<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Quarter Ended April 30, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-27612
----------------
DATA PROCESSING RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<C> <S>
California 95-3931443
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
18301 Von Karman Avenue, Suite 600
Irvine, CA 92612
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (949) 553-1102
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Number of shares of common stock outstanding as of April 30, 1999 is
14,727,376.
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<PAGE>
DATA PROCESSING RESOURCES CORPORATION
INDEX TO CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION
AND SIGNATURE
<TABLE>
<CAPTION>
Page
----
PART I. FINANCIAL INFORMATION
<C> <S> <C>
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF APRIL 30, 1999 (UNAUDITED)
AND JULY 31, 1998............................................. 3
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS AND NINE
MONTHS ENDED APRIL 30, 1999 AND 1998 (UNAUDITED).............. 4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED
APRIL 30, 1999 AND 1998 (UNAUDITED)........................... 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)......... 6-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..................................... 10-15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..... 16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................................. 17
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS...................... 17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................ 17
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.............. 17
ITEM 5. OTHER INFORMATION.............................................. 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................... 18
SIGNATURE............................................................... 19
</TABLE>
2
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
April 30, July 31,
1999 1998
----------- --------
(unaudited)
<S> <C> <C>
ASSETS
------
Current Assets:
Cash and Cash Equivalents................................ $ 29,657 $ 40,881
Investments.............................................. 22,294 59,969
Accounts Receivable (net of allowance for doubtful
accounts of $2,663 and $1,369
as of April 30, 1999 and July 31, 1998, respectively)... 52,786 48,103
Prepaid Expenses and Other Current Assets................ 8,708 4,601
Deferred Tax Asset....................................... 711 1,538
-------- --------
Total Current Assets..................................... 114,156 155,092
Property, net............................................ 9,209 4,445
Other Assets............................................. 1,095 921
Intangible Assets, net................................... 176,785 114,822
-------- --------
$301,245 $275,280
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts Payable and Accrued Liabilities................. $ 30,043 $ 31,694
Income Taxes Payable..................................... 581 1,625
Line of Credit........................................... -- 2,522
-------- --------
Total Current Liabilities................................ 30,624 35,841
Long-Term Deferred Income Taxes.......................... 784 784
Long-Term Debt, net...................................... 111,440 111,288
Commitments and Contingencies
Shareholders' Equity:
Common Stock; no par value; 60,000,000 shares
authorized; 14,727,376 and 13,677,028 shares issued
and outstanding as of April 30, 1999 and July 31,
1998, respectively.................................... 127,033 110,421
Compensation Expense Associated with Performance-
Vesting Options....................................... -- (1,553)
Retained Earnings...................................... 31,364 18,499
-------- --------
Total Shareholders' Equity........................... 158,397 127,367
-------- --------
$301,245 $275,280
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
-------------------- ------------------
1999 1998 1999 1998
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Revenues............................ $ 93,229 $ 70,424 $274,463 $182,901
Cost of Professional Services....... 65,490 49,858 191,618 131,108
--------- --------- -------- --------
Gross Margin....................... 27,739 20,566 82,845 51,793
Selling, General and Administrative
Expenses........................... 17,759 14,314 53,404 36,433
Merger-Related Expenses............. -- -- 3,054 --
Compensation Expense Associated with
Performance-Vesting Options........ -- -- 932 --
--------- --------- -------- --------
Operating Income.................... 9,980 6,252 25,455 15,360
Interest Expense, net............... (986) (342) (2,431) (218)
--------- --------- -------- --------
Income Before Provision for Income
Taxes.............................. 8,994 5,910 23,024 15,142
Provision for Income Taxes.......... 3,921 2,719 10,159 6,634
--------- --------- -------- --------
Net Income.......................... $ 5,073 $ 3,191 $ 12,865 $ 8,508
========= ========= ======== ========
Net Income per Share--Basic......... $ 0.35 $ 0.24 $ 0.91 $ 0.64
========= ========= ======== ========
Net Income per Share--Diluted....... $ 0.33 $ 0.23 $ 0.87 $ 0.62
========= ========= ======== ========
Weighted Average Common Shares
Outstanding--Basic................. 14,525 13,566 14,212 13,382
========= ========= ======== ========
Weighted Average Common Shares
Outstanding--Diluted............... 18,323 14,064 17,894 13,826
========= ========= ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 12,865 $ 8,508
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 994 526
Amortization........................................... 4,246 2,500
Amortization of debt discount and issue costs.......... 217 59
Compensation expense associated with performance-
vesting options....................................... 932 --
Changes in operating assets and liabilities, net of the
effect of acquisitions:
Accounts receivable.................................. (2,038) (9,413)
Deferred income taxes................................ 827 --
Prepaid expenses and other assets.................... (4,250) (2,082)
Accounts payable and accrued liabilities............. 529 4,360
Income taxes payable................................. (39) (672)
-------- --------
Net cash provided by operating activities.......... 14,283 3,786
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired......... (30,237) (28,067)
Proceeds from the sale of investments available for
sale.................................................... 37,675 --
Proceeds from the sale of land and building.............. -- 125
Cash paid for contingent acquisition obligations, net.... (28,911) (1,384)
Purchase of property..................................... (5,612) (1,460)
-------- --------
Net cash used in investing activities.............. (27,085) (30,786)
Cash flows from financing activities:
Proceeds from issuance of notes payable from private debt
offering, net........................................... -- 111,050
Net (repayments of) proceeds from line of credit......... (2,522) 1,137
Proceeds from employee stock purchase plan............... 1,684 667
Purchase of common stock from profit sharing plan........ (22) --
Proceeds from the exercise of stock options.............. 2,438 1,903
-------- --------
Net cash (used in) provided by financing
activities........................................ 1,578 114,757
-------- --------
Net increase (decrease) in cash and cash equivalents....... (11,224) 87,757
Cash and cash equivalents, beginning of period............. 40,881 17,817
-------- --------
Cash and cash equivalents, end of period................... $ 29,657 $105,574
======== ========
Supplemental information--Cash paid for:
Interest................................................. $ 6,314 $ 444
======== ========
Income taxes............................................. $ 9,488 $ 6,835
======== ========
Supplemental schedule of noncash investing and financing
activities:
Tax benefit of stock options exercised................... $ 924 $ 973
Detail of businesses acquired in purchase transactions:
Fair value of assets acquired............................ $ 37,667 $ 33,640
Common stock issued in acquisitions.................... (6,636) (3,989)
Cash paid for acquisitions, net of cash acquired....... (30,237) (28,067)
-------- --------
Liabilities assumed (relieved)......................... $ 794 $ 1,584
======== ========
Accrual to satisfy earnout obligation...................... $ 8,730 $ --
Shares issued to satisfy earnout obligation................ $ 6,992 $ --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
For the Three and Nine Months Ended April 30, 1999 and 1998
1. General
Business
Data Processing Resources Corporation (DPRC or the Company), a California
corporation, is a leading national specialty staffing company providing
information technology services to a diverse group of corporate clients.
On December 21, 1998, DPRC acquired Systems & Programming Consultants, Inc.
(SPC), a North Carolina corporation (see Note 3).
The consolidated financial statements, included herein, give retroactive
effect, for all periods presented, to the acquisition of SPC, as such business
combination has been accounted for as a pooling of interests, in accordance
with generally accepted accounting principles.
Interim Financial Data
The interim financial data as of April 30, 1999 and for the three and nine
months ended April 30, 1999 and 1998 is unaudited. The information reflects
all adjustments, consisting only of normal recurring entries, that, in the
opinion of management, are necessary to present fairly the financial position
and results of operations of the Company for the periods indicated. Results of
operations for the interim periods are not necessarily indicative of the
results of operations for the full fiscal year. This report should be read in
conjunction with the Company's Annual Report on Form 10-K/A (Amendment No. 1)
for the fiscal year ended July 31, 1998, Form 10-Q for the quarters ended
October 31, 1998, and January 31, 1999, the Company's Registration Statement
on Form S-4 (No. 333-61017) as declared effective by the Securities and
Exchange Commission on November 13, 1998, and the Company's Current Report on
Form 8-K, dated March 1, 1999, which gives retroactive effect to the Merger
with SPC. Certain reclassifications have been made in the consolidated
financial statements to conform amounts previously reported for fiscal 1998 to
the fiscal 1999 presentation.
2. Summary of Significant Accounting Policies
Net Income Per Share--In the second quarter of 1998, the Company adopted
SFAS No. 128 "Earnings Per Share." SFAS No. 128 redefines earnings per share
under generally accepted accounting principles. Under the new standard,
primary net income per share is replaced by basic net income per share and
fully diluted net income per share is replaced by diluted net income per
share. All historical earnings per share information has been restated as
required by SFAS No. 128.
Basic net income per share is computed using the weighted average number of
common shares outstanding during the periods presented. Diluted net income per
share is computed using the weighted average number of common and common
equivalent shares outstanding during the periods presented assuming the
exercise of all in-the-money stock options. The effect of the 5 1/4%
convertible subordinated notes issued in March 1998 was not dilutive for the
three and nine months ended April 30, 1998, but was dilutive for the three and
nine months ended April 30, 1999. Common equivalent shares have not been
included where inclusion would be antidilutive.
6
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)--(Continued)
For the Three and Nine Months Ended April 30, 1999 and 1998
2. Summary of Significant Accounting Policies--(continued)
<TABLE>
<CAPTION>
Three months Nine months
ended April ended April
30th 30th
------------- -------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Basic net income per share:
Weighted average number of common shares
outstanding..................................... 14,525 13,566 14,212 13,382
Effect of dilutive securities:
Stock options.................................... 559 498 443 444
Convertible notes................................ 3,239 -- 3,239 --
Diluted net income per share:
Weighted average number of common shares
outstanding..................................... 18,323 14,064 17,894 13,826
</TABLE>
Provider Contract--During fiscal year 1998, the Company entered into a
provider contract with a major customer whereby the Company provides
management services to the customer for a fee. Under the contract, the Company
manages temporary staffing services for the customer, either through the
Company's staff or through outside service providers. The Company bills the
customer for all services rendered, and remits payments to the outside
contractors for services provided by them. Payments received by the Company
for services provided by other entities are not reflected in the consolidated
statement of income, as the Company bears no credit risk under the contract
and does not retain any liability for services provided by such outside
contractors. Billings to the customer and liabilities recognized related to
the outside service providers totalled $630,000 for the three and nine months
ended April 30, 1998, $11.9 million for the three months ended April 30, 1999,
and $21.1 million for the nine months ended April 30, 1999.
Comprehensive Income--The Company adopted SFAS No. 130, Reporting
Comprehensive Income, in fiscal year 1999. SFAS No. 130 requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements. Other
than net income, the Company does not have any other elements of comprehensive
income requiring separate disclosure.
3. Acquisitions
In fiscal 1998 and 1999, the Company completed five acquisitions accounted
for as purchases. The excess of cost over fair value of net assets acquired
was allocated to goodwill, which is amortized using the straight-line method
over 25 years. The consolidated financial statements of the Company include
the results of operations for each acquired business from the acquisition
date. During fiscal 1999, the Company also completed the acquisition of SPC,
accounted for as a pooling of interests. A summary of the acquisitions in
fiscal 1998 and 1999 is as follows:
In January 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of S/3/G, Inc. (S/3/G). Under the terms of the
asset purchase agreement, the purchase price was $32.2 million, consisting of
$28.2 million in cash and 204,552 shares of restricted DPRC common stock,
valued at approximately $4.0 million. In addition, the former shareholder of
S/3/G had the right to receive certain additional consideration contingent
upon S/3/G's adjusted earnings before interest and taxes through December 31,
1998. The earnout was paid semi-annually, 85% in cash and 15% in shares of
restricted common stock. The first installment of the earnout payment,
consisting of $5.8 million in cash and 32,880 shares of restricted common
stock, was paid in September 1998. The final installment of the earnout
consisting of $23.5 million in cash and 164,167 shares of restricted common
stock was paid in May 1999.
In May 1998, the Company acquired by merger all of the outstanding capital
stock of EXi Corp., (EXi) a Minnesota Corporation.
7
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)--(Continued)
For the Three and Nine Months Ended April 30, 1999 and 1998
3. Acquisitions--(continued)
In October 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of RIDGE Consultants, Inc. (Ridge).
In November 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of Vista High-Tech Resources, Inc. and Vista High-
Tech Resources of RI, Inc. (collectively, Vista). Under the terms of the asset
purchase agreement, the former shareholder of Vista has the right to receive
certain additional consideration contingent upon Vista's adjusted earnings
before interest and taxes through July 31, 1999. The earnout is payable on or
before September 30, 1999, 65% in cash and 35% in shares of restricted DPRC
common stock.
In December 1998, the Company acquired SPC pursuant to the terms of the
Agreement and Plan of Merger, dated June 16, 1998, as amended on October 13,
1998 and on October 20, 1998, by and among DPRC, DPRC Acquisition Corp., a
wholly owned subsidiary of DPRC (Merger Sub), SPC and certain shareholders of
SPC (the Merger Agreement). The Merger Agreement stipulates that Merger Sub be
merged with and into SPC, with SPC continuing as the surviving corporation as a
wholly owned subsidiary of DPRC (the Merger). The consideration delivered in
connection with the Merger was paid in shares of DPRC common stock. In the
Merger, each outstanding share of SPC common stock was converted into 6.399204
shares of DPRC common stock (approximately 2.2 million shares of DPRC common
stock). No fractional shares were issued. Additionally, DPRC assumed the
outstanding options under the SPC Stock Option Plan. Such SPC options are fully
vested and exercisable to purchase approximately 1.1 million shares of DPRC
common stock at a weighted average option exercise price of approximately $4.06
per share. The Merger was approved on December 17, 1998, at a special meeting of
SPC shareholders and on December 21, 1998, at a special meeting of DPRC
shareholders. The effective date of the Merger was December 21, 1998.
The consolidated financial statements, included herein, give retroactive
effect, for all periods presented, to the Merger, as such business combination
has been accounted for as a pooling of interests, in accordance with generally
accepted accounting principles.
In April 1999, the Company acquired substantially all of the assets and
assumed certain liabilities of Qualitech Systems, Inc. and Qualitech Systems
of South Florida, Inc. (collectively, Qualitech).
Unaudited pro forma consolidated results of operations for the nine months
ended April 30, 1998 would have been as follows had the acquisition of S/3/G
occurred as of the beginning of the period (in thousands, except per share
data):
<TABLE>
<CAPTION>
Nine Months Ended
April 30, 1998
-----------------
<S> <C>
Pro forma revenues....................................... $190,244
Pro forma net income..................................... $ 7,886
Pro forma net income per share--basic.................... $ 0.57
Pro forma net income per share--diluted.................. $ 0.56
Pro forma weighted average common shares outstanding--
basic................................................... 13,716
Pro forma weighted average common shares outstanding--
diluted................................................. 14,156
</TABLE>
Pro forma adjustments have been applied to reflect the purchase of S/3/G
including the addition of amortization related to the intangible assets
acquired and reduction in interest income and additional interest expense.
8
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)--(Continued)
For the Three and Nine Months Ended April 30, 1999 and 1998
4. Debt
On March 24, 1998, the Company completed the sale of $115.0 million of its 5
1/4% convertible subordinated notes due 2005 (the "Notes") in a private
offering under Rule 144A to qualified institutional buyers. The Notes are
convertible at any time at the option of the holders into shares of common
stock of DPRC at a conversion price of $35.50 per share of common stock of the
Company. The Notes mature on April 1, 2005 and are non-callable for the first
three years. The Company used a portion of the net proceeds of the offering
for acquisitions and earnout payments in the amount of approximately $59.1
million for the nine months ended April 30, 1999. Interest is payable on April
1 and October 1 of each year, commencing on October 1, 1998. The Notes were
recorded net of a discount and issue costs of $3,950,000, which will be
amortized over seven years based on the effective interest method. As of April
30, 1999, accumulated amortization was $753,000. As of April 30, 1999, there
have been no conversions of notes to common stock.
The Company has a five-year, $60.0 million Revolving/Term Loan Agreement
(the "Credit Facility") with a bank syndicate. The Credit Facility consists of
a revolving line of credit of $60.0 million principal amount, and bears
interest at the prime rate to prime rate plus .5% or LIBOR plus 0.50% to 1.75%
depending on defined financial conditions. On June 30, 2001, the outstanding
principal balance on the facility converts to a two-year fully amortized term
loan. The Credit Facility is guaranteed by the Company's subsidiaries and
secured by substantially all of the assets of the Company and its
subsidiaries, including accounts receivable and equipment and a pledge of all
of the stock of the Company's subsidiaries. The Credit Facility contains
various covenants, including the maintenance of defined financial ratios such
as net worth. As of April 30, 1999, the Company had no borrowings outstanding
under the credit facility and was in compliance with bank covenants. The
Company's Credit Facility prohibits the payment of dividends without the prior
written consent of the lender.
5. Related Party Transactions
Information Technology Resources, Inc. (ITR) was formed by the founder of
the Company and certain other persons, including certain former employees of
ITR's primary client, with the founder owning approximately 79.0% of the
outstanding capital stock. Effective as of December 31, 1998, the founder sold
a portion of her stock in ITR to reduce her ownership interest to less than
10.0% of the outstanding capital stock. The Company provides certain
management services to ITR to support its operations, for which the Company
receives a management fee pursuant to a management services agreement.
Management fees earned by the Company were $135,000 and $270,000 for the nine
months ended April 30, 1999 and 1998, respectively. ITR also contracts with
the Company for technical consultants to meet its staffing needs. For the nine
months ended April 30, 1999 and 1998, the Company recorded revenues of
$2,023,000 and $2,295,000 from billing ITR for technical consultants,
respectively.
In fiscal 1998, a former member of DPRC's Board of Directors, who was also
the President of one of the Company's operating subsidiaries, acquired a 33%
ownership interest in Message & Ques Tech., Inc. (MQTECH), a software
development company, which interest was subsequently increased to 80%. The
Company provided technical consultants to MQTECH through its Computec
subsidiary. Revenue from MQTECH totaled approximately $200,000 and $2.2
million for the three and nine months ended April 30, 1999 respectively.
Accounts receivable as of April 30, 1999 totaled approximately $681,000. This
former director has provided a personal guarantee for full payment of the
outstanding receivable.
6. Subsequent Events
In June 1999, the Company announced the acquisition of substantially all of
the assets and assumption of certain liabilities of IT Services, Inc. (ITSI).
ITSI has the right to receive certain additional consideration contingent upon
ITSI's adjusted earnings before interest and taxes for the twelve month
periods ending April 30, 2000, and April 30, 2001. The earnouts are payable in
cash and restricted DPRC common stock, the combination of which to be
determined by the Company, with a minimum of 60% payable in cash. The earnouts
are due on or before July 1, 2000, and 2001, or as soon as practicable
thereafter, and will be recorded as an addition to goodwill.
9
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-
looking statements involve a number of risks and uncertainties, including,
without limitation, the Company's ability to recruit and retain qualified
technical consultants; manage growth; identify, acquire and integrate suitable
acquisition candidates; obtain sufficient working capital to support such
growth; compete successfully with existing and future competitors; and other
factors described throughout this Form 10-Q, the Company's Form 10-Q's for the
quarters ended October 31, 1998, and January 31, 1999, and in the Company's
Form 10-K/A (Amendment No. 1) for the year ended July 31, 1998, and the
Company's Current Report on Form 8-K, dated March 1, 1999, which gives
retroactive effect to the Merger with SPC. Form 10-Q for the quarters ended
October 31, 1997 and January 31, 1998. The actual results that the Company
achieves may differ materially from any forward-looking statements due to such
risks and uncertainties. Words such as "believes," "anticipates," "expects,"
"intends," and similar expressions are intended to identify forward-looking
statements, but are not the exclusive means of identifying such statements.
The Company undertakes no obligation to revise any forward-looking statements
in order to reflect events or circumstances that may arise after the date of
this report. Readers are urged to carefully review and consider the various
disclosures made by the Company in this report and in the Company's other
reports filed with the Securities and Exchange Commission that attempt to
advise interested parties of the risks and factors that may affect the
Company's business, including the risk factors set forth in the Company's
proxy and prospectus dated November 13, 1998.
Three Months Ended April 30, 1999 Compared to Three Months Ended April 30,
1998
Revenues. Revenues increased $22.8 million, or 32.4%, to $93.2 million for
the three months ended April 30, 1999 as compared to $70.4 million for the
three months ended April 30, 1998. This increase resulted primarily from the
contribution of revenues from the acquisitions of EXi (acquired in May 1998),
Ridge Consultants (acquired in October 1998), Vista (acquired in November
1998) and Qualitech (acquired in April 1999). These acquisitions contributed
$7.5 million of incremental revenue, or 10.6%. The remaining $15.3 million
increase in revenue is attributed to internal growth. Internal growth is due
to a combination of: (i) new information technology projects; (ii) increased
demand in the networking and communications market; (iii) a broadening of the
types of services being provided, such as packaged software implementations,
network management and desktop services, and Tandem (fault tolerance); (iv)
direct international recruiting through the Company's Computec subsidiary, as
well as direct and indirect recruiting in the Far East; and (v) increased
billing rates resulting from an increase in consultant wages.
Gross Margin. Gross margin increased $7.2 million, or 34.9%, to $27.7
million, for the three months ended April 30, 1999 as compared to $20.6
million for the three months ended April 30, 1998. As a percentage of
revenues, gross margin increased for the three months ended April 30, 1999 to
29.8% as compared to 29.2% for the same period in fiscal 1998. This gross
margin percentage improvement reflects higher gross margins from: (i)
acquisitions of companies with higher gross margin business, such as software
engineering and Microsoft Solutions; and (ii) emphasis on expansion of the
higher margin businesses in existing markets, including network management and
desktop services.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased approximately $3.4 million, or 24.1%, to
$17.8 million for the three months ended April 30, 1999, as compared to $14.3
million for the three months ended April 30, 1998. Selling, general and
administrative expenses decreased as a percentage of revenues to 19.0% for the
three months ended April 30, 1999, as compared to 20.3% for the same period in
fiscal 1998. Overall, the increase in selling, general and administrative
expenses was primarily due to: (i) increased amortization expense of $382,000
from intangible assets related to acquisitions; (ii) expenses of $1.8 million
for infrastructure required to support Company growth, and (iii) increased
expenses
10
<PAGE>
of $1.2 million related to additional corporate infrastructure. As a
percentage of revenue, selling, general and administrative expenses decreased
due to a decrease in the Company's ratio of fixed costs to total revenue.
Operating Income. Operating income increased $3.7 million, or 59.6%, to
$10.0 million for the three months ended April 30, 1999 from $6.3 million for
the same period in fiscal 1998. As a percentage of revenues, operating income
increased for the three months ended April 30, 1999 to 10.7% as compared to
8.9% for the same period in fiscal 1998. The incremental increase in operating
income primarily reflected the increase in gross margin percentage and
reduction of selling, general and administrative expenses, discussed above.
Interest Expense, net. The Company had net interest expense of $986,000 for
the three months ended April 30, 1999 as compared to net interest expense of
$342,000 for the three months ended April 30, 1998, primarily as a result of
interest expense on the $115.0 million aggregate principal amount of 5 1/4%
convertible subordinated notes issued in March 1998, which was offset by a
decrease in interest income for the three months ended April 30, 1999 compared
to the same period in fiscal 1998 due to the use of investment proceeds to
fund the Company's ongoing acquisition program.
Provision for Income Taxes. The Company's effective income tax rate
decreased to 43.6% for the three months ended April 30, 1999 from 46.0% for
the three months ended April 30, 1998. The decrease in the effective tax rate
is primarily due to a decrease in non-deductible amortization of goodwill as a
percentage of taxable income.
Nine Months Ended April 30, 1999 Compared to Nine Months Ended April 30, 1998
Revenues. Revenues increased $91.6 million, or 50.1%, to $274.5 million for
the nine months ended April 30, 1999 as compared to $182.9 million for the
nine months ended April 30, 1998. This increase resulted primarily from the
contribution of revenues from the acquisitions of S/3/G (acquired in January
1998), EXi (acquired in May 1998), Ridge Consultants (acquired in October
1998), Vista (acquired in November 1998), and Qualitech (acquired in April
1999). These acquisitions contributed $36.4 million of incremental revenue, or
19.9%. The remaining increase in revenue is attributed to an internal growth
of $55.2 million. Internal growth is due to a combination of: (i) new
information technology projects; (ii) increased demand in the networking and
communications market; (iii) a broadening of the types of services being
provided, such as packaged software implementations, and network management
and desktop services and Tandem (fault tolerance); (iv) direct international
recruiting through the Company's Computec subsidiary, as well as direct and
indirect recruiting in the Far East; and (v) increased billing rates resulting
from an increase in consultant wages.
Gross Margin. Gross margin increased $31.1 million, or 60.0%, to $82.8
million, for the nine months ended April 30, 1999 as compared to $51.8 million
for the nine months ended April 30, 1998. As a percentage of revenues, gross
margin increased for the nine months ended April 30, 1999 to 30.2% as compared
to 28.3% for the same period in fiscal 1998. This gross margin percentage
improvement reflects higher gross margins from: (i) acquisitions of companies
with higher gross margin business, such as packaged software implementation,
software engineering, and Microsoft Solutions; (ii) emphasis on expansion of
the higher margin businesses in existing markets, including network management
and desktop services; and (iii) internal growth in the Company's international
recruiting.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses, including merger-related expenses increased
approximately $21.0 million, or 57.5%, to $57.4 million for the nine months
ended April 30, 1999, as compared to $36.4 million for the nine months ended
April 30, 1998. Selling, general and administrative expenses also increased as
a percentage of revenues to 20.9% for the nine months ended April 30, 1999, as
compared to 19.9% for the same period in fiscal 1998. This increase is
primarily attributable to the transaction costs related to the SPC merger of
$3.1 million, and compensation expense associated with performance vesting
stock options related to the SPC merger of $0.9 million. Merger-related
charges included in selling, general and administrative expenses were 1.5% of
revenue for the nine months ended April 30, 1999.
11
<PAGE>
Operating Income. Operating income increased $10.1 million, or 65.7%, to
$25.5 million for the nine months ended April 30, 1999 from $15.4 million for
the same period in fiscal 1998. As a percentage of revenues, operating income
increased for the nine months ended April 30, 1999 to 9.3% as compared to 8.4%
for the same period in fiscal 1998. The increase in operating income primarily
reflected the increase in gross margin percentage, offset by the merger-
related expenses and compensation expense associated with performance-vesting
options aggregating $4.0 million incurred during the nine months ended April
30, 1999.
Interest Expense, net. The Company had net interest expense of $2.4 million
for the nine months ended April 30, 1999 as compared to net interest expense
of $218,000 for the nine months ended April 30, 1998, primarily as a result of
interest expense on the $115.0 million aggregate principal amount of 5 1/4%
convertible subordinated notes issued in March 1998, which was offset by
interest income from the investment of proceeds of those notes.
Provision for Income Taxes. The Company's effective income tax rate
increased to 44.1% for the nine months ended April 30, 1999 from 43.8% for the
nine months ended April 30, 1998. The increase in the effective tax rate is
primarily due to a decrease in interest income from short-term tax exempt
investments.
Liquidity and Capital Resources
Cash, cash equivalents and investments were $52.0 million, and working
capital totaled $84.5 million, as of April 30, 1999. Cash provided by
operating activities increased to $14.3 million for the nine months ended
April 30, 1999 as compared to $3.8 million in the same period in fiscal 1998.
The increase in cash provided was primarily due to an increase in net income
and a decrease in the days sales outstanding in accounts receivable to 50 days
in the third quarter of fiscal 1999, offset by decreases in accounts payable
and accrued liabilities.
Cash used in investing activities decreased to $27.0 million for the nine
months ended April 30, 1999, as compared to cash used of $30.8 million in the
same period in fiscal 1998. The decrease in cash used in fiscal 1999 is due
primarily to the proceeds from the sale of investments of $37.7 million offset
partially by cash used in connection with its ongoing acquisition program and
earnouts related to previous acquisitions.
On March 24, 1998, the Company completed the sale of $115 million of its 5
1/4% convertible subordinated Notes due 2005. The Notes are convertible at any
time at the option of the holders into shares of common stock of DPRC at a
conversion price of $35.50 per share of common stock of the Company. The Notes
mature on April 1, 2005 and are non-callable for the first three years. The
Company used a portion of the net proceeds of the offering for acquisitions in
the period and expects to use remaining net proceeds of the offering for
working capital and other general corporate purposes, including acquisitions.
