. Any termination by the Employer for Cause,
or by the Executive for Good Reason, shall be communicated to the
other party by Notice of Termination. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon; (ii)
to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment; and (iii) specifies the Date of Termination
(as defined below). Notice of intent to terminate employment for Good
Reason must be provided pursuant to Section 8.C. of this Agreement.
The failure by the Executive or the Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Employer hereunder or preclude the Executive or the
Employer from asserting such fact or circumstance in enforcing the
Executive's or the Employer's rights hereunder.
E. Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Employer for Cause, or by
the Executive for Good Reason, the date specified in the Notice of
Termination as the Date of Termination; (ii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be; and (iii) if
Executive's employment is terminated by either party other than for
death, Disability, Cause or Good Reason, the date set forth in the
notice required under subparagraph D. above as the Date of Termination
is to be effective.
9. Obligations of the Employer upon Termination. Upon termination of the
Executive's employment for any reason during the Term of this Agreement,
Executive shall be entitled to Base Salary and all benefits through the
Date of Termination, and to exercise then vested stock options in
accordance with Paragraph 5.A.(i) above. Upon the termination of the
Executive's employment during the Term of this Agreement by the Executive
for Good Reason, or by the Employer for any reason other than Cause,
Executive shall in addition be entitled to exercise the option(s) with
accelerated vesting pursuant to Paragraph 5.A.(ii) above. In addition, upon
the termination of the Executive's employment during the Term of this
Agreement by the Executive for Good Reason, or by the Employer for any
reason other the Cause, Disability or death, the Executive shall be
entitled to receive a lump sum payment equal to two (2) times the sum of
(i) Executive's Base Salary as of the Date of Termination and (ii) the
Executive's threshold bonus opportunity under the Incentive Plan based on
the threshold bonus opportunity for the year of termination. The lump sum
payment shall be paid no later than thirty days after the Date of
Termination in immediately available United States funds. Notwithstanding
the preceding provisions, at the Company's sole discretion, the Company may
pay the amount determined as a lump sum in this Paragraph 9 in 24 equal
monthly payments beginning on the first day of the month first following
the Date of Termination.
10. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise. The amounts provided for under this
Agreement shall not be reduced by any compensation earned or benefits
received by the Executive as the result of self-employment or employment by
another employer or otherwise.
11. Tax Effect. If Independent Tax Counsel shall determine that the
aggregate payments made, and benefits provided, to the Executive pursuant
to this Agreement and any other payments, and benefits provided, to the
Executive from the Employer, its affiliates and plans, which constitute
"parachute payments" as defined in Section 280G of the Code (or any
successor provision thereto) ("Parachute Payments") would be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount (determined by Independent Tax Counsel) such that
after payment by the Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the Gross-Up Payment
an amount equal to the Excise Tax imposed upon the payments. For purposes
of this Paragraph, "Independent Tax Counsel" shall mean a lawyer, a
certified public accountant with a nationally recognized accounting firm,
or a compensation consultant with a nationally recognized actuarial and
benefits consulting firm with expertise in the area of executive
compensation tax law, who shall be selected by the Employer and shall be
reasonably acceptable to the Executive, and whose fees and disbursements
shall be paid by the Employer.
A. If Independent Tax Counsel shall determine that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a
written opinion that the Executive has substantial authority not to
report any Excise Tax on the Executive's Federal income tax return. If
the Executive is subsequently required to make a payment of any Excise
Tax, then the Independent Tax Counsel shall determine the amount of
such additional payment ('Gross-Up Underpayment'), and any such
Gross-Up Underpayment shall be promptly paid by the Employer to or for
the benefit of the Executive. The fees and disbursements of the
Independent Tax Counsel shall be paid by the Employer.
B. The Executive shall notify the Employer in writing within 15 days
of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Employer of a Gross-Up Payment. If
the Employer notifies the Executive in writing that it desires to
contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, the Executive shall:
(i) give the Employer any information reasonably requested by the
Employer relating to such claim;
(ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Employer;
(iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
(iv) permit the Employer to participate in any proceedings
relating to such claim; provided, however, that the Employer
shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as
a result of such representation and payment of costs and
expenses. The Employer shall control all proceedings taken in
connection with such contest; provided, however, that if the
Employer directs the Executive to pay such claim and sue for a
refund, the Employer shall advance the amount of such payment to
the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance.
C. If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to Paragraph 11, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall,
within 10 days, pay to the Employer the amount of such refund,
together with any interest paid or credited thereon after taxes
applicable thereto.
12. Mandatory Deductions. Any amounts to which Executive is entitled as
compensation, bonus, merit bonus, or any other form of compensation subject
to withholding, shall be subject to usual deduction for appropriate
federal, state, and local income and employment tax obligations of
Executive.
13. Notices. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of receipt, if delivered
personally to the party to whom notice is to be given, or on the second day
after mailing, if mailed by first class mail, postage prepaid. Notices
shall be properly addressed to the parties at their respective addresses
set forth below or to such other address as either party may later specify
by notice to the other:
If to Employer:
Modis Professional Services, Inc.
Attn: Chief Executive Officer
1 Independent Drive
Jacksonville, Florida 32202
If to Executive:
Marc M. Mayo
1006 Maple Lane
Jacksonville, Florida 32207
14. Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof, including, but not limited to, any
and all prior employment agreements and related amendments entered into
between the Employer and the Executive. This Agreement may be changed only
by an agreement in writing signed by the party against whom any waiver,
change, amendment or modification is sought.
15. Waiver. The waiver by one party of a breach of any of the provisions of
this Agreement by the other shall not be construed as a waiver of any
subsequent breach.
16. Attorney's Fees. In the event of litigation or other dispute resolution
proceeding involving the interpretation or enforcement of this Agreement,
the prevailing party shall be entitled to recover from the other all fees,
costs and expenses incurred in connection therewith, including attorney's
fees through appeal.
17. Tax Withholding. The Employer shall have the right to deduct from all
benefits and/or payments under the Agreement any taxes required by law to
be paid or withheld with respect to such benefits or payments.
18. Governing Law; Venue. The Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Duval County, Florida,
shall be proper venue for any litigation arising out of this Agreement.
19. Paragraph Headings. Paragraph headings are for convenience only and are
not intended to expand or restrict the scope or substance of the provisions
of this Agreement.
20. Assignability. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer. This Agreement is a personal
employment agreement and the rights, obligations and interests of the
Executive hereunder may not be sold, assigned, transferred, pledged or
hypothecated.
21. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and shall in no way be impaired.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to account for more than one
such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 30th day
of July, 1999.
EXECUTIVE
/s/ Tyra Tutor /s/ Marc M. Mayo
__________________________ ___________________________
Witness Marc M. Mayo
EMPLOYER
/s/ John Marshall
___________________________ /s/ Derek E. Dewan
Witnesse By:___________________________
President, Chairman of the Board
and Chief Executive Officer
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of January, 1999, by and
between MODIS PROFESSIONAL SERVICES, INC. a Florida corporation, and its
successors ("Employer"), and TIMOTHY D. PAYNE, a resident of the State of
Florida ("Executive").
WHEREAS, the Employer and the Executive entered into an employment agreement on
April 1, 1997; and
WHEREAS, the Employer and the Executive desire to enter into an amended and
restated employment agreement, which agreement shall replace and thereby
supersede all prior employment agreements and any amendments thereto previously
executed between the Employer and the Executive;
NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants, and subject to the terms and conditions contained in this Agreement,
the Employer and Executive, intending to be legally bound, hereby agree as
follows:
1. Employment. Employer hereby employs Executive as President and Chief
Operating Officer of modis, Inc. ('modis'), a wholly owned subsidiary of
Employer, and Executive hereby accepts employment by Employer, in
accordance with and subject to the terms and conditions of this Agreement.
The Executive will report directly to the Chief Executive Officer of
Employer.
