<PAGE>
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 QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER 0-13984
DIVERSIFIED CORPORATE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-1565578
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12801 NORTH CENTRAL EXPRESSWAY
SUITE 350
DALLAS, TEXAS 75243
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 458-8500
Former name, former address and former fiscal year if changed since last report:
Indicate by check mark whether registrant (1) has filed all reports required
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 of the registrant outstanding on March 31,
1998, was 2,747,597.
Total Number of pages for
this 10-Q filing: 12
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
MARCH 31, DECEMBER 31,
1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents. . . . . . . . . . . . . . . . . $ 7,640,136 $ 7,500,188
Trade accounts receivable, less allowance for
doubtful accounts of approximately $488,000
and $536,000, respectively. . . . . . . . . . . . . . 5,220,878 4,882,788
Notes receivable-related party . . . . . . . . . . . . . . 10,648 10,387
Prepaid expenses and other current assets. . . . . . . . . 261,440 106,468
Federal income taxes receivable. . . . . . . . . . . . . . 105,048 201,436
Deferred income taxes. . . . . . . . . . . . . . . . . . . 256,294 243,518
----------- -----------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . 13,494,444 12,944,785
PROPERTY AND EQUIPMENT, NET. . . . . . . . . . . . . . . . . . . 1,472,617 1,389,761
OTHER ASSETS:
Investment in and advances to joint venture. . . . . . . . 244,560 226,638
Notes receivable-related party . . . . . . . . . . . . . . 8,644 11,385
Deferred income taxes. . . . . . . . . . . . . . . . . . . 379,575 428,330
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 164,373 160,657
----------- -----------
$15,764,213 $15,161,556
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable and accrued expenses. . . . . . . . $ 3,688,822 $ 3,487,470
Current maturities of long-term debt . . . . . . . . . . . 2,077 2,026
----------- -----------
TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . . . . 3,690,899 3,489,496
DEFERRED LEASE RENTS . . . . . . . . . . . . . . . . . . . . . . 26,799 53,131
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . . . 65,592 66,134
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 1,000,000 shares
authorized, none issued. . . . . . . . . . . . . . . . . - -
Common stock, $.10 par value; 10,000,000 shares
authorized, 2,993,446 and 2,985,946 shares
issued, respectively. . . . . . . . . . . . . . . . 299,345 298,595
Additional paid-in capital . . . . . . . . . . . . . . . . 11,131,128 11,080,504
Retained earnings. . . . . . . . . . . . . . . . . . . . . 735,625 358,871
Common stock held in treasury (245,849 shares at cost) . . (185,175) (185,175)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . 11,980,923 11,552,795
----------- -----------
$15,764,213 $15,161,556
----------- -----------
----------- -----------
</TABLE>
See notes to Consolidated Financial Statements.
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
FOR THE THREE MONTHS ENDED
MARCH 31,
-------------------------------
1998 1997
----------- -----------
<S> <C> <C>
NET SERVICE REVENUES:
Permanent placement . . . . . . . . . . . . . . . . . . . . $ 4,782,612 $ 3,680,408
Specialty services. . . . . . . . . . . . . . . . . . . . . 1,642,175 1,875,772
Contract placement. . . . . . . . . . . . . . . . . . . . . 2,488,008 1,722,418
Training. . . . . . . . . . . . . . . . . . . . . . . . . . 54,439 -
----------- -----------
8,967,234 7,278,598
COST OF SERVICES . . . . . . . . . . . . . . . . . . . . . . . . 6,363,263 5,194,543
----------- -----------
GROSS MARGIN . . . . . . . . . . . . . . . . . . . . . . . . . . 2,603,971 2,084,055
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,143,487) (1,886,885)
OTHER INCOME (EXPENSES):
Loss from joint venture operations. . . . . . . . . . . . . (13,623) (11,212)
Interest income (expense), net. . . . . . . . . . . . . . . 97,737 (70,525)
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . 6,000 32,758
----------- -----------
90,114 (48,979)
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM. . . . . . . . . . . . . . . . . . . 550,598 148,191
