EXHIBIT 10.1 - EXECUTIVE EMPLOYMENT AGREEMENT BETWEEN
ALTERNATIVE RESOURCES CORPORATION AND XXXXXXX X. XXXX
DATED AS OF JULY 23, 1998
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") made effective as of July 23,
1998 by and between Alternative Resources Corporation (the "Company") and
Xxxxxxx X. Xxxx (the "Executive").
In consideration of the mutual covenants contained in this Agreement,
the parties hereby agree as follows:
SECTION I
EMPLOYMENT
The Company agrees to employ the Executive, and the Executive agrees to
be employed by the Company for the Period of Employment as provided in Section
III A. below upon the terms and conditions provided in the Agreement.
SECTION II
POSITION AND RESPONSIBILITIES
During the Period of Employment, the Executive agrees to serve as Chief
Executive Officer, President and Chairman of the Board of the Company, and to be
responsible for the typical management responsibilities expected of an officer
holding such positions and such other responsibilities consistent with such
positions as may be assigned to the Executive from time to time by the Board of
Directors of the Company.
SECTION III
TERMS AND DUTIES
A. PERIOD OF EMPLOYMENT
The term of Executive's employment under this Agreement will commence
as of August 1, 1998, and shall continue through December 31, 1999, subject to
extension or termination as provided in this Agreement (the "Period of
Employment"). The term shall be extended for an additional one year period as of
December 31, 1999 and as of each December 31 thereafter, unless either party
gives ninety (90) days prior notice of its intent not to extend.
B. DUTIES
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During the Period of Employment, the Executive shall devote all of his
business time, attention and skill to the business and affairs of the Company
and its subsidiaries, except that Executive may (i) participate in the affairs
of any governmental, educational or other charitable institution, or engage in
professional speaking and writing activities, so long as the Board of Directors
of the Company, does not determine, in good faith, that such activities
unreasonably interfere with the business of the Company or diminish the
Executive's obligations under the Agreement; or (ii) serve as a member of the
board of directors of other corporations, so long as the Board of Directors of
the Company, in its discretion, specifically approves such service, and in
either case, the Executive shall be entitled to retain all fees, royalties and
other compensation derived from such activities in addition to the compensation
and other benefits payable to him under the Agreement; and provided further,
that the Executive may invest his personal or family funds in any form or manner
he may choose that will not require any services on his part in the operation of
or the affairs of the companies in which such investments are made. The
Executive will perform faithfully the duties consistent with his position as
Chief Executive Officer, President and Chairman of the Board which may be
assigned to him from time to time by the Board of Directors.
SECTION IV
COMPENSATION AND BENEFITS
A. SIGNING BONUS
On or before August 3, 1998, the Company shall pay the Executive a
bonus of Two Hundred Fifty Thousand Dollars ($250,000). Executive agrees that if
he terminates his employment with the Company voluntarily (other than in
connection with a disability as defined in Section VI) prior to August 1, 1999,
he shall repay the full amount of such bonus to the Company.
B. BASE SALARY
During the Period of Employment, the Company agrees to pay the
Executive a base salary ("Base Salary") of Three Hundred Thousand Dollars
($300,000). Such Base Salary shall be payable according to the customary
payroll practices of the Company but in no event less frequently than
bi-weekly installments. The Executive shall not be considered for an increase
in Base Salary until after January 1, 2000.
C. ANNUAL INCENTIVE AWARDS
The Executive will not be eligible for an annual incentive compensation
award for the period August 1, 1998 to December 31, 1998. The Executive shall be
eligible for an incentive compensation award for calendar year 1999 of up to One
Hundred Fifty Four Thousand One Hundred Sixty Nine Dollars ($154,169),
calculated by subtracting One Hundred Forty Five Thousand Eight Hundred Thirty
One Dollars ($145,831) from the amount (the "Gross Amount) determined under the
chart set forth below, based on the following process:
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(i) The Gross Amount shall equal the sum of Portions A, B, C and D to
the extent earned under these provisions;
(ii) The corresponding Amount of each Portion shall be fully earned
if both the Revenue Target and the EPS Target for such Portion
are met or exceeded;
(iii) If only the Revenue Target for a given Portion is met or
exceeded, 40% of the corresponding Amount shall be earned; if
only the EPS Target is met or exceeded, 60% of the
corresponding Amount shall be earned; and
(iv) The chart is as follows:
PORTION AMOUNT REVENUE TARGET EARNINGS PER SHARE
("EPS") TARGET
A. $100,000 $450 million $1.44
B. 100,000 460 million 1.48
C. 50,000 470 million 1.53
D. 50,000 480 million 1.57
For purposes of the above calculation, Revenue and Earnings Per Share shall be
determined by the independent auditors of the Corporation in their discretion.