Interest is payable on April 1 and October 1 of each year. Interest payments
commenced on October 1, 1998.
The Company has a five-year, $60.0 million Revolving/Term Loan Agreement
(the "Credit Facility") with a bank syndicate. The Credit Facility consists of
a revolving line of credit of $60.0 million principal amount, and bears
interest at the prime rate to prime rate plus .5% or LIBOR plus 0.50% to
1.75%, depending on defined financial conditions. On June 30, 2001, the
outstanding principal balance on the facility converts to a two-year fully
amortized term loan. The Credit Facility contains various covenants, including
the maintenance of defined financial ratios such as net worth. As of April 30,
1999, the Company had no borrowings outstanding under the Credit Facility and
was in compliance with bank covenants.
The Company previously completed the acquisition by merger of Computec
International Strategic Resources, Inc. (Computec) on April 30, 1997. The
definitive agreement obligates the Company to make earnout payments contingent
upon Computec's earnings before interest and taxes through December 31, 1998.
Specifically, the earnout is conditioned upon Computec's obtaining a higher
earnings before interest and taxes in calendar years 1997 and 1998 as compared
to calendar years 1996 and 1997, respectively, and if achieved, will be
calculated based upon a multiple of the calendar year's earnings before
interest and taxes that is in excess of
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<PAGE>
the prior year's earnings before interest and taxes. The earnout is payable
60% in cash and 40% in shares of common stock. The aggregate amount of the
initial consideration and the earnout may not exceed $70.0 million. The final
installment of the earnout was due in April 1999. The Company believes that
the final earnout payment, as adjusted, should be approximately $3.8 million,
and has recorded this estimate as an accrued liability. The parties are still
in the process of reviewing the earnout calculation in which the former
shareholders have disagreed with approximately $9 million of such adjustments
and contends the final payment should be approximately $13 million. Although
there is no legal action currently pending, the Company has given written
notice of its desire to resolve this issue under the dispute resolution
mechanisms of the merger agreement, and if necessary will demand mediation and
arbitration to resolve the amount of the final payment. As a result, the
ultimate amount of the final earnout payment to be made by the Company is
presently uncertain. The Company expects to pay any such earnout payment from
existing cash and cash equivalents, investments, cash flow from operations and
available borrowings under the Credit Facility.
On January 27, 1998, the Company completed the acquisition of substantially
all the assets of S/3/G for approximately $28.2 million in cash and 204,552
shares of restricted DPRC common stock, valued at approximately $4.0 million.
The Company borrowed $25.5 million under the credit facility to finance a
portion of the cash purchase price of such acquisition. The definitive
purchase agreement obligates the Company to make additional earnout payments
semi-annually contingent upon earnings before interest and taxes of the S/3/G
business through December 31, 1998. The earnout is conditioned upon the S/3/G
business first obtaining a 30.0% growth rate in calendar year 1998 as compared
to calendar year 1997 and, if achieved, will be calculated based upon a
multiple of the amount of the calendar year 1998 earnings before interest and
taxes that is in excess of such threshold. The earnout is payable semi-
annually, 85% in cash and 15% in shares of restricted common stock. The second
installment of the earnout consisting of $19.7 million in cash and 137,501
shares of restricted common stock was paid in March 1999. A final adjustment
to the earnout consisting of $4.0 million in cash and 26,666 shares of
restricted common stock was paid in May and June 1999, and recorded in
intangible assets and accounts payable and accrued liabilities as of April 30,
1999.
The Company is in the process of installing and implementing a new
Enterprise Resource Planning (ERP) system at an estimated cost of up to $9.5
million. The new ERP system is expected to take 18-24 months to fully install,
test and implement in all office locations. As of April 30, 1999, the Company
has spent approximately $4.4 million and is expecting to complete the
implementation by December 31, 1999, and remain within the $9.5 million
budget. The Company expects to pay the costs of this project with existing
cash and cash equivalents, investments, cash flow from operations and
available borrowings under the Credit Facility.
In November 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of Vista High-Tech Resources, Inc. and Vista High-
Tech Resources of RI, Inc. (collectively, Vista). Vista has the right to
receive certain additional consideration contingent upon Vista's adjusted
earnings before interest and taxes through July 31, 1999. The earnout is
payable 65% in cash and 35% in shares of restricted common stock. The earnout
is due on or before September 30, 1999 and will be recorded as an addition to
goodwill.
In June 1999, the Company announced the acquisition of substantially all of
the assets and assumption of certain liabilities of IT Services, Inc. (ITSI).
ITSI has the right to receive certain additional consideration contingent upon
ITSI's adjusted earnings before interest and taxes for the twelve month
periods ending April 30, 2000, and April 30, 2001. The earnouts are payable in
cash and restricted DPRC common stock, the combination of which to be
determined by the Company, with a minimum of 60% payable in cash. The earnouts
are due on or before July 1, 2000, and 2001, or as soon as practicable
thereafter, and will be recorded as an addition to goodwill.
The Company anticipates that its primary uses of working capital in future
periods will be for acquisitions, the internal development of new offices,
investments in its management information systems, earnout payments and the
funding of increases in accounts receivable. Although the Company seeks to use
its common stock to make acquisitions, to the extent possible, a substantial
portion of the purchase price for acquisitions has been paid in cash. The
Company continually reviews and evaluates acquisition candidates to complement
and expand its business, and is at various stages of evaluation and discussion
with a number of such candidates. Such acquisition candidates may also require
that all or a significant portion of the purchase price be paid in cash. The
Company's ability to grow through acquisitions is dependent on the
availability of suitable acquisition candidates and the terms on which such
candidates
13
<PAGE>
may be acquired, which may be adversely affected by competition for such
acquisitions. The Company cannot predict to what extent new offices will be
added through acquisitions as compared to internal development.
The Company anticipates that the opening of new offices will require an
investment of approximately $150,000 to $250,000 per office to acquire
equipment and supplies and to fund operating losses for the initial nine- to
12-month period of operations which management believes will generally be
required for a new office to achieve profitability. The Company expenses the
costs of opening a new office as incurred, except for the cost of equipment
and other capital assets, which are capitalized. Generally, expenditures for
such capital assets for a new office will be less than $100,000. There can be
no assurance that future offices will achieve profitability within a nine- to
12-month period after opening. The Company anticipates making additional
capital expenditures in connection with the development of new offices in
future periods and the improvement of its network and operating system
infrastructure and management reporting system.
The Company believes that the existing cash, cash equivalents and
investments, cash flow from operations and available borrowings under the
Credit Facility will be sufficient to meet the Company's presently anticipated
working capital needs for at least the next 12 months, although the Company is
evaluating various potential acquisitions which could require a substantial
portion of the existing cash, cash equivalents and investments, and
availability under the Credit Facility and could be completed within the next
12 months. To the extent the Company uses all of its cash resources and
existing credit for acquisitions, the Company may be required to obtain
additional funds, if available, through additional borrowings or equity
financings. There can be no assurance that such capital will be available on
acceptable terms. If the Company is unable to obtain sufficient financing, it
may be unable to fully implement its growth strategy.
Year 2000
The "Year 2000" issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from
the use of computer programs which have been written using two digits, rather
than four, to define the applicable year of business transactions. In
evaluating the Company's state of readiness the Company is considering the
following key areas: (i) the Company's principal staffing and financial
systems; (ii) software used in the Company's internal computer network; (iii)
third-party vendors; (iv) customers; and (v) telecommunications and other
support systems. The Company is addressing each of these areas in three
separate phases. The first phase identified all systems in each area that may
contain potential Year 2000 issues. The second phase involved an investigation
into whether a Year 2000 issue actually exists for each system identified. The
third phase involves actual resolution of the issue and/or the development of
a contingency plan.
The Company has completed the assessment and validation of the principal
staffing and financial systems. These systems are licensed from, and
maintained by, third-party software development companies, which the Company
believes are Year 2000 compliant. The Company has obtained representations
from these companies that indicate that the systems are Year 2000-compliant.
In addition to those representations, the Company completed its own tests of
these critical systems in March 1999 and found no Year 2000 issues. A new
financial system is currently being implemented and has been verified as Year
2000 compliant in March 1999. The Company is currently in the third phase of
the process, which involves contingency planning. The Company does not
anticipate any significant disruptions of the business resulting from its
principal staffing and financial systems.
The Company has completed the assessment and verification of the mission
critical software used on the Company's internal computer network. Software
used on the Company's internal computer network is substantially all licensed
from major software vendors that have represented that their products are
compliant or will be compliant by January 1, 2000. The Company is currently in
the third phase of the process, which involves contingency planning and
monitoring for each software product, supported by the Company. The
contingency plans are expected to be complete by July 31, 1999. The Company
does not anticipate any significant disruptions of the business resulting from
such software.
The Company completed a review of other third-party vendors in December
1998. In April 1999, the Company completed an investigation of those third
party vendors that are considered critical to determine their state of Year
2000 readiness and believes that its exposure in regards to third-party
vendors is minimal, as the Company is mainly a
14
<PAGE>
service provider and is not dependent on a supply of raw materials or
inventory. With the exception of basic utilities, payroll processing, bank
services and benefit administration, any disruption to the Company's other
vendors is not likely to significantly disrupt the Company's business.
The Company does rely on third-party vendors for payroll processing and
benefits administration. The payroll-processing vendor has indicated that its
product is Year 2000-compliant. The Company is in the process of selecting a
new benefits administrator and is expected to complete the selection by
September 1, 1999. Year 2000 compliance is a criterion for administrator
selection.
The Company is dependent on basic public infrastructure, such as
telecommunications and utilities, in order to function normally. Significant
long-term interruptions of this infrastructure could have an adverse effect on
the operations of the Company. The Company has contacted major
telecommunications and utility companies and does not expect significant
interruptions of service. Notwithstanding the Company's efforts in this area,
there can be no assurance that the Company can develop a contingency plan that
effectively deals with a major failure of public infrastructure.
The Company has completed evaluation of the potential risks associated with
its customers' Year 2000 issues. The first phase involved polling of the
Company's customers and consultants and was completed in March 1999. No
further activity is planned based on the results of the initial evaluation.
The Company feels that Year 2000 issues are not likely to cause a significant
disruption of development projects that its consultants are working on and
may, in some cases, actually create a demand for more consultant hours in
order to respond to Year 2000 disruptions.
The Company completed a review of non-information technology systems, such
as telephones and office equipment in May 1999. Facility-related systems
review is expected to be completed in June 1999. The first phase of
identifying potential issues was completed in January 1999. The Company is
currently planning contingencies to address potential risks in each of these
areas.
The Company does not believe that it will need to acquire any significant
new software systems in response to Year 2000 issues. The decision to develop
and implement a new ERP system was made independent of Year 2000 concerns for
the purposes of improving the Company's efficiency and financial reporting
capabilities. Most of the cost related to Year 2000 are for additional
technical services retained to supplement the existing information systems
staff for Year 2000 projects. The Company has incurred approximately $110,000
thus far on Year 2000 issues and expects to incur another $338,000 to complete
the project.
The Company is in Phase III of its Year 2000 project for all areas. This
phase is scheduled to be completed as discussed above. Upon completion of
Phase III contingency planning for each area, the Company will continue to
monitor activity throughout 1999 to assure the Company's readiness level is
maintained. There can be no assurance that any such plans will fully mitigate
any potential failures or problems. Furthermore, there may be certain mission-
critical third parties, such as utilities, telecommunication companies, or
vendors where alternative arrangements or sources are limited or unavailable.
The extent and magnitude of the Year 2000 problem as it will affect the
Company, both before, and for some period after, January 1, 2000, is difficult
to predict or quantify for a number of reasons. Among the most important are
the lack of control over systems that are used by the third parties who are
critical to the Company's operation, such as telecommunications and utilities
companies, the complexity of testing interconnected networks and applications
that depend on third-party networks and the uncertainty surrounding how others
will deal with liability issues raised by Year 2000-related failures.
Moreover, the estimated costs of implementing the Plan do not take into
account the costs, if any, that might be incurred as a result of Year 2000-
related failures that occur despite the Company's implementation of the plan.
Although the Company is not currently aware of any material operational
issues associated with preparing its internal systems for the Year 2000, or
material issues with respect to the adequacy of mission-critical third-party
systems, there can be no assurance, due to the overall complexity of the Year
2000 issue, that the Company will not experience material unanticipated
negative consequences and/or material costs caused by undetected errors or
defects in such systems or by the Company's failure to adequately prepare for
the results of such errors or defects, including costs or related litigation,
if any. The impact of such consequences could have a material adverse effect
on the Company's business, financial condition or results of operations.
15
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk related to changes in interest rates.
A discussion of the Company's accounting policies for financial instruments
and further disclosures relating to financial instruments is included in the
Summary of Significant Accounting Policies in the Notes to Consolidated
Financial Statements of the Company's Annual Report on Form 10-K/A (as
amended) for the year ended July 31, 1998. The Company monitors the risks
associated with interest rates and financial instrument positions.
The Company's revenue derived from international operations is not material
and, therefore, the risk related to foreign currency exchange rates is not
material.
16
<PAGE>
DATA PROCESSING RESOURCES CORPORATION
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 30, 1997, the Company acquired by merger Computec International
Strategic Resources, Inc. (Computec). The merger agreement provides that the
Company will make earnout payments contingent upon Computec's earnings before
interest and taxes through December 31, 1998 to Christopher Lancashire, the
former owner of Computec, who was a director of the Company during such time
period, and his wife and related trust. See Note 5 to the Consolidated
Financial Statements. The first installment of the earnout payment was paid in
October 1997, the second installment was paid in June 1998, the third
installment was paid in September 1998 and the fourth installment is due in
April 1999. Each of the earnout payments is payable 60% in cash and 40% in
shares of the Company's common stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources." However, the amount of the final earnout payment is
currently in dispute. The Company believes that the final earnout payment, as
adjusted, should be approximately $3.8 million, and has recorded this estimate
as an accrued liability. The parties are still in the process of reviewing the
earnout calculation in which the former shareholders have disagreed with
approximately $9 million of such adjustments and contends the final payment
should be approximately $13 million. Although there is no legal action
currently pending, the Company has requested mediation, and if necessary, will
demand arbitration of this dispute in accordance with the terms of the merger
agreement. As a result, the ultimate amount of the final earnout payment to be
made by the Company is uncertain.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In connection with the earnout provisions of the merger agreement governing
the acquisition on January 27, 1998 of S/3/G, Inc. (S/3/G), the Company issued
137,501 shares of restricted DPRC common stock on March 1, 1999 to MGM
Holdings, Inc. (formerly S/3/G, Inc.). The issuance of such shares was exempt
from the registration requirements of the Securities Act of 1933 by virtue of
Section 4(2) thereunder.
In connection with the purchase price adjustment contained in the merger
agreement governing the acquisition on May 21, 1998 of EXi Corp (EXi), the
Company issued a total of 11,436 shares of restricted DPRC common stock on
April 30, 1999 to Richard Reynertson, Cletus Tauer, Eugene Cooley, and Richard
Daly. The issuance of such shares was exempt from the registration
requirements of the Securities Act of 1933 by virtue of Section 4(2)
thereunder.
In connection with the Company's acquisition of substantially all of the
assets and assumption of certain liabilities of Qualitech Systems, Inc.
(Qualitech) on April 20, 1999, the Company issued 74,428 shares of restricted
DPRC common stock to Qualitech Systems, Inc. and 4,436 shares of restricted
DPRC common stock to Qualitech Systems of South Florida, Inc. The issuance of
such shares was exempt from the registration requirements of the Securities
Act of 1933 by virtue of Section 4(2) thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
17
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.1 Amendment No. 4 to Revolving/Term Loan Agreement
Exhibit 10.2 Amended and Restated Employment Agreement Dated May 4,
1999 between the Company and David M. Connell
Exhibit 10.3 Employment Agreement Dated May 26, 1999 between the
Company and Robert J. Gallagher
Exhibit 10.4 Employment Agreement Dated May 4, 1999 between the Company
and Thomas A. Vadnais
Exhibit 10.5 Employment Agreement Dated March 29, 1999 between the
Company and Richard D. Tipton
Exhibit 10.6 Amended and Restated Employment Agreement Dated May 26, 1999
between the Company and Mary Ellen Weaver
Exhibit 10.7 Amended and Restated Employment Agreement Dated May 26, 1999
between the Company and Richard E. Earley
Exhibit 27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed the following reports on Form 8-K with the
Securities and Exchange Commission (SEC) during the third quarter of
fiscal 1999:
Current Report on Form 8-K dated March 1, 1999, and filed with the
SEC on March 1, 1999 reporting under Item 5 certain consolidated
financial statements and information of the Company and its
subsidiaries to present the combined operations of the Company and SPC
on a retroactive basis to reflect the Company's acquisition of SPC in a
merger accounted for as a pooling of interests for financial reporting
purposes.
Current Report on Form 8-K/A dated December 21, 1998, and filed
with the SEC on March 8, 1999 reporting under Items 2 and 7, certain
financial statements and information relating to the Company's
acquisition of Systems & Programming Consultants, Inc. (SPC) in a merger
accounted for as a pooling of interests for financial reporting
purposes.
18
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irvine, State of
California, on the 14th day of June, 1999.
DATA PROCESSING RESOURCES
CORPORATION
/s/ James A. Adams
By: _________________________________
James A. Adams
Chief Financial Officer
19
<PAGE>
EXHIBIT 10.1
AMENDMENT NO. 4 TO REVOLVING/TERM LOAN AGREEMENT
This Amendment No. 4 to Revolving/Term Loan Agreement (this "Amendment") is
entered into with reference to the Revolving/Term Loan Agreement dated as of
September 25, 1997 (as heretofore amended, the "Loan Agreement") among Data
Processing Resources Corporation ("Borrower"), the Lenders party thereto, and
Wells Fargo Bank, National Association, as Administrative Agent. Capitalized
terms used but not defined herein are used with the meanings set forth for those
terms in the Loan Agreement.
Borrower and the Administrative Agent, acting with the consent of the
Requisite Lenders pursuant to Section 11.2 of the Loan Agreement, agree as
----
follows:
1. Section 6.19. Section 6.19 of the Loan Agreement is amended, effective
------------ ----
as of April 30, 1999, by striking the figures "$3,000,000" in the last line
thereof and substituting therefor the figures "$10,000,000."
2. Waiver. Compliance with Section 6.19 of the Loan Agreement, as in
------ ----
effect prior to this Amendment, is hereby waived with respect to periods prior
to April 30, 1999.
3. Conditions Precedent. The effectiveness of this Amendment shall be
--------------------
conditioned upon:
(a) The receipt by the Administrative Agent of an amendment fee of
$20,000 for the account of the Lenders according to their Pro
Rata Share, which the Administrative Agent shall promptly
disburse to the Lenders; and
(b) The receipt by the Administrative Agent of all of the following,
each properly executed by an authorized officer of each party
thereto and dated as of the date hereof:
(i) Counterparts of this Amendment executed by all parties
hereto;
(ii) Written consent of the Requisite Lenders as required under
Section 11.2 of the Loan Agreement in the form of Exhibit A
---- ---------
to this Amendment; and
1
<PAGE>
(iii) Written consent of the Subsidiary Guarantors in the form
of Exhibit B to this Amendment.
---------
4. Representation and Warranty. Borrower represents and warrants that no
---------------------------
Default or Event of Default has occurred and remains continuing.
5. Confirmation. In all other respects, the terms of the Loan Agreement
------------
and the other Loan Documents are hereby confirmed.
IN WITNESS WHEREOF, Borrower and the Administrative Agent have executed
this Amendment as of May 14, 1999 by their duly authorized representatives.
DATA PROCESSING RESOURCES CORPORATION
By: /s/ James A. Adams 5/14/99
--------------------------------
James A. Adams
Chief Financial Officer
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Administrative Agent
By: /s/ Jessica A. Owen
--------------------------------
Jessica Owen
Vice President
2
<PAGE>
Exhibit A to Amendment
CONSENT OF LENDER
-----------------
Reference is hereby made to that certain Revolving Term Agreement dated as
of September 25, 1997 (as heretofore amended, the "Loan Agreement") among Data
Processing Resources Corporation ("Borrower"), the Lenders party thereto and
Wells Fargo Bank, National Association, as Administrative Agent. Capitalized
terms used but not defined herein are used with the meanings set forth for those
terms in the Loan Agreement.
The undersigned Lender hereby consents to the execution and delivery of
Amendment No. 4 to Revolving/Term Loan Agreement by the Administrative Agent on
its behalf, substantially in the form of the most recent draft presented to the
undersigned Lender.
Date: May 6, 1999
Union Bank of California, N.A.
-------------------------------
[Name of Institution]
By /s/ Jim Heim
---------------------------
Jim Heim, Vice President
-------------------------------
[Printed Name and Title]
<PAGE>
Exhibit A to Amendment
CONSENT OF LENDER
-----------------
Reference is hereby made to that certain Revolving Term Agreement dated as
of September 25, 1997 (as heretofore amended, the "Loan Agreement") among Data
Processing Resources Corporation ("Borrower"), the Lenders party thereto and
Wells Fargo Bank, National Association, as Administrative Agent. Capitalized
terms used but not defined herein are used with the meanings set forth for those
terms in the Loan Agreement.
The undersigned Lender hereby consents to the execution and delivery of
Amendment No. 4 to Revolving/Term Loan Agreement by the Administrative Agent on
its behalf, substantially in the form of the most recent draft presented to the
undersigned Lender.
Date: May ___, 1999
Fleet National Bank
------------------------------
[Name of Institution]
By /s/ Michael J. Bassick
--------------------------
Michael J. Bassick, AVP
------------------------------
[Printed Name and Title]
<PAGE>
Exhibit B to Amendment
CONSENT OF SUBSIDIARY GUARANTORS
--------------------------------
Reference is hereby made to that certain Revolving Term Loan Agreement
dated as of September 27, 1997 among Data Processing Resources Corporation
("Borrower"), the Lenders party thereto, and Wells Fargo Bank, National
Association, as Administrative Agent (as heretofore amended, the "Loan
Agreement").
Each of the undersigned Subsidiary Guarantors hereby consents to Amendment
No. 4 to the Loan Agreement in the form executed by Borrower and confirms that
the Subsidiary Guaranty and all Collateral Documents to which it is a party
remain in full force and effect.
Dated: May 14, 1999
"Guarantors"
LEARDATA INFO-SERVICES, INC. PROFESSIONAL SOFTWARE
CONSULTANTS, INC.
By: /s/ James Adams By: /s/ James Adams
----------------------------- ---------------------------
James Adams, CFO James Adams, CFO
----------------------------- ------------------------------
[Printed name and title] [Printed name and title]
COMPUTEC INTERNATIONAL EXi CORP.
STRATEGIC RESOURCES, INC.
By: /s/ James Adams By: /s/ James Adams
----------------------------- ---------------------------
James Adams, CFO James Adams, CFO
----------------------------- ------------------------------
[Printed name and title] [Printed name and title]
<PAGE>
EXHIBIT 10.2
DATA PROCESSING RESOURCES CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May 4,
1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and DAVID M. CONNELL ("Employee"), with reference to the
following:
A. DPRC and Employee are parties to that certain Employment Agreement
dated August 1, 1995, as amended pursuant to that letter of understanding dated
September 20, 1996 and that certain Addendum to Employment Agreement dated
September 2, 1997 (the "Prior Employment Agreement").
B. DPRC and Employee now wish to amend and restate the Prior Employment
Agreement as set forth in this Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set forth
below, DPRC and Employee agree as follows:
1. Employment and Term.
-------------------
1.1 DPRC agrees to continue to employ Employee, and Employee agrees to
continue to be employed by DPRC, on the terms and conditions described
below.
1.2 The Prior Employment Agreement commenced on August 1, 1995 for a term
of three (3) years. This Agreement shall be effective as of May 4,
1999 (the "Effective Date") and shall, unless sooner terminated
pursuant to the terms set forth below, terminate on the third
anniversary of the Effective Date. The period during which Employee
is employed by DPRC hereunder is referred to as the "Term." The Term
shall be automatically extended for a period of twelve (12) additional
months unless DPRC shall notify Employee in writing, not less than six
(6) months prior to the end of the initial term or any extension
thereof, of DPRC's intention that the Term not be extended.
2. Duties.
------
2.1 Employee shall serve as the Executive Vice President and as a Director
of DPRC during the Term and shall devote his full-time efforts to such
duties and responsibilities as may be assigned to him from time to
time by, and shall report to, the Chairman and Chief Executive Officer
of
<PAGE>
DPRC. Such duties shall include strategic planning, mergers and
acquisitions and integration related activities.
2.2 Employee shall serve without additional compensation in one or more
offices, as a member of any committee of the Board of Directors of
DPRC or of any direct or indirect subsidiary of DPRC.
2.3 DPRC agrees that (i) Employee shall be permitted to work on a full-
time basis from his home office or a DPRC office situated in or around
the San Fernando Valley area of Los Angeles County, (ii) DPRC will not
ask Employee to relocate his home office or his residence from
Camarillo, California, and (iii) that DPRC will reimburse Employee
for, or pay directly, reasonable costs in connection with Employee's
lodging, for not more than three (3) nights per work week, in the
immediate vicinity of the offices of DPRC's corporate headquarters in
the event that Employee chooses at his option to work at DPRC's
corporate offices instead of his home office or another DPRC office in
the San Fernando Valley area.
3. Compensation.
------------
3.1 As consideration for the performance of his duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and incorporated
herein by this reference (the "Compensation").
3.2 Employee understands and acknowledges that, except as otherwise set
forth in this Agreement, the Compensation will constitute the full and
exclusive consideration to be received by Employee for all services
performed by Employee in connection with DPRC's employment of
Employee, and for the performance of all his promises and obligations
under this Agreement.
3.3 Aside from the Compensation, DPRC may adopt, or continue in force,
benefit plans for the benefit of its employees or certain of its
employees which may include, but not be limited to, group life
insurance, medical insurance, etc. DPRC may terminate any or all
such plans at any time and may choose not to adopt any additional or
replacement plans. Employee's rights under any benefit plans now in
force or later adopted by DPRC shall be governed solely by the terms
of such plans; provided, however, that in no event shall Employee's
rights under any such benefit plans be less than those of any other
senior executive officer of DPRC.
<PAGE>
4. Duty to Devote Full Time and Avoid Conflict of Interest. During the Term,
-------------------------------------------------------
Employee shall devote his full-time efforts to his duties as an employee of
DPRC and shall not, directly or indirectly, engage or participate in any
activities which are in conflict with the best interests of DPRC.
5. Compliance with Rules and Regulations. During the Term, Employee shall
-------------------------------------
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may from
time to time be adopted or modified, so long as they are uniformly applied
to all employees.
6. Non-competition and Non-solicitation by Employee.
------------------------------------------------
6.1 During the Term, Employee shall not engage in any activity competitive
with or adverse to DPRC's business or welfare, whether alone, as a
partner, or as an officer, director, employee or shareholder of any
other corporation and shall not otherwise undertake planning for or
the organization of any business activity competitive with DPRC's
business or combine or conspire with other employees or
representatives of DPRC for the purpose of organizing any such
competitive business activity; provided, however, that Employee may
own up to one percent (1%) of the outstanding stock of any publicly
traded corporation.
6.2 It is understood that Employee will gain knowledge and make contacts
with DPRC's customers and clients (sometimes collectively referred to
in this Agreement as the "Clients" and individually as a "Client") and
prospective clients of DPRC in the course of his employment. In
recognition of this understanding, Employee agrees as follows:
(a) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or attempt to interfere
in any way with any existing relationships of DPRC with any
Client with whom DPRC has participated in at least one project or
placement within the two (2) years prior to the termination of
his employment, and shall not solicit, divert or take away or
attempt to solicit, divert or take away any business of DPRC that
is either under contract or in negotiation at the time of the
termination of his employment.
(b) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or compete in any way
with any proposal efforts of DPRC already in progress (that is, a
proposal sent to or being then currently developed for a specific
Client or potential client of DPRC) at the time of the
termination of his employment.
<PAGE>
(c) For a period of two (2) years following the termination of his
employment, Employee shall not make use, in a manner competitive
with the business of DPRC, of any of his personal relationships
or business contacts developed during his employment or prior to
his employment.
