EMPLOYMENT AGREEMENT RE: XXXXXXX
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between Diversified Corporate Resources, Inc., a Texas corporation (herein
referred to as the "Company"), and Xxxxxxx X. Xxxxxxx (herein referred to as the
"Employee").
W I T N E S S E T H:
WHEREAS, the Employee recently became employed by the Company pursuant
to terms set forth in a letter to Employee dated September 16, 1999 from M. Xxx
Xxxxxxx, as President of the Company; and
WHEREAS, the Employee has heretofore executed an Agreement in Respect
of Confidentiality and Intellectual Property (the "Proprietary Information
Agreement"), dated August 19, 1999, related to certain confidential information
concerning Management Alliance Corporation/Information Systems Consulting
Corporation, and related entities; and
WHEREAS, by execution of this Agreement, the parties hereto acknowledge
and agree that (a) the Letter Agreement is hereby deemed to be merged into this
Agreement, and (b) the Proprietary Information Agreement remains in full force
and effect; and
WHEREAS, the parties hereto desire to have the terms and conditions of
such employment set forth in this Agreement.
NOW THEREFORE, for and in consideration of the mutual advantages and
benefits accruing respectively to the parties hereto, the mutual promises
hereinafter made and the acts to be performed by the respective parties hereto,
the Company and the Employee do hereby contract and agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee as the
Company's Treasurer, Chief Financial Officer and Principal Financial Officer
(prior to April, 2000, Employee was the Company's Director of Accounting and
Principal Accounting Officer). The Employee hereby accepts such employment,
to perform the duties and render services as herein set forth. Such
employment shall continue during the term of this Agreement.
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2. TERM. Except in the case of earlier termination as herein
specifically provided, the term of this Agreement shall be for the period
beginning of time on September 20, 1999, and ending December 31, 2001.
3. COMPENSATION. During the term of this Agreement but subject to the
conditions hereinafter set forth, the Company shall pay the Employee, as
compensation for the services of the Employee, as a base salary of $9,500 per
month, plus such additional compensation, if any, which the Board of Directors
(the "Board"), or the Compensation Committee of the Board (the "Compensation
Committee") may determine from time to time. Such annual salary shall be
reviewed each year by the Compensation Committee and may be increased but shall
not be decreased; effective as of April 8, 2000, the aforesaid minimum base
salary of Employee shall be $10,625.00 per month, and effective as of June 15,
2000, such minimum base salary shall be $11,666.66 per month. The Employee's
monthly salary shall be paid in equal semi-monthly installments (subject to
reduction for such payroll and withholding deductions as may be required by
law), and may be paid, in whole or in part, by one or more of the subsidiaries
of the Company.
In addition to the foregoing salary and bonus amounts to be paid to
Employee, the Employee shall be entitled to each of the following during the
term of this Agreement (at the Company's expense unless otherwise indicated):
(a) the right to participate in the Company's Executive Bonus Plan, which shall
entitle the Employee to such bonus award(s), if any, as will be determined by
the Compensation Committee and paid to the Employee by the Company, (b) an
automobile allowance of $400.00 per month (effective as of June 15, 2000, such
amount is increased to $500.00 per month), (c) health insurance coverage which
shall provide for payment of health, dental and related expenses incurred during
the term of this Agreement with respect to the Employee, the Employee's spouse
and the Employee's children, if any, and which shall contain such benefits and
options as shall be made available to other employees of the Company (the
parties acknowledge that the Employee shall be responsible for paying such
portion of this coverage as shall be consistent with Company policy for its
employees in general), (d) the right to participate in any and all
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401(k) plans and Section 125 plans now in effect or hereafter adopted by the
Company, (e) the right to participate in any other benefit plans of the
Company available to senior management executives of the Company to the
extent that either of the Executive Officers or the Board determines the
Employee shall be a participant in such plan(s), (f) such vacation and sick
leave as shall be permitted by the Company's standard policies for other
employees of the Company, and (g) options to purchase up to 20,000 of common
stock of the Company, pursuant to such terms and conditions as previously
determined by the Compensation Committee, and as shall be set forth in a
separate option agreement executed by the Company.
