Exhibit 10.1




 




EMPLOYMENT AGREEMENT




 




This EMPLOYMENT AGREEMENT

(“Agreement”) made effective as of September 16, 2002 by and between

Alternative Resources Corporation, and its successors and assigns, (the

“Company”) and Bill McLendon (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 Senior Vice President of the

Company in accordance with the By-laws and at the request of the Chief

Executive Officer. He is to assume both the management responsibilities

expected of an officer holding such positions in accordance with the By-laws

and such other responsibilities consistent with such positions as may be

assigned to the Executive from time to time by the CEO.




 




SECTION III




TERMS AND DUTIES




 




A.            Period of Employment




 




The term of Executive’s

employment under this Agreement will commence as of the effective date hereof,

and shall continue for an initial term of through August 31, 2004 and shall

automatically be extended year to year thereafter, subject, however, to

termination at any time as provided in this Agreement (the “Period of

Employment”).




 




B.            Duties




 




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 and not

engage in any other activities (whether or not for gain, profit or other

pecuniary advantage), except as provided below with the Company’s consent.  Executive shall perform faithfully the

duties assigned to him hereunder to the best of his abilities and agrees to

carry out the duties of his position and offices in the best interests of the

Company.  Executive covenants, warrants

and represents that he shall:  (i)

devote his full and best efforts to the fulfillment of his employment

obligation; (ii) exercise the highest ethical standards, the highest degree of

loyalty, and the highest standards of conduct in the performance of his duties;

and (iii) do nothing which he knows or should know




 





























 




will harm or could harm the

business or reputation of the Company. 

Executive shall at all times abide by all policies and procedures of the

Company as in effect or amended from time to time in the sole discretion of

such entity, 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, specifically

approves such service in its sole and absolute discretion, 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.




 




SECTION IV




COMPENSATION AND BENEFITS




 




A.            Base Salary




 




During the Period of

Employment, the Company agrees to pay the Executive a base salary at the annual

rate (“Base Salary”) of Two Hundred Thousand Dollars ($200,000). 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 may be eligible for base

salary increases as indicated by performance and/or market justification,

solely at the discretion of the Chief Executive Officer and as approved by the

Board of Directors.




 




B.            Annual Incentive Awards




 




For

the 2002 calendar year, the Executive shall be eligible to earn incentive

compensation of up to 100% of his pro-rated Base Salary, based upon performance

targets to be determined by the Board. 

For subsequent years, the Executive shall be eligible to earn incentive

compensation of up to 100% of his Base Salary (pro-rated in the case of partial

years), based upon performance targets to be determined by the Board.




 




C.            Options




 




The Company shall grant to the Executive the

following options and warrants:




 




1) An option to purchase 150,000 shares of

common stock of the Company with an exercise price equal to fair market value

per share on the date granted (“FMV Options”). 

Vesting shall occur in four equal annual installments on the first,

second, third and fourth anniversaries of the date hereof, so long as Executive

remains employed by the Company on the vesting dates.




 




2) A warrant from Wynnchurch Capital to

purchase 150,000 shares of common stock of the Company with a $.73 strike

price. Vesting shall occur under a two-part vesting schedule:




 




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i)              in

four equal annual installments on the first, second, third and fourth

anniversaries of the date hereof, so long as Executive remains employed by the

Company on the vesting dates; and




 




ii)            

a performance vesting component requires that the warrant can be exercised only

if the Company stock price achieves the following thresholds:




 




•

1st 50,000 warrant shares - $.75/share average trading price over 30 day

period;




•

2nd 50,000 warrant shares - $1.50/share average trading price over 30 day

period;




•

3rd 50,000 warrant shares - $2.50/share average trading price over 30 day

period




 




Notwithstanding the foregoing:




(i)            if the Period of Employment ends because the Company ends

the automatic extension thereof under Section III 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 and warrants shall become fully

vested and exercisable and shall remain exercisable for the remainder of their

terms as specified in those options.