(d) For a period of two (2) years following the termination of his
employment, Employee shall not induce, solicit or influence or
attempt to induce, solicit or influence any person who is engaged
as an employee or otherwise by DPRC, to terminate his or her
employment or other engagement with DPRC.
7. Trade Secrets of DPRC. Employee acknowledges and understands that during
---------------------
his employment, he will have access to and will utilize and review
information which constitutes valuable, important and confidential trade
secrets, as that term is interpreted under the Uniform Trade Secrets Act
(California Civil Code Section 3426 et seq.) and/or confidential and
-- ---
proprietary material and information of or relating to the business of DPRC
necessary for the successful conduct of DPRC's business. This information
includes, but is not limited to: (a) listings of and data regarding the
Clients (past and current); (b) information regarding potential customers
and clients; (c) data relating to the personnel, supervisory structure and
procedures of the Clients; (d) information regarding specific computer
technician staffing needs of the Clients; (e) information as to the
identity, whereabouts, capabilities and availability of contractors in
DPRC's database; (f) information regarding bidding, billing and pricing
practices; (g) information regarding the nature and type of services
rendered to the Clients; and (h) other methodologies, computer programs,
employee and contractor resumes, employee databases, processes,
compilations of information, results of proposals, job notes, reports and
records (all of which information is sometimes referred to in this
Agreement as the "Secrets"). The foregoing notwithstanding, Secrets shall
not include information or data which is (i) in the public domain, (ii)
generally known in the information technology staffing services industry,
(iii) already known to Employee as of the date he began his employment with
DPRC, or (iv) rightfully disclosed to Employee outside of the scope of his
employment with DPRC by a third party not under a duty of confidentiality
to DPRC. Employee understands further that the Secrets have been and will
be accumulated by Employee and other personnel at DPRC at considerable
expense to DPRC (including but not limited to compensation paid to DPRC
personnel dealing with the Secrets and the Clients), and that DPRC has and
will continue to expend its resources in order to maintain actively and
vigorously the confidentiality of the Secrets, as such information is
extremely valuable to DPRC, and well worth the expense of enforcement and
preservation of such confidentiality. Accordingly, Employee agrees as
follows:
<PAGE>
(a) All of the Secrets shall be safeguarded and treated as
confidential by Employee.
(b) Any and all data, notes, letters, computer programs and data,
reports, telephone records and all other written documentation
relating to the business of DPRC (including but not limited to
the Secrets) that may be collected, compiled, written, reviewed
or conceived by Employee from or by reason of services performed
by Employee for DPRC shall become the absolute property of DPRC,
and Employee shall not assert or establish a claim for any
statutory or common law right or any other possessory or
proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest confidence and shall
not (i) disclose any Secrets to any person, corporation, firm, or
other entity, either during the Term or thereafter, or (ii) use
any Secrets in Employee's subsequent business or employment
without the prior express written authorization of DPRC;
provided, however, that Employee may disclose Secrets to the
extent required to do so by a subpoena lawfully issued in a
judicial proceeding or arbitration.
(d) Employee shall not otherwise commit any act which shall
compromise the confidentiality of any Secrets, including but not
limited to making a copy of such property (whether electronic,
paper or otherwise) without the prior express written
authorization of DPRC.
8. Confidential Information of Clients. All ideas, concepts, information and
-----------------------------------
written material disclosed to Employee by DPRC, or acquired from any
Client, and all financial, accounting, statistical, personnel, and business
data and plans of the Clients, are and shall remain the sole and exclusive
property and proprietary information of DPRC, or such Client, as the case
may be, and are disclosed in confidence by DPRC or permitted to be acquired
from the Clients in reliance on Employee's agreement to maintain them in
confidence and not to use or disclose them to any other person except in
furtherance of DPRC's business.
9. Return of Information. At the time of the termination of his employment,
---------------------
Employee shall deliver promptly to DPRC all notes, books, electronic data
(regardless of storage media), correspondence and other written or
graphical records (including all copies thereof) in Employee's possession
or under
<PAGE>
Employee's control relating to any business, work, Clients or any other
aspect of DPRC, whether or not containing any Secrets, including but not
limited to each original and all copies of all or any part thereof.
10. Cooperation. Both during the Term and thereafter, Employee shall sign all
-----------
papers, give evidence and testimony and, at DPRC's expense, perform all
acts which, in DPRC's opinion, are necessary, proper or expedient to carry
out and fulfill the purposes and intents of this Agreement.
11. Remedies; Injunctive Relief. Employee acknowledges and agrees that, in the
---------------------------
event of a breach or threatened breach by Employee of any of the provisions
of this Agreement, DPRC shall be entitled to a preliminary and a permanent
injunction in order to prevent or restrain any such breach by Employee or
by Employee's partners, agents, representatives, servants, employers,
employees, and/or any and all persons directly or indirectly acting for or
with Employee, in addition to and not in limitation of any other rights,
remedies, or damages available to DPRC at law or in equity.
12. Termination of Employment.
-------------------------
12.1 DPRC may terminate Employee's employment at any time with "Cause" (as
defined below). In the event that DPRC terminates Employee's
employment with Cause, DPRC shall be obligated only to pay the base
salary of the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as
otherwise provided by this Agreement, DPRC shall have no further
obligation to Employee under this Agreement by way of compensation or
otherwise. Notwithstanding the foregoing, to the extent the grounds
for any proposed termination with Cause are capable of being cured or
remedied by Employee, DPRC shall not terminate Employee with Cause
unless the Chief Executive Officer of DPRC has first counseled
Employee as to how he could effect such cure or remedy and Employee
is given at least thirty (30) days to do so. A determination of
whether Employee has satisfactorily effected such cure or remedy
shall be promptly made by a majority of the disinterested directors
of the Board of Directors at the end of the period provided to
Employee for such cure or remedy and such determination shall be
final.
12.2 DPRC may terminate Employee's employment at any time without Cause
(as defined below) by giving Employee thirty (30) days' advance
written notice of such termination. Employee may resign for Good
Reason (as defined below) by giving DPRC thirty (30) days' advance
written notice of such resignation. In the event that DPRC terminates
Employee without Cause, or Employee resigns for Good Reason, DPRC
shall pay
<PAGE>
to Employee the base salary of the Compensation and provide the same
health and life insurance benefits through the effective date of such
termination or resignation and, thereafter, until the earlier to
occur of (i) the expiration of eighteen (18) months after the
effective date of such termination, (ii) the date upon which Employee
becomes employed on a full-time basis (including but not limited to
self-employment, but only if Employee holds himself out to the public
as being a self-employed consultant or other businessman), or (iii)
the date upon which Employee violates any of Sections 6 through 10,
inclusive. In addition, DPRC shall pay Employee, at such time
following completion of the fiscal year-end audit when all other
senior executive bonuses are paid, the pro-rated Incentive Bonus
described in such Exhibit "A" to which Employee was entitled during
his employment (which proration shall be based on a fraction, the
numerator of which is the number of calendar days during the fiscal
year during which Employee was employed prior to the effective date
of such termination or resignation and the denominator of which is
365).
12.3 Employee may resign without Good Reason at any time by giving DPRC
forty-five (45) days' advance written notice of such resignation. In
the event that Employee resigns without Good Reason, DPRC shall be
obligated only to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise agreed in
writing or as otherwise provided by this Agreement, DPRC shall have
no further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if Employee
becomes Disabled (as defined below) by giving Employee thirty (30)
days' advance written notice of such termination. In the event that
DPRC terminates Employee's because Employee has become Disabled, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective
date of such termination and, thereafter, until the earlier to occur
of (i) the expiration of eighteen (18) calendar months after the
effective date of such termination of employment, (ii) the date upon
which Employee becomes employed on a full-time basis (including but
not limited to self-employment, but only if Employee holds himself
out to the public as being a self-employed consultant or other
businessman), or (iii) the date upon which Employee violates any of
Sections 6 through 10, inclusive. In addition, DPRC shall pay
Employee, at such time following completion of the fiscal year-end
audit when all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which Employee was
entitled during his employment
<PAGE>
(which proration shall be based on a fraction, the numerator of which
is the number of calendar days during the fiscal year during which
Employee was employed prior to the effective date of such termination
and the denominator of which is 365).
12.5 Employee's agreements, duties and obligations under Sections 6
through 10, inclusive, shall survive the termination of this
Agreement and shall continue after any termination of Employee's
employment pursuant to Sections 12.1, 12.2, 12.3 or 12.4 of this
Agreement.
12.6 This Agreement will terminate immediately upon Employee's death. In
such event, DPRC shall pay to his estate (a) the base salary of the
Compensation through the date of Employee's death and, thereafter,
until the expiration of eighteen (18) calendar months after the date
of Employee's death, and, (b) at such time following completion of
the fiscal year-end audit when all other senior executive bonuses are
paid, the pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to Employee's death and the denominator of which is
365), and DPRC shall have no further obligation to Employee's estate
under this Agreement by way of compensation or otherwise.
12.7 As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Cause" shall mean an action or actions by Employee during his
employment (including but not limited to inactions) which
constitute either (i) gross insubordination, gross negligence,
unethical or criminal behavior constituting a felony under
federal or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer and/or
director of DPRC, or (ii) a violation of any of Sections 4
through 10, inclusive.
(b) "Disabled" shall mean Employee's ability to perform his duties
under this Agreement is impaired, due to sickness, physical or
mental impairment or injury, by more than twenty-five (25%) for
a period of six (6) consecutive months or for nine (9) months in
any consecutive twelve (12) month period. In the event Employee
disputes DPRC's determination that he is Disabled, Employee
shall give written notice of such dispute to DPRC during the
thirty (30) day notice period prior to the proposed
<PAGE>
effective date of such termination, and Employee and DPRC shall
thereupon each select, within ten (10) days of such notice from
Employee, a physician to evaluate whether Employee is Disabled.
Such physicians shall complete their evaluation and report to
the Board of Directors within ten (10) days. If such physicians
do not agree as to whether Employee is Disabled, they shall
promptly select a third physician to further evaluate Employee,
whose conclusion on such matter shall be rendered within ten
(10) days of his or her selection and shall be final and binding
on Employee and DPRC.
(c) "Good Reason" shall mean any of the following:
(i) (A) a demotion or assignment to Employee of duties
inconsistent with his position, duties, responsibilities
or status with DPRC, (B) a change in Employee's titles
adverse to Employee, or (C) any removal of Employee from
or any failure to reelect Employee to the office of
Executive Vice President of DPRC, except, in any such
case, with Employee's consent or in connection with the
termination of his employment pursuant to Section 12.1
(with Cause), 12.3 (resignation without Good Reason), 12.4
(disability), 12.6 (death) or retirement; provided,
however, that Good Reason shall not include the assignment
to Employee of any duties or responsibilities of one or
more management positions within his competence to the
extent that any such position is not filled at any time
and it is necessary to perform the duties and
responsibilities of such position pending the hiring of a
person to hold such position, and provided that DPRC is
actively seeking to fill such position during the period
of such assignment;
(ii) a purported reduction by DPRC in the Compensation in
effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or any
failure by DPRC to reimburse Employee or provide any
material benefits set forth in Exhibit A;
(iii) any failure by DPRC to continue in effect any benefit plan
or arrangement (including, without limitation, DPRC's
incentive bonus plan, profit sharing plan, stock option
plans, medical insurance plans, disability insurance
plans, life insurance plans or vacation pay plans, with
such
<PAGE>
generally applicable amendments thereto as may be approved
from time to time in good faith by DPRC's Board of
Directors) in which Employee is participating or other
plans providing Employee with substantially similar
benefits (each, a "Benefit Plan"), or any action by DPRC
which would materially and adversely affect Employee's
participation in or materially reduce Employee's benefits
under any Benefit Plan;
(iv) any failure by DPRC to obtain the assumption of this
Agreement by any successor or assign of DPRC, if such
successor or assign asserts the position that it is not
bound by the provisions hereof; or
(v) any failure by DPRC to comply with any material provision
of this Agreement;
provided, however, that no such action shall be considered to
constitute Good Reason unless and until Employee has given DPRC
written notice of, and thirty (30) days' opportunity to cure or
remedy the specific action which Employee alleges would
constitute Good Reason if not so cured or remedied and DPRC has
failed to effect such cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall constitute
the exclusive rights and remedies available to Employee relating to
or arising from the termination of his employment, including claims
for breach of contract or in tort; provided, however, that Employee
shall be entitled to pursue any and all available legal remedies
based on any claim that such termination constituted a violation of
applicable federal or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by DPRC,
whether oral or written, express or implied, formal or informal, are
intended, nor shall they be construed to limit the right or ability
of DPRC to terminate Employee's employment or the right or ability
of Employee to resign as set forth above. Except as otherwise agreed
in writing or as otherwise provided by this Agreement, upon
termination of Employee's employment, neither DPRC nor Employee
shall have any further obligation to each other by way of
compensation or otherwise.
12.10 DPRC will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of DPRC, by
agreement in form and
<PAGE>
substance reasonably satisfactory to Employee, expressly, absolutely
and unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that DPRC would be required
to perform this Agreement if no such succession or assignment had
taken place. In any such event, the term "DPRC" as used in this
Agreement shall mean any such successor or assign which executes and
delivers the agreement provided for in the immediately preceding
sentence or which otherwise becomes bound by the terms and
provisions of this Agreement by operation of law.
12.11 Employee shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other
employment or otherwise. Except as expressly provided herein, no
payment or benefit provided for under this Agreement shall be
reduced by any compensation earned by Employee as the result of
employment by another employer after the date of termination with
DPRC. Except as expressly provided herein, the provisions of this
Agreement, and any payment or benefit provided for hereunder, shall
not reduce any amounts otherwise payable, or in any way diminish
Employee's existing rights, or rights which would accrue solely as a
result of the passage of time, under any DPRC Benefit Plan,
employment agreement or other contract, plan or arrangement.
13. Miscellaneous Provisions.
------------------------
13.1 In the event that any of the provisions of this Agreement shall be
held to be invalid or unenforceable, then all other provisions shall
nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included in this
Agreement. In the event that any provision relating to the time
period of any restriction imposed by this Agreement shall be
declared by a court of competent jurisdiction to exceed the maximum
time period which such court deems reasonable and enforceable, then
the time period of restriction deemed reasonable and enforceable by
the court shall become and shall thereafter be the maximum time
period. In the event that any of the provisions of this Agreement
shall be determined to cause a disallowance of any "pooling of
interests" accounting treatment for any merger, acquisition or
consolidation of DPRC with another entity, such provisions shall be
deemed to be deleted and of no force and effect and all other
provisions shall nevertheless continue to be valid and enforceable
and read as though the deleted provisions had not been included in
this Agreement.
13.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties hereto.
<PAGE>
13.3 This Agreement shall be construed and enforced according to the laws
of the State of California, excluding its choice of law rules.
13.4 This Agreement supersedes all previous correspondence, promises,
representations, and agreements, if any, either written or oral,
between DPRC and Employee. No provision of this Agreement may be
modified except by a writing signed by Employee and by the Chief
Executive Officer of DPRC (or by such other person as may be
expressly authorized to sign such writing by the Board of Directors
of DPRC).
13.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement
shall be in writing and shall be personally served or deposited in
the United States mail, registered or certified, return receipt
requested, postage prepaid, addressed (i) in the case of notices to
DPRC, to the Chief Executive Officer of DPRC at DPRC's headquarters
office at such time, and (ii) in the case of notices to Employee, to
Employee's home address as set forth on the employment records of
DPRC, or to such other address as such party shall have specified
most recently by written notice. Notices shall be deemed given on
the date of service if personally served. Notices mailed as provided
herein shall be deemed given on the third business day following the
date so mailed.
13.6 Should any party institute any action or proceeding to enforce this
Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement or of any provision hereof, or for
a declaration of rights hereunder, the prevailing party in any such
action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys',
accountants' and experts' fees, incurred by the prevailing party in
connection with such action or proceeding.
14. Acknowledgment by Employee. Employee (i) has carefully read and considered
--------------------------
the provisions of this Agreement, (ii) has had an opportunity to review the
terms of this Agreement with legal counsel of his choosing, (iii) fully
understands the extent and impact of the terms and provisions of this
Agreement, and (iv) has executed this Agreement voluntarily.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By:___________________________ ______________________
Mary Ellen Weaver David M. Connell
Chief Executive Officer
<PAGE>
EXHIBIT A
COMPENSATION OF DAVID M. CONNELL
--------------------------------
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY: Employee's base salary shall be $255,000 per
------------
year, paid in at least bi-weekly installments. Employee's
base annual salary shall be reviewed and adjusted no less
frequently than once per year. In no event, and under no
circumstances, shall Employee's annual salary be reduced
below the most recent annual salary.
2. VACATION: During the Term, Employee shall be entitled to five (5)
---------
weeks of paid vacation time per calendar year (plus such
other time as may be permitted by the Board); provided,
however, that any such vacation time, if not used, will be
subject to DPRC's limitations on carrying forward unused
vacation time, pursuant to which Employee's accrued vacation
time may not exceed six (6) weeks at any time; and, provided
further, that Employee shall use his best efforts to
coordinate with the Chief Executive Officer of DPRC the
dates upon which he uses his vacation so as to minimize the
negative impact upon DPRC occasioned by Employee's absence.
Employee shall not be entitled to take in excess of four (4)
weeks vacation at any one time, except by the written
consent of the Chief Executive Officer of DPRC, or upon
request of DPRC in connection with Employee's leave of
absence for family, medical or other reasons, as permitted
by law.
3. OTHER
------
BENEFITS:
---------
During the Term, Employee shall be entitled to participate
in and receive benefits under all profit-sharing plans,
pension plans, group medical plans and other benefit plans
for the payment of additional compensation or benefits to
employees of DPRC that DPRC maintains for senior executive
employees. In the event employee is terminated without Cause
or due to Disability, or resigns for Good Reason, Employee
shall be entitled to continuation of health and life
insurance coverage for the period of time set forth in
Paragraphs 12.2 and 12.4 of this Agreement
<PAGE>
(the "DPRC Insurance Coverage Period"). During the DPRC
Insurance Coverage Period, DPRC shall pay the employer
portion of the cost of such coverage at the same levels
offered to its senior executive employees, and Employee
shall pay the employee portion of the cost of such coverage
at the same level paid by its senior executive employees.
Unless Employee was terminated for Cause, DPRC shall
continue, following the DPRC Insurance Coverage Period, to
offer group medical and life insurance at the same rates and
levels of coverage as are offered to its then-current senior
executive employees, until such time as Employee reaches age
65 (the "Employee Insurance Coverage Period"). During the
Employee Insurance Coverage Period, if Employee accepts
insurance coverage from DPRC, Employee shall pay the full
cost of the premiums for such coverage. During either the
DPRC Insurance Coverage Period or the Employee Insurance
Coverage Period, Employee shall have the option of choosing
Preferred Provider Organization, Exclusive Provider
Organization, Health Maintenance Organization or such other
types of plans or coverages as are available to DPRC's then-
current senior executive employees.
4. AUTOMOBILE
----------
ALLOWANCE: DPRC to pay Employee's automobile lease monthly payments
---------
of not more than $1,200, as well as all gasoline, insurance
premiums, registration fees and repair and maintenance costs
of such automobile. Employee shall be permitted to exchange
his leased vehicle for a new one of equal or comparable
value to that of the then currently leased vehicle to be
replaced, similarly equipped, one time during the Term.
5. BUSINESS
--------
EXPENDITURES: Employee may be authorized to incur reasonable expenses for
------------
promoting and conducting the business of DPRC, including but
not limited to expenditures for entertainment and travel, in
such amounts and at such times as shall be determined and
approved by the Chief Executive Officer of DPRC. DPRC shall
reimburse Employee monthly for all such approved business
expenses upon presentation of reasonable documentation
establishing the amount, date, place and essential character
of the expenditures.
<PAGE>
6. INCENTIVE
---------
BONUS: Employee's incentive bonus for each fiscal year shall
-----
provide for a maximum bonus of up to 200% of his base salary
for such year and shall be subject to such terms and
conditions as shall be determined in good faith by the Board
of Directors, with the recommendation of and in consultation
with the Compensation Committee of the Board of Directors.
The incentive bonus may be based on financially oriented
components or upon Employee's individual accomplishments or
both. At the request of Employee, within ten (10) business
days after the commencement of each fiscal quarter, DPRC
shall advance to Employee up to one-eighteenth (1/18th) of
the maximum bonus payable by DPRC to Employee hereunder. The
incentive bonus earned for a fiscal year of DPRC (less the
aggregate amount of all advances made by DPRC to Employee
with respect to such fiscal year) shall be paid not later
than thirty (30) calendar days following the review and
approval by the Board of Directors of DPRC of the final
financial statement results of the audit for said fiscal
year by DPRC's independent auditors. In the event that the
aggregate amount of advances made by DPRC to Employee
hereunder during any fiscal year exceeds the amount of the
incentive bonus earned by Employee for such fiscal year,
Employee, within thirty (30) calendar days of the
determination of such amount, shall pay such excess to DPRC.
The current incentive bonus plan is based on DPRC reaching
its internal target levels of budgeted operating income for
the fiscal year, as it may be amended as a result of
acquisitions for the year included (the "Target OI"). A
total of 50% of Employee's base salary shall be paid if the
Target OI is achieved by DPRC. For each 5% above Target OI
achieved by DPRC, Employee shall receive an additional 10%
of base salary up to the maximum 200% of base salary.
7. INDEMNI-
-------
FICATION: DPRC shall enter into a directors and officers
--------
Indemnification Agreement with Employee pursuant to which
DPRC will be required to indemnify Employee against personal
liability for acts of DPRC to the maximum extent permitted
by law.
<PAGE>
8. STOCK
-----
OPTIONS: Notwithstanding anything to the contrary in any Stock Option
-------
Agreement or Incentive Stock Agreement previously entered
into by DPRC and Employee, DPRC hereby reaffirms its
obligations under and pursuant to the "Change of Control"
provisions set forth in Paragraph 13 of the Prior Employment
Agreement. Specifically, upon the occurrence of a "change
of control" during the Term, any and all stock options
granted to Employee under DPRC's stock option plans shall,
whether or not Employee is terminated as a result of such
change of control, become immediately vested and exercisable
for a period not to exceed the lesser of (a) two (2) years,
or (b) the date on which such stock options would otherwise
have terminated (other than by reason of the termination of
the Employment). Notwithstanding the definition of "change
of control" or the two-year time limitation on accelerated
vesting set forth in the Prior Employment Agreement, for the
purpose of the amendment to all options previously granted
to Employee, as well as all future options, such stock
options shall vest in full following a "change of control"
during the Term and the term "change of control" shall mean
(i) any merger or consolidation where DPRC is not the
continuing or surviving corporation or pursuant to which all
or substantially all of the shares of DPRC's Common Stock
are converted into cash, other property or securities of
another corporation, other than, in either case, a merger or
consolidation in which the shares of DPRC's Common Stock
outstanding immediately prior to such merger or
consolidation represent or are converted into securities
representing more than 50% of the voting power of the
surviving corporation in such merger or consolidation or the
parent of such corporation, (ii) any sale, lease, exchange
or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of
DPRC, (iii) the approval by the shareholders of DPRC of any
plan or proposal for the liquidation or dissolution of DPRC,
(iv) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) shall become the beneficial
owner (within the meaning of
<PAGE>
Rule 13d-3 under the Exchange Act) of 35% or more of DPRC's
outstanding Common Stock after the date hereof, or (v) there
shall be any change of control of a nature which would be
required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Exchange Act or
any successor regulation of substantially similar import,
regardless of whether DPRC is subject to such reporting
requirement at such time.
In addition, in the event Employee is terminated without
Cause, as defined in Paragraph 12.7 of this Agreement, the
members of the Board of Directors who are not directly
involved in terminating Employee shall consider accelerating
vesting of any unvested options held by Employee based upon
all of the facts and circumstances surrounding the
termination, including Employee's performance and tenure
with DPRC; provided, however, that the disinterested
Directors involved in such determination shall be under no
obligation to accelerate vesting of options and shall
specifically not do so if such acceleration would cause a
disallowance of "pooling of interests" accounting in any
DPRC merger transactions.
9. ESTATE
------
PLANNING:
---------
DPRC will reimburse Employee for all reasonable attorney's
fees, in an amount not to exceed $5,000 per calendar year,
incurred in connection with creating, reviewing and/or
revising Employee's will and estate plan.
<PAGE>
EXHIBIT 10.3
DATA PROCESSING RESOURCES CORPORATION
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May 26,
1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and ROBERT J. GALLAGHER ("Employee"), with reference to
the following:
A. Employee and a subsidiary of DPRC are parties to that certain
Employment Agreement dated June 16, 1998 (the "Prior Employment Agreement").
B. DPRC and Employee now wish to terminate the Prior Employment Agreement,
and enter into a new agreement directly between DPRC and Employee on the terms
as set forth in this Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set forth
below, DPRC and Employee agree as follows:
1. EMPLOYMENT AND TERM.
-------------------
1.1 DPRC agrees to continue to employ Employee, and Employee agrees to
continue to be employed by DPRC, on the terms and conditions described
below.
1.2 The Prior Employment Agreement commenced on December 21, 1998 for a
term of two years. This Agreement shall be effective, and the Prior
Employment Agreement shall be terminated, as of the date first set
forth above (the "Effective Date"). This Agreement shall, unless
sooner terminated pursuant to the terms set forth below, terminate on
the second anniversary of the Effective Date. The period during which
Employee is employed by DPRC hereunder is referred to as the "Term."
The Term shall be automatically extended for a period of twelve (12)
additional months unless DPRC shall notify Employee in writing, not
less than six (6) months prior to the end of the initial term or any
extension thereof, of DPRC's intention that the Term not be extended.
2. DUTIES.
------
2.1 Employee shall serve as the Vice President, Operations of DPRC during
the Term and shall devote his full-time efforts to such duties and
responsibilities as may be assigned to him from time to time by, and
shall report to, the President and Chief Operating Officer of DPRC.
1
<PAGE>
3. COMPENSATION.
------------
3.1 As consideration for the performance of his duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and incorporated
herein by this reference (the "Compensation").
3.2 Employee understands and acknowledges that, except as otherwise set
forth in this Agreement, the Compensation will constitute the full and
exclusive consideration to be received by Employee for all services
performed by Employee in connection with DPRC's employment of
Employee, and for the performance of all his promises and obligations
under this Agreement.
3.3 Aside from the Compensation, DPRC may adopt, or continue in force,
benefit plans for the benefit of its employees or certain of its
employees which may include, but not be limited to, group life
insurance, medical insurance, etc. DPRC may terminate any or all
such plans at any time and may choose not to adopt any additional or
replacement plans. Employee's rights under any benefit plans now in
force or later adopted by DPRC shall be governed solely by the terms
of such plans; provided, however, that in no event shall Employee's
rights under any such benefit plans be less than those of any other
senior executive officer of DPRC.
4. DUTY TO DEVOTE FULL TIME AND AVOID CONFLICT OF INTEREST. During the Term,
-------------------------------------------------------
Employee shall devote his full-time efforts to his duties as an employee of
DPRC and shall not, directly or indirectly, engage or participate in any
activities which are in conflict with the best interests of DPRC.
5. COMPLIANCE WITH RULES AND REGULATIONS. During the Term, Employee shall
-------------------------------------
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may from
time to time be adopted or modified, so long as they are uniformly applied
to all employees.
6. NON-COMPETITION AND NON-SOLICITATION BY EMPLOYEE.
------------------------------------------------
6.1 During the Term, Employee shall not engage in any activity competitive
with or adverse to DPRC's business or welfare, whether alone, as a
partner, or as an officer, director, employee or shareholder of any
other corporation and shall not otherwise undertake planning for or
the organization of any business activity competitive with DPRC's
business or combine or conspire with other employees or
representatives of DPRC for the purpose of organizing any such
competitive business activity; provided, however, that Employee may
own up to one percent
2
<PAGE>
(1%) of the outstanding stock of any publicly traded corporation.
6.2 It is understood that Employee will gain knowledge and make contacts
with DPRC's customers and clients (sometimes collectively referred to
in this Agreement as the "Clients" and individually as a "Client") and
prospective clients of DPRC in the course of his employment. In
recognition of this understanding, Employee agrees as follows:
(a) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or attempt to interfere
in any way with any existing relationships of DPRC with any
Client with whom DPRC has participated in at least one project or
placement within the two (2) years prior to the termination of
his employment, and shall not solicit, divert or take away or
attempt to solicit, divert or take away any business of DPRC that
is either under contract or in negotiation at the time of the
termination of his employment.