4. DUTIES AND SERVICES. During the term of this Agreement, the
Employee agrees to (a) do his utmost to enhance and develop the best
interests and welfare of the Company, (b) give his best efforts and skill to
advancing and promoting the growth and success of the Company, and (c)
perform such duties or render such services as the Board of Directors of the
Company may, from time to time, reasonably confer upon or impose on the
Employee.
5. TERMINATION.
a. The Company may terminate the Executive's employment
pursuant to this Agreement at any time for "cause" as herein defined. The term
"cause" shall mean any of the following events: (i) the Executive's conviction
or plea of guilty to a crime involving moral turpitude, (ii) any act of
dishonesty or theft on the part of the Executive which involve the Company and
which, in the opinion of the Board, is detrimental to the best interests of the
Company, (iii) a material violation by the Executive of applicable laws (which
for this purpose shall include actions deemed by the Company's legal counsel to
be unlawful or in violation of those securities laws and regulations applicable
to the Company), any written policy of the Board, including the Company's policy
statement relating to trading in Company securities by Company personnel, or the
Company's employee handbook, (iv) the breach by the Executive in any material
respect of any of the substantive terms of this Agreement, and (v) the material
failure of
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the Executive to meet the performance goals which are assigned to him by the
Board of Directors or executive officers of the Company, and to which the
Executive has not objected to in writing as being unreasonable. The Company
will have the sole discretion to determine the applicability of the foregoing
matters, provided that (A) the Company will not be entitled to terminate this
Agreement for cause pursuant to (iv) or (v) above unless, prior to such
termination, the Employee has received a written reprimand detailing the
reasons for the failure of the Employee to comply with such provisions of
this Agreement, and (B) the Employee shall have had at least thirty (30) days
to cure the acts or omissions which constitute violations of Section 5(a)
(iv) above set forth, and at least one hundred twenty days (120) to cure any
violation of Section 5(a) (v) above set forth.
b. The Employee's employment by the Company shall automatically
terminate on the date of the Employee's death if the Employee dies during the
term of this Agreement.
c. If the Employee is incapacitated by an accident, sickness
or otherwise, so as to render him mentally or physically incapable of
performing the services required of him pursuant to this Agreement,
Employee's employment by the Company shall terminate thirty (30) days after
the day on which the Board determines that the Employee is so disabled and
that this Agreement should be terminated by reason of such disability.
Notwithstanding the foregoing, the Employee shall be notified in writing if
the Company determines that the Employee is disabled due to mental or
physical health; in such event, the Employee shall have the right to contest
any determination of disability by the Company. In the event that the
Employee does contest such determination, such matter shall be resolved by
arbitration pursuant to this Agreement.
d. The Employee may terminate his employment with the Company
at any time by giving one hundred twenty (120) days advance written notice to
the Company.
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6. SEVERANCE AND OTHER PAYMENTS.
a. If the Employee's employment pursuant to this Agreement is
terminated by the Employee, is terminated for "cause" (as herein defined) or is
terminated due to the death or disability (as determined pursuant to Section
5(c) of this Agreement) of the Employee, the Company shall not be obligated to
pay or provide any severance compensation or benefits to the Employee.
b. If the Employee's employment is terminated by the Company
during the term of this Agreement, for any reason other than "cause", the
Employee shall be entitled to receive (i) severance benefits in the form of
continuation of payment of Employee's base monthly salary (as provided herein)
for a period of six (6) months following the date the Employee ceases to be
employed by the Company. (such period of time is herein referred to as the
"Severance Period") and (ii) a prorata share (based upon the number of months
employed during the calendar year in which employment with the Company is
terminated) of any unpaid bonus which the Employee would otherwise have been
entitled to receive had he remained employed for the entirety of the calendar
year involved. Notwithstanding the foregoing, in the event of a Special Change
in Control of the Company (as hereinafter defined) and if the Employee's
employment with the Company is terminated for any reason other than Voluntary
Termination (as hereinafter defined) or termination for cause, as provided for
herein, during the twenty four (24) month period beginning on the Effective Date
of such Special Change in Control, (i) the Severance Period shall be extended by
six (6) months so that the Severance Period shall be twelve (12) months
following the date the Employee ceases to be employed by the Company (such
extended time period is herein referred to as the "Extended Severance Period"),
and (b) the payments to the Employee hereunder with respect to the Extended
Severance Period shall be at such times and in such amounts as would have been
paid to the Executive during the Extended Severance Period had the Employee's
employment not been terminated.