2. Duties and Authority. As President and Chief Operating Officer of modis,
Executive shall be responsible for management , fiscal responsibilities,
and strategic planning of modis and shall perform such other duties as are
assigned to the Executive by the Chief Executive Officer of the Employer.
Executive agrees to devote his full time, attention and best efforts to the
performance of his duties hereunder, provided, however, it shall not be
considered a violation of the foregoing for the Executive to serve on
corporate, industry, civic or charitable boards or committees, so long as
such activities do not materially interfere with the performance of the
Executive's responsibility as an employee of the Employer in accordance
with this Agreement.
3. Initial Term; Employment Period. The initial term of employment shall
begin on January 1, 1999 and end on December 31, 2000 (the 'Term of this
Agreement'). The Term of this Agreement shall be extended automatically for
one year on December 31, 2000, and each annual anniversary thereof (the
'Extension Date') unless, and until, at least 90 days prior to the
applicable Extension Date either the Employer or the Executive provides
written notice to the other party that this Agreement is not to be extended
(the later of December 31, 2000 or the last date shall be the 'End of
Term'). For purposes of this Agreement, the period beginning on January 1,
1999, and ending on the Date of Termination (as hereafter defined) shall be
referred to herein as the "Employment Period."
4. Compensation. During the Employment Period which is in the Term of this
Agreement, Executive shall receive the following compensation:
A. Base Salary. A base annual salary of $400,000.00, payable in
accordance with the Employer's standard practice for other comparable
executives. Executive's base salary shall be subject to annual review
by the Board of Directors of the Employer (the 'Board') for
discretionary periodic increases in accordance with the Employer's
compensation policies. References to 'Base Salary' in this Agreement
shall be to the base salary set forth in this Section 4.A. and shall
include any increases to such base salary made hereby.
B. Incentive Compensation. The Executive shall be entitled to a target
incentive compensation opportunity expressed as a percentage of Base
Salary of not less than 80% under the Modis Annual Incentive Plan
('Incentive Plan').
5. Stock Options. Employer shall continue to grant to Executive stock
options from time to time in a manner consistent with that to which it
grants to other senior executive officers of the Employer to purchase
shares of the common stock of the Employer pursuant to the Modis
Professional Services, Inc. Amended and Restated 1995 Stock Option Plan, as
amended from time to time, or pursuant to a newly established or successor
plan.
A. Exercise. Any existing stock option(s) and any stock options
granted after the effective date of this Agreement shall provide for:
(i) exercisability of vested options (including those vested
under paragraph 5.A.(ii) below) for at least two years following
the Executive's termination of employment with the Employer (or
if sooner, 10 years from date of grant of the option);
(ii) full vesting of options upon a Change in Control (as
hereafter defined) or termination of the Executive's employment
with the Employer for reasons other than (i) by the Employer for
Cause (as hereafter defined), or (ii) by the Executive without
Good Reason (as hereafter defined); and
(iii) exercisability only to the extent vested on the date of the
Executive's termination of employment with the Employer, in the
event of termination (i) by the Employer for Cause, or (ii) by
the Executive without Good Reason.
B. For purposes of this Agreement, 'Change in Control' shall mean:
(i) the acquisition by any person or persons (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934) not
a shareholder of Employer on June 1, 1998, of legal or beneficial
ownership of 35% or more of either (a) the then outstanding
shares of common stock of the Employer or (b) the combined voting
power of the then outstanding voting securities of the Employer
entitled to vote generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the Board
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Board
shall be considered as though such individual were a member of
the Board as of the date hereof;
(iii) approval by the shareholders of the Employer of a
reorganization, merger, or consolidation, in each case unless the
shareholders of the Employer immediately before such
reorganization, merger, or consolidation own, directly or
indirectly, immediately following such reorganization, merger, or
consolidation at least a majority of the combined voting power of
the outstanding voting securities of the corporation resulting
from such reorganization, merger, or consolidation in
substantially the same proportion as their ownership of the
voting securities immediately before such reorganization, merger
or consolidation; or
(iv) approval by the shareholders of the Employer of (a) a
complete liquidation or dissolution of the Employer or (b) the
sale or other disposition of more than 50% of the assets of the
Employer within a twelve month period.
6. Benefits. To the extent not otherwise provided herein (it being the
intent not to duplicate benefits) during the term of this Agreement,
Employer shall provide the Executive with all retirement, welfare, deferred
compensation, disability and other benefits generally provided to all of
the Employer's other senior executive officers. Executive shall be entitled
to four (4) weeks of paid vacation per calendar year. Unused vacation shall
be paid out at calendar year end. The Employer shall reimburse the
Executive for all reasonable and necessary expenses incurred while
conducting business in accordance with policies adopted by the Employer
from time to time. The Employer shall reimburse the Executive for all
reasonable and necessary expenses incurred while conducting the Employer's
business in accordance with policies adopted by the Employer from time to
time. The Employer shall pay the membership dues for the Executive for the
River Club. Furthermore, the Employer shall pay the Executive or a leasing
company, at the Executive's option, $750 per month for an automobile used
by the Executive for business purposes. The Executive acknowledges that
pursuant to the Internal Revenue Code, and the regulations promulgated
thereunder, the Employer may be required to report for tax purposes all or
a portion of certain of the benefits and reimbursements provided in this
Agreement as income in respect of the Executive.
7. Non-Compete; Confidentiality. In consideration of the employment of
Executive by Employer, Executive agrees as follows:
A. Non-Compete and Non-Solicitation. During the Employment Period and
for a period of two years after the Date of Termination, Executive
will not, directly or indirectly, within a fifty mile radius of any
office of modis (or a consolidated subsidiary) in existence on the
Date of Termination, own, manage, be employed by, work for, consult
for, be an officer or director of, advise, represent, engage in or
carry on any business which competes with the business of modis.
During the Employment Period and for a period of two years after the
Date of Termination, Executive will not, directly or indirectly,
solicit or induce, or attempt to solicit or induce, any employee of
the Employer (or a consolidated subsidiary) to leave the Employer (or
a consolidated subsidiary) for any reason whatsoever, or solicit the
services of any employee of the Employer (or a consolidated
subsidiary).
B. Non-Disclosure of Information. Executive will not at any time,
during or after the term of this Agreement in any fashion, form, or
manner, either directly or indirectly, divulge, disclose, or
communicate to any person, firm, or corporation, in any manner
whatsoever, any information of any kind, nature, or description
concerning any matters affecting or relating to the business of the
Employer, including, but not limited to, the names of any of its
customers or prospective customers or any other information concerning
the business of the Employer, its manner of operation, its plans, its
vendors, its suppliers, its advertising, its marketing, its methods,
its practices, or any other information of any kind, nature, or
description, without regard to whether any or all of the foregoing
matters would otherwise be deemed confidential, material, or
important; provided, however that this provision shall not prevent
disclosures by Executive to the extent such disclosures are (i)
believed by the Executive, in good faith and acting reasonably, to be
in the best interest of the Employer, (ii) of information that is
public at the time of the disclosure (other than as a result of the
Executive's violation of this Paragraph 7(b)), or (iii) as required by
law or legal process (and, if the Executive is so required to
disclose, Executive shall provide the Employer notice of such to allow
the Company the opportunity to contest such disclosure).
8. Termination of Employment.
A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
Additionally, if the Employer determines in good faith that the
Executive has incurred a Disability, it may give the Executive written
notice of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Employer shall
terminate effective on the later of (i) the date in the notice, (ii)
the day after receipt of such notice by the Executive, or (iii) the
date the Disability has been considered to occur (the 'Disability
Effective Date'), provided that, prior to such date, the Executive
shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, 'Disability' shall have the
meaning set forth in the Employee's long term disability plan or
policy covering the Executive and shall not be considered to have
occurred until after the waiting period as required by such plan or
policy.