(b) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or compete in any way
with any proposal efforts of DPRC already in progress (that is, a
proposal sent to or being then currently developed for a specific
Client or potential client of DPRC) at the time of the
termination of his employment.
(c) For a period of two (2) years following the termination of his
employment, Employee shall not make use, in a manner competitive
with the business of DPRC, of any of his personal relationships
or business contacts developed during his employment or prior to
his employment.
(d) For a period of two (2) years following the termination of his
employment, Employee shall not induce, solicit or influence or
attempt to induce, solicit or influence any person who is engaged
as an employee or otherwise by DPRC, to terminate his or her
employment or other engagement with DPRC.
7. TRADE SECRETS OF DPRC. Employee acknowledges and understands that during
---------------------
his employment, he will have access to and will utilize and review
information which constitutes valuable, important and confidential trade
secrets, as that term is interpreted under the Uniform Trade Secrets Act
(California Civil Code Section 3426 et seq.) and/or confidential and
-- ---
proprietary material and information of or relating to the business of DPRC
necessary for the successful conduct of DPRC's business. This information
includes, but is not limited to:
3
<PAGE>
(a) listings of and data regarding the Clients (past and current); (b)
information regarding potential customers and clients; (c) data relating to
the personnel, supervisory structure and procedures of the Clients; (d)
information regarding specific computer technician staffing needs of the
Clients; (e) information as to the identity, whereabouts, capabilities and
availability of contractors in DPRC's database; (f) information regarding
bidding, billing and pricing practices; (g) information regarding the
nature and type of services rendered to the Clients; and (h) other
methodologies, computer programs, employee and contractor resumes, employee
databases, processes, compilations of information, results of proposals,
job notes, reports and records (all of which information is sometimes
referred to in this Agreement as the "Secrets"). The foregoing
notwithstanding, Secrets shall not include information or data which is (i)
in the public domain, (ii) generally known in the information technology
staffing services industry, (iii) already known to Employee as of the date
he began his employment with DPRC, or (iv) rightfully disclosed to Employee
outside of the scope of his employment with DPRC by a third party not under
a duty of confidentiality to DPRC. Employee understands further that the
Secrets have been and will be accumulated by Employee and other personnel
at DPRC at considerable expense to DPRC (including but not limited to
compensation paid to DPRC personnel dealing with the Secrets and the
Clients), and that DPRC has and will continue to expend its resources in
order to maintain actively and vigorously the confidentiality of the
Secrets, as such information is extremely valuable to DPRC, and well worth
the expense of enforcement and preservation of such confidentiality.
Accordingly, Employee agrees as follows:
(a) All of the Secrets shall be safeguarded and treated as
confidential by Employee.
(b) Any and all data, notes, letters, computer programs and data,
reports, telephone records and all other written documentation
relating to the business of DPRC (including but not limited to
the Secrets) that may be collected, compiled, written, reviewed
or conceived by Employee from or by reason of services performed
by Employee for DPRC shall become the absolute property of DPRC,
and Employee shall not assert or establish a claim for any
statutory or common law right or any other possessory or
proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest confidence and shall
not (i) disclose any Secrets to any person, corporation, firm, or
other entity, either during the Term or thereafter, or (ii) use
any Secrets in Employee's subsequent business or employment
without the prior express written authorization of DPRC;
provided, however, that Employee may disclose Secrets to the
4
<PAGE>
extent required to do so by a subpoena lawfully issued in a
judicial proceeding or arbitration.
(d) Employee shall not otherwise commit any act which shall
compromise the confidentiality of any Secrets, including but not
limited to making a copy of such property (whether electronic,
paper or otherwise) without the prior express written
authorization of DPRC.
8. CONFIDENTIAL INFORMATION OF CLIENTS. All ideas, concepts, information and
-----------------------------------
written material disclosed to Employee by DPRC, or acquired from any
Client, and all financial, accounting, statistical, personnel, and business
data and plans of the Clients, are and shall remain the sole and exclusive
property and proprietary information of DPRC, or such Client, as the case
may be, and are disclosed in confidence by DPRC or permitted to be acquired
from the Clients in reliance on Employee's agreement to maintain them in
confidence and not to use or disclose them to any other person except in
furtherance of DPRC's business.
9. RETURN OF INFORMATION. At the time of the termination of his employment,
---------------------
Employee shall deliver promptly to DPRC all notes, books, electronic data
(regardless of storage media), correspondence and other written or
graphical records (including all copies thereof) in Employee's possession
or under Employee's control relating to any business, work, Clients or any
other aspect of DPRC, whether or not containing any Secrets, including but
not limited to each original and all copies of all or any part thereof.
10. COOPERATION. Both during the Term and thereafter, Employee shall sign
-----------
all papers, give evidence and testimony and, at DPRC's expense, perform all
acts which, in DPRC's opinion, are necessary, proper or expedient to carry
out and fulfill the purposes and intents of this Agreement.
11. REMEDIES; INJUNCTIVE RELIEF. Employee acknowledges and agrees that, in the
---------------------------
event of a breach or threatened breach by Employee of any of the provisions
of this Agreement, DPRC shall be entitled to a preliminary and a permanent
injunction in order to prevent or restrain any such breach by Employee or
by Employee's partners, agents, representatives, servants, employers,
employees, and/or any and all persons directly or indirectly acting for or
with Employee, in addition to and not in limitation of any other rights,
remedies, or damages available to DPRC at law or in equity.
5
<PAGE>
12. TERMINATION OF EMPLOYMENT.
-------------------------
12.1 DPRC may terminate Employee's employment at any time with "Cause" (as
defined below). In the event that DPRC terminates Employee's
employment with Cause, DPRC shall be obligated only to pay the base
salary of the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as otherwise
provided by this Agreement, DPRC shall have no further obligation to
Employee under this Agreement by way of compensation or otherwise.
Notwithstanding the foregoing, to the extent the grounds for any
proposed termination with Cause are capable of being cured or remedied
by Employee, DPRC shall not terminate Employee with Cause unless the
Chief Executive Officer of DPRC has first counseled Employee as to how
he could effect such cure or remedy and Employee is given at least
thirty (30) days to do so. A determination of whether Employee has
satisfactorily effected such cure or remedy shall be promptly made by
a majority of the disinterested directors of the Board of Directors at
the end of the period provided to Employee for such cure or remedy and
such determination shall be final.
12.2 DPRC may terminate Employee's employment at any time without Cause
(as defined below) by giving Employee thirty (30) days' advance
written notice of such termination. Employee may resign for Good
Reason (as defined below) by giving DPRC thirty (30) days' advance
written notice of such resignation. In the event that DPRC terminates
Employee without Cause, or Employee resigns for Good Reason, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective date
of such termination or resignation and, thereafter, until the earlier
to occur of (i) the expiration of twelve (12) months after the
effective date of such termination, (ii) the date upon which Employee
becomes employed on a full-time basis (including but not limited to
self-employment, but only if Employee holds himself out to the public
as being a self-employed consultant or other businessman), or (iii)
the date upon which Employee violates any of Sections 6 through 10,
inclusive. In addition, DPRC shall pay Employee, at such time
following completion of the fiscal year-end audit when all other
senior executive bonuses are paid, the pro-rated Incentive Bonus
described in such Exhibit "A" to which Employee was entitled during
his employment (which proration shall be based on a fraction, the
numerator of which is the number of calendar days during the fiscal
year during which Employee was employed prior to the effective date of
such termination or resignation and the denominator of which is 365).
If DPRC's medical and/or life insurance plans do not allow Employee's
continued participation in such plan or plans during
6
<PAGE>
the period described above, then DPRC shall pay to Employee, in
monthly installments, from the date on which Employee's participation
in such medical and/or life insurance, as applicable, is prohibited
for the remainder of the time period described in the third sentence
of this Section 12.2, the monthly premium or premiums which had been
payable by DPRC with respect to Employee for such discontinued medical
and/or life insurance, as applicable.
12.3 Employee may resign without Good Reason at any time by giving DPRC
forty-five (45) days' advance written notice of such resignation. In
the event that Employee resigns without Good Reason, DPRC shall be
obligated only to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise agreed in
writing or as otherwise provided by this Agreement, DPRC shall have no
further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if Employee
becomes Disabled (as defined below) by giving Employee thirty (30)
days' advance written notice of such termination. In the event that
DPRC terminates Employee's because Employee has become Disabled, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective date
of such termination and, thereafter, until the earlier to occur of (i)
the expiration of twelve (12) calendar months after the effective date
of such termination of employment, (ii) the date upon which Employee
becomes employed on a full-time basis (including but not limited to
self-employment, but only if Employee holds himself out to the public
as being a self-employed consultant or other businessman), or (iii)
the date upon which Employee violates any of Sections 6 through 10,
inclusive. In addition, DPRC shall pay Employee, at such time
following completion of the fiscal year-end audit when all other
senior executive bonuses are paid, the pro-rated Incentive Bonus
described in such Exhibit "A" to which Employee was entitled during
his employment (which proration shall be based on a fraction, the
numerator of which is the number of calendar days during the fiscal
year during which Employee was employed prior to the effective date of
such termination and the denominator of which is 365). If DPRC's
medical and/or life insurance plans do not allow Employee's continued
participation in such plan or plans during the period described above,
then DPRC shall pay to Employee, in monthly installments, from the
date on which Employee's participation in such medical and/or life
insurance, as applicable, is prohibited for the remainder of the time
period described in the second sentence of this Section 12.4, the
monthly premium or premiums which
7
<PAGE>
had been payable by DPRC with respect to Employee for such
discontinued medical and/or life insurance, as applicable.
12.5 Employee's agreements, duties and obligations under Sections 6
through 10, inclusive, shall survive the termination of this Agreement
and shall continue after any termination of Employee's employment
pursuant to Sections 12.1, 12.2, 12.3 or 12.4 of this Agreement.
12.6 This Agreement will terminate immediately upon Employee's death. In
such event, DPRC shall pay to his estate (a) the base salary of the
Compensation through the date of Employee's death and, thereafter,
until the expiration of twelve (12) calendar months after the date of
Employee's death, and, (b) at such time following completion of the
fiscal year-end audit when all other senior executive bonuses are
paid, the pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to Employee's death and the denominator of which is
365), and DPRC shall have no further obligation to Employee's estate
under this Agreement by way of compensation or otherwise.
12.7 As used in this Agreement, the following terms shall have the meanings
indicated:
(a) "Cause" shall mean an action or actions by Employee during his
employment (including but not limited to inactions) which
constitute either (i) gross insubordination, gross negligence,
unethical or criminal behavior constituting a felony under
federal or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer and/or
director of DPRC, or (ii) a violation of any of Sections 4
through 10, inclusive.
(b) "Disabled" shall mean Employee's ability to perform his duties
under this Agreement is impaired, due to sickness, physical or
mental impairment or injury, by more than twenty-five (25%) for a
period of six (6) consecutive months or for nine (9) months in
any consecutive twelve (12) month period. In the event Employee
disputes DPRC's determination that he is Disabled, Employee shall
give written notice of such dispute to DPRC during the thirty
(30) day notice period prior to the proposed effective date of
such termination, and Employee and DPRC shall thereupon each
select, within ten (10) days of such notice from
8
<PAGE>
Employee, a physician to evaluate whether Employee is Disabled.
Such physicians shall complete their evaluation and report to the
Board of Directors within ten (10) days. If such physicians do not
agree as to whether Employee is Disabled, they shall promptly
select a third physician to further evaluate Employee, whose
conclusion on such matter shall be rendered within ten (10) days of
his or her selection and shall be final and binding on Employee and
DPRC.
(c) "Good Reason" shall mean any of the following:
(i) (A) a demotion or assignment to Employee of duties
inconsistent with his position, duties, responsibilities or
status with DPRC, (B) a change in Employee's titles or
offices adverse to Employee, or (C) any removal of Employee
from or any failure to reelect Employee to the office of
Vice President, Operations of DPRC, except, in any such
case, with Employee's consent or in connection with the
termination of his employment pursuant to Section 12.1 (with
Cause), 12.3 (resignation without Good Reason), 12.4
(disability), 12.6 (death) or retirement; provided, however,
that Good Reason shall not include the assignment to
Employee of any duties or responsibilities of one or more
management positions within his competence to the extent
that any such position is not filled at any time and it is
necessary to perform the duties and responsibilities of such
position pending the hiring of a person to hold such
position, and provided that DPRC is actively seeking to fill
such position during the period of such assignment;
(ii) a purported reduction by DPRC in the Compensation in effect
on the date hereof or as the same may be increased from time
to time during the term of this Agreement or any failure by
DPRC to reimburse Employee or provide any material benefits
set forth in Exhibit A;
(iii) any failure by DPRC to continue in effect any benefit plan
or arrangement (including, without limitation, DPRC's
incentive bonus plan, profit sharing plan, stock option
plans, medical insurance plans, disability insurance plans,
life insurance plans or vacation pay plans, with such
generally applicable amendments thereto as may be approved
from time to time in good faith by DPRC's
9
<PAGE>
Board of Directors) in which Employee is participating or
other plans providing Employee with substantially similar
benefits (each, a "Benefit Plan"), or any action by DPRC
which would materially and adversely affect Employee's
participation in or materially reduce Employee's benefits
under any Benefit Plan;
(iv) any failure by DPRC to obtain the assumption of this
Agreement by any successor or assign of DPRC, if such
successor or assign asserts the position that it is not
bound by the provisions hereof; or
(v) any failure by DPRC to comply with any material provision of
this Agreement;
provided, however, that no such action shall be considered to
constitute Good Reason unless and until Employee has given DPRC
written notice of, and thirty (30) days' opportunity to cure or
remedy the specific action which Employee alleges would
constitute Good Reason if not so cured or remedied and DPRC has
failed to effect such cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall constitute
the exclusive rights and remedies available to Employee relating to or
arising from the termination of his employment, including claims for
breach of contract or in tort; provided, however, that Employee shall
be entitled to pursue any and all available legal remedies based on
any claim that such termination constituted a violation of applicable
federal or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by DPRC,
whether oral or written, express or implied, formal or informal, are
intended, nor shall they be construed to limit the right or ability of
DPRC to terminate Employee's employment or the right or ability of
Employee to resign as set forth above. Except as otherwise agreed in
writing or as otherwise provided by this Agreement, upon termination
of Employee's employment, neither DPRC nor Employee shall have any
further obligation to each other by way of compensation or otherwise.
12.10 DPRC will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of DPRC, by agreement
in form and substance reasonably satisfactory to Employee, expressly,
absolutely and unconditionally to assume and agree to perform this
Agreement in the
10
<PAGE>
same manner and to the same extent that DPRC would be required to
perform this Agreement if no such succession or assignment had taken
place. In any such event, the term "DPRC" as used in this Agreement
shall mean any such successor or assign which executes and delivers
the agreement provided for in the immediately preceding sentence or
which otherwise becomes bound by the terms and provisions of this
Agreement by operation of law.
12.11 Employee shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other
employment or otherwise. Except as expressly provided herein, no
payment or benefit provided for under this Agreement shall be reduced
by any compensation earned by Employee as the result of employment by
another employer after the date of termination with DPRC. Except as
expressly provided herein, the provisions of this Agreement, and any
payment or benefit provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish Employee's existing
rights, or rights which would accrue solely as a result of the
passage of time, under any DPRC Benefit Plan, employment agreement or
other contract, plan or arrangement.
13. MISCELLANEOUS PROVISIONS.
------------------------
13.1 In the event that any of the provisions of this Agreement shall be
held to be invalid or unenforceable, then all other provisions shall
nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included in this
Agreement. In the event that any provision relating to the time
period of any restriction imposed by this Agreement shall be declared
by a court of competent jurisdiction to exceed the maximum time
period which such court deems reasonable and enforceable, then the
time period of restriction deemed reasonable and enforceable by the
court shall become and shall thereafter be the maximum time period.
In the event that any of the provisions of this Agreement shall be
determined to cause a disallowance of any "pooling of interests"
accounting treatment for any merger, acquisition or consolidation of
DPRC with another entity, such provisions shall be deemed to be
deleted and of no force and effect and all other provisions shall
nevertheless continue to be valid and enforceable and read as though
the deleted provisions had not been included in this Agreement.
13.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties hereto.
13.3 This Agreement shall be construed and enforced according to the laws
of
11
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the State of California, excluding its choice of law rules.
13.4 This Agreement supersedes all previous correspondence, promises,
representations, and agreements, if any, either written or oral,
between DPRC and Employee. No provision of this Agreement may be
modified except by a writing signed by Employee and by the Chief
Executive Officer of DPRC (or by such other person as may be
expressly authorized to sign such writing by the Board of Directors
of DPRC).
13.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement
shall be in writing and shall be personally served or deposited in
the United States mail, registered or certified, return receipt
requested, postage prepaid, addressed (i) in the case of notices to
DPRC, to the Chief Executive Officer of DPRC at DPRC's headquarters
office at such time, and (ii) in the case of notices to Employee, to
Employee's home address as set forth on the employment records of
DPRC, or to such other address as such party shall have specified
most recently by written notice. Notices shall be deemed given on the
date of service if personally served. Notices mailed as provided
herein shall be deemed given on the third business day following the
date so mailed.
13.6 Should any party institute any action or proceeding to enforce this
Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement or of any provision hereof, or for a
declaration of rights hereunder, the prevailing party in any such
action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys',
accountants' and experts' fees, incurred by the prevailing party in
connection with such action or proceeding.
14. ACKNOWLEDGMENT BY EMPLOYEE. Employee (i) has carefully read and considered
--------------------------
the provisions of this Agreement, (ii) has had an opportunity to review the
terms of this Agreement with legal counsel of his choosing, (iii) fully
understands the extent and impact of the terms and provisions of this
Agreement, and (iv) has executed this Agreement voluntarily.
12
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By:_________________________ ______________________________
Mary Ellen Weaver Robert J. Gallagher
Chief Executive Officer
13
<PAGE>
EXHIBIT A
COMPENSATION OF ROBERT J. GALLAGHER
-----------------------------------
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY Employee's base salary shall be $200,000 per year, paid in
-----------
at least bi-weekly installments. Employee's base annual
salary shall be reviewed and adjusted no less frequently
than once per year. In no event, and under no circumstances,
shall Employee's annual salary be reduced below the most
recent annual salary.
2. VACATION During the Term, Employee shall be entitled to four (4)
--------
weeks of paid vacation time per calendar year (plus such
other time as may be permitted by the Board); provided,
however, that any such vacation time, if not used, will be
subject to DPRC's limitations on carrying forward unused
vacation time, pursuant to which Employee's accrued vacation
time may not exceed six (6) weeks at any time; and, provided
further, that Employee shall use his best efforts to
coordinate with the Chief Executive Officer of DPRC the
dates upon which he uses his vacation so as to minimize the
negative impact upon DPRC occasioned by Employee's absence.
Employee shall not be entitled to take in excess of four (4)
weeks vacation at any one time, except by the written
consent of the Chief Executive Officer of DPRC, or upon
request of DPRC in connection with Employee's leave of
absence for family, medical or other reasons, as permitted
by law.
3. OTHER
-----
BENEFITS: Employee shall be entitled to participate in and receive
--------
benefits under all profit-sharing plans, pension plans,
group medical plans and other benefit plans for the payment
of additional compensation or benefits to employees of DPRC
which DPRC at any time maintains for executive employees.
4. AUTOMOBILE
----------
ALLOWANCE: Employee's current automobile lease through SPC shall be
---------
continued by DPRC until the end of the current term of
14
<PAGE>
such lease. Thereafter, Employee shall be entitled to an
automobile allowance of $700 per month.
5. BUSINESS
--------
EXPENDITURES: Employee may be authorized to incur reasonable expenses for
------------
promoting and conducting the business of DPRC, including but
not limited to expenditures for entertainment and travel, in
such amounts and at such times as shall be determined and
approved by the Chief Executive Officer of DPRC. DPRC shall
reimburse Employee monthly for all such approved business
expenses upon presentation of reasonable documentation
establishing the amount, date, place and essential character
of the expenditures.
6. INCENTIVE
---------
BONUS: Employee's incentive bonus for each fiscal year shall
----- provide for a maximum bonus of up to 200% of his base salary
for such year and shall be subject to such terms and
conditions as shall be determined in good faith by the Board
of Directors, with the recommendation of and in consultation
with the Compensation Committee of the Board of Directors.
The incentive bonus may be based on financially oriented
components or upon Employee's individual accomplishments or
both. At the request of Employee, within ten (10) business
days after the commencement of each fiscal quarter, DPRC
shall advance to Employee up to one-eighteenth (1/18th) of
the maximum bonus payable by DPRC to Employee hereunder. The
incentive bonus earned for a fiscal year of DPRC (less the
aggregate amount of all advances made by DPRC to Employee
with respect to such fiscal year) shall be paid not later
than thirty (30) calendar days following the review and
approval by the Board of Directors of DPRC of the final
financial statement results of the audit for said fiscal
year by DPRC's independent auditors. In the event that the
aggregate amount of advances made by DPRC to Employee
hereunder during any fiscal year exceeds the amount of the
incentive bonus earned by Employee for such fiscal year,
Employee, within thirty (30) calendar days of the
determination of such amount, shall pay such excess to DPRC.
The current incentive bonus plan is based on DPRC reaching
its internal target levels of budgeted operating income for
the fiscal year, as it may be amended as a result of
15
<PAGE>
acquisitions for the year included (the "Target OI"). A
total of 50% of Employee's base salary shall be paid if the
Target OI is achieved by DPRC. For each 5% above Target OI
achieved by DPRC, Employee shall receive an additional 10%
of base salary up to the maximum 200% of base salary.
7. INDEMNI-
-------
FICATION: DPRC shall enter into a directors and officers
--------
Indemnification Agreement with Employee pursuant to which
DPRC will be required to indemnify Employee against personal
liability for acts of DPRC to the maximum extent permitted
by law.
8. STOCK
-----
OPTIONS: With respect to all current and future stock option grants
-------
by DPRC to Employee, such stock options shall vest in full
following a "change of control" during the Term. The term
"change of control" shall mean (i) any merger or
consolidation where DPRC is not the continuing or surviving
corporation or pursuant to which all or substantially all of
the shares of DPRC's Common Stock are converted into cash,
other property or securities of another corporation, other
than, in either case, a merger or consolidation in which the
shares of DPRC's Common Stock outstanding immediately prior
to such merger or consolidation represent or are converted
into securities representing more than 50% of the voting
power of the surviving corporation in such merger or
consolidation or the parent of such corporation, (ii) any
sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or
substantially all, of the assets of DPRC, (iii) the approval
by the shareholders of DPRC of any plan or proposal for the
liquidation or dissolution of DPRC, (iv) any "person" (as
such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act) of 35% or more of
DPRC's outstanding Common Stock after the date hereof, or
(v) there shall be any change of control of a nature which
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated
16
<PAGE>
under the Exchange Act or any successor regulation of
substantially similar import, regardless of whether DPRC is
subject to such reporting requirement at such time.
In addition, in the event Employee is terminated without
Cause, as defined in Paragraph 12.7 of this Agreement, the
members of the Board of Directors who are not directly
involved in terminating Employee shall consider accelerating
vesting of any unvested options held by Employee based upon
all of the facts and circumstances surrounding the
termination, including Employee's performance and tenure
with DPRC; provided, however, that the disinterested
Directors involved in such determination shall be under no
obligation to accelerate vesting of options and shall
specifically not do so if such acceleration would cause a
disallowance of "pooling of interests" accounting in any
DPRC merger transactions.
9. ESTATE
------
PLANNING:
---------
DPRC will reimburse Employee for all reasonable attorney's
fees, in an amount not to exceed $5,000 per calendar year,
incurred in connection with creating, reviewing and/or
revising Employee's will and estate plan.
17
<PAGE>
EXHIBIT 10.4
DATA PROCESSING RESOURCES CORPORATION
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May 4,
1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and THOMAS A. VADNAIS ("Employee").
1. Employment and Term.
-------------------
1.1 DPRC agrees to employ Employee, and Employee agrees to be employed by
DPRC, on the terms and conditions described below.
1.2 This Agreement shall be effective as of May 4, 1999 or such other date
as Employee may commence his employment with DPRC with the consent of
DPRC (the "Effective Date") and shall, unless sooner terminated
pursuant to the terms set forth below, terminate on the third
anniversary of the Effective Date. The period during which Employee
is employed hereunder is referred to as the "Term." The Term shall be
automatically extended for a period of twelve (12) additional months
unless DPRC shall notify Employee in writing, not less than six (6)
months prior to the end of the initial term or any extension thereof,
of DPRC's intention that the Term not be extended.
2. Duties.
------
2.1 Employee shall serve as the President and Chief Operating Officer of
DPRC during the Term and shall devote his full-time efforts to such
duties and responsibilities as may be assigned to him from time to
time by, and shall report to, the Chief Executive Officer of DPRC.
2.2 Employee shall serve without additional compensation in one or more
offices, as a Director or as a member of any committee of the Board of
Directors of DPRC or of any direct or indirect subsidiary of DPRC.
3. Compensation.
------------
3.1 As consideration for the performance of his duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and incorporated
herein by this reference (the "Compensation").
3.2 Employee understands and acknowledges that, except as otherwise set
forth in this Agreement, the Compensation will constitute the full and
exclusive consideration to be received by Employee for all services
performed by
1
<PAGE>
Employee in connection with DPRC's employment of Employee, and for the
performance of all his promises and obligations under this Agreement.
3.3 Aside from the Compensation, DPRC may adopt, or continue in force,
benefit plans for the benefit of its employees or certain of its
employees which may include, but not be limited to, group life
insurance, medical insurance, etc. DPRC may terminate any or all such
plans at any time and may choose not to adopt any additional or
replacement plans. Employee's rights under any benefit plans now in
force or later adopted by DPRC shall be governed solely by the terms
of such plans; provided, however, that in no event shall Employee's
rights under any such benefit plans be less than those of any other
senior executive officer of DPRC.
4. Duty to Devote Full Time and Avoid Conflict of Interest. During the Term,
-------------------------------------------------------
Employee shall devote his full-time efforts to his duties as an employee of
DPRC and shall not, directly or indirectly, engage or participate in any
activities which are in conflict with the best interests of DPRC.
5. Compliance with Rules and Regulations. During the Term, Employee shall
-------------------------------------
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may from
time to time be adopted or modified, so long as they are uniformly applied
to all employees.
6. Non-competition and Non-solicitation by Employee.
------------------------------------------------
6.1 During the Term, Employee shall not engage in any activity competitive
with or adverse to DPRC's business or welfare, whether alone, as a
partner, or as an officer, director, employee or shareholder of any
other corporation and shall not otherwise undertake planning for or
the organization of any business activity competitive with DPRC's
business or combine or conspire with other employees or
representatives of DPRC for the purpose of organizing any such
competitive business activity; provided, however, that Employee may
own up to one percent (1%) of the outstanding stock of any publicly
traded corporation.
6.2 It is understood that Employee will gain knowledge and make contacts
with DPRC's customers and clients (sometimes collectively referred to
in this Agreement as the "Clients" and individually as a "Client") and
prospective clients of DPRC in the course of his employment. In
recognition of this understanding, Employee agrees as follows:
(a) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or attempt to interfere
in any way with any existing relationships of DPRC with any
Client with whom DPRC has participated in at least one project or
placement within the
2
<PAGE>
two (2) years prior to the termination of his employment, and
shall not solicit, divert or take away or attempt to solicit,
divert or take away any business of DPRC that is either under
contract or in negotiation at the time of the termination of his
employment.
(b) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or compete in any way
with any proposal efforts of DPRC already in progress (that is, a
proposal sent to or being then currently developed for a specific
Client or potential client of DPRC) at the time of the
termination of his employment.
(c) For a period of two (2) years following the termination of his
employment, Employee shall not make use, in a manner competitive
with the business of DPRC, of any of his personal relationships
or business contacts developed during his employment or prior to
his employment.
(d) For a period of two (2) years following the termination of his
employment, Employee shall not induce, solicit or influence or
attempt to induce, solicit or influence any person who is engaged
as an employee or otherwise by DPRC, to terminate his or her
employment or other engagement with DPRC.