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7. WORKING CONDITIONS. The Company will provide the Employee with a
private office and support services.
8. TRAVEL AND ENTERTAINMENT. The Employee is authorized to incur
reasonable business expenses on behalf of the Company, including, but not by way
of limitation, expenditures of entertainment, gifts and travel; if any expenses
are of a kind or a cost in excess of the written policies established by the
Board, such expenses must be expressly authorized by the Board. The Company
agrees to reimburse the Employee for all such expenses upon the Employee's
presentation of an itemized account of such expenditures. In addition to the
foregoing, the Employee is entitled to incur, and to be reimbursed by the
Company, various and sundry fees, costs and expenses in connection with the
Employee being licensed as a Certified Public Accountant.
9. NON-SOLICITATION AGREEMENT. In the event of termination of
employment of the Employee with the Company for any reason, the Employee
agrees that the Employee shall not (directly or indirectly, as an employee,
representative or agent of a business or entity), for a one (1) year period
of time following the date of termination of such employment, (a) solicit for
employment or hire any individual who was an employee, agent or contractor of
the Company, or any of its affiliates, on the date of termination of such
employment or at any time within the twelve (12) months preceding the date of
termination of such employment, or (b) solicit the staff recruiting business
of any person or entity who is or was a customer, client, agent or
representative of the Company at the date of termination of such employment,
or at any time during the twelve (12) months preceding the date of
termination of such employment. Subject to the condition that the Company
must be in compliance with the terms of this Agreement as to the compensation
to be paid to the Employee, the covenants and agreements set forth in this
Section 9 shall survive the termination of this Agreement.
10. NONCOMPETITION AGREEMENT. The Employee acknowledges that the
special relationship of trust and confidence between himself, the Company, and
its clients, customers, vendors and suppliers
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creates a high risk and opportunity for the Employee to misappropriate the
relationship and goodwill existing between the Company and its clients,
customers, vendors and suppliers. The Employee further acknowledges and
agrees that it is fair and reasonable for the Company to take steps to
protect itself from the risk of such misappropriation. The Employee further
acknowledges that, prior to and during his employment with the Company, he
will be provided with access to the Company's confidential and proprietary
information that will enable him to benefit from the Company's goodwill and
how-how.
The Employee acknowledges that, in exchange for the execution of the
noncompetition restriction set forth below, he has received or will receive
substantial and valuable consideration. The Employee agrees that this
consideration constitutes fair and adequate consideration for the execution of
the noncompetition restrictions herein set forth.
During the term of this Agreement, and subsequent to the date
Employee's employment with the Company is terminated for any reason, Employee
agrees that, for a period of six (6) months after the date of termination of
such employment, without the prior written consent of the Company, the Employee
shall not, directly or indirectly, whether as a director, officer, employee,
agent, consultant or otherwise, engage in any of the following activities in the
restricted areas (as herein defined): (a) selling or soliciting contract or
permanent placement business to or from any person, business or entity, or (b)
engaging in the staff recruiting business. For purposes hereof, the restricted
area includes all areas within a fifty (50) mile radius of each city in which
are hereafter located staff recruiting offices of the Company (or its
subsidiaries or affiliates) at the date of termination of Employee's employment
with the Company.
The Employee agrees that the noncompetition restriction set forth above
is ancillary to an otherwise enforceable agreement and supported by independent
valuable consideration. The Employee further agrees that the limitations as to
time, geographical area and scope of activity to be restrained by this
restriction are reasonable and acceptable and do not impose any greater
restraint that is reasonable necessary to protect the goodwill and other
business interests of the Company. The Employee further agrees that if, at some
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later date, a court of competent jurisdiction determines that the restriction
set forth in this Section 10 does not meet such, this Section 10 may be reformed
by the court and enforced to the maximum extent permitted under Texas law.
If the Employee is found to have violated any of the provisions of this
Section 10, the Employee agrees that the restrictive period of each covenant so
violated shall be extended by a period of time equal to the period of such
violation by him. It is the intent of this Section 10 that the running of the
restrictive period of any covenant shall be tolled during any period of
violation of such covenant so that the Company may obtain the full and
reasonable protection for which it contracted and so the Employee may not profit
by his breach.
Subject to the condition that the Company must be in compliance with
the terms of this Agreement as to the compensation to be paid to the Employee,
the Employee's obligations under this Section 10 shall survive the termination
of this Agreement.
