Document:

EXHIBIT

10.1

 

EMPLOYMENT

AGREEMENT

 

This EMPLOYMENT

AGREEMENT (“Agreement”) made effective as of July 1, 2002 by and between

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

“Company”) and George W. Watts (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 President and Chief Executive

Officer of  the Company in accordance

with the By-laws and at the request of the Company’s Board of Directors, as a

director of the Company and  as a

director and officer of such subsidiaries of the Company as the Company’s Board

may designate, to be the principal Company officer responsible to implement

Board decisions, rules directives and procedures, and 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

Company’s Board of Directors; provided that in all cases Executive shall be

subject to the direction , control, rules and procedures imposed by the Board

of Directors.  Executive acknowledges

that in exercise of the Board’s right of direction and control, the Board may

designate any committee of directors or any single director, acting on behalf

of the whole Board, to communicate with Executive between meetings of the

Board.

 

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 June 30, 2004

and continue

 

 

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 Seventy- Five Thousand Dollars

($275,000). 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.

 

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

 

2

 

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 will

take all actions necessary to grant to Executive stock options to purchase

500,000 shares of common stock of the Company with an exercise price equal to

fair market value per share on the date hereof (“FMV Options”) and 500,000

shares of common stock of the Company with an exercise price of $2.50 per

share(“$2.50 Options”), the FMV Options and the $2.50 Options each vesting, so

long as Executive remains employed by the Company on the vesting dates, in four

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

anniversaries of the date hereof.

 

Notwithstanding

the foregoing:

 

(i)            if Executive is terminated Without

Cause or resigns for Good Reason prior to July 1, 2003, no options shall vest,

and they shall terminate.  If Executive

is terminated Without Cause or resigns for Good Reason on or after July 1, 2003

but prior to July 1, 2004, 50% of the FMV Options and 50% of the $2.50 Options

(in each case less the number of such options already vested) shall become

fully vested and exercisable for the designated post-termination period

specified in those options; and

 

(ii)           if there is a change in control of

the Company, all of the FMV Options and all of the $2.50 Options shall become

fully vested and shall remain exercisable both during employment and, if

Executive is terminated or resigns on or after the change in control, for the

designated post-termination period specified in those options.  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

 

3

 

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 of

matters of compensation.

 

During the Period

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

premiums (not to exceed $1,1440 per annum) and his private disability insurance

premiums (not to exceed $4,653.45 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.

 

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.

 

4

 

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.

 

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

resignation as director of the Company , 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 for the term of

severance payments

 

5

 

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 deliver

a resignation as director of the Company and 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 so long as he delivers,

upon request of the Company, a resignation as a Company’s director.  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 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.

 

(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 Chief

Executive Officer (ii) the Executive’s duties, responsibilities or authority

under this Agreement are materially reduced or diminished other than pursuant

to the

 

6

 

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, consolidation or merger of the Company or transfer of

all or a significant portion of its assets unless a successor or successors (by

merger, consolidation or otherwise) to which all or a significant portion of

its business and assets have been transferred shall have assumed all duties and

obligations of the Company under this Agreement.

 

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, 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.

 

7

 

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 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.

 

8

 

SECTION

X

INDEMNIFICATION,

LITIGATION

 

In addition to

such bylaw provisions as may from time to time be in effect, the Company will

execute with Executive the current form of Indemnification Agreement granted to

directors.  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 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

 

9

 

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.

 

10

 

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:

  	

   

  
	

   

  	

   

  
	

   

  	

  EXECUTIVE

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  George Watts

  

 

11EXHIBIT

10.2

SEPARATION AGREEMENT AND RELEASE

Alternative Resources

Corporation, a Delaware corporation (“ARC”), and Raymond R. Hipp, on behalf of

himself, his heirs and assigns (“Hipp”), hereby enter into this Separation

Agreement and Release (“Agreement”) this 13th day of June, 2002

WHEREAS, ARC has

requested that Hipp resign his employment and officer positions with ARC and

its subsidiaries and his director position with subsidiaries of ARC, effective

the date hereof (the “Termination Date”) and resign his director position with

ARC at the directors meeting following the 2002 annual meeting of stockholders;

