EMPLOYMENT AGREEMENT RE: HOSMER
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between Mountain Ltd., a Maine corporation (herein referred to as the
"Company"), Joseph H. Hosmer (herein referred to as the "Executive"), MAGIC
Northeast, Inc., a Delaware corporation ("Buyer"), 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, this Agreement is being entered into in connection with the
Buyer acquiring all of the capital stock of the Company pursuant to that
certain Purchase Agreement which is effective as of August 6, 1999, between
Buyer, DCRI, Executive, and Sandra Hosmer (herein referred to as the
"Purchase Agreement"); and
WHEREAS, the purpose of this document is to set forth the terms and
conditions of Executive's employment transactions contemplated by the
Purchase Agreement.
NOW THEREFORE, for and in consideration of the mutual advantages and
benefits accruing respectively to the parties hereto, the mutual promises
hereinafter made and the acts to be performed by the respective parties
hereto, the Company and the Executive do hereby contract and agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as the
President of the Company 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.
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 August 6,
1999, and ending September 30, 2002 (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 June
30, 2002.
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
percent (1%) of revenues of the operations of the Company 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 operations of the Company 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 (b) the Net Profits of the operations of the
Company (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 which in no event shall exceed the
following percentages of the annual revenues of the operations of the
Company: three percent (3%) in the year ended September 30, 2000, four and
one-half percent (4-1/2%) in the year ended September 30, 2001, and six
percent (6%) in the year ended September 30, 2002. Notwithstanding anything
herein to the contrary, it is agreed that, during the term of this Agreement,
revenues of the Company shall include (i) all revenues attributable to the
operations of the Company which have been diverted to an affiliate of the
Company without the prior written consent of the Executive; (the foregoing
does not cover split fees earned by an affiliate of the Company or an
employee of an affiliate of the Company) and (ii) all revenues attributable
to Alpine Overland & Wireless Company, a unlimited liability company under
the laws of the Providence of Nova Scotia, Canada, if Buyer purchases the
capital stock of Alpine Overland & Wireless Limited, a Maine corporation (the
"Parent"), pursuant to the Option Agreement being executed simultaneous with
execution of this Agreement.
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).
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
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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 portion of such health insurance to be paid for by the
Executive shall be consistent with Company's policy for its employees in
general until at least December 31, 1999 and thereafter shall be consistent
with DCRI's policy for other key executives); such coverage terms shall not
be revised until at least January 2, 2000, (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) the right to participate in any other
benefit plans of the Company in which other key employees of the Company have
the right to participate, (d) the right to all fringe benefits generally made
available to other key employees of the Company (including, but not by way of
limitation, disability benefits if and to the extent available), and (e) such
vacation and sick leave as shall be permitted by the Company's standard
policies; subject to the understanding that the amount of vacation time shall
not exceed six (6) weeks per annum unless approved in advance by Buyer.
4. 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. It is understood that the duties of the Executive shall be
comparable to his prior duties with the Company.
5. TERMINATION.
1. 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 Maine 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
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Employee Handbook and Company policy statement relating to trading in DCRI's
securities by the DCRI personnel (the "Insider Trading 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 budget and 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, and the Executive has had at least
thirty (30) days to cure the act or omission involved; provided, however, no
prior reprimand is required with respect to violations of DCRI's Insider
Trading Policy.
2. 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.
3. Subject to the exceptions set forth in Paragraphs 5(a) and 5(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.
4. 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.
5. 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
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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.
6. WORKING CONDITIONS. The Company will provide the Executive with a
private office and secretarial services, which shall be comparable to the
office and secretarial services provided to him by the Company. Unless the
parties mutually agree to the contrary, the office of the Executive will be
in Yarmouth, Maine.
7. TRAVEL 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 DCRI, such expenses must be expressly authorized by an
executive officer of DCRI. The Company agrees to reimburse the Executive for
all such expenses upon the Executive's presentation of an itemized account of
such expenditures.