INCOME TAXES, current provision. . . . . . . . . . . . . . . . . (173,844) 42,681
----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM . . . . . . . . . . . . . . . . 376,754 190,872
EXTRAORDINARY ITEM, gain on debt restructuring, net of
income tax. . . . . . . . . . . . . . . . . . . . . . . . . - 43,083
----------- -----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . $ 376,754 $ 233,955
----------- -----------
----------- -----------
BASIC EARNINGS PER SHARE:
Income before extraordinary item. . . . . . . . . . . . . . $ .14 $ .11
Extraordinary item. . . . . . . . . . . . . . . . . . . . . .00 .03
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .14 $ .14
----------- -----------
----------- -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING . . . . . . . . . . . 2,740,339 1,635,312
----------- -----------
----------- -----------
DILUTED EARNINGS PER SHARE:
Income before extraordinary item. . . . . . . . . . . . . . $ .13 $ .11
Extraordinary item. . . . . . . . . . . . . . . . . . . . . .00 .02
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .13 $ .13
----------- -----------
----------- -----------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING . . . . . . . . . . . . . . . . . 2,858,491 1,789,145
----------- -----------
----------- -----------
</TABLE>
See notes to Consolidated Financial Statements.
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
FOR THE THREE MONTHS ENDED
MARCH 31,
-----------------------------
1998 1997
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . . . $ 376,754 $ 233,955
Adjustments to reconcile net income to cash
provided by operating activities:
Extraordinary Item . . . . . . . . . . . . . . . . . . . - (43,083)
Depreciation and amortization. . . . . . . . . . . . . . 93,250 61,911
Provision for allowances . . . . . . . . . . . . . . . . (48,786) (7,849)
Income tax effect of options exercised . . . . . . . . . 28,875 -
Equity in loss of joint venture. . . . . . . . . . . . . 13,623 11,212
Deferred income taxes. . . . . . . . . . . . . . . . . . 35,979 -
Deferred lease rents . . . . . . . . . . . . . . . . . . (26,332) 12,064
Changes in operating assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . . . . . . (289,304) (248,841)
Refundable federal income taxes. . . . . . . . . . . . . 96,388 -
Prepaid expenses and other assets. . . . . . . . . . . . (130,724) (76,252)
Trade accounts payable and accrued expenses. . . . . . . 201,352 227,785
---------- ---------
Cash provided by operating activities. . . . . . . . . 351,075 170,902
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . (176,106) (286,092)
Deposits . . . . . . . . . . . . . . . . . . . . . . . . (3,716) 500
Loans and advances to related parties. . . . . . . . . . 2,480 (15,669)
Repayment from related parties . . . . . . . . . . . . . (1,749) 2,161
Net advances to joint venture. . . . . . . . . . . . . . (31,545) (68,612)
---------- ---------
Cash used in investing activities. . . . . . . . . . . (210,636) (367,712)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under other short-term debt. . . . . . . . . . - 84,807
Increase in borrowings under factoring and loan
arrangements. . . . . . . . . . . . . . . . . . . . . - 125,374
Principal payments under long-term debt obligations. . . (491) (5,442)
Book overdraft . . . . . . . . . . . . . . . . . . . . . - (98,158)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . - (32,853)
---------- ---------
Cash provided by (used in) financing activities. . . . (491) 73,728
Increase (decrease) in cash and cash equivalents . . . . 139,948 (123,082)
Cash and cash equivalents at beginning of year . . . . . 7,500,188 612,512
---------- ---------
Cash and cash equivalents at end of period . . . . . . . $7,640,136 $ 489,430
---------- ---------
---------- ---------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest . . . . . . . . . . . . . . . . . $ 2,153 $ 76,718
---------- ---------
---------- ---------
Cash paid for taxes. . . . . . . . . . . . . . . . . . . $ 32,489 $ 55,513
---------- ---------
---------- ---------
NON-CASH FINANCING ACTIVITY:
Receivable for exercise of stock options -
collected in April, 1998. . . . . . . . . . . . . . $ 22,500 $ -
---------- ---------
---------- ---------
</TABLE>
See notes to Consolidated Financial Statements.
