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EXHIBIT 10.35
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This first amendment (the "Amendment") to the employment agreement
dated as of October 1, 1996 (the "Agreement") among StaffMark, Inc.
("StaffMark"), HRA, Inc., a wholly-owned subsidiary of StaffMark and W. Xxxxx
Xxxxxxxxxxx ("Employee"), is made and entered as of September 17, 1999 by and
between StaffMark and Employee.
WHEREAS, the terms of Employee's overall executive compensation
package and the terms of this Amendment have been the subject of deliberation
by the Compensation Committee of the Board of Directors of StaffMark (the
"Compensation Committee") at meetings held on March 11, 1999, May 7, 1999, June
17, 1999, August 2, 1999, August 12, 1999, September 15, 1999 and September 17,
1999; and
WHEREAS, the Compensation Committee has been delegated authority, by
the Board of Directors of StaffMark at its meeting on August 12, 1999, to
determine the terms of, and approve, the Amendment;
WHEREAS, StaffMark believes that its interests would best be served by
securing Employee's continued employment; and
WHEREAS, StaffMark believes that, to achieve this goal, it is
necessary to extend the term of the Agreement, to revise the Agreement to
reflect certain modifications to the terms of the Employee's employment, to
provide severance benefits in additional specified circumstances, and to
provide certain benefits in the event of a change in control of StaffMark; and
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WHEREAS, the Compensation Committee has determined that the Amendment
is in the best interests of StaffMark and has approved the Amendment on
September 17, 1999.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. Section 1 of the Agreement is amended by deleting "September 30,
2001" in the second line thereof and replacing it with "April 1, 2002."
2. Effective January 1, 1999, the second sentence of Section 1 of the
Agreement is deleted and replaced with the following provision:
"During the term of this Agreement, the calendar year shall
be referred to herein as a "Compensation Year.""
3. Section 2(a) of the Agreement is amended by deleting (i) ", the
Board of Directors of the Company" in the fourth and fifth lines thereof and
(ii) "the Board of Directors or" in the fifth and sixth lines thereof.
4. Section 3 of the Agreement is amended by deleting "$125,000 per
annum through the expiration of the term of the Agreement," and is replacing it
with "$145,000 per year through September 30, 1999, and thereafter throughout
the term of this Agreement, $225,000 per year, in each case."
5. Section 5(b) of the Agreement is amended by inserting "Except as
provided in Section 6 hereof" (as renumbered) at the beginning of the initial
clause thereof.
6. Section 5(b)(i) of the Agreement is amended by adding "(excluding
circumstances involving Good Reason, as defined below)" immediately following
the word "Employee" in the second line thereof.
7. Section 5(b)(iii) of the Agreement is amended
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(a) by inserting "or by Employee for Good Reason (as defined
below)," immediately following the comma in the second line
thereof, and
(b) by deleting the words "continue to" on the third line
thereof and inserting after the word "pay" on the third line
thereof the phrase ", in such amount as is determined by
reference to clauses (A) and (B) below and on such payment
terms set forth in the last sentence of this paragraph
(iii)," and by deleting the word "to" on the fifth line
thereof, and
(c) by inserting "the lesser of two (2) years or" at the
beginning of clause 5(b)(iii)(B), and
(d) by adding the following provision to the end thereof:
""Good Reason" shall mean any of the following
circumstances unless remedied by StaffMark within thirty
(30) days after receipt of written notification by
Employee that such circumstances exist or have occurred:
(A) assignment to Employee of any duties inconsistent
with Employee's position, authority, duties or
responsibilities as contemplated by paragraph 2 of the
Agreement, or any other action by StaffMark that results
in diminution of such position, authority, duties or
responsibilities; or (B) any material failure by
StaffMark to comply with any of the material provisions
of the Agreement. The continuation of health insurance
benefits referenced above in this Section 5(b)(iii)
shall extend to (i) Employee and his eligible dependants
under the terms of the applicable StaffMark sponsored
health care plan by which he was covered at the time of
such termination of employment, as such plan may be in
effect or may be modified from time to time, in
consideration for Employee's payment of such premiums as
may be required to be paid by active employees of
StaffMark from time to time ("Required Premium
Payments") or (ii) if such StaffMark sponsored health
care plan does not by its terms allow Employee's
participation or continued
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participation, StaffMark shall obtain (in return for
Required Premium Payments) insurance coverage on behalf
of Employee and/or Employee's eligible dependents that
provides all benefits otherwise provided under such
StaffMark sponsored health care plan or, at StaffMark's
election (in return for Required Premium Payments) shall
provide such benefits from its own assets (collectively,
"Continued Health Care Coverage"). The payment of
Employee's base salary amount under the circumstances
set forth in the first sentence of this paragraph shall
be made in two equal payments (equal to one-half of such
aggregate amount) on each of the effective date of
termination and ninety days after the effective date of
termination."
8. The following new Section 6 is inserted immediately following
Section 5 of the Agreement, and subsequent Sections of the Agreement and all
references thereto are renumbered accordingly:
"6. CHANGE IN CONTROL
(a) If Employee's employment with StaffMark is
terminated within two years following a Change in
Control either by StaffMark for any reason or no
reason or by the Employee for Good Reason only,
StaffMark shall pay Employee a lump sum in the
amount of two (2) times Employee's base salary then
in effect and his bonus for the year in which the
termination of his employment occurs, such lump sum
payment shall be due on the effective date of the
termination of Employee's employment. In addition,
in the case of any such termination, Employee shall
be permitted to receive Continued Health Care
Coverage for the period described in clause
5(b)(iii)(B).