8. 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 any reason, the Executive agrees that the Executive shall
not, during the term of this Agreement, and for a two (2) year period of time
commencing September 30, 2002, unless Buyer shall default, without curing
during the applicable curative period, in paying the purchase price under the
Purchase Agreement in which event the two (2) year period shall commence with
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 staffing related business of
any person or entity who is or was a customer, client, agent or
representative of the Company, or any of its affiliates, at the date of
termination of his employment with the Company, or at any time during the
twelve (12) months preceding the date of termination
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of this Agreement. The covenants and agreements set forth in this Paragraph 8
shall survive the termination of this Agreement.
9. 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 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, owner or stockholder 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 Sates Census Bureau) of any city in which the Buyer
maintains a place of business as of the date of termination of the
Executive's employment with the Company.
10. CONSIDERATION AND ENFORCEMENT. The Executive acknowledges that,
in exchange for the execution of the nonsolicitation and noncompetition
restrictions set forth in Paragraphs 8 and 9 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 Buyer purchasing the
Company. The Executive agrees that such consideration constitutes fair and
adequate consideration for the
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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 8 and 9 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 8 or 9 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 8, 9 and 11 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.
Notwithstanding anything herein to the contrary, the restrictions set
forth in Paragraphs 8 and 9 shall not be revised as herein provided if the
Buyer is in default as to its monetary obligations under the terms of the
Purchase Agreement and the Buyer has not cured such default within the
applicable curative period following written notice from the Executive. Such
restrictions shall be revised so that the two (2) year period of time shall
be reduced by such number of months which shall be proportionate to the
amount of Purchase Price (as defined in the Purchase Agreement) not paid to
the Executive and Sandra Hosmer. Example: if half of the Purchase Price has
not been paid, the restrictions for the two (2) year time periods in
Paragraphs 8 and 9 would be reduced to a one (1) year period of time.
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The Executive's obligations under Paragraphs 8 and 9 of the Agreement
shall survive the termination of this Agreement.
11. NONDISCLOSURE AGREEMENT. During the term of this Agreement, the
Company will provide to the Executive certain confidential and proprietary
information owned by the Company, Buyer or DCRI. 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 customer
lists, product pricing, data, know-how, processes, ideas, product
development, market studies, computer software and programs, database
technologies, strategic planning, and risk management of each of the Company,
Buyer and DCRI. 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 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 Buyer and DCRI, 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.
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12. 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 (a) mail
shall be deemed to be given upon the earlier of actual receipt or three (3)
business days after deposit in the United States Postal Service, and (b)
telegram shall be deemed properly given only when received by the person to
whom it is sent.
13. 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.
14. MISCELLANEOUS.
1. Subject to the condition that this Agreement is not assignable
by either party without the prior written consent of the other party (except
that the Company may assign this Agreement to an affiliate or to a third
party purchaser of the Company or its assets), 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.
2. 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.
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3. 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.
4. Except as otherwise provided in Paragraph 10 of this
Agreement, any controversy between the parties to this Agreement involving a
dispute with respect to any of the terms, covenants, or conditions of this
Agreement shall be submitted to arbitration in the state of Maine, 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 14(d) is invoked, both appoint one
person as an arbitrator to hear and determine the dispute, then the two
arbitrators so chosen shall, within fifteen (15) days, select a third
impartial arbitrator; the majority decision of the arbitrators shall be final
and conclusive upon the parties to this Agreement. Each party to the
arbitration proceedings shall bear his or its own expenses, except that the
expenses of the arbitrators shall be borne by the Company and/or the
Executive as determined by the arbitrator(s) involved. In the event of any
litigation between the parties related to the compliance with the terms and
conditions of this Agreement, the parties hereto acknowledge and agree that
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.
5. This Agreement has been made under and shall be governed by
the laws of the State of Maine.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 6th day of August, 1999.
MOUNTAIN LTD., INC.
By:
-------------------------------------
M. Ted Dillard, Secretary
Address: 12801 North Central Expressway
10
Suite 350
Dallas, TX 75243
----------------------------------------
Joseph H. Hosmer
Address: 1012 Hallowell Road
Durham, Maine 04222
DIVERSIFIED CORPORATE RESOURCES, INC.
By:
-------------------------------------
M. Ted Dillard, President
Address: 12801 North Central Expressway
Suite 350
Dallas, TX 75243
MAGIC Northeast, Inc.
By:
-------------------------------------
M. Ted Dillard, Secretary
Address: 12801 North Central Expressway
Suite 350
Dallas, TX 75243
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