Notwithstanding the foregoing, if the Gross Amount is less than $145,831, the
Executive shall not be required to pay the difference to the Company.
D. OPTIONS
The Company will take all actions necessary to grant to Executive, as
of July 23, 1998, a non-qualified stock option to purchase 300,000 shares of the
Company's common stock at an exercise price equal to the closing price of the
common stock as reported in the WALL STREET JOURNAL for trading on July 23, 1998
and with a term of ten years. The option will not be exercisable until January
31, 1999 and shall become exercisable with respect to 7,143 shares on January
31, 1999 and with respect to an additional 7,143 shares on the last day of each
succeeding month, with the option becoming exercisable with respect to the final
7,137 shares on June 30, 2002.
In addition, if the Revenue of the Corporation (as described in
Paragraph C) for the first six months of 1999 meets or exceeds $220 million
or EPS (as so described) of the Corporation meets or exceeds $0.66, the
Corporation shall grant to Executive as of June 30, 1999, at an
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exercise price equal to the closing price on June 30, 1999, an additional
option covering a number of shares equal to (i) 75,000, if both Revenue and
EPS meet or exceed such targets; (ii) 30,000 if the Revenue target is met or
exceeded, but the EPS target is not; or (iii) 45,000 if the EPS target is met
or exceeded, but the Revenue target is not. Such additional option shall be
an incentive stock option under Section 422 of the Internal Revenue Code, to
the extent feasible under the Company's Stock Option Plan (the "Plan"). The
option described in this paragraph shall not be exercisable until December
31, 1999 and shall become exercisable with respect to one forty-second
(1/42nd) of the shares subject thereto (rounded to the nearest whole share)
on December 31, 1999 and additionally with respect to the same number of
shares on the last day of each succeeding month, with the option becoming
exercisable with respect to the remaining number of the shares subject
thereto on May 31, 2003.
The options described above shall be in the form approved by the Board of
Directors of the Company and, except as otherwise provided herein, shall be
governed by terms and provisions comparable to those applicable to options
granted under the Plan.
Notwithstanding the foregoing, if (i) the Period of Employment ends
because the Company ends the automatic extension thereof under Section IV A. of
this Agreement; (ii) the Company terminates the employment of the Executive
Without Cause as defined in Section VIII; (iii) the Executive's employment
hereunder terminates because of his death or disability (as defined in Section
VI); or (iv) there is a change in control of the Company, such options shall
become fully exercisable and shall remain exercisable for the remainder of their
term.
For purposes of this Agreement, a "change in control" of the Company
shall be deemed to occur in connection with any of the following events with
respect to the Company:
(i) The acquisition by an entity, person or group (including all
affiliates of such entity, person or group) of beneficial
ownership, as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934 (which definition shall apply
even if the Company is not then subject to such Act), of
capital stock of the Company entitled to exercise more than
30% of the outstanding voting power of all capital stock of
the Company ("Voting Stock");
(ii) The effective time of (i) a merger or consolidation of the
Company with one or more other corporations as a result of
which the holders of the outstanding Voting Stock immediately
prior to such merger or consolidation (other than the
surviving or resulting corporation or any affiliate thereof)
hold less than 50% of the Voting Stock of the surviving or
resulting corporation, or (ii) a transfer of more than 50% (in
value) of the assets of the Company other than to a transferee
in which the Company owns at least 50% of the Voting Stock; or
(iii) The election to the Board of Directors of the Company of the
lesser of (i) three directors or (ii) directors constituting a
majority of the number of directors of the Company then in
office, without the recommendation of the existing Board of
Directors.
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E. ADDITIONAL BENEFITS
The Executive will be entitled to participate in all compensation or
employee benefit plans or programs and receive all benefits and perquisites
for which any salaried executive employees are eligible under any existing or
future plan or program established by the Company for salaried executive
employees. The Executive will participate to the extent permissible under the
terms and provisions of such plans or programs in accordance with plan or
program provisions. These may include group hospitalization, health, dental
care, life or other insurance, tax qualified pension, savings, thrift and
profit sharing plans, termination pay programs, sick leave plans, travel or
accident insurance, short and long term disability insurance, and contingent
compensation plans including capital accumulation programs, restricted stock
programs, stock purchase programs and stock option plans. Nothing in this
Agreement will preclude the Company from amending or terminating any of the
plans or programs applicable to salaried executive employees of the Company.