B. Cause. The Employer may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean (i) a breach by the Executive of the Executive's
obligations under paragraph 2 above (other than as a result of
temporary incapacity due to physical or mental illness, or Disability)
which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Employer and which is not
remedied in a reasonable period of time (to be not less than 15 days)
after receipt of written notice from the Employer specifying such
breach or (ii) the conviction of the Executive of a felony; or (iii) a
breach of the Executive's fiduciary duty. No act or failure to act on
the Executive's part shall be considered willful unless done or
omitted in bad faith and without reasonable belief that the action or
omission was in the best interest of the Employer.
C. Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
(i) the assignment of the Executive of any duties inconsistent in
any respect with the Executive's position (including status,
offices, titles and reporting requirement), authority, duties or
responsibilities as contemplated by paragraph 2 or any other
action by the Employer which results in a diminution in such
position, authority, duties or responsibilities;
(ii) a reduction in the Executive's Base Salary or maximum bonus
opportunity which is more than de minimis (except if such
reduction is a part of a reduction for all executive officers of
the Employer);
(iii) a reduction which is more than de minimis (except if such
reduction is a part of a reduction for all executive officers of
the Employer) in the level of incentive compensation (including
stock options, restricted stock awards, stock appreciation
rights, retirement plan accruals and/or welfare plan benefits
(within the meaning of Section 3(1) of ERISA) accruing or
provided to the Executive;
(iv) any failure by the Employer to comply with any of the
provisions of this Agreement;
(v) Employer's requiring the Executive to be based at any office
or location other than Jacksonville, Florida; or
(vi) the Employer's providing notice to the Executive pursuant to
Paragraph 3 that the Agreement will not be extended unless the
purpose of such notice is to negotiate the terms of a new
agreement between the Employer and the Executive and the notice
provides that the Agreement continues in effect until such new
agreement is entered into.
For purposes of this subparagraph C, any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
However, no such event described hereunder shall constitute Good
Reason unless the Executive has given written notice to the
Employer specifying the event relied upon for such termination
within one year after the occurrence of such event and the
Employer has not remedied such within 60 days of receipt of such
notice. The Employer and the Executive, upon mutual written
agreement, may waive any of the foregoing provisions which would
otherwise constitute Good Reason.
D Notice of Termination. Any termination by the Employer for Cause, or
by the Executive for Good Reason, shall be communicated to the other
party by Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon; (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment; and (iii) specifies the Date of Termination
(as defined below). Notice of intent to terminate employment for Good
Reason must be provided pursuant to Section 8.C. of this Agreement.
The failure by the Executive or the Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Employer hereunder or preclude the Executive or the
Employer from asserting such fact or circumstance in enforcing the
Executive's or the Employer's rights hereunder.
E. Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Employer for Cause, or by
the Executive for Good Reason, the date specified in the Notice of
Termination as the Date of Termination; (ii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be; and (iii) if
Executive's employment is terminated by either party other than for
death, Disability, Cause or Good Reason, the date set forth in the
notice required under subparagraph D. above as the Date of Termination
is to be effective.
9. Obligations of the Employer upon Termination. Upon termination of the
Executive's employment for any reason during the Term of this Agreement,
Executive shall be entitled to Base Salary and all benefits through the
Date of Termination, and to exercise then vested stock options in
accordance with Paragraph 5.A.(i) above. Upon the termination of the
Executive's employment during the Term of this Agreement by the Executive
for Good Reason, or by the Employer for any reason other than Cause,
Executive shall in addition be entitled to exercise the option(s) with
accelerated vesting pursuant to Paragraph 5.A.(ii) above. In addition, upon
the termination of the Executive's employment during the Term of this
Agreement by the Executive for Good Reason, or by the Employer for any
reason other the Cause, Disability or death, the Executive shall be
entitled to receive a lump sum payment equal to two (2) times the sum of
(i) Executive's Base Salary as of the Date of Termination and (ii) the
Executive's threshold bonus opportunity under the Incentive Plan based on
the threshold bonus opportunity for the year of termination. The lump sum
payment shall be paid no later than thirty days after the Date of
Termination in immediately available United States funds. Notwithstanding
the preceding provisions, at the Employer's sole discretion, the Employer
may pay the amount determined as a lump sum in this Paragraph 9 in 24 equal
monthly payments beginning on the first day of the month first following
the Date of Termination.
10. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise. The amounts provided for under this
Agreement shall not be reduced by any compensation earned or benefits
received by the Executive as the result of self-employment or employment by
another employer or otherwise.
11. Tax Effect. If Independent Tax Counsel shall determine that the
aggregate payments made, and benefits provided, to the Executive pursuant
to this Agreement and any other payments, and benefits provided, to the
Executive from the Employer, its affiliates and plans, which constitute
"parachute payments" as defined in Section 280G of the Code (or any
successor provision thereto) ("Parachute Payments") would be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount (determined by Independent Tax Counsel) such that
after payment by the Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the Gross-Up Payment
an amount equal to the Excise Tax imposed upon the payments. For purposes
of this Paragraph, "Independent Tax Counsel" shall mean a lawyer, a
certified public accountant with a nationally recognized accounting firm,
or a compensation consultant with a nationally recognized actuarial and
benefits consulting firm with expertise in the area of executive
compensation tax law, who shall be selected by the Employer and shall be
reasonably acceptable to the Executive, and whose fees and disbursements
shall be paid by the Employer.
A. If Independent Tax Counsel shall determine that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a
written opinion that the Executive has substantial authority not to
report any Excise Tax on the Executive's Federal income tax return. If
the Executive is subsequently required to make a payment of any Excise
Tax, then the Independent Tax Counsel shall determine the amount of
such additional payment ('Gross-Up Underpayment'), and any such
Gross-Up Underpayment shall be promptly paid by the Employer to or for
the benefit of the Executive. The fees and disbursements of the
Independent Tax Counsel shall be paid by the Employer.
B. The Executive shall notify the Employer in writing within 15 days
of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Employer of a Gross-Up Payment. If
the Employer notifies the Executive in writing that it desires to
contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, the Executive shall:
(i) give the Employer any information reasonably requested by the
Employer relating to such claim;
(ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Employer;
(iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
(iv) permit the Employer to participate in any proceedings
relating to such claim; provided, however, that the Employer
shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as
a result of such representation and payment of costs and
expenses. The Employer shall control all proceedings taken in
connection with such contest; provided, however, that if the
Employer directs the Executive to pay such claim and sue for a
refund, the Employer shall advance the amount of such payment to
the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance.
C. If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to this Paragraph 11, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall,
within 10 days, pay to the Employer the amount of such refund,
together with any interest paid or credited thereon after taxes
applicable thereto.
12. Mandatory Deductions. Any amounts to which Executive is entitled as
compensation, bonus, merit bonus, or any other form of compensation subject
to withholding, shall be subject to usual deduction for appropriate
federal, state, and local income and employment tax obligations of
Executive.
13. Notices. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of receipt, if delivered
personally to the party to whom notice is to be given, or on the second day
after mailing, if mailed by first class mail, postage prepaid. Notices
shall be properly addressed to the parties at their respective addresses
set forth below or to such other address as either party may later specify
by notice to the other:
If to Employer:
Modis Professional Services, Inc.
Attn: Chief Executive Officer
1 Independent Drive
Jacksonville, Florida 32202
If to Executive:
Timothy D. Payne
at the then current address of the Executive
appearing in the corporate records of Employer
14. Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof, including, but not limited to, any
and all prior employment agreements and related amendments entered into
between the Employer and the Executive. This Agreement may be changed only
by an agreement in writing signed by the party against whom any waiver,
change, amendment or modification is sought.
15. Waiver. The waiver by one party of a breach of any of the provisions of
this Agreement by the other shall not be construed as a waiver of any
subsequent breach.
16. Attorney's Fees. In the event of litigation or other dispute resolution
proceeding involving the interpretation or enforcement of this Agreement,
the prevailing party shall be entitled to recover from the other all fees,
costs and expenses incurred in connection therewith, including attorney's
fees through appeal.