 




(ii)           For purposes of this Agreement, a “ change in control” of

the Company shall be deemed to occur at 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 of the Company 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 immediately prior to the

consummation of such transaction.  Solely

for the purposes of this definition, the Wynnchurch Capital entities shall

always be deemed to hold the shares into or for which any convertible

securities and warrants held by them are convertible or exercisable, and such

shares shall be deemed outstanding,




 




D.            Additional Benefits




 




Executive shall be entitled to

receive a paid vacation of four (4) weeks during each twelve (12) month period

during the Period of Employment, which may be used in accordance with Company

policy.  The Executive will also be

entitled to participate in all group hospitalization, health, dental care, life

or other insurance, tax qualified pension, savings, thrift and profit sharing

plans, sick leave plans, travel or accident insurance and short and long term

disability insurance plans or programs for which salaried executive employees

generally are eligible under any existing or future plan or program established

by the Company.  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.  This Agreement is otherwise in lieu of

entitlement to any other generally available benefits, perquisites or matters

of compensation.




 




During the Period of

Employment, the Company shall pay Executive’s private life insurance premiums

(not to exceed $1,440 per annum) and his private disability insurance premiums

(not




 




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to exceed $4,650 per

annum).  The Company may pay those

premiums in installments, if permitted by the terms of the policies.




 




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 or Chief Executive 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 pro-rated through the date that he becomes eligible for long term

disability; (ii) any earned annual incentive award, prorated through the date

on which the Executive is first determined to be disabled, payable when such

award would normally be determined to be earned and payable and (iii) his

accrued benefits under the terms of the plans and policies of the Company in

which he participates.




 




B.            Assistance to the Company




 




During the period the Executive

is receiving payments of either regular compensation, severance 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, pro-rated through the date

of death plus any earned annual incentive award, prorated through the date of

death and payable when such award would normally be determined to be earned and

payable and (ii) Executive’s designated beneficiary or estate, as the case may

be, shall be entitled to his accrued benefits, under the terms of the plans and

policies of the Company in which he participates.




 




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SECTION VIII




EFFECT OF TERMINATION OF EMPLOYMENT




 




A.            Termination Without Cause or for Good Reason




 




The Company shall have the

right to terminate Executive’s employment at any time Without Cause, upon

written notice.  Executive shall have

the right to terminate his employment for Good Reason upon written notice.  If the Company terminates Executive’s

employment Without Cause or the Executive terminates such employment for Good

Reason, then upon execution of a general release in favor of the Company and

its officers, directors employees, agent and attorneys, and conditional upon

both expiration of all statutory revocation periods without revocation and

continued compliance with the post-termination obligations of this Agreement,

Company will pay to the Executive severance at the then current annual rate of

Base Salary for a period of  twelve

months, payable in accordance with normal payroll practices.  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 a prorated portion of any earned

annual incentive award for the year in which the termination occurred, payable

at the time such award would normally be determined earned and payable.  Executive shall be entitled to continue his

current group health plan coverage, at the same cost (subject to generally

imposed increases), in accordance with his current group health plan elections

and the Company shall continue to pay Executive’s private life insurance and

private disability insurance premiums as specified in Section IV for the term

of severance payments




 




B.            Termination With Cause




 




The Company shall have the

right to terminate Executive’s employment With Cause upon written notice. If

the Company terminates Executive With Cause, Executive shall be entitled to

receive solely his Base Salary prorated through the date of Executive’s

termination, and his accrued benefits (excluding incentive award) under the

terms of the plans, policies and procedures of the Company.




 




C.            Resignation




 




Executive shall have the right

to voluntarily resign his employment without Good Reason at any time (including

by reason of retirement) upon two weeks’ prior notice to the Company.  If Executive voluntarily terminates his

employment with the Company other than for Good Reason (which is governed by

Paragraph A. of this Section) at any time, Executive shall be entitled to

receive solely his Base Salary prorated through the date of Executive’s

voluntary termination, and his accrued benefits under the terms of the plans,

policies and procedures of the Company (other than incentive awards).