7. Trade Secrets of DPRC. Employee acknowledges and understands that during
---------------------
his employment, he will have access to and will utilize and review
information which constitutes valuable, important and confidential trade
secrets, as that term is interpreted under the Uniform Trade Secrets Act
(California Civil Code Section 3426 et seq.) and/or confidential and
-- ---
proprietary material and information of or relating to the business of DPRC
necessary for the successful conduct of DPRC's business. This information
includes, but is not limited to: (a) listings of and data regarding the
Clients (past and current); (b) information regarding potential customers
and clients; (c) data relating to the personnel, supervisory structure and
procedures of the Clients; (d) information regarding specific computer
technician staffing needs of the Clients; (e) information as to the
identity, whereabouts, capabilities and availability of contractors in
DPRC's database; (f) information regarding bidding, billing and pricing
practices; (g) information regarding the nature and type of services
rendered to the Clients; and (h) other methodologies, computer programs,
employee and contractor resumes, employee databases, processes,
compilations of information, results of proposals, job notes, reports and
records (all of which information is sometimes referred to in this
Agreement as the "Secrets"). The foregoing notwithstanding, Secrets shall
not include information or data which is (i) in the public domain, (ii)
generally known in the information technology staffing services industry,
(iii) already known to Employee as of the date he began his employment with
DPRC, or (iv) rightfully disclosed to Employee outside of the scope of his
employment with DPRC by a third party not under a duty of
3
<PAGE>
confidentiality to DPRC. Employee understands further that the Secrets have
been and will be accumulated by Employee and other personnel at DPRC at
considerable expense to DPRC (including but not limited to compensation
paid to DPRC personnel dealing with the Secrets and the Clients), and that
DPRC has and will continue to expend its resources in order to maintain
actively and vigorously the confidentiality of the Secrets, as such
information is extremely valuable to DPRC, and well worth the expense of
enforcement and preservation of such confidentiality. Accordingly, Employee
agrees as follows:
(a) All of the Secrets shall be safeguarded and treated as
confidential by Employee.
(b) Any and all data, notes, letters, computer programs and data,
reports, telephone records and all other written documentation
relating to the business of DPRC (including but not limited to
the Secrets) that may be collected, compiled, written, reviewed
or conceived by Employee from or by reason of services performed
by Employee for DPRC shall become the absolute property of DPRC,
and Employee shall not assert or establish a claim for any
statutory or common law right or any other possessory or
proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest confidence and shall
not (i) disclose any Secrets to any person, corporation, firm, or
other entity, either during the Term or thereafter, or (ii) use
any Secrets in Employee's subsequent business or employment
without the prior express written authorization of DPRC;
provided, however, that Employee may disclose Secrets to the
extent required to do so by a subpoena lawfully issued in a
judicial proceeding or arbitration.
(d) Employee shall not otherwise commit any act which shall
compromise the confidentiality of any Secrets, including but not
limited to making a copy of such property (whether electronic,
paper or otherwise) without the prior express written
authorization of DPRC.
8. Confidential Information of Clients. All ideas, concepts, information and
-----------------------------------
written material disclosed to Employee by DPRC, or acquired from any
Client, and all financial, accounting, statistical, personnel, and business
data and plans of the Clients, are and shall remain the sole and exclusive
property and proprietary information of DPRC, or such Client, as the case
may be, and are disclosed in confidence by DPRC or permitted to be acquired
from the Clients in reliance on Employee's agreement to maintain them in
confidence and not to use or disclose them to any other person except in
furtherance of DPRC's business.
4
<PAGE>
9. Return of Information. At the time of the termination of his employment,
---------------------
Employee shall deliver promptly to DPRC all notes, books, electronic data
(regardless of storage media), correspondence and other written or
graphical records (including all copies thereof) in Employee's possession
or under Employee's control relating to any business, work, Clients or any
other aspect of DPRC, whether or not containing any Secrets, including but
not limited to each original and all copies of all or any part thereof.
10. Cooperation. Both during the Term and thereafter, Employee shall sign
-----------
all papers, give evidence and testimony and, at DPRC's expense, perform all
acts which, in DPRC's opinion, are necessary, proper or expedient to carry
out and fulfill the purposes and intents of this Agreement.
11. Remedies; Injunctive Relief. Employee acknowledges and agrees that, in the
---------------------------
event of a breach or threatened breach by Employee of any of the provisions
of this Agreement, DPRC shall be entitled to a preliminary and a permanent
injunction in order to prevent or restrain any such breach by Employee or
by Employee's partners, agents, representatives, servants, employers,
employees, and/or any and all persons directly or indirectly acting for or
with Employee, in addition to and not in limitation of any other rights,
remedies, or damages available to DPRC at law or in equity.
12. Termination of Employment.
-------------------------
12.1 DPRC may terminate Employee's employment at any time with "Cause" (as
defined below). In the event that DPRC terminates Employee's
employment with Cause, DPRC shall be obligated only to pay the base
salary of the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as
otherwise provided by this Agreement, DPRC shall have no further
obligation to Employee under this Agreement by way of compensation or
otherwise. Notwithstanding the foregoing, to the extent the grounds
for any proposed termination with Cause are capable of being cured or
remedied by Employee, DPRC shall not terminate Employee with Cause
unless the Chief Executive Officer of DPRC has first counseled
Employee as to how he could effect such cure or remedy and Employee
is given at least thirty (30) days to do so. A determination of
whether Employee has satisfactorily effected such cure or remedy
shall be promptly made by a majority of the disinterested directors
of the Board of Directors at the end of the period provided to
Employee for such cure or remedy and such determination shall be
final.
12.2 DPRC may terminate Employee's employment at any time without Cause
(as defined below) by giving Employee thirty (30) days' advance
written notice of such termination. Employee may resign for Good
Reason (as defined below) by giving DPRC thirty (30) days' advance
written notice of such resignation. In the event that DPRC terminates
Employee without Cause, or Employee resigns
5
<PAGE>
for Good Reason, DPRC shall pay to Employee the base salary of the
Compensation and provide the same health and life insurance benefits
through the effective date of such termination or resignation and,
thereafter, until the earlier to occur of (i) the expiration of
twelve (12) months after the effective date of such termination, (ii)
the date upon which Employee becomes employed on a full-time basis
(including but not limited to self-employment, but only if Employee
holds himself out to the public as being a self-employed consultant
or other businessman), or (iii) the date upon which Employee violates
any of Sections 6 through 10, inclusive. In addition, DPRC shall pay
Employee, at such time following completion of the fiscal year-end
audit when all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which Employee was
entitled during his employment (which proration shall be based on a
fraction, the numerator of which is the number of calendar days
during the fiscal year during which Employee was employed prior to
the effective date of such termination or resignation and the
denominator of which is 365). If DPRC's medical and/or life insurance
plans do not allow Employee's continued participation in such plan or
plans during the period described above, then DPRC shall pay to
Employee, in monthly installments, from the date on which Employee's
participation in such medical and/or life insurance, as applicable,
is prohibited for the remainder of the time period described in the
third sentence of this Section 12.2, the monthly premium or premiums
which had been payable by DPRC with respect to Employee for such
discontinued medical and/or life insurance, as applicable.
12.3 Employee may resign without Good Reason at any time by giving DPRC
forty-five (45) days' advance written notice of such resignation. In
the event that Employee resigns without Good Reason, DPRC shall be
obligated only to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise agreed in
writing or as otherwise provided by this Agreement, DPRC shall have
no further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if Employee
becomes Disabled (as defined below) by giving Employee thirty (30)
days' advance written notice of such termination. In the event that
DPRC terminates Employee's because Employee has become Disabled, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective
date of such termination and, thereafter, until the earlier to occur
of (i) the expiration of twelve (12) calendar months after the
effective date of such termination of employment, (ii) the date upon
which Employee becomes employed on a full-time basis (including but
not limited to self-employment, but only if Employee holds himself
out to the public as being a self-employed consultant or other
businessman), or (iii) the date upon which Employee violates any of
Sections 6 through 10, inclusive. In addition,
6
<PAGE>
DPRC shall pay Employee, at such time following completion of the
fiscal year-end audit when all other senior executive bonuses are
paid, the pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to the effective date of such termination and the
denominator of which is 365). If DPRC's medical and/or life insurance
plans do not allow Employee's continued participation in such plan or
plans during the period describe above, then DPRC shall pay to
Employee, in monthly installments, from the date on which Employee's
participation in such medical and/or life insurance, as applicable,
is prohibited for the remainder of the time period described in the
second sentence of this Section 12.4, the monthly premium or premiums
which had been payable by DPRC with respect to Employee for such
discontinued medical and/or life insurance, as applicable.
12.5 Employee's agreements, duties and obligations under Sections 6
through 10, inclusive, shall survive the termination of this
Agreement and shall continue after any termination of Employee's
employment pursuant to Sections 12.1, 12.2, 12.3 or 12.4 of this
Agreement.
12.6 This Agreement will terminate immediately upon Employee's death. In
such event, DPRC shall pay to his estate (a) the base salary of the
Compensation through the date of Employee's death and, thereafter,
until the expiration of twelve (12) calendar months after the date of
Employee's death, and, (b) at such time following completion of the
fiscal year-end audit when all other senior executive bonuses are
paid, the pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to Employee's death and the denominator of which is
365), and DPRC shall have no further obligation to Employee's estate
under this Agreement by way of compensation or otherwise.
12.7 As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Cause" shall mean an action or actions by Employee during his
employment (including but not limited to inactions) which
constitute either (i) gross insubordination, gross negligence,
unethical or criminal behavior constituting a felony under
federal or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer and/or
director of DPRC, or (ii) a violation of any of Sections 4
through 10, inclusive.
7
<PAGE>
(b) "Disabled" shall mean Employee's ability to perform his duties
under this Agreement is impaired, due to sickness, physical or
mental impairment or injury, by more than twenty-five (25%) for a
period of six (6) consecutive months or for nine (9) months in
any consecutive twelve (12) month period. In the event Employee
disputes DPRC's determination that he is Disabled, Employee shall
give written notice of such dispute to DPRC during the thirty
(30) day notice period prior to the proposed effective date of
such termination, and Employee and DPRC shall thereupon each
select, within ten (10) days of such notice from Employee, a
physician to evaluate whether Employee is Disabled. Such
physicians shall complete their evaluation and report to the
Board of Directors within ten (10) days. If such physicians do
not agree as to whether Employee is Disabled, they shall promptly
select a third physician to further evaluate Employee, whose
conclusion on such matter shall be rendered within ten (10) days
of his or her selection and shall be final and binding on
Employee and DPRC.
(c) "Good Reason" shall mean any of the following:
(i) (A) demotion or assignment to Employee of duties
inconsistent with his position, duties, responsibilities or
status with DPRC, (B) a change in Employee's titles or
offices adverse to Employee, or (C) any removal of Employee
from or any failure to reelect Employee to the office of
President and Chief Operating Officer of DPRC, except, in
any such case, with Employee's consent or in connection
with the termination of his employment pursuant to Section
12.1 (with Cause), 12.3 (resignation without Good Reason),
12.4 (disability), 12.6 (death) or retirement; provided,
however, that Good Reason shall not include the assignment
to Employee of any duties or responsibilities of one or
more management positions within his competence to the
extent that any such position is not filled at any time and
it is necessary to perform the duties and responsibilities
of such position pending the hiring of a person to hold
such position, and provided that DPRC is actively seeking
to fill such position during the period of such assignment;
(ii) a purported reduction by DPRC in the Compensation in effect
on the date hereof or as the same may be increased from
time to time during the term of this Agreement or any
failure by DPRC to reimburse Employee or provide any
material benefits set forth in Exhibit A;
(iii) any failure by DPRC to continue in effect any benefit plan
or
8
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arrangement (including, without limitation, DPRC's
incentive bonus plan, profit sharing plan, stock option
plans, medical insurance plans, disability insurance plans,
life insurance plans or vacation pay plans, with such
generally applicable amendments thereto as may be approved
from time to time in good faith by DPRC's Board of
Directors) in which Employee is participating or other
plans providing Employee with substantially similar
benefits (each, a "Benefit Plan"), or any action by DPRC
which would materially and adversely affect Employee's
participation in or materially reduce Employee's benefits
under any Benefit Plan;
(iv) any failure by DPRC to obtain the assumption of this
Agreement by any successor or assign of DPRC, if such
successor or assign asserts the position that it is not
bound by the provisions hereof; or
(v) any failure by DPRC to comply with any material provision
of this Agreement;
provided, however, that no such action shall be considered to
constitute Good Reason unless and until Employee has given DPRC
written notice of, and thirty (30) days' opportunity to cure or
remedy the specific action which Employee alleges would
constitute Good Reason if not so cured or remedied and DPRC has
failed to effect such cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall constitute
the exclusive rights and remedies available to Employee relating to
or arising from the termination of his employment, including claims
for breach of contract or in tort; provided, however, that Employee
shall be entitled to pursue any and all available legal remedies
based on any claim that such termination constituted a violation of
applicable federal or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by DPRC,
whether oral or written, express or implied, formal or informal, are
intended, nor shall they be construed to limit the right or ability
of DPRC to terminate Employee's employment or the right or ability of
Employee to resign as set forth above. Except as otherwise agreed in
writing or as otherwise provided by this Agreement, upon termination
of Employee's employment, neither DPRC nor Employee shall have any
further obligation to each other by way of compensation or otherwise.
12.10 DPRC will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of DPRC, by agreement
in form and substance reasonably
9
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satisfactory to Employee, expressly, absolutely and unconditionally
to assume and agree to perform this Agreement in the same manner and
to the same extent that DPRC would be required to perform this
Agreement if no such succession or assignment had taken place. In any
such event, the term "DPRC" as used in this Agreement shall mean any
such successor or assign which executes and delivers the agreement
provided for in the immediately preceding sentence or which otherwise
becomes bound by the terms and provisions of this Agreement by
operation of law.
12.11 Employee shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other
employment or otherwise. Except as expressly provided herein, no
payment or benefit provided for under this Agreement shall be reduced
by any compensation earned by Employee as the result of employment by
another employer after the date of termination with DPRC. Except as
expressly provided herein, the provisions of this Agreement, and any
payment or benefit provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish Employee's existing
rights, or rights which would accrue solely as a result of the
passage of time, under any DPRC Benefit Plan, employment agreement or
other contract, plan or arrangement.
13. Miscellaneous Provisions.
------------------------
13.1 In the event that any of the provisions of this Agreement shall be
held to be invalid or unenforceable, then all other provisions shall
nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included in this
Agreement. In the event that any provision relating to the time
period of any restriction imposed by this Agreement shall be declared
by a court of competent jurisdiction to exceed the maximum time
period which such court deems reasonable and enforceable, then the
time period of restriction deemed reasonable and enforceable by the
court shall become and shall thereafter be the maximum time period.
13.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties hereto.
13.3 This Agreement shall be construed and enforced according to the laws
of the State of California, excluding its choice of law rules.
13.4 This Agreement supersedes all previous correspondence, promises,
representations, and agreements, if any, either written or oral,
between DPRC and Employee. No provision of this Agreement may be
modified except by a writing signed by Employee and by the Chief
Executive Officer of DPRC (or by such other person as may be
expressly authorized to sign such writing by the
10
<PAGE>
Board of Directors of DPRC).
13.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement
shall be in writing and shall be personally served or deposited in
the United States mail, registered or certified, return receipt
requested, postage prepaid, addressed (i) in the case of notices to
DPRC, to the Chief Executive Officer of DPRC at DPRC's headquarters
office at such time, and (ii) in the case of notices to Employee, to
Employee's home address as set forth on the employment records of
DPRC, or to such other address as such party shall have specified
most recently by written notice. Notices shall be deemed given on the
date of service if personally served. Notices mailed as provided
herein shall be deemed given on the third business day following the
date so mailed.
13.6 Should any party institute any action or proceeding to enforce this
Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement or of any provision hereof, or for a
declaration of rights hereunder, the prevailing party in any such
action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys',
accountants' and experts' fees, incurred by the prevailing party in
connection with such action or proceeding.
14. Acknowledgment by Employee. Employee (i) has carefully read and considered
--------------------------
the provisions of this Agreement, (ii) has had an opportunity to review the
terms of this Agreement with legal counsel of his choosing, (iii) fully
understands the extent and impact of the terms and provisions of this
Agreement, and (iv) has executed this Agreement voluntarily.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By:__________________________ _______________________
Mary Ellen Weaver Thomas A. Vadnais
Chief Executive Officer
11
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EXHIBIT A
Compensation of Thomas A. Vadnais
---------------------------------
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY Employee's base salary shall be $315,000 per year, paid in
-----------
at least bi-weekly installments. Employee's base annual
salary shall be reviewed and adjusted no less frequently
than once per year. In no event, and under no circumstances,
shall Employee's annual salary be reduced below the most
recent annual salary.
2. VACATION During the Term, Employee shall be entitled to four (4)
--------
weeks of paid vacation time per calendar year (plus such
other time as may be permitted by the Board); provided,
however, that any such vacation time, if not used, will be
subject to DPRC's limitations on carrying forward unused
vacation time, pursuant to which Employee's accrued vacation
time may not exceed six (6) weeks at any time; and, provided
further, that Employee shall use his best efforts to
coordinate with the Chief Executive Officer of DPRC the
dates upon which he uses his vacation so as to minimize the
negative impact upon DPRC occasioned by Employee's absence.
Employee shall not be entitled to take in excess of four (4)
weeks vacation at any one time, except by the written
consent of the Chief Executive Officer of DPRC, or upon
request of DPRC in connection with Employee's leave of
absence for family, medical or other reasons, as permitted
by law.
3. OTHER
-----
BENEFITS: Employee shall be entitled to participate in and receive
--------
benefits under all profit-sharing plans, pension plans,
group medical plans and other benefit plans for the payment
of additional compensation or benefits to employees of DPRC
which DPRC at any time maintains for executive employees.
4. AUTOMOBILE
----------
ALLOWANCE: Employee shall be entitled to an automobile allowance of
---------
$900 per month.
5. BUSINESS
--------
EXPENDITURES: Employee may be authorized to incur reasonable expenses for
------------
promoting and conducting the business of DPRC, including but
12
<PAGE>
not limited to expenditures for entertainment and travel, in
such amounts and at such times as shall be determined and
approved by the Chief Executive Officer of DPRC. DPRC shall
reimburse Employee monthly for all such approved business
expenses upon presentation of reasonable documentation
establishing the amount, date, place and essential character
of the expenditures.
6. INCENTIVE
---------
BONUS: Employee's incentive bonus for each fiscal year shall
-----
provide for a maximum bonus of up to 200% of his base salary
for such year and shall be subject to such terms and
conditions as shall be determined in good faith by the Board
of Directors, with the recommendation of and in consultation
with the Compensation Committee of the Board of Directors.
The incentive bonus may be based on financially oriented
components or upon Employee's individual accomplishments or
both. At the request of Employee, within ten (10) business
days after the commencement of each fiscal quarter, DPRC
shall advance to Employee up to one-eighteenth (1/18th) of
the maximum bonus payable by DPRC to Employee hereunder. The
incentive bonus earned for a fiscal year of DPRC (less the
aggregate amount of all advances made by DPRC to Employee
with respect to such fiscal year) shall be paid not later
than thirty (30) calendar days following the review and
approval by the Board of Directors of DPRC of the final
financial statement results of the audit for said fiscal
year by DPRC's independent auditors. In the event that the
aggregate amount of advances made by DPRC to Employee
hereunder during any fiscal year exceeds the amount of the
incentive bonus earned by Employee for such fiscal year,
Employee, within thirty (30) calendar days of the
determination of such amount, shall pay such excess to DPRC.
The current incentive bonus plan is based on DPRC reaching
its internal target levels of budgeted operating income for
the fiscal year, as it may be amended as a result of
acquisitions for the year included (the "Target OI"). A
total of 50% of Employee's base salary shall be paid if the
Target OI is achieved by DPRC. For each 5% above Target OI
achieved by DPRC, Employee shall receive an additional 10%
of base salary up to the maximum 200% of base salary.
7. INDEMNI-
--------
FICATION: DPRC shall enter into a directors and officers
--------
Indemnification Agreement with Employee pursuant to which
DPRC will be required to indemnify Employee against personal
liability for acts of DPRC to the maximum extent permitted
by law.
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<PAGE>
8. STOCK
-----
OPTIONS: Subject to the commencement of employment, the Board of
-------
Directors has approved the grant to Employee of a stock
option under the Company's 1994 Stock Option Plan to
purchase up to 320,000 shares of Common Stock. The exercise
price of such stock option shall be equal to the fair market
value of the Common Stock on the Effective Date and the
option shall vest (i.e., become exercisable) in four equal
annual installments, commencing on the first anniversary of
the Effective Date. Such stock option shall be in the form
generally approved for grants to officers of DPRC; provided,
however, that such stock option and all future stock option
grants to Employee shall vest in full following a "change of
control" during the Term. For the purposes of such stock
option grants, the term "change of control" shall mean (i)
any merger or consolidation where DPRC is not the continuing
or surviving corporation or pursuant to which all or
substantially all of the shares of DPRC's Common Stock are
converted into cash, other property or securities of another
corporation, other than, in either case, a merger or
consolidation in which the shares of DPRC's Common Stock
outstanding immediately prior to such merger or
consolidation represent or are converted into securities
representing more than 50% of the voting power of the
surviving corporation in such merger or consolidation or the
parent of such corporation, (ii) any sale, lease, exchange
or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of
DPRC, (iii) the approval by the shareholders of DPRC of any
plan or proposal for the liquidation or dissolution of DPRC,
(iv) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange
Act) of 35% or more of DPRC's outstanding Common Stock after
the date hereof, or (v) there shall be any change of control
of a nature which would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act or any successor
regulation of substantially similar import, regardless of
whether DPRC is subject to such reporting requirement at
such time.
In addition, in the event Employee is terminated without
Cause, as defined in Paragraph 12.7 of this Agreement, the
members of
14
<PAGE>
the Board of Directors who are not directly involved in
terminating Employee shall consider accelerating vesting of
any unvested options held by Employee based upon all of the
facts and circumstances surrounding the termination,
including Employee's performance and tenure with DPRC;
provided, however, that the disinterested Directors involved
in such determination shall be under no obligation to
accelerate vesting of options and shall specifically not do
so if such acceleration would cause a disallowance of
"pooling of interests" accounting in any DPRC merger
transactions.
9. RELOCATION
----------
EXPENSES: In connection with Employee's relocation of his and his
--------
families' personal residence in Atlanta, Georgia, DPRC shall
reimburse Employee for all of his reasonable and customary
expenses with respect to such relocation, including, without
limitation, the following: (a) all non-recurring closing
costs on the sale of Employee's current personal residence;
(b) all closing costs on the purchase of Employee's new
personal residence in Southern California, except that
points on such purchase shall not exceed two (2) points; (c)
all reasonable and customary travel related expenses for
Employee and his spouse to find a replacement residence in
Southern California; (d) all reasonable and customary
interim storage expenses for personal property if Employee
decides to construct a home in Southern California; and (e)
all reasonable and customary expenses for interim living
expenses in Southern California and related travel expenses
until the earlier of the completion of Employee's relocation
of his family or the first 90 days during the Term, which
90-day period may be extended for an additional 60-day
period with the consent of DPRC, which consent shall not be
unreasonably withheld. To the extent that Employee shall
incur any personal federal or state tax income liability in
connection with DPRC's reimbursement of any of the foregoing
to Employee, DPRC, within thirty (30) calendar days after
Employee's submission to DPRC of his personal federal and
state tax returns demonstrating such income tax liabilities,
shall pay Employee an amount equal to one and two-thirds
(1.67) times Employee's actual personal tax liability.
10. ESTATE
------
PLANNING: During calendar year 1999, DPRC shall reimburse Employee for
--------
all reasonable attorney's fees (not to exceed three percent
(3%) of the amount of Employee's then base salary) incurred
by
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<PAGE>
Employee in connection with reviewing and revising
Employee's will and estate plan to reflect any necessary or
desirable changes resulting from Employee's relocation to
Southern California.
Following calendar year 1999, DPRC will reimburse Employee
for all reasonable attorney's fees, in an amount not to
exceed $5,000 per calendar year, incurred in connection with
creating, reviewing and/or revising Employee's will and
estate plan.
16
<PAGE>
EXHIBIT 10.5
DATA PROCESSING RESOURCES CORPORATION
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of March
29, 1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and RICHARD D. TIPTON ("Employee").
1. Employment and Term.
-------------------
1.1 DPRC agrees to employ Employee, and Employee agrees to be employed by
DPRC, on the terms and conditions described below.
1.2 This Agreement shall be effective as of March 29, 1999 or such other
date as Employee may commence his employment with DPRC with the
consent of DPRC (the "Effective Date") and shall, unless sooner
terminated pursuant to the terms set forth below, terminate on the
second anniversary of the Effective Date. The period during which
Employee is employed hereunder is referred to as the "Term." The Term
shall be automatically extended for a period of twelve (12) additional
months unless DPRC shall notify Employee in writing, not less than six
(6) months prior to the end of the initial term or any extension
thereof, of DPRC's intention that the Term not be extended.
2. Duties.
------
2.1 Employee shall serve as the Vice President, General Counsel and
Secretary of DPRC during the Term and shall devote his full-time
efforts to such duties and responsibilities as may be assigned to him
from time to time by, and shall report to, the Chairman and Chief
Executive Officer of DPRC.
2.2 DPRC agrees that (i) it will not ask or direct Employee to relocate
his residence from Carlsbad, California, and (ii) it will reimburse
Employee for, or pay directly, reasonable costs in connection with
Employee's lodging, for not more than two (2) nights per work week, in
the immediate vicinity of the offices of DPRC's corporate
headquarters.
3. Compensation.
------------
3.1 As consideration for the performance of his duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and incorporated
herein by this reference
1
<PAGE>
(the "Compensation").
3.2 Employee understands and acknowledges that, except as otherwise set
forth in this Agreement, the Compensation will constitute the full and
exclusive consideration to be received by Employee for all services
performed by Employee in connection with DPRC's employment of
Employee, and for the performance of all his promises and obligations
under this Agreement.
3.3 Aside from the Compensation, DPRC may adopt, or continue in force,
benefit plans for the benefit of its employees or certain of its
employees which may include, but not be limited to, group life
insurance, medical insurance, etc. DPRC may terminate any or all such
plans at any time and may choose not to adopt any additional or
replacement plans. Employee's rights under any benefit plans now in
force or later adopted by DPRC shall be governed solely by the terms
of such plans; provided, however, that in no event shall Employee's
rights under any such benefit plans be less than those of any other
senior executive officer of DPRC.
4. Duty to Devote Full Time and Avoid Conflict of Interest. During the Term,
-------------------------------------------------------
Employee shall devote his full-time efforts to his duties as an employee of
DPRC and shall not, directly or indirectly, engage or participate in any
activities which are in conflict with the best interests of DPRC.
5. Compliance with Rules and Regulations. During the Term, Employee shall
-------------------------------------
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may from
time to time be adopted or modified, so long as they are uniformly applied
to all employees.
6. Non-competition and Non-solicitation by Employee.
------------------------------------------------
6.1 During the Term, Employee shall not engage in any activity competitive
with or adverse to DPRC's business or welfare, whether alone, as a
partner, or as an officer, director, employee or shareholder of any
other corporation and shall not otherwise undertake planning for or
the organization of any business activity competitive with DPRC's
business or combine or conspire with other employees or
representatives of DPRC for the purpose of organizing any such
competitive business activity; provided, however, that Employee may
own up to one percent (1%) of the outstanding stock of any publicly
traded corporation.
6.2 It is understood that Employee will gain knowledge and make contacts
with DPRC's customers and clients (sometimes collectively referred to
in this Agreement as the "Clients" and individually as a "Client") and
2
<PAGE>
prospective clients of DPRC in the course of his employment. In
recognition of this understanding, Employee agrees as follows:
(a) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or attempt to interfere
in any way with any existing relationships of DPRC with any
Client with whom DPRC has participated in at least one project or
placement within the two (2) years prior to the termination of
his employment, and shall not solicit, divert or take away or
attempt to solicit, divert or take away any business of DPRC that
is either under contract or in negotiation at the time of the
termination of his employment.
(b) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or compete in any way
with any proposal efforts of DPRC already in progress (that is, a
proposal sent to or being then currently developed for a specific
Client or potential client of DPRC) at the time of the
termination of his employment.