WHEREAS, ARC is willing

to provide certain benefits to Hipp in exchange for the covenants and releases

set forth herein;

1.             Hipp hereby resigns his employment and all officer

positions with ARC and subsidiaries. He also hereby resigns all director

positions with ARC subsidiaries and all positions as trustee of all ARC

retirement or welfare plans.  Hipp shall

execute any additional documents required to reflect such resignations.  Hipp agrees that he shall submit his

resignation as director of ARC at the directors meeting following the 2002

annual meeting of stockholders. These resignations and commitment to resign are

not conditional or subject to revocation, notwithstanding the right to revoke

the agreements set forth in the remainder of this Agreement.  For six months after the Termination Date,

Hipp shall be reasonably available to consult with ARC on and make transitional

introductions to key customers.

2.             In full and final satisfaction of all claims by Hipp

against ARC and the other Released Parties (as defined in Section 4), in lieu

of any other payments, covenants or obligations of ARC under the Employment

Agreement effective July 23, 1998 (“Employment Agreement”) and in consideration

for and subject to the undertakings described in this Agreement and conditional

upon Hipp’s compliance with and not revoking this Agreement, ARC agrees to make

the following payments and to provide the following benefits to Hipp:

a.                                       ARC shall pay Hipp no later than the next

regularly scheduled pay period following Hipp’s Termination Date, the amount of

all accrued base salary and unused vacation through the Termination Date, less

normal withholding as required by law.

b.                                      ARC shall pay to Hipp a total severance

payment of  Seven Hundred Twenty

Thousand Dollars ($720,000.00), payable in equal, installments according to

ARC’s customary payroll practices over the twenty-four month period beginning

on the next regular pay day following the Termination Date (but not earlier

than the day that this Agreement becomes irrevocable, assuming it is not

previously revoked (the “Effective Date”)), less normal withholding as required

by law.

c.                                       Conditional upon Fleet Capital

Corporation waiving any potential default under the net worth and fixed charge

covenants of ARC’s Credit and Security Agreement dated January 31, 2002 for

the  second quarter of 2002 (“Credit

Agreement”), ARC shall pay Hipp’s remaining unpaid 

 

portion of stay-bonus as

follows, less normal withholding as required by law:

i.              $200,0000 on the Effective Date; and

ii.             $28,000

on January 1, 2003.

ARC shall use reasonable

efforts (but without guaranty) to obtain the Fleet  Capital Corporation waiver.

If Fleet Capital Corporation

does not waive any potential default under the fixed charge and net worth

covenants of the Credit Agreement, ARC shall pay Hipp’s remaining unpaid

portion of stay-bonus as follows, less normal withholding as required by law:

i.              $57,000

on June 30, 2002;

ii.             $57,000

on September 30, 2002; and

iii.            $114,000

on December 31, 2002.

 

d.                                      Hipp shall be

entitled to continue his current group health plan coverage, without premium

charge, in accordance with his current group health plan elections  for the term of severance payments as

provided in Section 2(b) of this Agreement. 

Thereafter, ARC shall provide Hipp and any “qualified beneficiary” as

defined in Section 4980B(g)(1) of the Internal Revenue Code (“Code’)  with “continuation coverage” as defined in

Section 4980B(f)(2) of the Code, without premium charge, until the period of

coverage ends as provided in Section 4980B(f)(2)(B) of the Code.  Prior to the end of the COBRA continuation

period, Hipp will apply for an individual insurance policy with an insurance

company of his choice, said individual insurance policy to be effective once

COBRA continuation has been exhausted in full. 

ARC will pay the premium cost of individual insurance coverage (not to

exceed $25,000 per year) until the date Hipp reaches age 65 (August ,

2007).  In the event Hipp is determined

to be uninsurable, and is issued written notice of such by the insurance

company, Hipp must enroll in the state alternative coverage program established

under the federal Health Insurance Portability and Accountability Act of 1996

(HIPAA), and ARC will pay the premium for HIPAA alternative state coverage (not

to exceed $25,000 per year) until Hipp reaches age 65.  Hipp is required to enroll in either

individual coverage, if available, or in HIPAA alternative state coverage prior

to incurring a 63 day break in coverage, as specified under HIPAA.  The 63 day period begins on the day

following the last day of COBRA continuation coverage under this Agreement.