11. NONDISCLOSURE AGREEMENT. During the term of this Agreement, the
Company will provide to the Employee certain confidential and proprietary
information owned by the Company. The Employee acknowledges that he occupies or
will occupy a position of trust and confidence with the Company, and that the
Company would be irreparably damaged if Employee were to breach the covenants
set forth in this Paragraph 10. Accordingly, the Employee agrees that he will
not, without the prior written consent of the Company, at any time during the
term of this Agreement or any time thereafter, except as may be required by
competent legal authority or as required by the Company to be disclosed in the
course of performing the Employee's duties under this Agreement for the Company,
use or disclose to any person, firm or other legal entity, any confidential
records, secrets or information related to the Company or any entity which is a
parent, subsidiary or affiliate of the Company (collectively, "Confidential
Information"). Confidential Information shall include, without limitation,
information about customer lists, product pricing, data, know-how, processes,
ideas, product development, market studies, information technology, computer
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software and programs, database technologies, strategic planning, and risk
management related to the Company and/or its subsidiaries and affiliates. The
Employee acknowledges and agrees that all Confidential Information of the
Company and/or its subsidiaries and affiliates that he has acquired, or may
acquire, was received, or will be received in confidence and as a fiduciary of
the Company. The Employee will exercise utmost diligence to protect and guard
such Confidential Information. The Employee agrees that he will not, without the
express written consent of Company, take with him upon the termination of this
Agreement any document or paper, or any photocopy or reproduction or duplication
thereof, relating to any Confidential Information.
At or about the time of execution of this Agreement, the Employee
agrees to execute the Company's standard proprietary agreement related to
Confidential Information. The Employee's obligations under this Section 11 shall
survive the termination of this Agreement.
12. CERTAIN DEFINITIONS.
(a) "Special Change in Control" means (i) any person or entity,
including a "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other than the Company, a
majority-owned subsidiary thereof, or J. Xxxxxxx Xxxxx ("Xxxxx") and any
affiliates of Xxxxx, becomes the beneficial owner (as defined pursuant to
Schedule 13(d) under the Exchange Act) of the Company's securities having
twenty-five percent (25%) or more of the combined voting power of the then
outstanding securities of the Company that may be cast for the election of
directors of the Company, or (ii) as the result of, or in connection with,
any cash tender or exchange offer, merger or other business combination,
sales of assets or contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power of the then
outstanding securities of the Company or any successor corporation or entity
entitled to vote generally in the election of the directors of the Company,
or such other corporation or entity after such transaction, are beneficially
owned (as defined pursuant to Section 13(d) of the Exchange Act) in the
aggregate by the holders of the
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Company's securities entitled to vote generally in the election of directors
of the Company immediately prior to such transaction, or (iii) during any
period of two (2) consecutive years, individuals who at the beginning of any
such period constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of each director of
the Company first elected during such period was approved by a vote of at
least two-thirds of the directors of the Company then still in office who
were directors of the Company at the beginning of any such period.
(b) the "Effective Date" of such Special Change in Control
shall be the earlier of the date on which an event described in Section
12(a)(i), (ii) or (iii), occurs, or if earlier, the date of the occurrence of
(i) the approval by shareholders of an agreement by the Company, the
consummation of which would result in an event described in Section 12(a)(i),
(ii), or (iii), or (ii) the acquisition of beneficial ownership (as defined
pursuant to Section 13(d) of the Exchange Act), directly or indirectly, by any
entity, person or group (other than the Company, a majority-owned subsidiary of
the Company, or Xxxxx and any affiliate of Xxxxx) of securities of the Company
representing five percent (5%) or more of the combined voting power of the
Company's outstanding securities, provided, however, the events described in
Section 12(b)(i) and (ii) will be considered the Effective Date of a Special
Change in Control if they are followed within six (6) months by an event
described in Section 12(a)(i), (ii) or (iii).
