EMPLOYMENT AGREEMENT RE: ▇▇▇▇▇▇▇
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between DCRI Acquisition Corporation, a Texas corporation (herein referred to as
the "Company"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (herein referred to as the "Executive"), and
Diversified Corporate Resources, Inc., a Texas corporation ("DCRI").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive and the Executive
desires to be employed by the Company; and
WHEREAS, DCRI is the parent corporation of the Company; and
WHEREAS, this agreement is being entered into in connection with the
Company acquiring (the document captioned Asset Purchase Agreement which is
effective as of October 1, 1998, and to which sets forth the terms and
conditions of such acquisition is herein referred to as the "Purchase
Agreement") all or substantially all of the assets of Texcel, Inc., a
Pennsylvania corporation, and Texcel Technical Services, Inc., a Pennsylvania
corporation (collectively such entities are herein collectively referred to as
the "Acquired Companies"); and
WHEREAS, the purpose of this document is to set forth the terms and
conditions of such employment.
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 Executive do hereby contract and agree as follows:
1. Employment. The Company hereby employs the Executive as the
General Manager of the Mid Atlantic Region of the Company (which shall include
1
the business operations previously conducted by the Acquired Companies and may,
at the Company's reasonable discretion, include additional operations subject to
the following provisions), and the Executive 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. The parties hereto acknowledge
that (a) the Mid Atlantic Region is to include the states of Pennsylvania, New
Jersey, Maryland, Delaware and Washington D.C. and such other areas mutually
agreed upon by the Executive and the Company in the future, and (b) the
Executives duties and responsibilities in the Mid Atlantic Region (i) will
include the permanent placement activities and related temporary placement
activities (the "Basic Activities") of the Company (such as those services
currently provided by DCRI and its affiliates under the operating model of
Management Alliance Corporation, a subsidiary of DCRI), and (ii) will include
the business operations in the Mid Atlantic Region of any acquisitions made by
the Company in the future except the business operations of acquisitions
involving entities which are involved in the Basic Activities, but (A) which are
not headquartered in the Mid Atlantic Region and which have some portion of its
business operations in the Mid Atlantic Region (as then encompassing), or (B)
which are headquartered in the Mid Atlantic Region (as then encompassing) but
which have a majority of its business operations elsewhere than in the Mid
Atlantic Region, and (c) the Company, DCRI and its affiliates are not precluded
(such activities are not deemed to be included in the duties and
responsibilities of the Executive unless the parties mutually agree to the
contrary in writing) from (i) buying or operating contract placement services or
related services currently performed under the operating model of Information
Systems Consulting Corp., a subsidiary of DCRI, or any other business activities
not included in the Basic Activities, or (ii) conducting business in the Mid
Atlantic Region from offices outside of the Mid Atlantic Region.
2
2. Term. Except in the case of earlier termination as herein
specifically provided, the Executive's employment with the Company pursuant to
this Agreement shall be for a three (3) year period beginning on October 1,
1998, and ending September 30, 2001 (such date being the "Initial Termination
Date"). This Agreement shall thereafter continue until (a) this Agreement is
terminated prior to the Initial Termination Date for some reason permitted
hereunder, or (b) one of the parties shall give written notice to the other at
least ninety (90) days in advance of termination at any time after July 1, 2001.
3. Compensation. As compensation for the services of Executive during
the initial term hereof, the Company shall pay the Executive a base salary as
below provided plus such additional compensation as herein set forth. The base
salary to be paid to the Executive shall be an amount equal to one and
six-tenths percent (1.6%) of the Company's revenues during each calendar year,
or portion thereof involved, during the term of this Agreement, plus ten percent
(10%) of the net, after tax profits (the "Net Profits" as below defined) of the
Company's Mid Atlantic Region during each calendar year, or portion thereof
involved, during the term of this Agreement. For purposes hereof, (a) the
Company's revenues shall be determined by DCRI pursuant to generally accepted
accounting principles consistently applied, and shall only include the revenues
from the business operations conducted by the Acquired Companies prior to the
Company acquiring the Acquired Companies, and the revenues of business
operations specifically assigned (by written notice to the Executive) by DCRI to
be part of the Company's Mid Atlantic Region (as herein defined), and (b) the
Net Profits of the Company's Mid-Atlantic Region (as herein defined) shall be
determined by DCRI pursuant to generally accepted accounting principles
consistently applied (based upon the assumption, for tax computation purposes,
that the Company is not part of a consolidated group), and adjusted pursuant to
DCRI's normal intercompany, affiliate and overhead allocations.