Notwithstanding the foregoing sentence, no such amendment or termination
shall reduce or otherwise adversely affect Executive's rights under Section
IV C. of this Agreement. In addition to the foregoing benefits, Executive
shall be entitled to receive the following:
(i) term life insurance of not less than $250,000; and
(ii) a paid vacation of four (4) weeks during each twelve (12)
month period during the Period of Employment.
F. RELOCATION
The Company shall pay Executive's actual expenses incurred since
July 9, 1998 for the Executive's relocation to Barrington Hills, Illinois,
including Realtor fees on his Omaha, Nebraska residence, reasonable moving
costs and travel, and temporary living expenses in the North or Northwest
Suburbs of Chicago through August 9, 1998. In addition, the Company shall
provide the Executive with a tax gross-up payment in an amount necessary to
pay his federal and state income taxes attributable to payments under this
paragraph F. (including taxes attributable to such gross-up payment).
G. ADJUSTMENTS
Notwithstanding any provision here and to the contrary, the Company
and the Executive agree that the Board of Directors of the Company shall
reevaluate the Revenue and EPS Targets set forth in Section IV C. and D. as
part of the approval of the 1999 Operating Plan for the Company. To the
extent deemed necessary by the Board of Directors to align such targets with
such Operating Plan, such targets hereunder shall be adjusted.
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H. LEGAL FEES
The Company shall reimburse the Executive for reasonable legal fees
incurred by him in the negotiation of this Agreement.
SECTION V
BUSINESS EXPENSES
The Company will reimburse the Executive for all reasonable travel and
other expenses incurred by the Executive in connection with the performance of
his duties and responsibilities under this Agreement. Executive must support all
expenditures with customary receipts and expense reports subject to review by
the Company's Chief Financial Officer.
SECTION VI
DISABILITY
A. PAYMENTS
Executive's employment hereunder may be terminated by the Company if
(i) Executive becomes physically or mentally incapacitated, (ii) is unable
for a period of one hundred eighty (180) consecutive days to perform his
material duties and responsibilities and (iii) a determination is made
regarding Executive's continued incapacity by a physician appointed by the
Company (such continued incapacity is hereinafter referred to as
"disability"). Upon any such termination for disability, Executive shall be
entitled to receive (i) his Base Salary, as well as the annual incentive
award, prorated in each case through the date on which the Executive is first
eligible to receive payment of long term disability benefits in lieu of Base
Salary under the Company's long term disability benefit plan as then in
effect covering the Executive, and (ii) his accrued benefits under the terms
of the plans, policies and procedures of the Company.
B. ASSISTANCE TO THE COMPANY
During the period the Executive is receiving payments of either regular
compensation or disability insurance benefits described in this Agreement and as
long as he is physically and mentally able to do so, the Executive will furnish
information and assistance to the Company and from time to time will make
himself available to the Company with respect to areas and matters in which he
was involved during his employment with the Company.
SECTION VII
DEATH
In the event of the death of the Executive during the Period of
Employment, (i) Executive's estate shall be entitled to receive his Base
Salary, as well as the annual incentive award, prorated in each case through
the date of Executive's death, and (ii) Executive's designated beneficiary or
estate, as the case may be, shall be entitled to his accrued benefits,
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including, but not limited to, life insurance proceeds, under the terms of
the plans, policies and procedures of the Company.
SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
A. TERMINATION WITHOUT CAUSE
If the Company terminates Executive's employment Without Cause during
the Term of Employment, as defined in this Agreement, or the Term of Employment
ends because the Company ends the automatic extension thereof under Section III
A. of this Agreement, the Company will pay to the Executive in a lump sum, his
Base Salary for a period of twenty-four (24) months. Earned but unpaid Base
Salary will be paid in a lump sum at the time of such termination. The Company
also will pay the Executive in a lump sum upon such termination an amount equal
to a prorated portion of the annual incentive award for the year in which the
termination occurred. The benefits and perquisites described in this Agreement
as in effect at the date of termination of employment will be continued for the
then remaining Period of Employment.