17. Tax Withholding. The Employer shall have the right to deduct from all
benefits and/or payments under the Agreement any taxes required by law to
be paid or withheld with respect to such benefits or payments.
18. Governing Law; Venue. The Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Duval County, Florida,
shall be proper venue for any litigation arising out of this Agreement.
19. Paragraph Headings. Paragraph headings are for convenience only and are
not intended to expand or restrict the scope or substance of the provisions
of this Agreement.
20. Assignability. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer. This Agreement is a personal
employment agreement and the rights, obligations and interests of the
Executive hereunder may not be sold, assigned, transferred, pledged or
hypothecated.
21. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and shall in no way be impaired.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to account for more than one
such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 30th
day of July, 1999.
EXECUTIVE
/s/ Tyra Tutor /s/ Timothy D. Payne
__________________________ ___________________________
Witness Timothy D. Payne
EMPLOYER
/s/ Marc Mayo
___________________________ /s/ Derek E. Dewan
Witness By:___________________________
President, Chairman of the Board
and Chief Executive Officer
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of January, 1999, by and
between MODIS PROFESSIONAL SERVICES, INC. a Florida corporation, and its
successors ("Employer"), and GEORGE BAJALIA a resident of the State of Florida
("Executive").
WHEREAS, the Employer and the Executive wish to enter into an employment
agreement;
NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants, and subject to the terms and conditions contained in this Agreement,
the Employer and Executive, intending to be legally bound, hereby agree as
follows:
1. Employment. Employer hereby employs Executive as President and Chief
Operating Officer of Employer's Professional Services Division, and
Executive hereby accepts employment by Employer, in accordance with and
subject to the terms and conditions of this Agreement. The Executive will
report directly to the Chief Executive Officer of Employer.
2. Duties and Authority. As President and Chief Operating Officer of
Employer's Professional Services Division, Executive shall be responsible
for management , fiscal responsibilities, and strategic planning of the
Professional Services Division and shall perform such other duties as are
assigned to the Executive by the Chief Executive Officer of the Employer.
Executive agrees to devote his full time, attention and best efforts to the
performance of his duties hereunder, provided, however, it shall not be
considered a violation of the foregoing for the Executive to serve on
corporate, industry, civic or charitable boards or committees, so long as
such activities do not materially interfere with the performance of the
Executive's responsibility as an employee of the Employer in accordance
with this Agreement.
3. Initial Term; Employment Period. The initial term of employment shall
begin on January 1, 1999 and end on December 31, 2000 (the 'Term of this
Agreement'). The Term of this Agreement shall be extended automatically for
one year on December 31, 2000, and each annual anniversary thereof (the
'Extension Date') unless, and until, at least 90 days prior to the
applicable Extension Date either the Employer or the Executive provides
written notice to the other party that this Agreement is not to be extended
(the later of December 31, 2000 or the last date to which the Term is
extended shall be the 'End of Term'). For purposes of this Agreement, the
period beginning on January 1, 1999, and ending on the Date of Termination
(as hereafter defined) shall be referred to herein as the "Employment
Period."
4. Compensation. During the Employment Period which is in the Term of this
Agreement, Executive shall receive the following compensation:
A. Base Salary. A base annual salary of $200,000.00, payable in
accordance with the Employer's standard practice for other comparable
executives. Executive's base salary shall be subject to annual review
by the Board of Directors of the Employer (the 'Board') for
discretionary periodic increases in accordance with the Employer's
compensation policies. References to 'Base Salary' in this Agreement
shall be to the base salary set forth in this Section 4.A. and shall
include any increases to such base salary made hereby.
B. Incentive Compensation. The Executive shall be entitled to a target
incentive compensation opportunity expressed as a percentage of Base
Salary of not less than 80% under the Modis Annual Incentive Plan
('Incentive Plan').
5. Stock Options. Employer shall continue to grant to Executive stock
options from time to time in a manner consistent with that to which it
grants to other senior executive officers of the Employer to purchase
shares of the common stock of the Employer pursuant to the Modis
Professional Services, Inc. Amended and Restated 1995 Stock Option Plan, as
amended from time to time, or pursuant to a newly established or successor
plan.
A. Exercise. Any existing stock option(s) and any stock options
granted after the effective date of this Agreement shall provide for:
(i) exercisability of vested options (including those vested
under Paragraph 5.A.(ii) below) for at least two years following
the Executive's termination of employment with the Employer (or
if sooner, 10 years from date of grant of the option);
(ii) full vesting of options upon a Change in Control (as
hereafter defined) or termination of the Executive's employment
with the Employer for reasons other than (i) by the Employer for
Cause (as hereafter defined) or (ii) by the Executive without
Good Reason (as hereafter defined); and
(iii) exercisability only to the extent vested on the date of the
Executive's termination of employment with the Employer, in the
event of termination (i) by the Employer for Cause, (ii) by the
Executive without Good Reason.
B. For purposes of this Agreement, 'Change in Control' shall mean:
(i) the acquisition by any person or persons (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934) not
a shareholder of Employer on June 1, 1998, of legal or beneficial
ownership of 35% or more of either (a) the then outstanding
shares of common stock of the Employer or (b) the combined voting
power of the then outstanding voting securities of the Employer
entitled to vote generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the Board
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Board
shall be considered as though such individual were a member of
the Board as of the date hereof;
(iii) approval by the shareholders of the Employer of a
reorganization, merger, or consolidation, in each case unless the
shareholders of the Employer immediately before such
reorganization, merger, or consolidation own, directly or
indirectly, immediately following such reorganization, merger, or
consolidation at least a majority of the combined voting power of
the outstanding voting securities of the corporation resulting
from such reorganization, merger, or consolidation in
substantially the same proportion as their ownership of the
voting securities immediately before such reorganization, merger
or consolidation; or
(iv) approval by the shareholders of the Employer of (a) a
complete liquidation or dissolution of the Employer or (b) the
sale or other disposition of more than 50% of the assets of the
Employer within a twelve month period.
6. Benefits. To the extent not otherwise provided herein (it being the
intent not to duplicate benefits) during the term of this Agreement,
Employer shall provide the Executive with all retirement, welfare, deferred
compensation, disability and other benefits generally provided to all of
the Employer's other senior executive officers. Executive shall be entitled
to four (4) weeks of paid vacation per calendar year. Unused vacation shall
be paid out at calendar year end. The Employer shall reimburse the
Executive for all reasonable and necessary expenses incurred while
conducting business in accordance with policies adopted by the Employer
from time to time. The Employer shall reimburse the Executive for all
reasonable and necessary expenses incurred while conducting the Employer's
business in accordance with policies adopted by the Employer from time to
time. The Employer shall pay the membership dues for the Executive for the
River Club. Furthermore, the Employer shall pay the Executive or a leasing
company, at the Executive's option, $750 per month for an automobile used
by the Executive for business purposes. The Executive acknowledges that
pursuant to the Internal Revenue Code, and the regulations promulgated
thereunder, the Employer may be required to report for tax purposes all or
a portion of certain of the benefits and reimbursements provided in this
Agreement as income in respect of the Executive.
7. Non-Compete; Confidentiality. In consideration of the employment of
Executive by Employer, Executive agrees as follows:
A. NonCompete and Non-Solicitation. During the Employment Period and
for a period of two years after the Date of Termination, Executive
will not, directly or indirectly, within a fifty mile radius of any
office of Employer's Professional Services Division (or a consolidated
subsidiary) in existence on the Date of Termination, own, manage, be
employed by, work for, consult for, be an officer or director of,
advise, represent, engage in or carry on any business which competes
with the business of Employer's Professional Services Division. During
the Employment Period and for a period of two years after the Date of
Termination, Executive will not, directly or indirectly, solicit or
induce, or attempt to solicit or induce, any employee of the Employer
(or a consolidated subsidiary) to leave the Employer (or a
consolidated subsidiary) for any reason whatsoever, or solicit the
services of any employee of the Employer (or a consolidated
subsidiary).