3
During the term of this Agreement from the date of execution until
December 31, 1998, the Executive shall be paid at a monthly rate of $16,667.
Commencing January 1, 1999, the estimated base salary to be paid to the
Executive during each calendar year (or portion thereof if less than the entire
calendar year is involved) during the term of this Agreement shall be paid based
upon the Company's budget for the calendar year involved (or portion thereof if
less than the entire calendar year is involved or if the Company's results fail
to reach budget during any time period subsequent to June 30, 1999); during 1999
the Executive is to be paid, as estimated base salary and bonus, at the rate of
$15,000 per month. In the event that the estimated base salary and bonus paid to
the Executive during any calendar year (based upon estimates as aforesaid)
exceeds the actual amount of compensation payable to the Executive for the time
period involved, the amount of overpayment shall be a liability payable by the
Executive to the Company and may, at the Company's option, be deducted from
amounts thereafter payable to the Executive as base salary and bonus or as any
other form of compensation if any such compensation becomes payable to the
Executive. In the event that the estimated base salary and bonus paid to the
Executive during any calendar year (based upon estimates as foresaid) is less
than the actual amount of compensation payable to the Executive for the time
period involved, the amount of underpayment shall be paid by the Company to the
Executive promptly following determination of the actual amount of compensation
payable to the Executive. Subject to the foregoing, the Executive's estimated
base salary and bonus shall be paid in equal semi-monthly installments (subject
to reduction for such payroll and withholding deductions as may be required by
law).
4
In addition to the Executive's base salary and bonus, the Executive
shall be entitled to each of the following during the term of this Agreement (at
the Company's expenses unless otherwise indicated): (a) 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 Executive, the
Executive's spouse and the Executive's children, and which shall contain such
benefits and options as shall be made available to other employees of the
Company (the parties acknowledge that the Executive shall be responsible for
paying such portion of this coverage as shall be consistent with Company policy
for its employees in general), (b) the right to participate in any and all
401(k) plans and Section 125 plans now in effect or hereafter adopted by the
Company or DCRI, (c) a car allowance of up to $550 per month, (d) the right to
the use of a cellular phone which may be in the Company's name or the
Executive's name, (e) membership in the country club in which the Executive is
now a member (the dues, which are to be paid by the Company, are not in excess
of $300 per month at this time), (f) the right to participate in any other
benefit plans of the Company to the extent that the Board of Directors of DCRI
determines the Executive shall be a participant in such plan(s), (g) the right
to all fringe benefits generally made available to other executives and/or
employees of the Company (including, but not by way of limitation, disability
benefits if and to the extent available) at the discretion of the Board of
Directors of DCRI, (h) such vacation and sick leave as shall be permitted by
DCRI's standard policies for other senior executive employees of the Company and
DCRI, and (i) options to purchase shares of capital stock of DCRI, to the extent
that the Board of Directors of DCRI determines that the Executive shall be
awarded options under one or more of DCRI's stock option plans (the Company
agrees that the Executive shall be entitled to be awarded such number of options
5
to purchase shares of Common Stock of DCRI as shall be comparable to the number
of options hereafter granted to other managers of DCRI with job responsibilities
and size of operations comparable to the job responsibilities and size of
operations of the Executive).
4. Contingent Payment. In addition to the compensation payables to
the Executive pursuant to Paragraph 3 of this Agreement, the Company agrees to
pay to the Executive, with respect to each calendar year, or portion thereof
involved, during the term of this Agreement, a contingent payment based upon the
Company's Net Profits (determined in the same manner as set forth in Paragraph 3
of this Agreement) in relationship to the Company's Net Profits in the prior
calendar year, or portion thereof involved. Such contingent payment (a) shall be
equal to twenty-five percent (25%) of the portion of the Company's Net Profits
for the calendar year involved (or portion thereof) which exceed by twenty-five
percent (25%) the Company's Net Profits in the prior calendar year or portion
thereof, and (b) shall in no event exceed $125,000 for any calendar year or a
prorata amount of $125,000 if less than a full calendar year is involved (for
the balance of 1998, the maximum contingent payment would be $31,250). Example:
if the Company's Net Profits are $150,000 for the period from January 1, 1999 to
December 31, 1999, and if the net, after tax profits of the Acquired Companies
were $100,000 during the same time period in 1998, the contingent payment to the
Executive for 1999 would be $6,250 (25% of $25,000).
5. Duties and Services. During the term of this Agreement, the
Executive 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 Executive.