(c) For a period of two (2) years following the termination of his
employment, Employee shall not make use, in a manner competitive
with the business of DPRC, of any of his personal relationships
or business contacts developed during his employment or prior to
his employment.
(d) For a period of two (2) years following the termination of his
employment, Employee shall not induce, solicit or influence or
attempt to induce, solicit or influence any person who is engaged
as an employee or otherwise by DPRC, to terminate his or her
employment or other engagement with DPRC.
7. Trade Secrets of DPRC. Employee acknowledges and understands that during
---------------------
his employment, he will have access to and will utilize and review
information which constitutes valuable, important and confidential trade
secrets, as that term is interpreted under the Uniform Trade Secrets Act
(California Civil Code Section 3426 et seq.) and/or confidential and
-- ---
proprietary material and information of or relating to the business of DPRC
necessary for the successful conduct of DPRC's business. This information
includes, but is not limited to: (a) listings of and data regarding the
Clients (past and current); (b) information regarding potential customers
and clients; (c) data relating to the personnel, supervisory structure and
procedures of the Clients; (d) information regarding specific computer
technician staffing needs of the Clients; (e) information as to the
identity, whereabouts, capabilities and availability of contractors in
DPRC's
3
<PAGE>
database; (f) information regarding bidding, billing and pricing
practices; (g) information regarding the nature and type of services
rendered to the Clients; and (h) other methodologies, computer programs,
employee and contractor resumes, employee databases, processes,
compilations of information, results of proposals, job notes, reports and
records (all of which information is sometimes referred to in this
Agreement as the "Secrets"). The foregoing notwithstanding, Secrets shall
not include information or data which is (i) in the public domain, (ii)
generally known in the information technology staffing services industry,
(iii) already known to Employee as of the date he began his employment with
DPRC, or (iv) rightfully disclosed to Employee outside of the scope of his
employment with DPRC by a third party not under a duty of confidentiality
to DPRC. Employee understands further that the Secrets have been and will
be accumulated by Employee and other personnel at DPRC at considerable
expense to DPRC (including but not limited to compensation paid to DPRC
personnel dealing with the Secrets and the Clients), and that DPRC has and
will continue to expend its resources in order to maintain actively and
vigorously the confidentiality of the Secrets, as such information is
extremely valuable to DPRC, and well worth the expense of enforcement and
preservation of such confidentiality. Accordingly, Employee agrees as
follows:
(a) All of the Secrets shall be safeguarded and treated as
confidential by Employee.
(b) Any and all data, notes, letters, computer programs and data,
reports, telephone records and all other written documentation
relating to the business of DPRC (including but not limited to
the Secrets) that may be collected, compiled, written, reviewed
or conceived by Employee from or by reason of services performed
by Employee for DPRC shall become the absolute property of DPRC,
and Employee shall not assert or establish a claim for any
statutory or common law right or any other possessory or
proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest confidence and shall
not (i) disclose any Secrets to any person, corporation, firm, or
other entity, either during the Term or thereafter, or (ii) use
any Secrets in Employee's subsequent business or employment
without the prior express written authorization of DPRC;
provided, however, that Employee may disclose Secrets to the
extent required to do so by a subpoena lawfully issued in a
judicial proceeding or arbitration.
(d) Employee shall not otherwise commit any act which shall
compromise the confidentiality of any Secrets, including but not
4
<PAGE>
limited to making a copy of such property (whether electronic,
paper or otherwise) without the prior express written
authorization of DPRC.
8. Confidential Information of Clients. All ideas, concepts, information and
-----------------------------------
written material disclosed to Employee by DPRC, or acquired from any
Client, and all financial, accounting, statistical, personnel, and business
data and plans of the Clients, are and shall remain the sole and exclusive
property and proprietary information of DPRC, or such Client, as the case
may be, and are disclosed in confidence by DPRC or permitted to be acquired
from the Clients in reliance on Employee's agreement to maintain them in
confidence and not to use or disclose them to any other person except in
furtherance of DPRC's business.
9. Return of Information. At the time of the termination of his employment,
---------------------
Employee shall deliver promptly to DPRC all notes, books, electronic data
(regardless of storage media), correspondence and other written or
graphical records (including all copies thereof) in Employee's possession
or under Employee's control relating to any business, work, Clients or any
other aspect of DPRC, whether or not containing any Secrets, including but
not limited to each original and all copies of all or any part thereof.
10. Cooperation. Both during the Term and thereafter, Employee shall sign all
-----------
papers, give evidence and testimony and, at DPRC's expense, perform all
acts which, in DPRC's opinion, are necessary, proper or expedient to carry
out and fulfill the purposes and intents of this Agreement.
11. Remedies; Injunctive Relief. Employee acknowledges and agrees that, in the
---------------------------
event of a breach or threatened breach by Employee of any of the provisions
of this Agreement, DPRC shall be entitled to a preliminary and a permanent
injunction in order to prevent or restrain any such breach by Employee or
by Employee's partners, agents, representatives, servants, employers,
employees, and/or any and all persons directly or indirectly acting for or
with Employee, in addition to and not in limitation of any other rights,
remedies, or damages available to DPRC at law or in equity.
12. Termination of Employment.
-------------------------
12.1 DPRC may terminate Employee's employment at any time with "Cause" (as
defined below). In the event that DPRC terminates Employee's
employment with Cause, DPRC shall be obligated only to pay the base
salary of the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as
otherwise provided by this Agreement, DPRC shall have no further
obligation to Employee
5
<PAGE>
under this Agreement by way of compensation or otherwise.
Notwithstanding the foregoing, to the extent the grounds for any
proposed termination with Cause are capable of being cured or
remedied by Employee, DPRC shall not terminate Employee with Cause
unless the Chief Executive Officer of DPRC has first counseled
Employee as to how he could effect such cure or remedy and Employee
is given at least thirty (30) days to do so. A determination of
whether Employee has satisfactorily effected such cure or remedy
shall be promptly made by a majority of the disinterested directors
of the Board of Directors at the end of the period provided to
Employee for such cure or remedy and such determination shall be
final.
12.2 DPRC may terminate Employee's employment at any time without Cause
(as defined below) by giving Employee thirty (30) days' advance
written notice of such termination. Employee may resign for Good
Reason (as defined below) by giving DPRC thirty (30) days' advance
written notice of such resignation. In the event that DPRC terminates
Employee without Cause, or Employee resigns for Good Reason, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective
date of such termination or resignation and, thereafter, until the
earlier to occur of (i) the expiration of twelve (12) months after
the effective date of such termination, (ii) the date upon which
Employee becomes employed on a full-time basis (including but not
limited to self-employment, but only if Employee holds himself out to
the public as being a self-employed consultant or other businessman),
or (iii) the date upon which Employee violates any of Sections 6
through 10, inclusive. In addition, DPRC shall pay Employee, at such
time following completion of the fiscal year-end audit when all other
senior executive bonuses are paid, the pro-rated Incentive Bonus
described in such Exhibit "A" to which Employee was entitled during
his employment (which proration shall be based on a fraction, the
numerator of which is the number of calendar days during the fiscal
year during which Employee was employed prior to the effective date
of such termination or resignation and the denominator of which is
365). If DPRC's medical and/or life insurance plans do not allow
Employee's continued participation in such plan or plans during the
period described above, then DPRC shall pay to Employee, in monthly
installments, from the date on which Employee's participation in such
medical and/or life insurance, as applicable, is prohibited for the
remainder of the time period described in the third sentence of this
Section 12.2, the monthly premium or premiums which had been payable
by DPRC with respect to Employee for such discontinued medical and/or
life insurance, as applicable.
6
<PAGE>
12.3 Employee may resign without Good Reason at any time by giving DPRC
forty-five (45) days' advance written notice of such resignation. In
the event that Employee resigns without Good Reason, DPRC shall be
obligated only to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise agreed in
writing or as otherwise provided by this Agreement, DPRC shall have
no further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if Employee
becomes Disabled (as defined below) by giving Employee thirty (30)
days' advance written notice of such termination. In the event that
DPRC terminates Employee's because Employee has become Disabled, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective
date of such termination and, thereafter, until the earlier to occur
of (i) the expiration of twelve (12) calendar months after the
effective date of such termination of employment, (ii) the date upon
which Employee becomes employed on a full-time basis (including but
not limited to self-employment, but only if Employee holds himself
out to the public as being a self-employed consultant or other
businessman), or (iii) the date upon which Employee violates any of
Sections 6 through 10, inclusive. In addition, DPRC shall pay
Employee, at such time following completion of the fiscal year-end
audit when all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which Employee was
entitled during his employment (which proration shall be based on a
fraction, the numerator of which is the number of calendar days
during the fiscal year during which Employee was employed prior to
the effective date of such termination and the denominator of which
is 365). If DPRC's medical and/or life insurance plans do not allow
Employee's continued participation in such plan or plans during the
period described above, then DPRC shall pay to Employee, in monthly
installments, from the date on which Employee's participation in such
medical and/or life insurance, as applicable, is prohibited for the
remainder of the time period described in the second sentence of this
Section 12.4, the monthly premium or premiums which had been payable
by DPRC with respect to Employee for such discontinued medical and/or
life insurance, as applicable.
12.5 Employee's agreements, duties and obligations under Sections 6
through 10, inclusive, shall survive the termination of this
Agreement and shall continue after any termination of Employee's
employment pursuant to Sections 12.1, 12.2, 12.3 or 12.4 of this
Agreement.
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12.6 This Agreement will terminate immediately upon Employee's death. In
such event, DPRC shall pay to his estate (a) the base salary of the
Compensation through the date of Employee's death and, thereafter,
until the expiration of twelve (12) calendar months after the date of
Employee's death, and, (b) at such time following completion of the
fiscal year-end audit when all other senior executive bonuses are
paid, the pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to Employee's death and the denominator of which is
365), and DPRC shall have no further obligation to Employee's estate
under this Agreement by way of compensation or otherwise.
12.7 As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Cause" shall mean an action or actions by Employee during his
employment (including but not limited to inactions) which
constitute either (i) gross insubordination, gross negligence,
unethical or criminal behavior constituting a felony under
federal or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer and/or
director of DPRC, or (ii) a violation of any of Sections 4
through 10, inclusive.
(b) "Disabled" shall mean Employee's ability to perform his duties
under this Agreement is impaired, due to sickness, physical or
mental impairment or injury, by more than twenty-five (25%) for a
period of six (6) consecutive months or for nine (9) months in
any consecutive twelve (12) month period. In the event Employee
disputes DPRC's determination that he is Disabled, Employee shall
give written notice of such dispute to DPRC during the thirty
(30) day notice period prior to the proposed effective date of
such termination, and Employee and DPRC shall thereupon each
select, within ten (10) days of such notice from Employee, a
physician to evaluate whether Employee is Disabled. Such
physicians shall complete their evaluation and report to the
Board of Directors within ten (10) days. If such physicians do
not agree as to whether Employee is Disabled, they shall promptly
select a third physician to further evaluate Employee, whose
conclusion on such matter shall be rendered within ten (10) days
of his or her selection and shall be final and binding on
Employee and DPRC.
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<PAGE>
(c) "Good Reason" shall mean any of the following:
(i) (A) demotion or assignment to Employee of duties
inconsistent with his position, duties, responsibilities or
status with DPRC, (B) a change in Employee's titles or
offices adverse to Employee, or (C) any removal of Employee
from or any failure to reelect Employee to the offices of
Vice President, General Counsel and Secretary of DPRC,
except, in any such case, with Employee's consent or in
connection with the termination of his employment pursuant
to Section 12.1 (with Cause), 12.3 (resignation without Good
Reason), 12.4 (disability), 12.6 (death) or retirement;
provided, however, that Good Reason shall not include the
assignment to Employee of any duties or responsibilities of
one or more management positions within his competence to
the extent that any such position is not filled at any time
and it is necessary to perform the duties and
responsibilities of such position pending the hiring of a
person to hold such position, and provided that DPRC is
actively seeking to fill such position during the period of
such assignment;
(ii) a purported reduction by DPRC in the Compensation in effect
on the date hereof or as the same may be increased from time
to time during the term of this Agreement or any failure by
DPRC to reimburse Employee or provide any material benefits
set forth in Exhibit A;
(iii) any failure by DPRC to continue in effect any benefit plan
or arrangement (including, without limitation, DPRC's
incentive bonus plan, profit sharing plan, stock option
plans, medical insurance plans, disability insurance plans,
life insurance plans or vacation pay plans, with such
generally applicable amendments thereto as may be approved
from time to time in good faith by DPRC's Board of
Directors) in which Employee is participating or other plans
providing Employee with substantially similar benefits
(each, a "Benefit Plan"), or any action by DPRC which would
materially and adversely affect Employee's participation in
or materially reduce Employee's benefits under any Benefit
Plan;
(iv) any failure by DPRC to obtain the assumption of this
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<PAGE>
Agreement by any successor or assign of DPRC, if such
successor or assign asserts the position that it is not
bound by the provisions hereof; or
(v) any failure by DPRC to comply with any material provision of
this Agreement;
provided, however, that no such action shall be considered to
constitute Good Reason unless and until Employee has given DPRC
written notice of, and thirty (30) days' opportunity to cure or
remedy the specific action which Employee alleges would
constitute Good Reason if not so cured or remedied and DPRC has
failed to effect such cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall constitute
the exclusive rights and remedies available to Employee relating to
or arising from the termination of his employment, including claims
for breach of contract or in tort; provided, however, that Employee
shall be entitled to pursue any and all available legal remedies
based on any claim that such termination constituted a violation of
applicable federal or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by DPRC,
whether oral or written, express or implied, formal or informal, are
intended, nor shall they be construed to limit the right or ability
of DPRC to terminate Employee's employment or the right or ability of
Employee to resign as set forth above. Except as otherwise agreed in
writing or as otherwise provided by this Agreement, upon termination
of Employee's employment, neither DPRC nor Employee shall have any
further obligation to each other by way of compensation or otherwise.
12.10 DPRC will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of DPRC, by agreement
in form and substance reasonably satisfactory to Employee, expressly,
absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that DPRC would
be required to perform this Agreement if no such succession or
assignment had taken place. In any such event, the term "DPRC" as
used in this Agreement shall mean any such successor or assign which
executes and delivers the agreement provided for in the immediately
preceding sentence or which otherwise becomes bound by the terms and
provisions of this Agreement by operation of law.
10
<PAGE>
12.11 Employee shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other
employment or otherwise. Except as expressly provided herein, no
payment or benefit provided for under this Agreement shall be reduced
by any compensation earned by Employee as the result of employment by
another employer after the date of termination with DPRC. Except as
expressly provided herein, the provisions of this Agreement, and any
payment or benefit provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish Employee's existing
rights, or rights which would accrue solely as a result of the
passage of time, under any DPRC Benefit Plan, employment agreement or
other contract, plan or arrangement.
13. Miscellaneous Provisions.
------------------------
13.1 In the event that any of the provisions of this Agreement shall be
held to be invalid or unenforceable, then all other provisions shall
nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included in this
Agreement. In the event that any provision relating to the time
period of any restriction imposed by this Agreement shall be declared
by a court of competent jurisdiction to exceed the maximum time
period which such court deems reasonable and enforceable, then the
time period of restriction deemed reasonable and enforceable by the
court shall become and shall thereafter be the maximum time period.
13.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties hereto.
13.3 This Agreement shall be construed and enforced according to the laws
of the State of California, excluding its choice of law rules.
13.4 This Agreement supersedes all previous correspondence, promises,
representations, and agreements, if any, either written or oral,
between DPRC and Employee. No provision of this Agreement may be
modified except by a writing signed by Employee and by the Chief
Executive Officer of DPRC (or by such other person as may be
expressly authorized to sign such writing by the Board of Directors
of DPRC).
13.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement
shall
11
<PAGE>
be in writing and shall be personally served or deposited in the
United States mail, registered or certified, return receipt
requested, postage prepaid, addressed (i) in the case of notices to
DPRC, to the Chief Executive Officer of DPRC at DPRC's headquarters
office at such time, and (ii) in the case of notices to Employee, to
Employee's home address as set forth on the employment records of
DPRC, or to such other address as such party shall have specified
most recently by written notice. Notices shall be deemed given on the
date of service if personally served. Notices mailed as provided
herein shall be deemed given on the third business day following the
date so mailed.
13.6 Should any party institute any action or proceeding to enforce this
Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement or of any provision hereof, or for a
declaration of rights hereunder, the prevailing party in any such
action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys',
accountants' and experts' fees, incurred by the prevailing party in
connection with such action or proceeding.
14. Acknowledgment by Employee. Employee (i) has carefully read and considered
--------------------------
the provisions of this Agreement, (ii) has had an opportunity to review the
terms of this Agreement with legal counsel of his choosing, (iii) fully
understands the extent and impact of the terms and provisions of this
Agreement, and (iv) has executed this Agreement voluntarily.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By:___________________________ ______________________________
Mary Ellen Weaver Richard D. Tipton
Chief Executive Officer
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<PAGE>
EXHIBIT A
Compensation of Richard D. Tipton
---------------------------------
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY: Employee's base salary shall be $150,000 per year, paid in at
------------
least bi-weekly installments. Employee's base annual salary
shall be reviewed and adjusted no less frequently than once
per year. In no event, and under no circumstances, shall
Employee's annual salary be reduced below the most recent
annual salary.
2. VACATION: During the Term, Employee shall be entitled to four (4) weeks
---------
of paid vacation time per calendar year (plus such other time
as may be permitted by the Board); provided, however, that
any such vacation time, if not used, will be subject to
DPRC's limitations on carrying forward unused vacation time,
pursuant to which Employee's accrued vacation time may not
exceed six (6) weeks at any time; and, provided further, that
Employee shall use his best efforts to coordinate with the
Chief Executive Officer of DPRC the dates upon which he uses
his vacation so as to minimize the negative impact upon DPRC
occasioned by Employee's absence. Employee shall not be
entitled to take in excess of four (4) weeks vacation at any
one time, except by the written consent of the Chief
Executive Officer of DPRC, or upon request of DPRC in
connection with Employee's leave of absence for family,
medical or other reasons, as permitted by law.
3. OTHER
-----
BENEFITS: Employee shall be entitled to participate in and receive
---------
benefits under all profit-sharing plans, pension plans, group
medical plans and other benefit plans for the payment of
additional compensation or benefits to employees of DPRC
which DPRC at any time maintains for executive employees.
4. AUTOMOBILE
----------
ALLOWANCE: Employee shall be entitled to an automobile allowance of $700
----------
per month.
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<PAGE>
5. BUSINESS
--------
EXPENDITURES: Employee may be authorized to incur reasonable expenses for
-------------
promoting and conducting the business of DPRC, including but
not limited to expenditures for entertainment and travel, in
such amounts and at such times as shall be determined and
approved by the Chief Executive Officer of DPRC. DPRC shall
reimburse Employee monthly for all such approved business
expenses upon presentation of reasonable documentation
establishing the amount, date, place and essential character
of the expenditures.
6. INCENTIVE
---------
BONUS: Employee's incentive bonus for each fiscal year shall provide
------
for a maximum bonus of up to 200% of his base salary for such
year and shall be subject to such terms and conditions as
shall be determined in good faith by the Board of Directors,
with the recommendation of and in consultation with the
Compensation Committee of the Board of Directors. The
incentive bonus may be based on financially oriented
components or upon Employee's individual accomplishments or
both. At the request of Employee, within ten (10) business
days after the commencement of each fiscal quarter, DPRC
shall advance to Employee up to one-eighteenth (1/18th) of
the maximum bonus payable by DPRC to Employee hereunder. The
incentive bonus earned for a fiscal year of DPRC (less the
aggregate amount of all advances made by DPRC to Employee
with respect to such fiscal year) shall be paid not later
than thirty (30) calendar days following the review and
approval by the Board of Directors of DPRC of the final
financial statement results of the audit for said fiscal year
by DPRC's independent auditors. In the event that the
aggregate amount of advances made by DPRC to Employee
hereunder during any fiscal year exceeds the amount of the
incentive bonus earned by Employee for such fiscal year,
Employee, within thirty (30) calendar days of the
determination of such amount, shall pay such excess to DPRC.
The current incentive bonus plan is based on DPRC reaching
its internal target levels of budgeted operating income for
the fiscal year, as it may be amended as a result of
acquisitions for the year included (the "Target OI"). A total
of 50% of Employee's base salary shall be paid if the
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<PAGE>
Target OI is achieved by DPRC. For each 5% above Target OI
achieved by DPRC, Employee shall receive an additional 10% of
base salary up to the maximum 200% of base salary.
7. INDEMNI-
--------
FICATION: DPRC shall enter into a directors and officers
---------
Indemnification Agreement with Employee pursuant to which
DPRC will be required to indemnify Employee against personal
liability for acts of DPRC to the maximum extent permitted by
law.
8. STOCK
-----
OPTIONS: The Board of Directors has approved the grant to Employee of
--------
a stock option under the Company's 1994 Stock Option Plan to
purchase up to 25,000 shares of Common Stock. The exercise
price of such stock option shall be equal to the fair market
value of the Common Stock on the Effective Date and the
option shall vest (i.e., become exercisable) in four equal
annual installments, commencing on the first anniversary of
the Effective Date. Such stock option shall be in the form
generally approved for grants to officers of DPRC; provided,
however, that such stock option, and any future stock option
grants to Employee, shall vest in full following a "change of
control" during the Term. For the purposes of Employee's
stock options, the term "change of control" shall mean (i)
any merger or consolidation where DPRC is not the continuing
or surviving corporation or pursuant to which all or
substantially all of the shares of DPRC's Common Stock are
converted into cash, other property or securities of another
corporation, other than, in either case, a merger or
consolidation in which the shares of DPRC's Common Stock
outstanding immediately prior to such merger or consolidation
represent or are converted into securities representing more
than 50% of the voting power of the surviving corporation in
such merger or consolidation or the parent of such
corporation, (ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of
all, or substantially all, of the assets of DPRC, (iii) the
approval by the shareholders of DPRC of any plan or proposal
for the liquidation or dissolution of DPRC, (iv) any "person"
(as
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<PAGE>
such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act) of 35% or more of
DPRC's outstanding Common Stock after the date hereof, or (v)
there shall be any change of control of a nature which would
be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange
Act or any successor regulation of substantially similar
import, regardless of whether DPRC is subject to such
reporting requirement at such time.
In addition, in the event Employee is terminated without
Cause, as defined in Paragraph 12.7 of this Agreement, the
members of the Board of Directors who are not directly
involved in terminating Employee shall consider accelerating
vesting of any unvested options held by Employee based upon
all of the facts and circumstances surrounding the
termination, including Employee's performance and tenure with
DPRC; provided, however, that the disinterested Directors
involved in such determination shall be under no obligation
to accelerate vesting of options and shall specifically not
do so if such acceleration would cause a disallowance of
"pooling of interests" accounting in any DPRC merger
transactions.
9. ESTATE
------
PLANNING:
---------
DPRC will reimburse Employee for all reasonable attorney's
fees, in an amount not to exceed $5,000 per calendar year,
incurred in connection with creating, reviewing and/or
revising Employee's will and estate plan.
16
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EXHIBIT 10.6
DATA PROCESSING RESOURCES CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May 26,
1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and MARY ELLEN WEAVER ("Employee"), with reference to the
following:
A. DPRC and Employee are parties to that certain Employment Agreement
dated August 1, 1995, as amended pursuant to that certain letter of
understanding dated March 11, 1996 (the "Prior Employment Agreement").
B. DPRC and Employee now wish to amend and restate the Prior Employment
Agreement as set forth in this Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set forth
below, DPRC and Employee agree as follows:
1. Employment and Term.
-------------------
1.1 DPRC agrees to continue to employ Employee, and Employee agrees to
continue to be employed by DPRC, on the terms and conditions described
below.
1.2 The Prior Employment Agreement commenced on August 1, 1995 for a term
of four (4) years. This Agreement shall be effective as of the date
first set forth above (the "Effective Date") and shall, unless sooner
terminated pursuant to the terms set forth below, terminate on the
third anniversary of the Effective Date. The period during which
Employee is employed by DPRC hereunder is referred to as the "Term."
The Term shall be automatically extended for a period of twelve (12)
additional months unless DPRC shall notify Employee in writing, not
less than six (6) months prior to the end of the initial term or any
extension thereof, of DPRC's intention that the Term not be extended.
2. Duties.
------
2.1 Employee shall serve as the Chief Executive Officer and as Chairman of
the Board of Directors of DPRC during the Term and shall devote her
full-time efforts to such duties and responsibilities as may be
assigned to her from time to time by, and shall report to, the Board
of Directors of DPRC. To the extent that Employee performs services
for or on behalf
1
<PAGE>
of Information Technology Resources, Inc. ("ITR") during the term of
that certain Management Services Agreement between DPRC and ITR dated
as of August 1, 1997, or any extension or renewal thereof, including
but not limited to membership on the Board of Directors of ITR, then
for the purposes of this Agreement, such services (the "ITR Services")
shall (a) be deemed to comply with the aforementioned duty of Employee
to DPRC, (b) shall not be deemed to violate any of the covenants of
Employee set forth herein, and (c) shall be deemed to be work for DPRC
and not for any other entity.
2.2 During the Term, DPRC agrees that it will not ask or direct Employee
to relocate her main office or operations outside of Orange County,
California.
2.3 Employee shall serve without additional compensation in one or more
offices, as a Director or as a member of any committee of the Board of
Directors of DPRC or of any direct or indirect subsidiary of DPRC.
3. Compensation.
------------
3.1 As consideration for the performance of her duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and incorporated
herein by this reference (the "Compensation").
3.2 Employee understands and acknowledges that, except as otherwise set
forth in this Agreement, the Compensation will constitute the full and
exclusive consideration to be received by Employee for all services
performed by Employee in connection with DPRC's employment of
Employee, and for the performance of all her promises and obligations
under this Agreement.
3.3 Aside from the Compensation, DPRC may adopt, or continue in force,
benefit plans for the benefit of its employees or certain of its
employees which may include, but not be limited to, group life
insurance, medical insurance, etc. DPRC may terminate any or all
such plans at any time and may choose not to adopt any additional or
replacement plans. Employee's rights under any benefit plans now in
force or later adopted by DPRC shall be governed solely by the terms
of such plans; provided, however, that in no event shall Employee's
rights under any such benefit plans be less than those of any other
senior executive officer of DPRC.
4. Duty to Devote Full Time and Avoid Conflict of Interest. During the Term,
-------------------------------------------------------
Employee shall devote her full-time efforts to her duties as an employee of
2
<PAGE>
DPRC and shall not, directly or indirectly, engage or participate in any
activities which are in conflict with the best interests of DPRC.
5. Compliance with Rules and Regulations. During the Term, Employee shall
-------------------------------------
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may from
time to time be adopted or modified, so long as they are uniformly applied
to all employees.
6. Non-competition AND Non-solicitation by Employee.
------------------------------------------------
6.1 During the Term, Employee shall not engage in any activity competitive
with or adverse to DPRC's business or welfare, whether alone, as a
partner, or as an officer, director, employee or shareholder of any
other corporation and shall not otherwise undertake planning for or
the organization of any business activity competitive with DPRC's
business or combine or conspire with other employees or
representatives of DPRC for the purpose of organizing any such
competitive business activity; provided, however, that Employee may
own up to one percent (1%) of the outstanding stock of any publicly
traded corporation.
6.2 It is understood that Employee will gain knowledge and make contacts
with DPRC's customers and clients (sometimes collectively referred to
in this Agreement as the "Clients" and individually as a "Client") and
prospective clients of DPRC in the course of his employment. In
recognition of this understanding, Employee agrees as follows:
(a) For a period of two (2) years following the termination of her
employment, Employee shall not interfere or attempt to interfere
in any way with any existing relationships of DPRC with any
Client with whom DPRC has participated in at least one project or
placement within the two (2) years prior to the termination of
her employment, and shall not solicit, divert or take away or
attempt to solicit, divert or take away any business of DPRC that
is either under contract or in negotiation at the time of the
termination of her employment.
(b) For a period of two (2) years following the termination of her
employment, Employee shall not interfere or compete in any way
with any proposal efforts of DPRC already in progress (that is, a
proposal sent to or being then currently developed for a specific
Client or potential client of DPRC) at the time of the
termination of her employment.