2

 

e.                                       ARC shall pay to Hipp in accordance with

ARC policy, all reimbursements for business expenses  incurred through the Termination Date, upon submission of reports

in accordance with ARC procedures; and

If Hipp should die while

any amounts are payable under this Agreement, 

such amounts shall be payable to Hipp’s estate.

 

3.             Hipp agrees that (except in connection with tax

reporting, or pursuant to legal process or any legal action to enforce the

terms of this Agreement), he shall keep confidential the terms of this

Agreement, except for disclosure to immediate family members under condition of

confidentiality, and except for information which ARC has first disclosed

pursuant to SEC rules.  Truthful

testimony pursuant to legal process shall not be considered a violation of the

first sentence of this Section 3.  In

the event that Hipp will be required pursuant to law or legal process to

disclose any information described in the first sentence of this Section 3,

Hipp shall provide ARC with notice within 48 hours of receipt of the order or

process compelling such disclosure and shall cooperate with ARC in any efforts

it undertakes to seek a protective order or other limitations on such

disclosure.

4.             Hipp on behalf of himself, his heirs, executors,

attorneys, administrators, successors and assigns, hereby fully and forever, to

the full extent permitted by law, releases and discharges ARC and each of ARC’s

subsidiaries and each of their directors, officers, employees, accountants,

agents and attorneys, past, present and future, and all predecessors,

successors and assigns thereof (collectively “Released Parties”) from any and

all claims, demands, agreements, actions, suits, causes of action, damages,

injunctions, restraints and liabilities, of whatever kind or nature, in law,

equity or otherwise, whether now known or unknown, which have ever existed or

which may now exist (except to enforce the terms of this Agreement or his

vested retirement benefits), including, but not limited to, any and all claims,

liabilities, demands or causes of action relating to or arising out of Hipp’s

employment, or separation from ARC including, without limitation, claims under

Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et

seq., 42 U.S.C. § 1981, the Civil Rights Act of 1991, the Age

Discrimination in Employment Act, the Older Workers Benefit Protection Act, the

Americans with Disabilities Act, the Family and Medical Leave Act, the Illinois

Human Rights Act, the Illinois Wage Payment and Collection Act, the Worker

Adjustment and Retraining Notification Act, the anti-trust and restraint of

trade statutes and common law, the federal and state (including, without

limitation, Illinois) statutes or common law, or claims for breach of contract,

for misrepresentation, for violation of any other federal, state or local

statute, ordinance or regulation or common law dealing in any respect with

discrimination in employment or otherwise, defamation, retaliatory or wrongful

discharge under the common law of any state, infliction of emotional distress

or any other tort under the common law of any state or for attorney’s

fees.  Hipp acknowledges and agrees that

this release and the covenant not to sue set forth in this Agreement are

essential and material terms of this Agreement and that without such release

and covenant not to sue, the parties would not have reached an agreement.  Hipp understands and acknowledges the

significance and consequences of this release and this Agreement.

3

 

Notwithstanding the

foregoing, nothing herein shall be deemed to release (i) ARC from any

indemnification obligations to Hipp it has under law, ARC’s certificate of

incorporation or bylaws or Hipp’s existing indemnification agreement, (ii) Hipp

from any rights he may have with respect to any ARC stock of which he is the

record owner, or (iii) Hipp with respect to any rights that Hipp may have in

connection with any employee benefit plan as defined in Section 3(3) of the

Employee Retirement Security Income Act of 1974, as amended.

5.             The following provisions are applicable to and made a

part of this Agreement and the foregoing general release and waiver:

a.                                       Hipp acknowledges that this Agreement

includes a waiver of rights and claims under the Age Discrimination in

Employment Act and understands that he is not waiving rights or claims that may

arise after the date the parties execute this Agreement (Hipp hereby

acknowledging that any claims arising out his resignation arose prior to the

date hereof);

b.                                      In exchange for this general release and

waiver hereunder, Hipp hereby acknowledges that he has received separate

consideration beyond that to which he is otherwise entitled under ARC policy or

applicable law;

c.                                       Hipp acknowledges that he has entered into

this Agreement knowingly and voluntarily with full understanding of its terms;

d.                                      Hipp acknowledges that he has waived his

right to consider this Agreement for at least twenty-one (21) days; and

e.                                       Hipp understands that he may revoke this

Agreement during the seven ( 7) calendar days following execution of this

Agreement if such revocation is received in hand by ARC to the attention of S.