B. Non-Disclosure of Information. Executive will not at any time,
during or after the term of this Agreement in any fashion, form, or
manner, either directly or indirectly, divulge, disclose, or
communicate to any person, firm, or corporation, in any manner
whatsoever, any information of any kind, nature, or description
concerning any matters affecting or relating to the business of the
Employer, including, but not limited to, the names of any of its
customers or prospective customers or any other information concerning
the business of the Employer, its manner of operation, its plans, its
vendors, its suppliers, its advertising, its marketing, its methods,
its practices, or any other information of any kind, nature, or
description, without regard to whether any or all of the foregoing
matters would otherwise be deemed confidential, material, or
important, provided, however that this provision shall not prevent
disclosures by Executive to the extent such disclosures are (I)
believed by the Executive, in good faith and acting reasonably, to be
in the best interest of the Employer, (ii) of information that is
public at the time of the disclosure (other than as a result of the
Executive's violation of this Paragraph 7(b)), or (iii) as required by
law or legal process (and, if the Executive is so required to
disclose, Executive shall provide the Employer notice of such to allow
the Company the opportunity to contest such disclosure).
8. Termination of Employment.
A. Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
Additionally, if the Employer determines in good faith that the
Executive has incurred a Disability, it may give the Executive written
notice of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Employer shall
terminate effective on the later of (i) the date in the notice, (ii)
the day after receipt of such notice by the Executive, or (iii) the
date the Disability has been considered to occur (the 'Disability
Effective Date'), provided that, prior to such date, the Executive
shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall have the
meaning set forth in the Employee's long term disability plan or
policy covering the Executive and shall not be considered to have
occurred until after the waiting period as required by such plan or
policy.
B. Cause. The Employer may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean (i) a breach by the Executive of the Executive's
obligations under Paragraph 2 above (other than as a result of
temporary incapacity due to physical or mental illness, or Disability)
which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Employer and which is not
remedied in a reasonable period of time (to be not less than 15 days)
after receipt of written notice from the Employer specifying such
breach or (ii) the conviction of the Executive of a felony; or (iii) a
breach of the Executive's fiduciary duty. No act or failure to act on
the Executive's part shall be considered willful unless done or
omitted in bad faith and without reasonable belief that the action or
omission was in the best interest of the Employer.
C. Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
(i) the assignment of the Executive of any duties inconsistent in
any respect with the Executive's position (including status,
offices, titles and reporting requirement), authority, duties or
responsibilities as contemplated by Paragraph 2 or any other
action by the Employer which results in a diminution in such
position, authority, duties or responsibilities;
(ii) a reduction in the Executive's Base Salary or maximum bonus
opportunity which is more than de minimis (except if such
reduction is a part of a reduction for all executive officers of
the Employer);
(iii) a reduction which is more than de minimis (except if such
reduction is a part of a reduction for all executive officers of
the Employer) in the level of incentive compensation (including
stock options, restricted stock awards, stock appreciation
rights, retirement plan accruals and/or welfare plan benefits
(within the meaning of Section 3(1) of ERISA) accruing or
provided to the Executive;
(iv) any failure by the Employer to comply with any of the
provisions of this Agreement,
(v) Employer's requiring the Executive to be based at any office
or location other than Jacksonville, Florida; or
(vi) the Employer's providing notice to the Executive pursuant to
Paragraph 3 that the Agreement will not be extended, unless the
purpose of such notice is to negotiate the terms of a new
agreement between the Employer and the Executive and the notice
provides that the Agreement continues in effect until such new
agreement is entered into.
For purposes of this subparagraph C, any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
However, no such event described hereunder shall constitute Good
Reason unless the Executive has given written notice to the
Employer specifying the event relied upon for such termination
within one year after the occurrence of such event and the
Employer has not remedied such within 60 days of receipt of such
notice. The Employer and the Executive, upon mutual written
agreement, may waive any of the foregoing provisions which would
otherwise constitute Good Reason.
D Notice of Termination. Any termination by the Employer for Cause, or
by the Executive for Good Reason, shall be communicated to the other
party by Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon; (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment; and (iii) specifies the Date of Termination
(as defined below). Notice of intent to terminate employment for Good
Reason must be provided pursuant to Section 8.C. of this Agreement.
The failure by the Executive or the Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Employer hereunder or preclude the Executive or the
Employer from asserting such fact or circumstance in enforcing the
Executive's or the Employer's rights hereunder.
E. Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Employer for Cause, or by
the Executive for Good Reason, the date specified in the Notice of
Termination as the Date of Termination; (ii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be; and (iii) if
Executive's employment is terminated by either party other than for
death, Disability, Cause or Good Reason, the date set forth in the
notice required under subparagraph D. above as the Date of Termination
is to be effective.
9. Obligations of the Employer upon Termination. Upon termination of the
Executive's employment for any reason during the Term of this Agreement,
Executive shall be entitled to Base Salary and all benefits through the
Date of Termination, and to exercise then vested stock options in
accordance with Paragraph 5.A.(i) above. Upon the termination of the
Executive's employment during the Term of this Agreement by the Executive
for Good Reason, or by the Employer for any reason other than Cause,
Executive shall in addition be entitled to exercise the option(s) with
accelerated vesting pursuant to Paragraph 5.A.(ii) above. In addition, upon
the termination of the Executive's employment during the Term of this
Agreement by the Executive for Good Reason, or by the Employer for any
reason other the Cause, Disability or death, the Executive shall be
entitled to receive a lump sum payment equal to two (2) times the sum of
(i) Executive's Base Salary as of the Date of Termination and (ii) the
Executive's threshold bonus opportunity under the Incentive Plan based on
the threshold bonus opportunity for the year of termination. The lump sum
payment shall be paid no later than thirty days after the Date of
Termination in immediately available United States funds. Notwithstanding
the preceding provisions, at the Employer's sole discretion, the Employer
may pay the amount determined as a lump sum in this Paragraph 9 in 24 equal
monthly payments beginning on the first day of the month first following
the Date of Termination.
10. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise. The amounts provided for under this
Agreement shall not be reduced by any compensation earned or benefits
received by the Executive as the result of self-employment or employment by
another employer or otherwise.
11. Tax Effect. If Independent Tax Counsel shall determine that the
aggregate payments made, and benefits provided, to the Executive pursuant
to this Agreement and any other payments, and benefits provided, to the
Executive from the Employer, its affiliates and plans, which constitute
"parachute payments" as defined in Section 280G of the Code (or any
successor provision thereto) ("Parachute Payments") would be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount (determined by Independent Tax Counsel) such that
after payment by the Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the Gross-Up Payment
an amount equal to the Excise Tax imposed upon the payments. For purposes
of this Paragraph, "Independent Tax Counsel" shall mean a lawyer, a
certified public accountant with a nationally recognized accounting firm,
or a compensation consultant with a nationally recognized actuarial and
benefits consulting firm with expertise in the area of executive
compensation tax law, who shall be selected by the Employer and shall be
reasonably acceptable to the Executive, and whose fees and disbursements
shall be paid by the Employer.
A. If Independent Tax Counsel shall determine that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a
written opinion that the Executive has substantial authority not to
report any Excise Tax on the Executive's Federal income tax return. If
the Executive is subsequently required to make a payment of any Excise
Tax, then the Independent Tax Counsel shall determine the amount of
such additional payment ('Gross-Up Underpayment'), and any such
Gross-Up Underpayment shall be promptly paid by the Employer to or for
the benefit of the Executive. The fees and disbursements of the
Independent Tax Counsel shall be paid by the Employer.
B. The Executive shall notify the Employer in writing within 15 days
of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Employer of a Gross-Up Payment. If
the Employer notifies the Executive in writing that it desires to
contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, the Executive shall:
(i) give the Employer any information reasonably requested by the
Employer relating to such claim;
(ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Employer;
(iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
(iv) permit the Employer to participate in any proceedings
relating to such claim; provided, however, that the Employer
shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as
a result of such representation and payment of costs and
expenses. The Employer shall control all proceedings taken in
connection with such contest; provided, however, that if the
Employer directs the Executive to pay such claim and sue for a
refund, the Employer shall advance the amount of such payment to
the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance.