(c) For a period of two (2) years following the termination of her
3
<PAGE>
employment, Employee shall not make use, in a manner competitive
with the business of DPRC, of any of her personal relationships
or business contacts developed during her employment or prior to
her employment.
(d) For a period of two (2) years following the termination of her
employment, Employee shall not induce, solicit or influence or
attempt to induce, solicit or influence any person who is engaged
as an employee or otherwise by DPRC, to terminate his or her
employment or other engagement with DPRC.
7. Trade Secrets of DPRC. Employee acknowledges and understands that during
---------------------
her employment, she will have access to and will utilize and review
information which constitutes valuable, important and confidential trade
secrets, as that term is interpreted under the Uniform Trade Secrets Act
(California Civil Code Section 3426 et seq.) and/or confidential and
-- ---
proprietary material and information of or relating to the business of DPRC
necessary for the successful conduct of DPRC's business. This information
includes, but is not limited to: (a) listings of and data regarding the
Clients (past and current); (b) information regarding potential customers
and clients; (c) data relating to the personnel, supervisory structure and
procedures of the Clients; (d) information regarding specific computer
technician staffing needs of the Clients; (e) information as to the
identity, whereabouts, capabilities and availability of contractors in
DPRC's database; (f) information regarding bidding, billing and pricing
practices; (g) information regarding the nature and type of services
rendered to the Clients; and (h) other methodologies, computer programs,
employee and contractor resumes, employee databases, processes,
compilations of information, results of proposals, job notes, reports and
records (all of which information is sometimes referred to in this
Agreement as the "Secrets"). The foregoing notwithstanding, Secrets shall
not include information or data which is (i) in the public domain, (ii)
generally known in the information technology staffing services industry,
(iii) already known to Employee as of the date she began her employment
with DPRC, or (iv) rightfully disclosed to Employee outside of the scope of
his employment with DPRC by a third party not under a duty of
confidentiality to DPRC. Employee understands further that the Secrets
have been and will be accumulated by Employee and other personnel at DPRC
at considerable expense to DPRC (including but not limited to compensation
paid to DPRC personnel dealing with the Secrets and the Clients), and that
DPRC has and will continue to expend its resources in order to maintain
actively and vigorously the confidentiality of the Secrets, as such
information is extremely valuable to DPRC, and well worth the expense of
enforcement and preservation of such confidentiality. Accordingly,
Employee agrees as follows:
(a) All of the Secrets shall be safeguarded and treated as
confidential
4
<PAGE>
by Employee.
(b) Any and all data, notes, letters, computer programs and data,
reports, telephone records and all other written documentation
relating to the business of DPRC (including but not limited to
the Secrets) that may be collected, compiled, written, reviewed
or conceived by Employee from or by reason of services performed
by Employee for DPRC shall become the absolute property of DPRC,
and Employee shall not assert or establish a claim for any
statutory or common law right or any other possessory or
proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest confidence and shall
not (i) disclose any Secrets to any person, corporation, firm, or
other entity, either during the Term or thereafter, or (ii) use
any Secrets in Employee's subsequent business or employment
without the prior express written authorization of DPRC;
provided, however, that Employee may disclose Secrets to the
extent required to do so by a subpoena lawfully issued in a
judicial proceeding or arbitration.
(d) Employee shall not otherwise commit any act which shall
compromise the confidentiality of any Secrets, including but not
limited to making a copy of such property (whether electronic,
paper or otherwise) without the prior express written
authorization of DPRC.
8. Confidential Information of Clients. All ideas, concepts, information and
-----------------------------------
written material disclosed to Employee by DPRC, or acquired from any
Client, and all financial, accounting, statistical, personnel, and business
data and plans of the Clients, are and shall remain the sole and exclusive
property and proprietary information of DPRC, or such Client, as the case
may be, and are disclosed in confidence by DPRC or permitted to be acquired
from the Clients in reliance on Employee's agreement to maintain them in
confidence and not to use or disclose them to any other person except in
furtherance of DPRC's business.
9. Return of Information. At the time of the termination of her employment,
---------------------
Employee shall deliver promptly to DPRC all notes, books, electronic data
(regardless of storage media), correspondence and other written or
graphical records (including all copies thereof) in Employee's possession
or under Employee's control relating to any business, work, Clients or any
other aspect of DPRC, whether or not containing any Secrets, including but
not limited to each original and all copies of all or any part thereof.
5
<PAGE>
10. Cooperation. Both during the Term and thereafter, Employee shall sign
-----------
all papers, give evidence and testimony and, at DPRC's expense, perform all
acts which, in DPRC's opinion, are necessary, proper or expedient to carry
out and fulfill the purposes and intents of this Agreement.
11. Remedies; Injunctive Relief. Employee acknowledges and agrees that, in the
---------------------------
event of a breach or threatened breach by Employee of any of the provisions
of this Agreement, DPRC shall be entitled to a preliminary and a permanent
injunction in order to prevent or restrain any such breach by Employee or
by Employee's partners, agents, representatives, servants, employers,
employees, and/or any and all persons directly or indirectly acting for or
with Employee, in addition to and not in limitation of any other rights,
remedies, or damages available to DPRC at law or in equity.
12. Termination of Employment.
-------------------------
12.1 DPRC may terminate Employee's employment at any time with "Cause" (as
defined below). In the event that DPRC terminates Employee's
employment with Cause, DPRC shall be obligated only to pay the base
salary of the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as
otherwise provided by this Agreement, DPRC shall have no further
obligation to Employee under this Agreement by way of compensation or
otherwise. Notwithstanding the foregoing, to the extent the grounds
for any proposed termination with Cause are capable of being cured or
remedied by Employee, DPRC shall not terminate Employee with Cause
unless the Board of Directors of DPRC has first counseled Employee as
to how she could effect such cure or remedy and Employee is given at
least thirty (30) days to do so. A determination of whether Employee
has satisfactorily effected such cure or remedy shall be promptly
made by a majority of the disinterested directors of the Board of
Directors at the end of the period provided to Employee for such cure
or remedy and such determination shall be final.
12.2 DPRC may terminate Employee's employment at any time without Cause
(as defined below) by giving Employee thirty (30) days' advance
written notice of such termination. Employee may resign for Good
Reason (as defined below) by giving DPRC thirty (30) days' advance
written notice of such resignation. In the event that DPRC terminates
Employee without Cause, or Employee resigns for Good Reason, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective
date of such termination or resignation and, thereafter, until the
earlier to occur of (i)
6
<PAGE>
the expiration of twenty-four (24) months after the effective date of
such termination, (ii) the date upon which Employee becomes employed
on a full-time basis (including but not limited to self-employment,
but only if Employee holds herself out to the public as being a self-
employed consultant or other businesswoman), or (iii) the date upon
which Employee violates any of Sections 6 through 10, inclusive. In
addition, DPRC shall pay Employee, at such time following completion
of the fiscal year-end audit when all other senior executive bonuses
are paid, the pro-rated Incentive Bonus described in such Exhibit "A"
to which Employee was entitled during her employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to the effective date of such termination or
resignation and the denominator of which is 365).
12.3 Employee may resign without Good Reason at any time by giving DPRC
forty-five (45) days' advance written notice of such resignation. In
the event that Employee resigns without Good Reason, DPRC shall be
obligated only to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise agreed in
writing or as otherwise provided by this Agreement, DPRC shall have
no further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if Employee
becomes Disabled (as defined below) by giving Employee thirty (30)
days' advance written notice of such termination. In the event that
DPRC terminates Employee's because Employee has become Disabled, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective
date of such termination and, thereafter, until the earlier to occur
of (i) the expiration of twenty-four (24) calendar months after the
effective date of such termination of employment, (ii) the date upon
which Employee becomes employed on a full-time basis (including but
not limited to self-employment, but only if Employee holds herself
out to the public as being a self-employed consultant or other
businesswoman), or (iii) the date upon which Employee violates any of
Sections 6 through 10, inclusive. In addition, DPRC shall pay
Employee, at such time following completion of the fiscal year-end
audit when all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which Employee was
entitled during her employment (which proration shall be based on a
fraction, the numerator of which is the number of calendar days
during the fiscal year during which Employee was employed prior to
the effective date of such
7
<PAGE>
termination and the denominator of which is 365).
12.5 Employee's agreements, duties and obligations under Sections 6
through 10, inclusive, shall survive the termination of this
Agreement and shall continue after any termination of Employee's
employment pursuant to Sections 12.1, 12.2, 12.3 or 12.4 of this
Agreement.
12.6 This Agreement will terminate immediately upon Employee's death. In
such event, DPRC shall pay to her estate (a) the base salary of the
Compensation through the date of Employee's death and, thereafter,
until the expiration of twenty-four (24) calendar months after the
date of Employee's death, and, (b) at such time following completion
of the fiscal year-end audit when all other senior executive bonuses
are paid, the pro-rated Incentive Bonus described in such Exhibit "A"
to which Employee was entitled during her employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to Employee's death and the denominator of which is
365), and DPRC shall have no further obligation to Employee's estate
under this Agreement by way of compensation or otherwise.
12.7 As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Cause" shall mean an action or actions by Employee during her
employment (including but not limited to inactions) which
constitute either (i) gross insubordination, gross negligence,
unethical or criminal behavior constituting a felony under
federal or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer and/or
director of DPRC, or (ii) a violation of any of Sections 4
through 10, inclusive.
(b) "Disabled" shall mean Employee's ability to perform her duties
under this Agreement is impaired, due to sickness, physical or
mental impairment or injury, by more than twenty-five (25%) for a
period of six (6) consecutive months or for nine (9) months in
any consecutive twelve (12) month period. In the event Employee
disputes DPRC's determination that she is Disabled, Employee
shall give written notice of such dispute to DPRC during the
thirty (30) day notice period prior to the proposed effective
date of such termination, and Employee and DPRC shall thereupon
each select, within ten (10) days of such notice from Employee, a
physician to evaluate whether Employee is Disabled.
8
<PAGE>
Such physicians shall complete their evaluation and report to the
Board of Directors within ten (10) days. If such physicians do
not agree as to whether Employee is Disabled, they shall promptly
select a third physician to further evaluate Employee, whose
conclusion on such matter shall be rendered within ten (10) days
of his or her selection and shall be final and binding on
Employee and DPRC.
(c) "Good Reason" shall mean any of the following:
(i) (A) a demotion or assignment to Employee of duties
inconsistent with her position, duties, responsibilities
or status with DPRC, (B) a change in Employee's titles or
offices adverse to Employee, or (C) any removal of
Employee from or any failure to reelect Employee to the
office of Chief Executive Officer of DPRC, except, in any
such case, with Employee's consent or in connection with
the termination of his employment pursuant to Section 12.1
(with Cause), 12.3 (resignation without Good Reason), 12.4
(disability), 12.6 (death) or retirement; provided,
however, that Good Reason shall not include the assignment
to Employee of any duties or responsibilities of one or
more management positions within her competence to the
extent that any such position is not filled at any time
and it is necessary to perform the duties and
responsibilities of such position pending the hiring of a
person to hold such position, and provided that DPRC is
actively seeking to fill such position during the period
of such assignment;
(ii) a purported reduction by DPRC in the Compensation in
effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or any
failure by DPRC to reimburse Employee or provide any
material benefits set forth in Exhibit A;
(iii) any failure by DPRC to continue in effect any benefit plan
or arrangement (including, without limitation, DPRC's
incentive bonus plan, profit sharing plan, stock option
plans, medical insurance plans, disability insurance
plans, life insurance plans or vacation pay plans, with
such generally applicable amendments thereto as may be
approved from time to time in good faith by DPRC's Board
of Directors) in which Employee is participating or
9
<PAGE>
other plans providing Employee with substantially similar
benefits (each, a "Benefit Plan"), or any action by DPRC
which would materially and adversely affect Employee's
participation in or materially reduce Employee's benefits
under any Benefit Plan;
(iv) any failure by DPRC to obtain the assumption of this
Agreement by any successor or assign of DPRC, if such
successor or assign asserts the position that it is not
bound by the provisions hereof; or
(v) any failure by DPRC to comply with any material provision of
this Agreement;
provided, however, that no such action shall be considered to
constitute Good Reason unless and until Employee has given DPRC
written notice of, and thirty (30) days' opportunity to cure or
remedy the specific action which Employee alleges would
constitute Good Reason if not so cured or remedied and DPRC has
failed to effect such cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall constitute
the exclusive rights and remedies available to Employee relating to
or arising from the termination of his employment, including claims
for breach of contract or in tort; provided, however, that Employee
shall be entitled to pursue any and all available legal remedies
based on any claim that such termination constituted a violation of
applicable federal or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by DPRC,
whether oral or written, express or implied, formal or informal, are
intended, nor shall they be construed to limit the right or ability
of DPRC to terminate Employee's employment or the right or ability of
Employee to resign as set forth above. Except as otherwise agreed in
writing or as otherwise provided by this Agreement, upon termination
of Employee's employment, neither DPRC nor Employee shall have any
further obligation to each other by way of compensation or otherwise.
12.10 DPRC will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of DPRC, by agreement
in form and substance reasonably satisfactory to Employee, expressly,
absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that DPRC would
be required to
10
<PAGE>
perform this Agreement if no such succession or assignment had taken
place. In any such event, the term "DPRC" as used in this Agreement
shall mean any such successor or assign which executes and delivers
the agreement provided for in the immediately preceding sentence or
which otherwise becomes bound by the terms and provisions of this
Agreement by operation of law.
12.11 Employee shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other
employment or otherwise. Except as expressly provided herein, no
payment or benefit provided for under this Agreement shall be reduced
by any compensation earned by Employee as the result of employment by
another employer after the date of termination with DPRC. Except as
expressly provided herein, the provisions of this Agreement, and any
payment or benefit provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish Employee's existing
rights, or rights which would accrue solely as a result of the
passage of time, under any DPRC Benefit Plan, employment agreement or
other contract, plan or arrangement.
13. Indemnification for Income Tax Deficiency. In the event that the deduction
------------------------------------------
for federal income tax purposes is disallowed for any part of (a) the
compensation paid to Employee or to Thomas A. Ballantyne III, or (b) any
part of the management fee paid to Ballantyne Computer Service, Inc.
("BCSI"), during DPRC's fiscal years ending in 1992, 1993, 1994 or 1995
(the "Relevant Years") and DPRC is thereby required to pay an income tax
deficiency, then Employee agrees to pay to DPRC (i) the income tax
deficiency payable by DPRC with respect to compensation paid to Employee
during the Relevant Years, and (ii) $200,000 of the income tax deficiency
payable by DPRC with respect to compensation paid by DPRC to BCSI during
the Relevant Years. Employee agrees that any payment due DPRC from
Employee pursuant to this Paragraph 13 shall first be paid by reducing
Employee's base salary and incentive bonus payable under this Agreement,
and Employee shall, not later than one year after DPRC's payment of such
income tax deficiencies, pay DPRC any then unpaid portion of her obligation
under this Paragraph 13. As used herein, the term "income tax deficiency"
is intended by DPRC and Employee to include any and all interest which
shall have accrued and shall be payable with respect to any such deficiency
assessed against DPRC.
14. Miscellaneous Provisions.
------------------------
14.1 In the event that any of the provisions of this Agreement shall be
held to be invalid or unenforceable, then all other provisions shall
nevertheless continue to be valid and enforceable as though the
invalid or
11
<PAGE>
unenforceable parts had not been included in this Agreement. In the
event that any provision relating to the time period of any
restriction imposed by this Agreement shall be declared by a court of
competent jurisdiction to exceed the maximum time period which such
court deems reasonable and enforceable, then the time period of
restriction deemed reasonable and enforceable by the court shall
become and shall thereafter be the maximum time period. In the event
that any of the provisions of this Agreement shall be determined to
cause a disallowance of any "pooling of interests" accounting
treatment for any merger, acquisition or consolidation of DPRC with
another entity, such provisions shall be deemed to be deleted and of
no force and effect and all other provisions shall nevertheless
continue to be valid and enforceable and read as though the deleted
provisions had not been included in this Agreement.
14.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties hereto.
14.3 This Agreement shall be construed and enforced according to the laws
of the State of California, excluding its choice of law rules.
14.4 This Agreement supersedes all previous correspondence, promises,
representations, and agreements, if any, either written or oral,
between DPRC and Employee. No provision of this Agreement may be
modified except by a writing signed by Employee and by the President
of DPRC (or by such other person as may be expressly authorized to
sign such writing by the Board of Directors of DPRC).
14.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement
shall be in writing and shall be personally served or deposited in
the United States mail, registered or certified, return receipt
requested, postage prepaid, addressed (i) in the case of notices to
DPRC, to the President of DPRC at DPRC's headquarters office at such
time, and (ii) in the case of notices to Employee, to Employee's home
address as set forth on the employment records of DPRC, or to such
other address as such party shall have specified most recently by
written notice. Notices shall be deemed given on the date of service
if personally served. Notices mailed as provided herein shall be
deemed given on the third business day following the date so mailed.
14.6 Should any party institute any action or proceeding to enforce this
Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement or of any provision hereof, or for a
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<PAGE>
declaration of rights hereunder, the prevailing party in any such
action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys',
accountants' and experts' fees, incurred by the prevailing party in
connection with such action or proceeding.
15. Acknowledgment By Employee. Employee (i) has carefully read and considered
--------------------------
the provisions of this Agreement, (ii) has had an opportunity to review the
terms of this Agreement with legal counsel of her choosing, (iii) fully
understands the extent and impact of the terms and provisions of this
Agreement, and (iv) has executed this Agreement voluntarily.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By:_____________________________ ______________________________________
Thomas A. Vadnais Mary Ellen Weaver
President
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EXHIBIT A
COMPENSATION OF MARY ELLEN WEAVER
---------------------------------
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY: Employee's base salary shall be $300,000 per
------------
year, paid in at least bi-weekly installments. Employee's
base annual salary shall be reviewed and adjusted no less
frequently than once per year. In no event, and under no
circumstances, shall Employee's annual salary be reduced
below the most recent annual salary.
2. VACATION: During the Term, Employee shall be entitled to
---------
six (6) weeks of paid vacation time per calendar year (plus
such other time as may be permitted by the Board); provided,
however, that any such vacation time, if not used, will be
subject to DPRC's limitations on carrying forward unused
vacation time, pursuant to which Employee's accrued vacation
time may not exceed ten (10) weeks at any time; and,
provided further, that Employee shall use her best efforts
to coordinate with the Board of Directors of DPRC the dates
upon which she uses his vacation so as to minimize the
negative impact upon DPRC occasioned by Employee's absence.
Employee shall not be entitled to take in excess of four (4)
weeks vacation at any one time, except by the written
consent of at least one non-employee member of the Board of
Directors of DPRC, or upon request of DPRC in connection
with Employee's leave of absence for family, medical or
other reasons, as permitted by law.
3. Other
-----
Benefits:
--------
During the Term, Employee shall be entitled to participate
in and receive benefits under all profit-sharing plans,
pension plans, group medical plans and other benefit plans
for the payment of additional compensation or benefits to
employees of DPRC that DPRC maintains for senior executive
employees. In the event Employee is terminated without
Cause or due to Disability, or resigns for Good Reason,
Employee shall be entitled to continuation of
14
<PAGE>
health and life insurance coverage for the period of time
set forth in Paragraphs 12.2 and 12.4 of this Agreement (the
"DPRC Insurance Coverage Period"). During the DPRC Insurance
Coverage Period, DPRC shall pay the employer portion of the
cost of such coverage at the same levels offered to its
senior executive employees, and Employee shall pay the
employee portion of the cost of such coverage at the same
level paid by its senior executive employees. Unless
Employee was terminated for Cause, DPRC shall continue,
following the DPRC Insurance Coverage Period, to offer group
medical and life insurance at the same rates and levels of
coverage as are offered to its then-current senior executive
employees, until such time as Employee reaches age 65 (the
"Employee Insurance Coverage Period"). During the Employee
Insurance Coverage Period, if Employee accepts insurance
coverage from DPRC, Employee shall pay the full cost of the
premiums for such coverage. During either the DPRC Insurance
Coverage Period or the Employee Insurance Coverage Period,
Employee shall have the option of choosing Preferred
Provider Organization, Exclusive Provider Organization,
Health Maintenance Organization or such other types of plans
or coverages as are available to DPRC's then-current senior
executive employees.
4. AUTOMOBILE
----------
ALLOWANCE: DPRC to pay Employee's automobile lease monthly payments of
---------
not more than $1,500, as well as all gasoline, insurance
premiums, registration fees and repair and maintenance costs
of such automobile. During the Term, Employee shall be
permitted twice to exchange her leased vehicle for a new one
of equal or comparable value to that of the then currently
leased vehicle to be replaced, similarly equipped.
5. BUSINESS
--------
EXPENDITURES: Employee may be authorized to incur reasonable expenses for
------------
promoting and conducting the business of DPRC, including but
not limited to expenditures for entertainment and travel, in
such amounts and at such times as shall be determined and
approved by DPRC. DPRC shall reimburse Employee monthly for
all such approved
15
<PAGE>
business expenses upon presentation of reasonable
documentation establishing the amount, date, place and
essential character of the expenditures.
6. INCENTIVE
---------
BONUS: Employee's incentive bonus for each fiscal year shall
-----
provide for a maximum bonus of up to 200% of his base salary
for such year and shall be subject to such terms and
conditions as shall be determined in good faith by the Board
of Directors, with the recommendation of and in consultation
with the Compensation Committee of the Board of Directors.
The incentive bonus may be based on financially oriented
components or upon Employee's individual accomplishments or
both. At the request of Employee, within ten (10) business
days after the commencement of each fiscal quarter, DPRC
shall advance to Employee up to one-eighteenth (1/18th) of
the maximum bonus payable by DPRC to Employee hereunder. The
incentive bonus earned for a fiscal year of DPRC (less the
aggregate amount of all advances made by DPRC to Employee
with respect to such fiscal year) shall be paid not later
than thirty (30) calendar days following the review and
approval by the Board of Directors of DPRC of the final
financial statement results of the audit for said fiscal
year by DPRC's independent auditors. In the event that the
aggregate amount of advances made by DPRC to Employee
hereunder during any fiscal year exceeds the amount of the
incentive bonus earned by Employee for such fiscal year,
Employee, within thirty (30) calendar days of the
determination of such amount, shall pay such excess to DPRC.
The current incentive bonus plan is based on DPRC reaching
its internal target levels of budgeted operating income for
the fiscal year, as it may be amended as a result of
acquisitions for the year included (the "Target OI"). A
total of 50% of Employee's base salary shall be paid if the
Target OI is achieved by DPRC. For each 5% above Target OI
achieved by DPRC, Employee shall receive an additional 10%
of base salary up to the maximum 200% of base salary.
7. INDEMNI-
--------
FICATION: DPRC shall enter into a directors and officers
--------
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Indemnification Agreement with Employee pursuant to which
DPRC will be required to indemnify Employee against personal
liability for acts of DPRC to the maximum extent permitted
by law.
8. STOCK
------
OPTIONS: With respect to all future stock option grants by DPRC to
-------
Employee, such stock options shall vest in full following a
"change of control" during the Term. For purposes of such
stock option grants, the term "change of control" shall mean
(i) any merger or consolidation where DPRC is not the
continuing or surviving corporation or pursuant to which all
or substantially all of the shares of DPRC's Common Stock
are converted into cash, other property or securities of
another corporation, other than, in either case, a merger or
consolidation in which the shares of DPRC's Common Stock
outstanding immediately prior to such merger or
consolidation represent or are converted into securities
representing more than 50% of the voting power of the
surviving corporation in such merger or consolidation or the
parent of such corporation, (ii) any sale, lease, exchange
or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of
DPRC, (iii) the approval by the shareholders of DPRC of any
plan or proposal for the liquidation or dissolution of DPRC,
(iv) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange
Act) of 35% or more of DPRC's outstanding Common Stock after
the date hereof, or (v) there shall be any change of control
of a nature which would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act or any successor
regulation of substantially similar import, regardless of
whether DPRC is subject to such reporting requirement at
such time.
In addition, in the event Employee is terminated without
Cause, as defined in Paragraph 12.7 of this Agreement, the
members of the Board of Directors who are not directly
involved in terminating Employee shall consider accelerating
vesting of any unvested options held by
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Employee based upon all of the facts and circumstances
surrounding the termination, including Employee's
performance and tenure with DPRC; provided, however, that
the disinterested Directors involved in such determination
shall be under no obligation to accelerate vesting of
options and shall specifically not do so if such
acceleration would cause a disallowance of "pooling of
interests" accounting in any DPRC merger transactions.
9. ESTATE
------
PLANNING:
---------
DPRC will reimburse Employee for all reasonable attorney's
fees, in an amount not to exceed $5,000 per calendar year,
incurred in connection with creating, reviewing and/or
revising Employee's will and estate plan.
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EXHIBIT 10.7
DATA PROCESSING RESOURCES CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May 26,
1999, by and between DATA PROCESSING RESOURCES CORPORATION, a California
corporation ("DPRC"), and RICHARD E. EARLEY ("Employee"), with reference to the
following:
A. DPRC and Employee are parties to that certain Employment Agreement
dated March 1, 1996, as amended pursuant to that certain Amendment to Employment
Agreement dated September 16, 1996 and that certain Addendum to Employment
Agreement dated September 2, 1997 (the "Prior Employment Agreement").
B. DPRC and Employee now wish to amend and restate the Prior Employment
Agreement as set forth in this Agreement.
NOW, THEREFORE, in consideration for the promises and obligations set forth
below, DPRC and Employee agree as follows:
1. Employment and Term.
-------------------
1.1 DPRC agrees to continue to employ Employee, and Employee agrees to
continue to be employed by DPRC, on the terms and conditions described
below.
1.2 The Prior Employment Agreement commenced on March 1, 1996 for a term
of twenty (20) months. By mutual agreement between DPRC and Employee,
the term of the Prior Employment Agreement has continued through the
present. This Agreement shall be effective as of the date first set
forth above (the "Effective Date") and shall, unless sooner terminated
pursuant to the terms set forth below, terminate on the second
anniversary of the Effective Date. The period during which Employee
is employed by DPRC hereunder is referred to as the "Term." The Term
shall be automatically extended for a period of twelve (12) additional
months unless DPRC shall notify Employee in writing, not less than six
(6) months prior to the end of the initial term or any extension
thereof, of DPRC's intention that the Term not be extended.
2. Duties.
------
2.1 Employee shall serve as the President - Specialty Services Division of
DPRC during the Term and shall devote his full-time efforts to such
1
<PAGE>
duties and responsibilities as may be assigned to him from time to
time by, and shall report to, the President and Chief Operating
Officer of DPRC.
3. Compensation.
------------
3.1 As consideration for the performance of his duties and
responsibilities hereunder, Employee shall be entitled to the
compensation set forth on Exhibit "A" attached hereto and incorporated
herein by this reference (the "Compensation").
3.2 Employee understands and acknowledges that, except as otherwise set
forth in this Agreement, the Compensation will constitute the full and
exclusive consideration to be received by Employee for all services
performed by Employee in connection with DPRC's employment of
Employee, and for the performance of all his promises and obligations
under this Agreement.
3.3 Aside from the Compensation, DPRC may adopt, or continue in force,
benefit plans for the benefit of its employees or certain of its
employees which may include, but not be limited to, group life
insurance, medical insurance, etc. DPRC may terminate any or all
such plans at any time and may choose not to adopt any additional or
replacement plans. Employee's rights under any benefit plans now in
force or later adopted by DPRC shall be governed solely by the terms
of such plans; provided, however, that in no event shall Employee's
rights under any such benefit plans be less than those of any other
senior executive officer of DPRC.
4. Duty to Devote Full Time and Avoid Conflict of Interest. During the Term,
-------------------------------------------------------
Employee shall devote his full-time efforts to his duties as an employee of
DPRC and shall not, directly or indirectly, engage or participate in any
activities which are in conflict with the best interests of DPRC.
5. Compliance with Rules and Regulations. During the Term, Employee shall
-------------------------------------
comply with DPRC's rules, regulations and practices, including but not
limited to those rules concerning vacation and sick leave, as they may from
time to time be adopted or modified, so long as they are uniformly applied
to all employees.