Purcell by 5pm on the seventh day, and that the Agreement shall not become

effective or enforceable until after 5pm on such seventh calendar day.

Hipp acknowledges that he

may learn of circumstances bearing upon the things and items released by this

Agreement, but it is his intention by doing so and doing the acts called for by

this Agreement, that this Agreement shall be effective as a full and final

accord and satisfaction and release of each and every thing and item released

herein, whether known or unknown.

6.             To the maximum extent permitted by law, Hipp covenants

not to sue or to institute or cause to be instituted any kind of claim or

action (except to enforce this Agreement) in any federal, state or local agency

or court against any of the parties released hereby relating to the matters

covered by such releases.

7.             Hipp warrants and represents that he has neither made,

will make, nor suffer to be made any assignment or transfer of any right,

claim, demand or cause of action covered by the above releases or covenant not

to sue, that he is the sole and absolute owner thereof, and that he has not

filed or suffered to be filed on his behalf against the other party, any 

4

 

claim, action, demand of any kind covered by the above

releases or covenant not to sue as of the Termination Date.

8.             Not later than 

Monday, June 17, 2002, Hipp shall return to ARC all property of ARC

under his possession or control.

9.             Neither this Agreement nor performance hereunder

constitutes an admission by either party of any violation of any federal, state

or local law, regulation, common law, of any breach of any contract or any

other wrongdoing of any type.

10.           In the event that any section or

provision of this Agreement shall be determined to be contrary to governing law

or otherwise unenforceable, all remaining portions of this Agreement shall be

enforced to the maximum extent permitted by law; the unenforceable paragraph,

subparagraph or provision shall first be construed or interpreted, if possible,

to render it enforceable and, if that is not possible, then the provision shall

be severed and disregarded, and the remainder of this Agreement shall be

enforced to the maximum extent permitted by law.

11.           Hipp acknowledges and confirms, and

as a material term to this Agreement agrees to abide by, the covenants in

Section IX A (Cooperation), IX B (Confidential Information), IX C (Certain

Restricted Activities) of Hipp’s Employment Agreement.  Both parties agree that the remedies for

breach in Section IX D thereof apply to any breach of this Agreement

12.           Hipp shall not take any action

intended to portray ARC or its management 

in a negative light.  Hipp

acknowledges that he has no authority from and after the Termination Date to

act as a spokesperson for ARC.

13.           This Agreement shall be governed by

and construed in accordance with the internal substantive laws of the State of

Illinois.

14.           Hipp acknowledges that he has

carefully read this Agreement and fully understands its meaning, that counsel

represented him in connection with the negotiation of this Agreement, that he

has full knowledge of the effect of this Agreement and is entering into it

voluntarily and without coercion or duress, and the only consideration he is

receiving for signing this Agreement is described herein, and no other promises

or representations of any kind have been made by any person or entity to cause

him to sign this Agreement.

5

 

15.           Except for the provisions of the

Employment Agreement incorporated into Section 11 of this Agreement which the

parties acknowledge continue beyond the Termination Date, and any

indemnification obligations to Hipp under Hipp’s existing indemnification

agreement, this Agreement contains the entire agreement and understanding

between ARC and Hipp concerning the matters described herein and supercedes all

prior agreements, discussions, negotiations and understandings between ARC and

Hipp. The terms of this Agreement cannot be changed except in a subsequent

document signed by Hipp and an authorized representative of ARC.

Alternative Resources Corporation.

	

  By:

  	

  /s/ Joanne

  Brandes

  	

   

  
	

  Its

  	

  Director and

  authorized signatory

  	

   

  
	

   

  	

   

  	

   

  
	

  /s/

  	

  Raymond R. Hipp

  	

   

  
	

  Raymond R. Hipp

  	

   

  

 

6

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