C. If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to this Paragraph 11, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall,
within 10 days, pay to the Employer the amount of such refund,
together with any interest paid or credited thereon after taxes
applicable thereto.
12. Mandatory Deductions. Any amounts to which Executive is entitled as
compensation, bonus, merit bonus, or any other form of compensation subject
to withholding, shall be subject to usual deduction for appropriate
federal, state, and local income and employment tax obligations of
Executive.
13. Notices. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of receipt, if delivered
personally to the party to whom notice is to be given, or on the second day
after mailing, if mailed by first class mail, postage prepaid. Notices
shall be properly addressed to the parties at their respective addresses
set forth below or to such other address as either party may later specify
by notice to the other:
If to Employer:
Modis Professional Services, Inc.
Attn: Chief Executive Officer
1 Independent Drive
Jacksonville, Florida 32202
If to Executive:
George Bajalia
at the then current address of the Executive
appearing in the corporate records of Employer
14. Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof, including, but not limited to, any
and all prior employment agreements and related amendments entered into
between the Employer and the Executive. This Agreement may be changed only
by an agreement in writing signed by the party against whom any waiver,
change, amendment or modification is sought.
15. Waiver. The waiver by one party of a breach of any of the provisions of
this Agreement by the other shall not be construed as a waiver of any
subsequent breach.
16. Attorney's Fees. In the event of litigation or other dispute resolution
proceeding involving the interpretation or enforcement of this Agreement,
the prevailing party shall be entitled to recover from the other all fees,
costs and expenses incurred in connection therewith, including attorney's
fees through appeal.
17. Tax Withholding. The Employer shall have the right to deduct from all
benefits and/or payments under the Agreement any taxes required by law to
be paid or withheld with respect to such benefits or payments.
18. Governing Law; Venue. The Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Duval County, Florida,
shall be proper venue for any litigation arising out of this Agreement.
19. Paragraph Headings. Paragraph headings are for convenience only and are
not intended to expand or restrict the scope or substance of the provisions
of this Agreement.
20. Assignability. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer. This Agreement is a personal
employment agreement and the rights, obligations and interests of the
Executive hereunder may not be sold, assigned, transferred, pledged or
hypothecated.
21. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and shall in no way be impaired.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to account for more than one
such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 30th
day of July, 1999.
EXECUTIVE
/s/ Tyra Tutor /s/ George Bajalia
__________________________ ___________________________
Witness George Bajalia
EMPLOYER
/s/ Marc Mayo
___________________________ /s/ Derek E. Dewan
Witness By:___________________________
President, Chairman of the Board
and Chief Executive Officer
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of January, 1999, by and
between MODIS PROFESSIONAL SERVICES, INC. a Florida corporation, and its
successors ("Employer"), and ROBERT P. CROUCH a resident of the State of Florida
("Executive").
WHEREAS, the Employer and the Executive wish to enter into an employment
agreement;
NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants, and subject to the terms and conditions contained in this Agreement,
the Employer and Executive, intending to be legally bound, hereby agree as
follows:
1. Employment. Employer hereby employs Executive as Vice President and
Chief Accounting Officer, and Executive hereby accepts employment by
Employer, in accordance with and subject to the terms and conditions of
this Agreement. The Executive will report directly to the Chief Executive
Officer of Employer.
2. Duties and Authority. As Vice President and Chief Accounting Officer ,
Executive shall be responsible for management of the accounting and related
functions of Employer and shall perform such other duties as are assigned
to the Executive by the Chief Executive Officer of the Employer. Executive
agrees to devote his full time, attention and best efforts to the
performance of his duties hereunder; provided, however, it shall not be
considered a violation of the foregoing for the Executive to serve on
corporate, industry, civic or charitable boards or committees, so long as
such activities do not materially interfere with the performance of the
Executive's responsibility as an employee of the Employer in accordance
with this Agreement.
3. Initial Term; Employment Period. The initial term of employment shall
begin on January 1, 1999 and end on December 31, 2000 (the 'Term of this
Agreement'). The Term of this Agreement shall be extended automatically for
one year on December 31, 2000, and each annual anniversary thereof (the
'Extension Date') unless, and until, at least 90 days prior to the
applicable Extension Date either the Employer or the Executive provides
written notice to the other party that this Agreement is not to be extended
(the later of December 31, 2000 or the last date to which the Term is
extended shall be the 'End of Term'). For purposes of this Agreement, the
period beginning on January 1, 1999, and ending on the Date of Termination
(as hereafter defined) shall be referred to herein as the "Employment
Period."
4. Compensation. During the Employment Period which is in the Term of this
Agreement, Executive shall receive the following compensation:
A. Base Salary. A base annual salary of $150,000.00, payable in
accordance with the Employer's standard practice for other comparable
executives. Executive's base salary shall be subject to annual review
by the Board of Directors of the Employer (the 'Board') for
discretionary periodic increases in accordance with the Employer's
compensation policies. References to 'Base Salary' in this Agreement
shall be to the base salary set forth in this Section 4.A. and shall
include any increases to such base salary made hereby.
B. Incentive Compensation. The Executive shall be entitled to a target
incentive compensation opportunity expressed as a percentage of Base
Salary of not less than 60% under the Modis Annual Incentive Plan
('Incentive Plan').
5. Stock Options. Employer shall continue to grant to Executive stock
options from time to time in a manner consistent with that to which it
grants to other senior executive officers of the Employer to purchase
shares of the common stock of the Employer pursuant to the Modis
Professional Services, Inc. Amended and Restated 1995 Stock Option Plan, as
amended from time to time, or pursuant to a newly established or successor
plan.
A. Exercise. Any existing stock option(s) and any stock options
granted after the effective date of this Agreement shall provide for:
(i) exercisability of vested options (including those vested
under paragraph 5.A.(ii) below) for at least two years following
the Executive's termination of employment with the Employer (or
if sooner, 10 years from date of grant of the option);
(ii) full vesting of options upon a Change in Control (as
hereafter defined) or termination of the Executive's employment
with the Employer for reasons other than (i) by the Employer for
Cause (as hereafter defined) or (ii) by the Executive without
Good Reason (as hereafter defined) and
(iii) exercisability only to the extent vested on the date of the
Executive's termination of employment with the Employer, in the
event of termination (i) by the Employer for Cause, or (ii) by
the Executive without Good Reason.
B. For purposes of this Agreement, 'Change in Control' shall mean:
(i) the acquisition by any person or persons (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934) not
a shareholder of Employer on June 1, 1998, of legal or beneficial
ownership of 35% or more of either (a) the then outstanding
shares of common stock of the Employer or (b) the combined voting
power of the then outstanding voting securities of the Employer
entitled to vote generally in the election of directors;
(ii) individuals who, as of the date hereof, constitute the Board
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Employer's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Board
shall be considered as though such individual were a member of
the Board as of the date hereof;
(iii) approval by the shareholders of the Employer of a
reorganization, merger, or consolidation, in each case unless the
shareholders of the Employer immediately before such
reorganization, merger, or consolidation own, directly or
indirectly, immediately following such reorganization, merger, or
consolidation at least a majority of the combined voting power of
the outstanding voting securities of the corporation resulting
from such reorganization, merger, or consolidation in
substantially the same proportion as their ownership of the
voting securities immediately before such reorganization, merger
or consolidation; or
(iv) approval by the shareholders of the Employer of (a) a
complete liquidation or dissolution of the Employer, or (b) the
sale or other disposition of more than 50% of the assets of the
Employer within a twelve month period.