(b) A "Change in Control" shall be deemed to have
occurred if: (i) any person, other than StaffMark
or an employee benefit plan of StaffMark, acquires
directly or indirectly the "beneficial ownership"
(as defined in
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Section 13(d) of the Securities Exchange Act of
1934, as amended, "Beneficial Ownership") of any
voting security of StaffMark and immediately after
such acquisition such person is, directly or
indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total
voting power of all of the then-outstanding
StaffMark voting securities of StaffMark; (ii) the
individuals (A) who, as of the effective date of
StaffMark's registration statement with respect to
its initial public offering, constitute the Board
of Directors of StaffMark (the "Original
Directors") or (B) who thereafter are elected to
the Board of Directors of StaffMark and whose
election, or nomination for election to the Board
of Directors of StaffMark was approved by vote of
at least two-thirds (2/3) of the Original Directors
then still in office (such directors becoming
"Additional Original Directors" immediately
following their election) or (C) who are elected to
the Board of Directors of StaffMark and whose
election, or nomination for election, to the Board
of Directors of StaffMark was approved by a vote of
at least two-thirds (2/3) of the Original Directors
and Additional Original Directors then still in
office (such directors also becoming Additional
Original Directors immediately following their
election), cease for any reason to constitute a
majority of the members of the Board of Directors
of StaffMark; (iii) the stockholders of StaffMark
shall approve a merger or merger agreement
involving StaffMark, a consolidation transaction
involving StaffMark, a recapitalization or
reorganization of StaffMark, a reverse stock split
of outstanding StaffMark voting securities,
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or the consummation of any such transaction if
stockholder approval is not sought nor obtained,
provided, however, that the foregoing referenced
transactions or events in this clause (iii) shall
not constitute a "Change of Control" if such
transaction or event would result in at least 75%
of the total voting power represented by
outstanding securities of the surviving or
resulting entity (immediately after such
transaction or event after giving effect to the
consideration issued or transferred in such
transaction or event on an as-converted or
fully-diluted basis) being Beneficially Owned by at
least 75% of the holders of outstanding voting
securities of StaffMark immediately prior to the
transaction, with the voting power of each such
continuing holder relative to other such continuing
holders not altered in the transaction in any
material way; or (iv) the stockholders of StaffMark
shall approve a plan of complete liquidation of
StaffMark or an agreement for the sale or
disposition by StaffMark of all or a substantial
portion of StaffMark's assets (i.e., 50% or more of
the total assets of StaffMark).
(c) (i) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be
determined that any payment or distribution by
StaffMark to or for the benefit of Employee,
whether paid or payable or distributed or
distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would
constitute an "excess parachute payment" within the
meaning of section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), the
aggregate present value of amounts payable or
distributable to or for the benefit of the Employee
pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are
hereinafter referred to as "Agreement Payments")
shall be reduced (but not below zero) to the
Reduced Amount. The "Reduced Amount" shall be an
amount expressed in present value which maximizes
the aggregate
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present value of Agreement Payments without causing
any Payment to be subject to the taxation under
section 4999 of the Code. For purposes of this
Section 6, present value shall be determined in
accordance with section 280G(d)(4) of the Code.
(ii) All determinations to be made under
this Section 6 shall be made by StaffMark's
independent public accountant immediately prior to
the Change of Control (the "Accounting Firm"),
which firm shall provide its determinations and any
supporting calculations both to StaffMark and
Employee within 10 days of the effective date of
the termination of Employee's employment. Any such
determination by the Accounting Firm shall be
binding upon StaffMark and Employee.
(iii) As a result of the uncertainty
in the application of section 280G of the Code at
the time of the initial determination by the
Accounting Firm hereunder, it is possible that
Agreement Payments, as the case may be, will have
been made by StaffMark which should not have been
made ("Overpayment") or that additional Agreement
Payments which have not been made by StaffMark
could have been made ("Underpayment"), in each
case, consistent with the calculations required to
be made hereunder. Within two years after the
effective date of the termination of Employee's
employment, the Accounting Firm shall review the
determination made by it pursuant to paragraph (i),
above. In the event that the Accounting Firm
determines that an Overpayment has been made, any
such Overpayment shall be treated for all purposes
as a loan to Employee which Employee shall repay to
StaffMark together with interest at the applicable
Federal rate provided for in section 7872(f)(2) of
the Code (the "Federal Rate"); provided, however,
that no amount shall be payable by Employee to
StaffMark if and to the extent such payment would
not reduce the amount which is subject to taxation
under section 4999 of the Code. In the event that
the Accounting Firm determines that an Underpayment
has occurred, any such Underpayment shall be
promptly paid by StaffMark to or for the benefit of
Employee together with interest at the Federal
Rate.
(iv) All of the fees and expenses of the
Accounting Firm in performing the determinations
referred to in paragraphs (ii) and (iii) above
shall be borne solely by StaffMark. StaffMark
agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims,
damages and expenses resulting from or relating to
its determinations pursuant to paragraphs (ii) and
(iii) above,
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except for claims, damages or expenses resulting
from the negligence or misconduct of the Accounting
Firm."
8. The provisions of Section 10 (formerly Section 9) of the Agreement
shall be effective as of the date hereof.
9. Except as otherwise set forth herein, the Agreement shall remain in
full force and effect in accordance with its terms from and after the date
hereof. All references to the Agreement from and after the date hereof shall be
deemed to include the Agreement as amended by the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the day and year first above written.
EMPLOYEE: STAFFMARK, INC.:
/s/ W. XXXXX XXXXXXXXXXX
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W. Xxxxx Xxxxxxxxxxx By: /s/ XXXXX X. XXXXXX
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WITNESS: /s/ XXXXX X. XxXXXXXX Title: Chief Executive Officer
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