6
6. 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) any act or omission
constituting fraud under the laws of the States of Texas or Pennsylvania, or the
United States of America, or (ii) a finding of probable cause, or a plea of nolo
contendere to, a felony or other crime involving moral turpitude, or (iii) the
grossly negligent performance by the Executive of the responsibilities of his
position, or (iv) the material failure by the Executive to adhere to the
policies or directives of the Company and DCRI, including those set forth in
DCRI's Employee Handbook and Company policy statement relating to trading in
DCRI's securities by the DCRI personnel (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Policy"), or (v)
the Executive's engagement in any act of dishonesty or theft within the scope of
his employment that, in the opinion of the Board of Directors of DCRI, is
detrimental to the best interests of the Company, or (vi) the Executive's
excessive use and/or distribution of alcohol or illegal substances during
business hours and at the Company's premises, or (vii) the breach of any of the
substantive terms of this Agreement, or (viii) the failure of the Executive to
meet the performance goals for the operations for which the Executive is
responsible. The determination by the Board of Directors of DCRI, as to the
matters covered by (iii), (iv), (v) or (viii) above shall be conclusive;
provided, however, that the Company will not be entitled to terminate this
Agreement for cause pursuant to (iii), (iv) or (viii) above unless, prior to
such termination, the Executive has received a written reprimand detailing the
acts or omissions constituting such failure to perform the responsibilities of
his position, to adhere to the Company's policies or to meet his performance
goals, except that no prior reprimand is required with respect to violations of
DCRI's ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Policy.
7
b. The Executive may terminate this Agreement by giving the
Company and DCRI written notice at least ninety (90) days in advance of the
termination date if (i) the Company expands (subject to the market conditions at
the time) or restricts the Executive's duties, without the consent of the
Executive, to an extent inconsistent with the terms of this Agreement and the
market conditions at the time, or (ii) the Company or DCRI materially breach
(following expiration of the applicable cure periods) their obligations under
the terms of the Purchase Agreement.
Subject to the exceptions set forth in Paragraphs 6(a) and 6(b) of
this Agreement, neither the Company nor the Executive may terminate the
Executive's employment with the Company at any time during the term of this
Agreement.
d. The Executive's employment by the Company shall
automatically terminate on the date of the Executive's death if the Executive
dies during the term of this Agreement.
e. If the Executive 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, Executive's employment
by the Company shall terminate thirty (30) days after the day on which the Board
determines that the Executive is so disabled and that this Agreement should be
terminated by reason of such disability. Notwithstanding the foregoing, the
Executive shall be notified in writing if the Company determines that the
Executive is disabled due to mental or physical health; in such event, the
Executive shall have the right to contest any determination of disability by the
Company. In the event that the Executive does contest such determination, such
matter shall be resolved by arbitration pursuant to this Agreement.
7. Working Conditions. The Company will provide the Executive
with a private office and secretarial services.
8
▇.▇▇▇▇▇▇ and Entertainment. The Executive 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 Executive for all such expenses upon the Executive's presentation
of an itemized account of such expenditures.
2.Non-Solicitation Agreement. In the event that the termination of
employment of the Executive pursuant to this Agreement is effectuated by the
Executive electing to terminate his employment pursuant to this Agreement, or by
the Company for "cause" (as herein defined) the Executive agrees that the
Executive shall not, during the term of this Agreement, and for a two (2) year
period of time following the date of termination of this Agreement, (a) solicit
for employment or hire any individual who was an executive or employee of the
Company, or any of its affiliates, on the date of termination of this Agreement
or at any time within the twelve (12) months preceding the date of termination
of his employment with the Company, or (b) solicit the 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 his employment with the Company, or any of its
affiliates, or at any time during the twelve (12) months preceding the date of
termination of this Agreement. The covenants and agreements set forth in this
Paragraph 9 shall survive the termination of this Agreement.