6. Benefits. To the extent not otherwise provided herein (it being the
intent not to duplicate benefits) during the term of this Agreement,
Employer shall provide the Executive with all retirement, welfare, deferred
compensation, disability and other benefits generally provided to all of
the Employer's other senior executive officers. Executive shall be entitled
to four (4) weeks of paid vacation per calendar year. Unused vacation shall
be paid out at calendar year end. The Employer shall reimburse the
Executive for all reasonable and necessary expenses incurred while
conducting business in accordance with policies adopted by the Employer
from time to time. The Employer shall reimburse the Executive for all
reasonable and necessary expenses incurred while conducting the Employer's
business in accordance with policies adopted by the Employer from time to
time. The Employer shall pay the membership dues for the Executive for the
River Club. Furthermore, the Employer shall pay the Executive or a leasing
company, at the Executive's option, $750 per month for an automobile used
by the Executive for business purposes. The Executive acknowledges that
pursuant to the Internal Revenue Code, and the regulations promulgated
thereunder, the Employer may be required to report for tax purposes all or
a portion of certain of the benefits and reimbursements provided in this
Agreement as income in respect of the Executive.
7. Non-Compete; Confidentiality. In consideration of the employment of
Executive by Employer, Executive agrees as follows:
A. Non-Compete and Non-Solicitation. During the Employment Period and
for a period of two years after the Date of Termination, Executive
will not, directly or indirectly, within a fifty mile radius of any
office of Employer's offices in existence on the Date of Termination,
own, manage, be employed by, work for, consult for, be an officer or
director of, advise, represent, engage in or carry on any business
which competes with the business of Employer. During the Employment
Period and for a period of two years after the Date of Termination,
Executive will not, directly or indirectly, solicit or induce, or
attempt to solicit or induce, any employee of the Employer (or a
consolidated subsidiary) to leave the Employer (or a consolidated
subsidiary) for any reason whatsoever, or solicit the services of any
employee of the Employer (or a consolidated subsidiary).
B. Non-Disclosure of Information. Executive will not at any time,
during or after the term of this Agreement in any fashion, form, or
manner, either directly or indirectly, divulge, disclose, or
communicate to any person, firm, or corporation, in any manner
whatsoever, any information of any kind, nature, or description
concerning any matters affecting or relating to the business of the
Employer, including, but not limited to, the names of any of its
customers or prospective customers or any other information concerning
the business of the Employer, its manner of operation, its plans, its
vendors, its suppliers, its advertising, its marketing, its methods,
its practices, or any other information of any kind, nature, or
description, without regard to whether any or all of the foregoing
matters would otherwise be deemed confidential, material, or
important; provided, however that this provision shall not prevent
disclosures by Executive to the extent such disclosures are (i)
believed by the Executive, in good faith and acting reasonably, to be
in the best interest of the Employer, (ii) of information that is
public at the time of the disclosure (other than as a result of the
Executive's violation of this Paragraph 7(b)), or (iii) as required by
law or legal process (and, if the Executive is so required to
disclose, Executive shall provide the Employer notice of such to allow
the Company the opportunity to contest such disclosure).
8. Termination of Employment.
A. Death or Disability.. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
Additionally, if the Employer determines in good faith that the
Executive has incurred a Disability, it may give the Executive written
notice of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Employer shall
terminate effective on the later of (i) the date in the notice, (ii)
the day after receipt of such notice by the Executive, or (iii) the
date the Disability has been considered to occur (the 'Disability
Effective Date'), provided that, prior to such date, the Executive
shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall have the
meaning set forth in the Employee's long term disability plan or
policy covering the Executive and shall not be considered to have
occurred until after the waiting period as required by such plan or
policy.
B. Cause. The Employer may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean (i) a breach by the Executive of the Executive's
obligations under paragraph 2 above (other than as a result of
temporary incapacity due to physical or mental illness, or Disability)
which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Employer and which is not
remedied in a reasonable period of time (to be not less than 15 days)
after receipt of written notice from the Employer specifying such
breach or (ii) the conviction of the Executive of a felony; or (iii) a
breach of the Executive's fiduciary duty. No act or failure to act on
the Executive's part shall be considered willful unless done or
omitted in bad faith and without reasonable belief that the action or
omission was in the best interest of the Employer.
C. Good Reason. The Executive's employment may be terminated by the
Executive at any time for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
(i) the assignment of the Executive of any duties inconsistent in
any respect with the Executive's position (including status,
offices, titles and reporting requirement), authority, duties or
responsibilities as contemplated by paragraph 2 or any other
action by the Employer which results in a diminution in such
position, authority, duties or responsibilities,
(ii) a reduction in the Executive's Base Salary or maximum bonus
opportunity which is more than de minimis (except if such
reduction is a part of a reduction for all executive officers of
the Employer);
(iii) a reduction which is more than de minimis (except if such
reduction is a part of a reduction for all executive officers of
the Employer) in the level of incentive compensation (including
stock options, restricted stock awards, stock appreciation
rights, retirement plan accruals and/or welfare plan benefits
(within the meaning of Section 3(1) of ERISA) accruing or
provided to the Executive;
(iv) any failure by the Employer to comply with any of the
provisions of this Agreement,
(v) Employer's requiring the Executive to be based at any office
or location other than Jacksonville, Florida; or
(vi) the Employer's providing notice to to Paragraph 3 that the
Agreement will not be extended, unless the purpose of such notice
is to negotiate the terms of a new agreement between the Employer
and the Executive and the notice provides that the Agreement
continues in effect until such new agreement is entered into.
For purposes of this subparagraph C, any good faith determination
of "Good Reason" made by the Executive shall be conclusive.
However, no such event described hereunder shall constitute Good
Reason unless the Executive has given written notice to the
Employer specifying the event relied upon for such termination
within one year after the occurrence of such event and the
Employer has not remedied such within 60 days of receipt of such
notice. The Employer and the Executive, upon mutual written
agreement, may waive any of the foregoing provisions which would
otherwise constitute Good Reason.
D Notice of Termination. Any termination by the Employer for Cause, or
by the Executive for Good Reason, shall be communicated to the other
party by Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon; (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment; and (iii) specifies the Date of Termination
(as defined below). Notice of intent to terminate employment for Good
Reason must be provided pursuant to Section 8.C. of this Agreement.
The failure by the Executive or the Employer to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Employer hereunder or preclude the Executive or the
Employer from asserting such fact or circumstance in enforcing the
Executive's or the Employer's rights hereunder.
E. Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Employer for Cause, or by
the Executive for Good Reason, the date specified in the Notice of
Termination as the Date of Termination; (ii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be; and (iii) if
Executive's employment is terminated by either party other than for
death, Disability, Cause or Good Reason, the date set forth in the
notice required under subparagraph D. above as the Date of Termination
is to be effective.
9. Obligations of the Employer upon Termination. Upon termination of the
Executive's employment for any reason during the Term of this Agreement,
Executive shall be entitled to Base Salary and all benefits through the
Date of Termination, and to exercise then vested stock options in
accordance with Paragraph 5.A.(i) above. Upon the termination of the
Executive's employment during the Term of this Agreement by the Executive
for Good Reason, or by the Employer for any reason other than Cause,
Executive shall in addition be entitled to exercise the option(s) with
accelerated vesting pursuant to Paragraph 5.A.(ii) above. In addition, upon
the termination of the Executive's employment during the Term of this
Agreement by the Executive for Good Reason, or by the Employer for any
reason other the Cause, Disability or death, the Executive shall be
entitled to receive a lump sum payment equal to two (2) times the sum of
(i) Executive's Base Salary as of the Date of Termination and (ii) the
Executive's threshold bonus opportunity under the Incentive Plan based on
the threshold bonus opportunity for the year of termination. The lump sum
payment shall be paid no later than thirty days after the Date of
Termination in immediately available United States funds. Notwithstanding
the preceding provisions, at the Employer's sole discretion, the Employer
may pay the amount determined as a lump sum in this Paragraph 9 in 24 equal
monthly payments beginning on the first day of the month first following
the Date of Termination.