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the operations of
Diversified Corporate Resources, Inc. and its subsidiaries (the "Company"),
all of which are wholly owned. The financial information for the three
months ended March 31, 1998 and 1997, is unaudited but includes all
adjustments (consisting only of normal recurring accruals) which the Company
considers necessary for a fair presentation of the results for the periods.
The financial information should be read in conjunction with the consolidated
financial statements for the year ended December 31, 1997, included in the
Company's Annual Report on Form 10-K ("Form 10-K"). Operating results for
the three months ended March 31, 1998, are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1998.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of:
<TABLE>
MARCH 31, DECEMBER 31,
1998 1997
---------- ----------
<S> <C> <C>
Computer equipment and software . . $1,430,088 $1,281,305
Office equipment and furniture. . . 541,912 536,518
Leasehold improvements. . . . . . . 178,832 160,124
---------- ----------
2,150,832 1,977,947
Less accumulated depreciation and
amortization . . . . . . . . . (678,215) (588,186)
---------- ----------
$1,472,617 $1,389,761
---------- ----------
---------- ----------
</TABLE>
Included in computer equipment and software are software development costs in
progress of approximately $143,000 and $93,000 at March 31, 1998 and December
31, 1997, respectively.
3. INCOME TAXES
The income tax provision (benefit) and the amount computed by applying the
federal statutory income tax rate to income before income taxes differs as
follows:
<TABLE>
FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
1998 1997
-------- --------
<S> <C> <C>
Tax provision (at statutory rate). . . . $192,709 $ 79,545
Utilization of net operating loss
carryforwards. . . . . . . . . . . . (79,545)
Other, principally change of estimate. . (31,467) -
State income tax (benefit) . . . . . . . 12,602 (42,681)
-------- --------
Total. . . . . . . . . . . . . . . $173,844 $(42,681)
-------- --------
-------- --------
</TABLE>
<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
4. EARNINGS PER SHARE
Basic EPS was determined by dividing net income by the weighted
average number of shares of common stock outstanding during the year and
diluted EPS included these shares plus common stock equivalents outstanding
during the year (common stock equivalents are excluded if the effects of
inclusion are antidilutive).
The following is reconciliation of the weighted average number of
shares outstanding during the period for basic and diluted earnings per share.
<TABLE>
FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Basic . . . . . . . . . . . . . . . 2,740,339 1,635,312
Net effect of dilutive stock
options . . . . . . . . . . . . . 118,152 153,833
--------- ---------
Diluted . . . . . . . . . . . . . . 2,858,491 1,789,145
--------- ---------
--------- ---------
Total options and warrants
outstanding. . . . . . . . . . 589,590 470,000
Options and warrants not
considered because effects
of inclusion would be
antidilutive . . . . . . . . . 267,090 52,000
</TABLE>
5. CONTINGENCIES
The Company was named as a garnishee in a lawsuit against the
majority shareholder, which the Company believes is without merit. As the
result of an Agreed Temporary Order dated October 24, 1996, the Company was
non-suited in this matter. The Company has filed a separate lawsuit against
the plaintiff seeking damages and reimbursement of expenses, alleging that
plaintiffs interfered with Company business transactions and proposed
financings resulting in delays of certain transactions, lost opportunities,
lost profits and other significant losses. Additionally, the Company has
been named in a lawsuit filed by two former employees claiming damages for
the fair market value of certain shares of common stock of certain
subsidiaries of the Company as well as other damages for breach of contract
and various other allegations. The Company has filed a third party petition
against one of these plaintiffs and a counterclaim against the other
plaintiff. The Company is also involved in certain other litigation and
disputes not previously noted. With respect to all the aforementioned
matters, management believes they are without merit and has concluded that
the ultimate resolution of such will not have a material effect on the
Company's consolidated financial statements.