6. Non-competition and Non-solicitation by Employee.
------------------------------------------------
6.1 During the Term, Employee shall not engage in any activity competitive
with or adverse to DPRC's business or welfare, whether alone, as a
partner, or as an officer, director, employee or shareholder of any
other corporation and shall not otherwise undertake planning for or
the
2
<PAGE>
organization of any business activity competitive with DPRC's business
or combine or conspire with other employees or representatives of DPRC
for the purpose of organizing any such competitive business activity;
provided, however, that Employee may own up to one percent (1%) of the
outstanding stock of any publicly traded corporation.
6.2 It is understood that Employee will gain knowledge and make contacts
with DPRC's customers and clients (sometimes collectively referred to
in this Agreement as the "Clients" and individually as a "Client") and
prospective clients of DPRC in the course of his employment. In
recognition of this understanding, Employee agrees as follows:
(a) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or attempt to interfere
in any way with any existing relationships of DPRC with any
Client with whom DPRC has participated in at least one project or
placement within the two (2) years prior to the termination of
his employment, and shall not solicit, divert or take away or
attempt to solicit, divert or take away any business of DPRC that
is either under contract or in negotiation at the time of the
termination of his employment.
(b) For a period of two (2) years following the termination of his
employment, Employee shall not interfere or compete in any way
with any proposal efforts of DPRC already in progress (that is, a
proposal sent to or being then currently developed for a specific
Client or potential client of DPRC) at the time of the
termination of his employment.
(c) For a period of two (2) years following the termination of his
employment, Employee shall not make use, in a manner competitive
with the business of DPRC, of any of his personal relationships
or business contacts developed during his employment or prior to
his employment.
(d) For a period of two (2) years following the termination of his
employment, Employee shall not induce, solicit or influence or
attempt to induce, solicit or influence any person who is engaged
as an employee or otherwise by DPRC, to terminate his or her
employment or other engagement with DPRC.
7. Trade Secrets of Dprc. Employee acknowledges and understands that during
---------------------
his employment, he will have access to and will utilize and review
information which constitutes valuable, important and confidential trade
secrets, as that term
3
<PAGE>
is interpreted under the Uniform Trade Secrets Act (California Civil Code
Section 3426 et seq.) and/or confidential and proprietary material and
-- ---
information of or relating to the business of DPRC necessary for the
successful conduct of DPRC's business. This information includes, but is
not limited to: (a) listings of and data regarding the Clients (past and
current); (b) information regarding potential customers and clients; (c)
data relating to the personnel, supervisory structure and procedures of the
Clients; (d) information regarding specific computer technician staffing
needs of the Clients; (e) information as to the identity, whereabouts,
capabilities and availability of contractors in DPRC's database; (f)
information regarding bidding, billing and pricing practices; (g)
information regarding the nature and type of services rendered to the
Clients; and (h) other methodologies, computer programs, employee and
contractor resumes, employee databases, processes, compilations of
information, results of proposals, job notes, reports and records (all of
which information is sometimes referred to in this Agreement as the
"Secrets"). The foregoing notwithstanding, Secrets shall not include
information or data which is (i) in the public domain, (ii) generally known
in the information technology staffing services industry, (iii) already
known to Employee as of the date he began his employment with DPRC, or (iv)
rightfully disclosed to Employee outside of the scope of his employment
with DPRC by a third party not under a duty of confidentiality to DPRC.
Employee understands further that the Secrets have been and will be
accumulated by Employee and other personnel at DPRC at considerable expense
to DPRC (including but not limited to compensation paid to DPRC personnel
dealing with the Secrets and the Clients), and that DPRC has and will
continue to expend its resources in order to maintain actively and
vigorously the confidentiality of the Secrets, as such information is
extremely valuable to DPRC, and well worth the expense of enforcement and
preservation of such confidentiality. Accordingly, Employee agrees as
follows:
(a) All of the Secrets shall be safeguarded and treated as
confidential by Employee.
(b) Any and all data, notes, letters, computer programs and data,
reports, telephone records and all other written documentation
relating to the business of DPRC (including but not limited to
the Secrets) that may be collected, compiled, written, reviewed
or conceived by Employee from or by reason of services performed
by Employee for DPRC shall become the absolute property of DPRC,
and Employee shall not assert or establish a claim for any
statutory or common law right or any other possessory or
proprietary right with respect to any of the above.
(c) Employee shall hold the Secrets in strictest confidence and shall
not (i) disclose any Secrets to any person, corporation, firm, or
4
<PAGE>
other entity, either during the Term or thereafter, or (ii) use
any Secrets in Employee's subsequent business or employment
without the prior express written authorization of DPRC;
provided, however, that Employee may disclose Secrets to the
extent required to do so by a subpoena lawfully issued in a
judicial proceeding or arbitration.
(d) Employee shall not otherwise commit any act which shall
compromise the confidentiality of any Secrets, including but not
limited to making a copy of such property (whether electronic,
paper or otherwise) without the prior express written
authorization of DPRC.
8. CONFIDENTIAL INFORMATION OF CLIENTS. All ideas, concepts, information and
-----------------------------------
written material disclosed to Employee by DPRC, or acquired from any
Client, and all financial, accounting, statistical, personnel, and business
data and plans of the Clients, are and shall remain the sole and exclusive
property and proprietary information of DPRC, or such Client, as the case
may be, and are disclosed in confidence by DPRC or permitted to be acquired
from the Clients in reliance on Employee's agreement to maintain them in
confidence and not to use or disclose them to any other person except in
furtherance of DPRC's business.
9. RETURN OF INFORMATION. At the time of the termination of his employment,
---------------------
Employee shall deliver promptly to DPRC all notes, books, electronic data
(regardless of storage media), correspondence and other written or
graphical records (including all copies thereof) in Employee's possession
or under Employee's control relating to any business, work, Clients or any
other aspect of DPRC, whether or not containing any Secrets, including but
not limited to each original and all copies of all or any part thereof.
10. COOPERATION. Both during the Term and thereafter, Employee shall sign
-----------
all papers, give evidence and testimony and, at DPRC's expense, perform all
acts which, in DPRC's opinion, are necessary, proper or expedient to carry
out and fulfill the purposes and intents of this Agreement.
11. REMEDIES; INJUNCTIVE RELIEF. Employee acknowledges and agrees that, in the
---------------------------
event of a breach or threatened breach by Employee of any of the provisions
of this Agreement, DPRC shall be entitled to a preliminary and a permanent
injunction in order to prevent or restrain any such breach by Employee or
by Employee's partners, agents, representatives, servants, employers,
employees, and/or any and all persons directly or indirectly acting for or
with Employee, in addition to and not in limitation of any other rights,
remedies, or damages
5
<PAGE>
available to DPRC at law or in equity.
12. TERMINATION OF EMPLOYMENT.
-------------------------
12.1 DPRC may terminate Employee's employment at any time with "Cause" (as
defined below). In the event that DPRC terminates Employee's
employment with Cause, DPRC shall be obligated only to pay the base
salary of the Compensation through the effective date of such
resignation and, except as otherwise agreed in writing or as
otherwise provided by this Agreement, DPRC shall have no further
obligation to Employee under this Agreement by way of compensation or
otherwise. Notwithstanding the foregoing, to the extent the grounds
for any proposed termination with Cause are capable of being cured or
remedied by Employee, DPRC shall not terminate Employee with Cause
unless the Chief Executive Officer of DPRC has first counseled
Employee as to how he could effect such cure or remedy and Employee
is given at least thirty (30) days to do so. A determination of
whether Employee has satisfactorily effected such cure or remedy
shall be promptly made by a majority of the disinterested directors
of the Board of Directors at the end of the period provided to
Employee for such cure or remedy and such determination shall be
final.
12.2 DPRC may terminate Employee's employment at any time without Cause
(as defined below) by giving Employee thirty (30) days' advance
written notice of such termination. Employee may resign for Good
Reason (as defined below) by giving DPRC thirty (30) days' advance
written notice of such resignation. In the event that DPRC terminates
Employee without Cause, or Employee resigns for Good Reason, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective
date of such termination or resignation and, thereafter, until the
earlier to occur of (i) the expiration of twelve (12) months after
the effective date of such termination, (ii) the date upon which
Employee becomes employed on a full-time basis (including but not
limited to self-employment, but only if Employee holds himself out to
the public as being a self-employed consultant or other businessman),
or (iii) the date upon which Employee violates any of Sections 6
through 10, inclusive. In addition, DPRC shall pay Employee, at such
time following completion of the fiscal year-end audit when all other
senior executive bonuses are paid, the pro-rated Incentive Bonus
described in such Exhibit "A" to which Employee was entitled during
his employment (which proration shall be based on a fraction, the
numerator of which is the number of calendar days during the fiscal
year during which Employee was employed prior to the effective date
of such termination or resignation and the denominator of
6
<PAGE>
which is 365). If DPRC's medical and/or life insurance plans do not
allow Employee's continued participation in such plan or plans during
the period described above, then DPRC shall pay to Employee, in
monthly installments, from the date on which Employee's participation
in such medical and/or life insurance, as applicable, is prohibited
for the remainder of the time period described in the third sentence
of this Section 12.2, the monthly premium or premiums which had been
payable by DPRC with respect to Employee for such discontinued
medical and/or life insurance, as applicable.
12.3 Employee may resign without Good Reason at any time by giving DPRC
forty-five (45) days' advance written notice of such resignation. In
the event that Employee resigns without Good Reason, DPRC shall be
obligated only to pay the base salary of the Compensation through the
effective date of such resignation and, except as otherwise agreed in
writing or as otherwise provided by this Agreement, DPRC shall have
no further obligation to Employee under this Agreement by way of
compensation or otherwise.
12.4 DPRC may terminate Employee's employment at any time if Employee
becomes Disabled (as defined below) by giving Employee thirty (30)
days' advance written notice of such termination. In the event that
DPRC terminates Employee's because Employee has become Disabled, DPRC
shall pay to Employee the base salary of the Compensation and provide
the same health and life insurance benefits through the effective
date of such termination and, thereafter, until the earlier to occur
of (i) the expiration of twelve (12) calendar months after the
effective date of such termination of employment, (ii) the date upon
which Employee becomes employed on a full-time basis (including but
not limited to self-employment, but only if Employee holds himself
out to the public as being a self-employed consultant or other
businessman), or (iii) the date upon which Employee violates any of
Sections 6 through 10, inclusive. In addition, DPRC shall pay
Employee, at such time following completion of the fiscal year-end
audit when all other senior executive bonuses are paid, the pro-rated
Incentive Bonus described in such Exhibit "A" to which Employee was
entitled during his employment (which proration shall be based on a
fraction, the numerator of which is the number of calendar days
during the fiscal year during which Employee was employed prior to
the effective date of such termination and the denominator of which
is 365). If DPRC's medical and/or life insurance plans do not allow
Employee's continued participation in such plan or plans during the
period described above, then DPRC shall pay to Employee, in monthly
installments, from the date on which Employee's participation in such
medical and/or life insurance, as applicable, is
7
<PAGE>
prohibited for the remainder of the time period described in the
second sentence of this Section 12.4, the monthly premium or premiums
which had been payable by DPRC with respect to Employee for such
discontinued medical and/or life insurance, as applicable.
12.5 Employee's agreements, duties and obligations under Sections 6
through 10, inclusive, shall survive the termination of this
Agreement and shall continue after any termination of Employee's
employment pursuant to Sections 12.1, 12.2, 12.3 or 12.4 of this
Agreement.
12.6 This Agreement will terminate immediately upon Employee's death. In
such event, DPRC shall pay to his estate (a) the base salary of the
Compensation through the date of Employee's death and, thereafter,
until the expiration of twelve (12) calendar months after the date of
Employee's death, and, (b) at such time following completion of the
fiscal year-end audit when all other senior executive bonuses are
paid, the pro-rated Incentive Bonus described in such Exhibit "A" to
which Employee was entitled during his employment (which proration
shall be based on a fraction, the numerator of which is the number of
calendar days during the fiscal year during which Employee was
employed prior to Employee's death and the denominator of which is
365), and DPRC shall have no further obligation to Employee's estate
under this Agreement by way of compensation or otherwise.
12.7 As used in this Agreement, the following terms shall have the
meanings indicated:
(a) "Cause" shall mean an action or actions by Employee during his
employment (including but not limited to inactions) which
constitute either (i) gross insubordination, gross negligence,
unethical or criminal behavior constituting a felony under
federal or state law and which involves moral turpitude, or a
breach of fiduciary duty of Employee as an officer and/or
director of DPRC, or (ii) a violation of any of Sections 4
through 10, inclusive.
(b) "Disabled" shall mean Employee's ability to perform his duties
under this Agreement is impaired, due to sickness, physical or
mental impairment or injury, by more than twenty-five (25%) for
a period of six (6) consecutive months or for nine (9) months in
any consecutive twelve (12) month period. In the event Employee
disputes DPRC's determination that he is Disabled, Employee
shall give written notice of such dispute to DPRC during the
thirty (30) day notice period prior to the proposed
8
<PAGE>
effective date of such termination, and Employee and DPRC shall
thereupon each select, within ten (10) days of such notice from
Employee, a physician to evaluate whether Employee is Disabled.
Such physicians shall complete their evaluation and report to the
Board of Directors within ten (10) days. If such physicians do
not agree as to whether Employee is Disabled, they shall promptly
select a third physician to further evaluate Employee, whose
conclusion on such matter shall be rendered within ten (10) days
of his or her selection and shall be final and binding on
Employee and DPRC.
(c) "Good Reason" shall mean any of the following:
(i) (A) a demotion or assignment to Employee of duties
inconsistent with his position, duties, responsibilities
or status with DPRC, (B) a change in Employee's titles or
offices adverse to Employee, or (C) any removal of
Employee from or any failure to reelect Employee to the
office of President - Specialty Services of DPRC, except,
in any such case, with Employee's consent or in connection
with the termination of his employment pursuant to Section
12.1 (with Cause), 12.3 (resignation without Good Reason),
12.4 (disability), 12.6 (death) or retirement; provided,
however, that Good Reason shall not include the assignment
to Employee of any duties or responsibilities of one or
more management positions within his competence to the
extent that any such position is not filled at any time
and it is necessary to perform the duties and
responsibilities of such position pending the hiring of a
person to hold such position, and provided that DPRC is
actively seeking to fill such position during the period
of such assignment;
(ii) a purported reduction by DPRC in the Compensation in
effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or any
failure by DPRC to reimburse Employee or provide any
material benefits set forth in Exhibit A;
(iii) any failure by DPRC to continue in effect any benefit plan
or arrangement (including, without limitation, DPRC's
incentive bonus plan, profit sharing plan, stock option
plans, medical insurance plans, disability insurance
plans, life insurance plans or vacation pay plans, with
such
9
<PAGE>
generally applicable amendments thereto as may be approved
from time to time in good faith by DPRC's Board of
Directors) in which Employee is participating or other
plans providing Employee with substantially similar
benefits (each, a "Benefit Plan"), or any action by DPRC
which would materially and adversely affect Employee's
participation in or materially reduce Employee's benefits
under any Benefit Plan;
(iv) any failure by DPRC to obtain the assumption of this
Agreement by any successor or assign of DPRC, if such
successor or assign asserts the position that it is not
bound by the provisions hereof; or
(v) any failure by DPRC to comply with any material provision
of this Agreement;
provided, however, that no such action shall be considered to
constitute Good Reason unless and until Employee has given DPRC
written notice of, and thirty (30) days' opportunity to cure or
remedy the specific action which Employee alleges would
constitute Good Reason if not so cured or remedied and DPRC has
failed to effect such cure or remedy.
12.8 The rights and remedies provided in this Section 12 shall constitute
the exclusive rights and remedies available to Employee relating to
or arising from the termination of his employment, including claims
for breach of contract or in tort; provided, however, that Employee
shall be entitled to pursue any and all available legal remedies
based on any claim that such termination constituted a violation of
applicable federal or state statutes or regulations.
12.9 No policies or procedures of DPRC or benefits provided by DPRC,
whether oral or written, express or implied, formal or informal, are
intended, nor shall they be construed to limit the right or ability
of DPRC to terminate Employee's employment or the right or ability
of Employee to resign as set forth above. Except as otherwise agreed
in writing or as otherwise provided by this Agreement, upon
termination of Employee's employment, neither DPRC nor Employee
shall have any further obligation to each other by way of
compensation or otherwise.
12.10 DPRC will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of DPRC, by
agreement in form and
10
<PAGE>
substance reasonably satisfactory to Employee, expressly, absolutely
and unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that DPRC would be required
to perform this Agreement if no such succession or assignment had
taken place. In any such event, the term "DPRC" as used in this
Agreement shall mean any such successor or assign which executes and
delivers the agreement provided for in the immediately preceding
sentence or which otherwise becomes bound by the terms and
provisions of this Agreement by operation of law.
12.11 Employee shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other
employment or otherwise. Except as expressly provided herein, no
payment or benefit provided for under this Agreement shall be
reduced by any compensation earned by Employee as the result of
employment by another employer after the date of termination with
DPRC. Except as expressly provided herein, the provisions of this
Agreement, and any payment or benefit provided for hereunder, shall
not reduce any amounts otherwise payable, or in any way diminish
Employee's existing rights, or rights which would accrue solely as a
result of the passage of time, under any DPRC Benefit Plan,
employment agreement or other contract, plan or arrangement.
13. MISCELLANEOUS PROVISIONS.
------------------------
13.1 In the event that any of the provisions of this Agreement shall be
held to be invalid or unenforceable, then all other provisions shall
nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included in this
Agreement. In the event that any provision relating to the time
period of any restriction imposed by this Agreement shall be
declared by a court of competent jurisdiction to exceed the maximum
time period which such court deems reasonable and enforceable, then
the time period of restriction deemed reasonable and enforceable by
the court shall become and shall thereafter be the maximum time
period. In the event that any of the provisions of this Agreement
shall be determined to cause a disallowance of any "pooling of
interests" accounting treatment for any merger, acquisition or
consolidation of DPRC with another entity, such provisions shall be
deemed to be deleted and of no force and effect and all other
provisions shall nevertheless continue to be valid and enforceable
and read as though the deleted provisions had not been included in
this Agreement.
13.2 This Agreement shall be binding upon the heirs, executors,
administrators, and successors-in-interest of the parties hereto.
11
<PAGE>
13.3 This Agreement shall be construed and enforced according to the laws
of the State of California, excluding its choice of law rules.
13.4 This Agreement supersedes all previous correspondence, promises,
representations, and agreements, if any, either written or oral,
between DPRC and Employee. No provision of this Agreement may be
modified except by a writing signed by Employee and by the Chief
Executive Officer of DPRC (or by such other person as may be
expressly authorized to sign such writing by the Board of Directors
of DPRC).
13.5 All notices, demands, requests, consents, approvals or other
communications (collectively "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement
shall be in writing and shall be personally served or deposited in
the United States mail, registered or certified, return receipt
requested, postage prepaid, addressed (i) in the case of notices to
DPRC, to the Chief Executive Officer of DPRC at DPRC's headquarters
office at such time, and (ii) in the case of notices to Employee, to
Employee's home address as set forth on the employment records of
DPRC, or to such other address as such party shall have specified
most recently by written notice. Notices shall be deemed given on the
date of service if personally served. Notices mailed as provided
herein shall be deemed given on the third business day following the
date so mailed.
13.6 Should any party institute any action or proceeding to enforce this
Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement or of any provision hereof, or for a
declaration of rights hereunder, the prevailing party in any such
action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys',
accountants' and experts' fees, incurred by the prevailing party in
connection with such action or proceeding.
14. ACKNOWLEDGMENT BY EMPLOYEE. Employee (i) has carefully read and considered
--------------------------
the provisions of this Agreement, (ii) has had an opportunity to review the
terms of this Agreement with legal counsel of his choosing, (iii) fully
understands the extent and impact of the terms and provisions of this
Agreement, and (iv) has executed this Agreement voluntarily.
12
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
DATA PROCESSING EMPLOYEE
RESOURCES CORPORATION
By:______________________________ _____________________________
Mary Ellen Weaver Richard E. Earley
Chief Executive Officer
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EXHIBIT A
COMPENSATION OF RICHARD E. EARLEY
---------------------------------
The following summarizes the compensation to which Employee shall be
entitled under the foregoing terms of this Employment Agreement.
1. BASE SALARY Employee's base salary shall be $225,000 per year, paid in at
-----------
least bi-weekly installments. Employee's base annual salary
shall be reviewed and adjusted no less frequently than once
per year. In no event, and under no circumstances, shall
Employee's annual salary be reduced below the most recent
annual salary.
2. VACATION During the Term, Employee shall be entitled to four (4) weeks
--------
of paid vacation time per calendar year (plus such other time
as may be permitted by the Board); provided, however, that any
such vacation time, if not used, will be subject to DPRC's
limitations on carrying forward unused vacation time, pursuant
to which Employee's accrued vacation time may not exceed six
(6) weeks at any time; and, provided further, that Employee
shall use his best efforts to coordinate with the Chief
Executive Officer of DPRC the dates upon which he uses his
vacation so as to minimize the negative impact upon DPRC
occasioned by Employee's absence. Employee shall not be
entitled to take in excess of four (4) weeks vacation at any
one time, except by the written consent of the Chief Executive
Officer of DPRC, or upon request of DPRC in connection with
Employee's leave of absence for family, medical or other
reasons, as permitted by law.
3. OTHER
-----
BENEFITS: Employee shall be entitled to participate in and receive
--------
benefits under all profit-sharing plans, pension plans, group
medical plans and other benefit plans for the payment of
additional compensation or benefits to employees of DPRC which
DPRC at any time maintains for executive employees.
4. AUTOMOBILE
----------
ALLOWANCE: Employee shall be entitled to an automobile allowance of $700
---------
per month.
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5. BUSINESS
--------
EXPENDITURES: Employee may be authorized to incur reasonable expenses for
------------
promoting and conducting the business of DPRC, including but
not limited to expenditures for entertainment and travel, in
such amounts and at such times as shall be determined and
approved by the Chief Executive Officer of DPRC. DPRC shall
reimburse Employee monthly for all such approved business
expenses upon presentation of reasonable documentation
establishing the amount, date, place and essential character
of the expenditures.
6. INCENTIVE
---------
BONUS: Employee's bonus shall be calculated on the extent to which
-----
DPRC achieves its internal budgeted earnings before interest
and taxes, as amended due to corporate acquisitions for the
subject fiscal year ("Budgeted EBIT") in the Specialty
Services Division (the "SSD"). Subject to proration for the
period of time during the fiscal year that Employee has been
in charge of the SSD, Employee shall earn an incentive bonus
based upon the following: (i) in the event that the SSD
achieves 85% of Budgeted EBIT, Employee shall receive an
annual bonus equal to 15% of base salary, (ii) in the event
that the SSD achieves 115% of Budgeted EBIT, Employee shall
receive an annual bonus equal to 100% of base salary, (iii)
in the event that the SSD achieves between 85% and 115% of
Budgeted EBIT, Employee's bonus shall be adjusted
proportionally between 15% and 100% of base salary, (iv) in
the event that the SSD achieves in excess of 115% of
Budgeted EBIT, for each 5% above Budgeted EBIT, Employee
shall receive an additional 10% of base salary up to a
maximum 200% of base salary. Employee's incentive bonus for
each fiscal year shall provide for a maximum bonus of up to
200% of his base salary for such year and shall be subject
to such additional terms and conditions as shall be
determined in good faith by the Board of Directors, with the
recommendation of and in consultation with the Compensation
Committee of the Board of Directors. At the request of
Employee, within ten (10) business days after the
commencement of each fiscal quarter, DPRC shall advance to
Employee up to one-eighteenth (1/18th) of the maximum bonus
payable by DPRC to Employee hereunder. The incentive bonus
earned for a fiscal year
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<PAGE>
of DPRC (less the aggregate amount of all advances made by
DPRC to Employee with respect to such fiscal year) shall be
paid not later than thirty (30) calendar days following the
review and approval by the Board of Directors of DPRC of the
final financial statement results of the audit for said
fiscal year by DPRC's independent auditors. In the event
that the aggregate amount of advances made by DPRC to
Employee hereunder during any fiscal year exceeds the amount
of the incentive bonus earned by Employee for such fiscal
year, Employee, within thirty (30) calendar days of the
determination of such amount, shall pay such excess to DPRC.
7. INDEMNI-
-------
FICATION: DPRC shall enter into a directors and officers
--------
Indemnification Agreement with Employee pursuant to which
DPRC will be required to indemnify Employee against personal
liability for acts of DPRC to the maximum extent permitted
by law.
8. STOCK
-----
OPTIONS: Notwithstanding anything to the contrary in any Stock Option
-------
Agreement or Incentive Stock Agreement previously entered
into by DPRC and Employee, DPRC hereby reaffirms its
obligations under and pursuant to that certain Amendment to
Employment Agreement dated September 16, 1996 between DPRC
and Employee (the "1996 Amendment"), the terms and
conditions of which were authorized and approved by the
Board of Directors of DPRC on July 23, 1996. Specifically,
upon the occurrence of a "change of control" during the
Term, any and all stock options granted to Employee under
DPRC's stock option plans shall, whether or not Employee is
terminated as a result of such change of control, become
immediately vested and exercisable for a period not to
exceed the lesser of (a) two (2) years, or (b) the date on
which such stock options would otherwise have terminated
(other than by reason of the termination of the Employment).
Notwithstanding the definition of "change of control" or the
two-year time limitation on accelerated vesting set forth in
the Prior Employment Agreement, for the purpose of the
amendment to all options previously granted to Employee, as
well as all future options, such stock options shall vest in
full following a "change of
16
<PAGE>
control" during the Term and the term "change of control"
shall mean (i) any merger or consolidation where DPRC is not
the continuing or surviving corporation or pursuant to which
all or substantially all of the shares of DPRC's Common
Stock are converted into cash, other property or securities
of another corporation, other than, in either case, a merger
or consolidation in which the shares of DPRC's Common Stock
outstanding immediately prior to such merger or
consolidation represent or are converted into securities
representing more than 50% of the voting power of the
surviving corporation in such merger or consolidation or the
parent of such corporation, (ii) any sale, lease, exchange
or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of
DPRC, (iii) the approval by the shareholders of DPRC of any
plan or proposal for the liquidation or dissolution of DPRC,
(iv) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange
Act) of 35% or more of DPRC's outstanding Common Stock after
the date hereof, or (v) there shall be any change of control
of a nature which would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act or any successor
regulation of substantially similar import, regardless of
whether DPRC is subject to such reporting requirement at
such time.
In addition, in the event Employee is terminated without
Cause, as defined in Paragraph 12.7 of this Agreement, the
members of the Board of Directors who are not directly
involved in terminating Employee shall consider accelerating
vesting of any unvested options held by Employee based upon
all of the facts and circumstances surrounding the
termination, including Employee's performance and tenure
with DPRC; provided, however, that the disinterested
Directors involved in such determination shall be under no
obligation to accelerate vesting of options and shall
specifically not do so if such acceleration would cause a
disallowance of "pooling of interests" accounting in any
DPRC merger transactions.
17
<PAGE>
9. ESTATE
------
PLANNING: DPRC will reimburse Employee for all reasonable attorney's
---------
fees, in an amount not to exceed $5,000 per calendar year,
incurred in connection with creating, reviewing and/or
revising Employee's will and estate plan.
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERNALLY
PREPARED CONSOLIDATED FINANCIAL STATEMENTS FOR THE 9 MONTHS ENDED APRIL 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR PERIOD ENDED
APRIL 30, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> APR-30-1999
<CASH> 29,657
<SECURITIES> 22,294
<RECEIVABLES> 52,786
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 114,156
<PP&E> 9,209
<DEPRECIATION> 0
<TOTAL-ASSETS> 301,245
<CURRENT-LIABILITIES> 30,624
<BONDS> 0
0
0
<COMMON> 127,033
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 301,245
<SALES> 0
<TOTAL-REVENUES> 274,463
<CGS> 0
<TOTAL-COSTS> 191,618
<OTHER-EXPENSES> 57,390
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,431
<INCOME-PRETAX> 23,024
<INCOME-TAX> 10,159
<INCOME-CONTINUING> 12,865
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,865
<EPS-BASIC> .91<F1>
<EPS-DILUTED> .87<F2>
<FN>
<F1>EPS IS REPORTED AS "BASIC EPS," AS PRESCRIBED BY SFAS NO. 128
<F2>EPS IS REPORTED AS "DILUTED EPS," AS PRESCRIBED BY SFAS NO. 128
</FN>
</TABLE>