10. Mitigation of Damages. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise. The amounts provided for under this
Agreement shall not be reduced by any compensation earned or benefits
received by the Executive as the result of self-employment or employment by
another employer or otherwise.
11. Tax Effect. If Independent Tax Counsel shall determine that the
aggregate payments made, and benefits provided, to the Executive pursuant
to this Agreement and any other payments, and benefits provided, to the
Executive from the Employer, its affiliates and plans, which constitute
"parachute payments" as defined in Section 280G of the Code (or any
successor provision thereto) ("Parachute Payments") would be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount (determined by Independent Tax Counsel) such that
after payment by the Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the Gross-Up Payment
an amount equal to the Excise Tax imposed upon the payments. For purposes
of this Paragraph, "Independent Tax Counsel" shall mean a lawyer, a
certified public accountant with a nationally recognized accounting firm,
or a compensation consultant with a nationally recognized actuarial and
benefits consulting firm with expertise in the area of executive
compensation tax law, who shall be selected by the Employer and shall be
reasonably acceptable to the Executive, and whose fees and disbursements
shall be paid by the Employer.
A. If Independent Tax Counsel shall determine that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a
written opinion that the Executive has substantial authority not to
report any Excise Tax on the Executive's Federal income tax return. If
the Executive is subsequently required to make a payment of any Excise
Tax, then the Independent Tax Counsel shall determine the amount of
such additional payment ('Gross-Up Underpayment'), and any such
Gross-Up Underpayment shall be promptly paid by the Employer to or for
the benefit of the Executive. The fees and disbursements of the
Independent Tax Counsel shall be paid by the Employer.
B. The Executive shall notify the Employer in writing within 15 days
of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Employer of a Gross-Up Payment. If
the Employer notifies the Executive in writing that it desires to
contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, the Executive shall:
(i) give the Employer any information reasonably requested by the
Employer relating to such claim;
(ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Employer;
(iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
(iv) permit the Employer to participate in any proceedings
relating to such claim; provided, however, that the Employer
shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as
a result of such representation and payment of costs and
expenses. The Employer shall control all proceedings taken in
connection with such contest; provided, however, that if the
Employer directs the Executive to pay such claim and sue for a
refund, the Employer shall advance the amount of such payment to
the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance.
C. If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to this Paragraph 11, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall,
within 10 days, pay to the Employer the amount of such refund,
together with any interest paid or credited thereon after taxes
applicable thereto.
12. Mandatory Deductions. Any amounts to which Executive is entitled as
compensation, bonus, merit bonus, or any other form of compensation subject
to withholding, shall be subject to usual deduction for appropriate
federal, state, and local income and employment tax obligations of
Executive.
13. Notices. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of receipt, if delivered
personally to the party to whom notice is to be given, or on the second day
after mailing, if mailed by first class mail, postage prepaid. Notices
shall be properly addressed to the parties at their respective addresses
set forth below or to such other address as either party may later specify
by notice to the other:
If to Employer:
Modis Professional Services, Inc.
Attn: Chief Executive Officer
1 Independent Drive
Jacksonville, Florida 32202
If to Executive:
Robert P. Crouch
at the then current address of the Executive
appearing in the corporate records of Employer
14. Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof, including, but not limited to, any
and all prior employment agreements and related amendments entered into
between the Employer and the Executive. This Agreement may be changed only
by an agreement in writing signed by the party against whom any waiver,
change, amendment or modification is sought.
15. Waiver. The waiver by one party of a breach of any of the provisions of
this Agreement by the other shall not be construed as a waiver of any
subsequent breach.
16. Attorney's Fees. In the event of litigation or other dispute resolution
proceeding involving the interpretation or enforcement of this Agreement,
the prevailing party shall be entitled to recover from the other all fees,
costs and expenses incurred in connection therewith, including attorney's
fees through appeal.
17. Tax Withholding. The Employer shall have the right to deduct from all
benefits and/or payments under the Agreement any taxes required by law to
be paid or withheld with respect to such benefits or payments.
18. Governing Law; Venue. The Agreement shall be construed and enforced in
accordance with the laws of the State of Florida. Duval County, Florida,
shall be proper venue for any litigation arising out of this Agreement.
19. Paragraph Headings. Paragraph headings are for convenience only and are
not intended to expand or restrict the scope or substance of the provisions
of this Agreement.
20. Assignability. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer. This Agreement is a personal
employment agreement and the rights, obligations and interests of the
Executive hereunder may not be sold, assigned, transferred, pledged or
hypothecated.
21. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and shall in no way be impaired.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to account for more than one
such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 30th
day of July, 1999.
EXECUTIVE
/s/ Tyra Tutor /s/ Robert P. Crouch
__________________________ ___________________________
Witness Robert P. Crouch
EMPLOYER
/s/ Marc Mayo
___________________________ /s/ Derek E. Dewan
Witness By:___________________________
President, Chairman of the Board
and Chief Executive Officer
<TABLE>
<CAPTION>
(dollar amounts in thousands except per share amounts)
Three Months Ended Six Months Ended
-------------------------------- ----------------------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic income per common share computation:
Income available to common shareholders
from continuing operations $ 25,961 $ 24,124 $ 50,189 $ 46,221
------------- ------------- ------------- -------------
Income available to common shareholders
from discontinued operations $ - $ 12,634 $ - $ 23,113
------------- ------------- ------------- -------------
Average common shares outstanding 96,152 110,576 96,221 107,922
============= ============= ============= =============
Basic income per common share from
continuing operations $ 0.27 $ 0.22 $ 0.52 $ 0.43
============= ============= ============= =============
Basic income per common share from
discontinued operations $ - $ 0.11 $ - $ 0.21
============= ============= ============= =============
Basic net income per common share $ 0.27 $ 0.33 $ 0.52 $ 0.64
============= ============= ============= =============
Diluted income per common share computation:
Income available to common shareholders
from continuing operations $ 25,961 $ 24,124 $ 50,189 $ 46,221
Interest paid on convertible debt, net of
tax benefit - 928 - 1,856
------------- ------------- ------------- -------------
Income available to common shareholders and
assumed conversions from continuing
operations $ 25,961 $ 25,052 $ 50,189 $ 48,077
------------- ------------- ------------- -------------
Average common shares outstanding 96,152 110,576 96,221 107,922
Incremental shares from assumed conversions:
Convertible debt - 7,599 - 7,599
Stock options 501 3,710 567 3,923
------------- ------------- ------------- -------------
Diluted average common shares outstanding 96,653 121,885 96,788 119,444
============= ============= ============= =============
Diluted income per common share from
continuing operations $ 0.27 $ 0.21 $ 0.52 $ 0.40
============== ============= ============= =============
Diluted income per common share from
discontinued operations $ - $ 0.10 $ - $ 0.19
============== ============= ============= =============
Diluted net income per common share $ 0.27 $ 0.31 $ 0.52 $ 0.59
============== ============= ============= =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Jun-30-1999
<PERIOD-TYPE> 6-MOS
<CASH> 26,240
<SECURITIES> 0
<RECEIVABLES> 372,582
<ALLOWANCES> 14,443
<INVENTORY> 0
<CURRENT-ASSETS> 436,085
<PP&E> 86,988
<DEPRECIATION> 47,282
<TOTAL-ASSETS> 1,547,588
<CURRENT-LIABILITIES> 194,218
<BONDS> 0
0
0
<COMMON> 959
<OTHER-SE> 1,132,280
<TOTAL-LIABILITY-AND-EQUITY> 1,547,588
<SALES> 501,679
<TOTAL-REVENUES> 501,679
<CGS> 366,459
<TOTAL-COSTS> 366,459
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 540
<INTEREST-EXPENSE> 1,457
<INCOME-PRETAX> 42,910
<INCOME-TAX> 16,949
<INCOME-CONTINUING> 25,961
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,961
<EPS-BASIC> 0.27
<EPS-DILUTED> 0.27
</TABLE>
