Non-director Officer's Indemnification Agreement

EMPLOYEE SOLUTIONS, INC.
NON-DIRECTOR OFFICER'S INDEMNIFICATION AGREEMENT


This Agreement, which shall be effective as of November 21, 1996, is by and between Employee Solutions, Inc., an Arizona corporation (the "Company"), and Roy A. Flegenheimer, the undersigned officer of the Company (the "Indemnitee").


RECITALS


WHEREAS, it is essential for the Company to be able to retain and attract as officers the most capable persons available.


WHEREAS, Indemnitee is an executive officer of the Company.


WHEREAS, both the Company and Indemnitee recognize the risk created by the increased risk of litigation and other claims being asserted against officers of public companies in today's environment.


WHEREAS, effective January 1, 1996, the Arizona Business Corporation Act ("ABCA") has been changed, and the Company and Indemnitee wish to avail themselves of the revised provisions of the ABCA, and to specify certain matters not specifically provided in the ABCA.


WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies.


COVENANTS


THEREFORE, in consideration of the promises in this Agreement, and intending to be legally bound hereby, and for other good and valuable consideration, the adequacy of which is hereby acknowledged, the parties agree as follows:


1. Certain Definitions.


(a) Action: any threatened, pending or completed action, suit, proceeding or alternate dispute resolution mechanism, or any inquiry, hearing or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or alternate dispute resolution mechanism, whether civil, criminal, administrative, investigative or other, and whether formal or informal.


(b) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 20% or more of the total voting power represented by the Company's then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all the Company's assets.


(c) Derivative Action: an Action by or in the right of the Company.


(d) Expenses: include attorneys' fees, court costs, deposition costs, court reporter fees, travel and all other costs, expenses and obligations actually paid to another or incurred in connection with investigating the facts underlying the Action, preparing to defend and defending the Action or preparing for and participating in the Action as a witness, or any of the foregoing expenses incurred on appeal or in an action or other proceeding to enforce Indemnitee's rights hereunder, or any other reasonable expenses incurred by Indemnitee in participating in any Indemnifiable Action or Indemnifiable Derivative Action.
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(e) Indemnifiable Action or Indemnifiable Derivative Action: any Action or Derivative Action arising out of or relating, directly or indirectly, to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or a subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation, limited liability company, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Indemnitee in any such capacity.


(f) Potential Change in Control: shall be deemed to have occurred if (i) the Company enters into an agreement or arrangement, the consummation of which would result in the occurrence of a Change in Control; (ii) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; (iii) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, who is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company's then outstanding Voting Securities, increases such person's beneficial ownership of such securities by 5% or more over the percentage so owned by such person on the date hereof; or (iv) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.


(g) Voting Securities: any securities of the Company which vote generally in the election of directors.


2. No Pending Actions. Indemnitee represents to the Company that, to Indemnitee's actual knowledge, (i) there is no Indemnifiable Action or Indemnifiable Derivative Action involving Indemnitee as of the date of this Agreement and (ii) no facts exist that may form the basis for any such Action involving Indemnitee.


3. Indemnification For Actions Other Than Derivative Actions. If Indemnitee was, is, or becomes a party to or a witness or other participant in, or is threatened to be made a party to or witness or other participant in, an Indemnifiable Action other than an Indemnifiable Derivative Action, the Company shall, subject to the provisions of this Agreement, indemnify Indemnitee to the fullest extent permitted by law against any and all Expenses, judgments, fines, penalties, and amounts paid in settlement of such Action.
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4. Indemnification For Derivative Actions.


(a) Basic Indemnification. If Indemnitee was, is, or becomes a party to or a witness or other participant in, or is threatened to be made a party to or witness or other participant in an Indemnifiable Derivative Action, the Company shall, subject to the provisions of this Agreement, indemnify Indemnitee to the fullest extent permitted by law against any and all Expenses, but not judgments, fines, or, except as set forth below, amounts paid in settlement of such Derivative Action.


(b) Adjudication of Liability in Derivative Actions. Notwithstanding Paragraph 4(a), no indemnification shall be made in respect of any claim, issue, or matter as to which Indemnitee shall have been adjudged (by final judicial determination from which there is no furt ...