B. TERMINATION WITH CAUSE
If the Company terminates Executive With Cause, (i) Executive shall be
entitled to receive his Base Salary prorated through the date of Executive's
termination, and (ii) Executive shall be entitled to his accrued benefits under
the terms of the plans, policies and procedures of the Company.
C. EFFECT OF CERTAIN TERMINATIONS
Upon termination of the Executive's employment for reasons other than
due to death, disability, or pursuant to Paragraph A of this Section, or upon
Executive's resignation, the Period of Employment and the Company's obligation
to make payments under this Agreement will cease as of the date of termination
except as expressly defined in this Agreement. Executive shall have the right to
voluntarily terminate this Agreement, other than for Good Reason or in
conjunction with a Change in Control, upon two weeks' prior notice to the
Company. If Executive voluntarily terminates his employment with the Company,
(i) Executive shall be entitled to receive his Base Salary prorated through the
date of Executive's voluntary termination, and (ii) Executive shall be entitled
to his accrued benefits under the terms of the plans, policies and procedures of
the Company.
D. DEFINITIONS
For this Agreement, the following terms have the following meanings:
(1) Termination "With Cause" means termination of the
Executive's employment by the Company's Board of Directors acting in good
faith by written notice by the
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Company to the Executive specifying the event relied upon for such
termination, due to the Executive's serious, willful misconduct with respect
to his duties under this Agreement, including, but not limited to, conviction
for a felony or perpetration of a common law fraud, which has resulted or is
likely to result in material economic damage to the Company.
(2) Termination "Without Cause" means termination by the
Company of the Executive's employment other than due to death, disability, or
termination With Cause.
SECTION IX
OTHER DUTIES OF THE EXECUTIVE DURING
AND AFTER THE PERIOD OF EMPLOYMENT
A. COOPERATION DURING AND AFTER EMPLOYMENT
The Executive will, with reasonable notice during or after the Period
of Employment, furnish information as may be in his possession and cooperate
with the Company as may reasonably be requested in connection with any claims or
legal actions in which the Company is or may become a party.
B. CONFIDENTIAL INFORMATION
The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other
relationships of the Company, as hereinafter defined, is confidential and is
a unique and valuable asset of the Company. Access to and knowledge of this
information are essential to the performance of the Executive's duties under
this Agreement. The Executive will not during the Period of Employment or
after, except to the extent reasonably necessary in performance of the duties
under this Agreement, give to any person, firm, association, corporation or
governmental agency any information concerning the affairs, business,
clients, customers or other relationships of the Company, except as required
by law. The Executive will not make use of this type of information for his
own purposes or for the benefit of any person or organization other than the
Company. The Executive will also use his best efforts to prevent the
disclosure of this information by others. All records, memoranda, etc.,
relating to the business of the Company, whether made by the Executive or
otherwise coming into his possession, are confidential and will remain the
property of the Company.
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C. CERTAIN RESTRICTED ACTIVITIES
During the Period of Employment and for a one (1) year period
thereafter, the Executive will not use his status with the Company to obtain
goods or services from another organization other than in the ordinary course
of business. During the Period of Employment and for a one (1) year period
following termination of the Period of Employment: the Executive will not
make any statements or perform any acts intended to advance the interest of
any existing or prospective competitors of the Company in any way that will
injure the interest of the Company; the Executive, without prior express
written approval by the Board of Directors of the Company, will not directly
or indirectly own or hold any proprietary interest in or be employed by or
receive compensation from any party engaged in the same or any similar
business in the same geographic areas the Company does business; and the
Executive, without express prior written approval from the Board of
Directors, will not solicit any members of the then current customers,
clients or suppliers of the Company or discuss with any employee of the
Company information or operation of any business intended to compete with the
Company. For the purposes of the Agreement, proprietary interest means legal
or equitable ownership, whether through stock holdings or otherwise, of a
debt or equity interest (including options, warrants, rights and convertible
interest) in a business firm or entity, or ownership of more than 2% of any
class of equity interest in a publicly-held company. The Executive
acknowledges that the covenants contained herein are reasonable as to
geographic and temporal scope. For a twelve (12) month period after
termination of the Period of Employment for any reason, the Executive will
not hire any employee of the Company or solicit, other than by means of a
general solicitation to the public such as a newspaper advertisement, or
encourage any such employee to leave the employ of the Company.