 




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 Company to the




 




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Executive specifying the event

relied upon for such termination, due to (i) breach of Executive’s obligation

to utilize his best efforts in performance of his duties or any other material

term of this Agreement which is not cured (but only if the circumstances would

permit a cure) to the Board’s satisfaction within ten business days (or such

shorter period as circumstances reasonably require) following written notice

specifying the breach and the cure required (ii) the Executive’s breach of his

fiduciary duties to the Company or his gross negligence or willful misconduct,

including, but not limited to, conviction for a felony or perpetration of a

common law fraud, or  (iii) failure to

follow specific directions and orders of the Board of Directors pertaining to

the Executive’s duties under this agreement.




 




(2)           Termination “Without Cause” means termination by the

Company of the Executive’s employment other than due to death, disability, or

termination With Cause.




 




(3)           Termination for “Good Reason” means

termination of the Executive’s employment by the Executive within twelve (12)

months after (i) the Company fails to elect or maintain the Executive as Senior

Vice President (ii) the Executive’s duties, responsibilities or authority under

this Agreement are materially reduced or diminished other than pursuant to the

Board’s exercise of its absolute rights of direction and control (iv) the

compensation received by the Executive is reduced in the aggregate (other than

as a result of adjustments applied uniformly to all executive employees), and

such reduction is not remedied within thirty (30) days of the Executive’s

notice to the Company thereof, (v) the Company violates any other material

terms of the Agreement which is not cured within 30 days following written

notice to the Company specifying the violation and the required cure, or (vii)

there is a liquidation, dissolution, or change of control of the Company.




 




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.  During any

severance period, Executive agrees to be reasonably available to assist in

transition.




 




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,




 




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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.




 




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 or its subsidiaries in any way that will injure the interest of the

Company or its subsidiaries; 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 or its subsidiaries do 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 its subsidiaries or discuss with any employee of

the Company or its subsidiaries information or operation of any business

intended to compete with the Company or its subsidiaries.  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 its subsidiaries 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 or its subsidiaries.




 




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 acknowledges 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




 




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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.




 




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 officer 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, or consulting

agreements  or letters of understanding

between the Company, its predecessors and its affiliates, and the Executive.




 




SECTION XIII




MODIFICATION




 




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.




 




In

the event there should be any controversy or dispute arising with respect to this

Employment Agreement between the Executive and the Company, the parties agree

properly and in good faith to attempt to settle such dispute amicably.  In the event that the parties are unable to

do so, any




 




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such

controversy or dispute shall be settled by arbitration held in Chicago,

Illinois in accordance with the rules of the American Arbitration Association

for the resolution of Employment Disputes then in effect, except as otherwise

provided herein.  Any and all awards

rendered by the arbitration shall be final and binding upon the parties.  In no event may an arbitrator allow any

party to join claims of any other employee in a single arbitration proceeding

without both parties’ written consent. 

Executive and the Company agree that, without regard to the amount at

stake, all claims submitted to arbitration shall be decided by a single

arbitrator.  Executive and the Company

further acknowledge and agree that any dispute or claim arising under the Age Discrimination

in Employment Act, Title VII of the Civil Rights Act of 1964 as amended by the

Civil Rights Act of 1991, the Americans With Disabilities Act, the Employee

Retirement Income Security Act of 1974, Illinois Human Rights Act, the Cook

County and Chicago Human Rights Ordinances, and any other federal, state or

local statute or ordinance, rule and/or regulation, public policy or tort law

(regardless of whether statutory or common law origin), shall be subject to,

and must be resolved by, arbitration as provided in this Section.   Judgment may be entered on the arbitrator’s

award in any court of competent jurisdiction.




 




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




600 Hart Road, Suite 300,




Barrington, Illinois  60010




 




Attention: Chairman




 




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 the address he has furnished to

the Company in writing.




 




SECTION XVI




BINDING AGREEMENT




 




This Agreement shall be binding

on the parties’ successors, heirs and assigns.




 




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SECTION XVII




MISCELLANEOUS




 




A.            Multiple Counterparts




 




This Agreement

may be executed simultaneously in multiple counterparts each of the same force

and effect.




 




B.            Severability




 




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:


  	

   


  	

   


  	

   


  
	

  George Watts, CEO


  	

   


  
	

   


  	

   


  
	

  EXECUTIVE


  	

   


  
	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  By:


  	

  Bill McLendon


  	

   


  	

   


  





 




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