(c) "Voluntary Termination" shall mean Executive's resignation
from the Company unless such resignation is as a direct proximate result of (i)
without Executive's express written consent, assignment to Executive of any
duties materially inconsistent with his position, duties, responsibilities and
status with the Company on the Effective Date of the Special Change in Control,
(ii) a reduction of Executive's base compensation and bonus compensation (other
than a reduction in payments under the Company's incentive bonus program based
on a reduction in net profits of the Company) to an amount that is greater than
ten percent (10%) lower than such compensation on the Effective Date of the
Special
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Change in Control, (iii) relocation of Executive's principal location of work
to any location that is both (A) in excess of fifty (50) miles form the
location of Executive's principal location of work on the Effective Date of
the Special Change in Control, and (B) in excess of the sum of the distance
from Executive's principal residence on such Effective Date to the location
of the Executive's principal location of work on such Effective Date, plus
fifty (50) miles, (iv) failure by the Company to require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company, by
agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place, or (v) any material breach of the Agreement
as in effect on the Effective Date of the Special Change in Control by the
Company.
13. NOTICES. All notices or other instruments or communications
provided for in this Agreement shall be in writing and signed by the party
giving same and shall be deemed properly given if delivered in person, including
delivery by overnight courier, or if sent by registered or certified United
States mail, postage pre-paid, addressed to such party at the address listed
below. Each party may, by notice to the other party, specify any other address
for the receipt of such notices, instruments or communications. Any notice,
instrument or communication sent by telegram shall be deemed properly given only
when received by the person to whom it is sent.
14. MISCELLANEOUS.
a. Subject to the condition that this Agreement is not
assignable by either party without the prior written consent of the other party
(except that the Company may assign this Agreement to an affiliate), the terms
and provisions of this Agreement shall inure to the benefit of, and shall be
binding on, the parties hereto and their respective heirs, representatives,
successors and assigns.
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b. With the exception of the Proprietary Information Agreement
which remains in full force and effect, this Agreement supersedes all other
agreements, either oral or in writing, between the parties to this Agreement,
with respect to the employment of the Employee by the Company. This Agreement
contains the entire understanding of the parties and all of the covenants and
agreement between the parties with respect to such employment. Any such prior
agreements are hereby terminated without obligation for any payments otherwise
due thereunder. No waiver or modification of this Agreement or of any covenant,
condition or limitation herein contained shall be valid, unless in writing and
duly executed by the party to be charged therewith, and no evidence of any
waiver or modification shall be offered or received in evidence of any
proceeding, arbitration, or litigation between the parties hereto arising out of
or affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing, duly executed as
aforesaid, and the parties further agree that the provisions of this Paragraph
may not be waived except as herein set forth.
c. All agreements and covenants contained herein are severable
and in the event any of them, with the exception of those contained in Section 1
hereof, shall be held to be invalid, as written pursuant to the arbitration or
judicial proceedings provided for in this Agreement, this Agreement shall be
interpreted as if such invalid agreements or covenants were not contained
herein.
d. Any controversy between the parties to this Agreement
involving the construction or application of any of the terms, covenants, or
conditions of this Agreement shall be submitted to arbitration in Dallas County,
Texas, if either party to this Agreement shall request arbitration by notice in
writing to the other party. In such event, the parties to this Agreement shall,
within thirty (30) days after this Section 14(d) is invoked, both appoint one
person as an arbitrator to hear and determine the dispute, then the two
arbitrators so chosen shall, within fifteen (15) days, select a third impartial
arbitrator; the majority decision of the arbitrators shall be final and
conclusive upon the parties to this Agreement. Each
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party to the arbitration proceedings shall bear his or its own expenses,
except that the expenses of the arbitrators shall be borne equally by the
Company and the Employee.
e. In the event of any litigation between the parties related
to the compliance with the terms and conditions of this Agreement, the parties
hereto acknowledge and agree that (i) such litigation proceedings must be held
in Dallas County, Texas, and (ii) the prevailing party in such litigation
proceedings shall be entitled to recover, from the nonprevailing party,
reasonable attorneys' fees and expenses incurred in connection with the dispute
involved.
f. This Agreement has been made under and shall be governed by
the laws of the State of Texas.
IN WITNESS WHEREOF, this Agreement is dated and effective as of
September 20, 1999, but is actually executed this ____ day of _________, 2000.
COMPANY:
DIVERSIFIED CORPORATE RESOURCES, INC.
By:
------------------------------------
M. Xxx Xxxxxxx, President
Address: 00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
EMPLOYEE:
---------------------------------------
Xxxxxxx X. Xxxxxxx
Address: 0000 Xxxx Xxxxx Xxxx
Xxxxx, XX 00000
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