D. REMEDIES
The Executive acknowledges that his breach or threatened or
attempted breach of any provision of Section IX would cause irreparable harm
to the Company not compensable in monetary damages and that the Company shall
be entitled, in addition to all other applicable remedies, to a temporary and
permanent injunction and a decree for specific performance of the terms of
Section IX without being required to prove damages or furnish any bond or
other security. The Executive hereby acknowledge the necessity of protection
against the competition of, and certain other possible adverse actions by,
the Executive and that the nature and scope of such protection has been
carefully considered by the parties. The period provided and the area covered
are expressly represented and agreed to be fair, reasonable and necessary.
If, however, any court or arbitrator determines that the restrictions
described herein are not reasonable, the court or arbitration panel may
modify, rewrite or interpret such restrictions to include as much of their
nature and scope as will render them enforceable.
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SECTION X
INDEMNIFICATION, LITIGATION
The Company will indemnify the Executive to the fullest extent
permitted by the laws of the state of incorporation in effect at that time, or
certificate of incorporation and by-laws of the Company whichever affords the
greater protection to the Executive. The Company will use its best efforts to
obtain and maintain customary directors and officers liability insurance,
covering Executive. The foregoing indemnification shall continue to apply
following termination of the Period of Employment for actions or omissions
during the Period of Employment.
SECTION XI
WITHHOLDING TAXES
The Company may directly or indirectly withhold from any payments under
this Agreement all federal, state, city or other taxes that shall be required
pursuant to any law or governmental regulation.
SECTION XII
EFFECT OF PRIOR AGREEMENTS
This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter and supersedes any prior
employment, severance, or other similar agreements between the Company, its
predecessors and its affiliates, and the Executive.
SECTION XIII
MODIFICATION
Subject to Section IV G., this Agreement may not be modified or amended
except in writing signed by the parties. No term or condition of this Agreement
will be deemed to have been waived, except in writing by the party charged with
waiver. A waiver shall operate only as to the specific term or condition waived
and will not constitute a waiver for the future or act on anything other than
that which is specifically waived.
SECTION XIV
GOVERNING LAW; ARBITRATION
This Agreement and its validity, interpretation, performance and
enforcement shall be governed by the laws of the State of Illinois, without
giving effect to the choice of law provisions thereof.
Any dispute among the parties hereto shall be settled by arbitration in
accordance with the then applicable rules of the American Arbitration
Association and judgment upon the award rendered may be entered in any court
having jurisdiction thereof.
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SECTION XV
NOTICES
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt requested,
or when delivered if by hand, overnight delivery services or confirmed facsimile
transmission, to the following:
(a) If to the Company, at:
Alternative Resources Corporation
000 Xxx-Xxxxx Xxxxxxxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Chairperson, Governance Committee of Board
of Directors
or at such other address as may have been furnished to the Executive by the
Company in writing, or
(b) If to the Executive, at:
000 Xxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000
or such other address as may have been furnished to the Company by the
Executive in writing.
SECTION XVI
BINDING AGREEMENT
This Agreement shall be binding on the parties' successors, heirs
and assigns.
SECTION XVII
MISCELLANEOUS
A. MULTIPLE COUNTERPARTS
This Agreement may be executed simultaneously in multiple counterparts
each of the same force and effect.
B. SEVERABILITY
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If any phrase, clause or provision of this Agreement is declared
invalid or unenforceable by an arbitrator or court of competent jurisdiction,
such phrase, clause or provision shall be deemed severed from this Agreement,
but will not affect any other provisions of this Agreement, which shall
otherwise remain in full force and effect. In addition, there will be
automatically substituted herein for such severed phrase, clause or provision
a phrase, clause or provision as similar as possible which is valid and
enforceable.
C. HEADINGS
The headings and subheadings of this Agreement are inserted for
convenience of reference only and are not to be considered in construction of
the provisions hereof.
D. CONSTRUCTION
The Company and the Executive acknowledge that this Agreement was the
result of arm's-length negotiations between sophisticated parties each
represented by legal counsel. Each and every provision of this Agreement shall
be construed as though both parties participated equally in the drafting of
same, and any rule of construction that a document shall be construed against
the drafting party shall not be applicable to this Agreement.
E. SURVIVORSHIP
The provisions of Sections IV-XVII shall survive the termination or
expiration of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY
ALTERNATIVE RESOURCES CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
XxXxxx Xxxxxxx, Chairperson
Governance Committee of the Board of Directors
EXECUTIVE
/s/ Xxxxxxx X. Xxxx
------------------------------------
Xxxxxxx X. Xxxx
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