3.Noncompetition Agreement. The Executive acknowledges that the special
relationship of trust and confidence between himself, the Company, and its
clients, customers, vendors and suppliers creates a high risk and opportunity
for the Executive to misappropriate the relationship and goodwill existing
9
between the Company and its clients, customers, vendors and suppliers. The
Executive 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 Executive 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 know-how. The Executive acknowledges that it would be inherent in
the performance of his duties as a director, officer, employee, agent or
consultant of any person, association, entity or organization that competes with
the Company to disclose or use such information, as well as to misappropriate
the Company's goodwill and know-how for the benefit of such other person,
association, entity or company. Ancillary to the enforceable promises set forth
in this Agreement, the Executive agrees that during the term of this Agreement
and for a period of two (2) years after the date of termination of his
employment with the Company, for whatever reason, the Executive shall not,
without the prior written consent of the Company, directly or indirectly,
whether as a director, officer, employee, agent, consultant or otherwise, engage
in any activities in competition with the Company in the metropolitan areas (as
defined by the United States Census Bureau) of any city in which the Company
maintains a place of business as of the date of termination of the Executive's
employment with the Company. 1.Consideration and Enforcement. The Executive
acknowledges that, in exchange for the execution of the nonsolicitation and
noncompetition restrictions set forth in Paragraphs 9 and 10 of this Agreement,
the Executive has received or will receive substantial and valuable
consideration in connection with this Agreement and as a result of the Company
10
purchasing the Acquired Companies. The Executive agrees that such consideration
constitutes fair and adequate consideration for the nonsolicitation and
noncompetition restrictions set forth in this Agreement. The Executive further
agrees that the limitations as to time, geographical area and scope of activity
to be restrained by these restrictions are reasonable and acceptable and do not
impose any greater restraint than is reasonably necessary to protect the
goodwill and other business interests of the Company. The Executive further
agrees that if, at some later date, a court of competent jurisdiction determines
that any one or more of the restrictions set forth in Paragraphs 9 and 10 of
this Agreement are unenforceable by reason of extending for too great a period
of time or over too great a geographical area, such provisions shall be reformed
by the court and enforced to extend over the period of time for which it may be
enforceable and over the maximum geographical area to which it may be
enforceable. If the Executive is found to have violated any of the provisions of
Paragraphs 9 or 10 of this Agreement, the Executive 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 the parties 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 that Executive may not
profit by his breach. The Executive acknowledges and agrees that the Company's
remedies at law may be inadequate in the event of a breach or threatened breach
of the covenants set forth in Paragraphs 9, 10 and 12 of this Agreement, and in
such event, Buyer shall be entitled to have an injunction issued by any court of
competent jurisdiction, enjoining and restraining each and every party concerned
therewith from the creation or continuation of such breach.
11
Notwithstanding anything herein to the contrary, the restrictions set
forth in Paragraphs 9 and 10 shall not be applicable if the Company is in
default as to its monetary obligations under the terms of the Purchase Agreement
and the Company has not cured such default within the applicable curative period
following written notice from the Acquired Companies.
The Executive's obligations under Paragraphs 9 and 10 of the Agreement
shall survive the termination of this Agreement.
2.Nondisclosure Agreement. During the term of this Agreement, the Company
will provide to the Executive certain confidential and proprietary information
owned by the Company. The Executive 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 Executive were to breach the covenants set forth in
this Paragraph. Accordingly, the Executive 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 Executive'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 parent, subsidiary or
affiliated person or entity (collectively, "Confidential Information").
Confidential Information shall include, without limitation, information about
the Company's customer lists, product pricing, data, know-how, processes, ideas,
product development, market studies, computer software and programs, database
technologies, strategic planning, and risk management. The Executive
acknowledges and agrees that all Confidential Information of the Company and/or
its affiliates that he has acquired, or may acquire, were received, or will be
12
received in confidence and as a fiduciary of the Company. The Executive will
exercise utmost diligence to protect and guard such Confidential Information.
The Executive agrees that he will not, without the express written consent of
the Board of Directors of the 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. The parties
hereto acknowledge that the definition of Confidential Information does not
include information which (a) is a matter of public record or is provided in
other sources available to the industry other than as a result of disclosure by
the Executive, (b) was available to the Executive on a non-confidential basis,
(c) becomes available to the Executive from a source not known to the Executive
to have a duty of confidentiality with regard to the information, or (d) was or
is independently developed by the Executive from non-confidential sources.
3.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.
4.DCRI Guaranty. DCRI shall and does hereby guarantee the performance
by the Company of all of the obligations and commitments of the Company as set
forth in this Agreement.
5. 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
13
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.
b. This Agreement supersedes all other agreements, either oral or
in writing, between the parties to this Agreement, with respect to the
employment of the Executive 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 Paragraph 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.
a.Except as otherwise provided in Paragraph 11 of this Agreement, any
controversy between the parties to this Agreement involving the construction or
application of any of the terms, covenants, or conditions of this Agreement
14
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 Paragraph 15(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 party to the arbitration proceedings shall bear
his or its own expenses, except that the expenses of a the arbitrators shall be
borne equally by the Company and the Executive.
b. In the event of any litigation between the parties related to the com-
pliance 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.
15
c.This Agreement has been made under and shall be governed by the laws of
the State of Texas.
[ This space left blank is intentional ]
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of October 1, 1998 but actually executed this ___ day of October,
1998.
DCRI ACQUISITION CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address: ------------------------------
-----------------------------------
DIVERSIFIED CORPORATE RESOURCES,
INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
17