6. NEW ACCOUNTING PRONOUNCEMENTS
During June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." During February 1998, the FASB issued
SFAS No. 132 "Employers' Disclosures about Pensions and other Post Retirement
Benefits". Preliminary analysis of these new standards by the Company
indicates that they will not have a material effect on the Company's
financial statements. The standards are effective for financial statements
for fiscal years beginning after December 15,1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 AND 1997
NET SERVICE REVENUES. Net service revenues increased approximately $1.7
million or 23.2% to $9.0 million in the first quarter of 1998, compared to
$7.3 million for the comparable 1997 quarter. Permanent placement revenues
increased approximately $1.1 million or 30.0% to $4.8 million for the quarter
ended March 31, 1998, compared to $3.7 million for the comparable 1997
quarter. As a result of the increased demand for permanent placement
personnel, specialty service revenues decreased approximately $234,000 or
12.5% to $1.6 million for the first quarter of 1998, compared to $1.9 million
for the comparable 1997 quarter. Contract placement revenues increased
approximately $766,000 or 44.5% to $2.5 million in the first quarter of 1998,
compared to $1.7 million for the comparable 1997 quarter. The increase in net
service revenues was primarily attributable to the Company's continued focus
on high-margin, high-end niche employment markets such as the information
technology and engineering/technical disciplines.
GROSS MARGIN. Gross margin increased approximately $520,000 or 25.0% to $2.6
million in the first quarter of 1998, compared to $2.1 million for the
comparable 1997 quarter. Gross margin as a percentage of net service
revenues increased to approximately 29.0% in the first quarter of 1998
compared to approximately 28.6% in the comparable period in 1997. The
increase in gross margin percentage was primarily due to an increase in
permanent placement revenues, the Company's highest margin business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased approximately $257,000 or 13.6% to $2.1
million in the first quarter of 1998, compared to $1.9 million for the
comparable 1997 quarter. Selling, general and administrative expenses as a
percentage of net service revenues decreased to approximately 23.9% in the
first quarter of 1998 from approximately 25.9% in the comparable 1997
quarter.
OTHER INCOME AND EXPENSES. Other income was approximately $90,000 in the
first quarter of 1998 compared to expense of approximately $49,000 in the
comparable 1997 quarter. This was primarily due to a decrease in interest
expense resulting from the retirement of all short-term debt of the Company
during the fourth quarter of 1997, as well as interest earnings during the
first quarter of 1998 on the proceeds from the Company's Public Offering.
INCOME TAXES. Income tax expense increased approximately $217,000
to approximately $174,000 for the first quarter of 1998, compared
to a benefit of approximately $43,000 for the comparable 1997
quarter. This increase was primarily due to the utilization of net
operating losses in the 1997 quarter to offset taxable income and a
first quarter 1997 credit of approximately $68,000 relating to an
estimated prior year provision taken by the Company for state
income tax expense.
NET INCOME. Net income increased approximately $143,000 or 61% to
approximately $377,000 in the first quarter of 1998 as compared to
approximately $234,000 in the comparable 1997 quarter.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was approximately $9.8 million at March 31, 1998, compared
to working capital of approximately $9.5 million at December 31, 1997. The
increase in working capital of approximately $348,000 during the first
quarter of 1997 was primarily due to the profitable operations of the Company.
<PAGE>
Cash flow provided by operating activities of approximately $351,000
resulted primarily from the profitable operations of the Company during the
first quarter of 1998. The Company made capital expenditures of
approximately $176,000 during the first quarter of 1998.
The Company is continually evaluating various financing strategies to be
utilized in expanding its business and to fund future growth or acquisitions.
Management of the Company anticipates that funds from the fourth quarter 1997
public offering and cash flow from operations will provide adequate liquidity
to fund its internal growth plans and operations for the next twelve months.
The Company's internal 1998 growth plans include the enhancement and
expansion of its training facilities, the expansion and improvement of its
applicant database and back office, the expansion and opening of new profit
centers in existing locations and the opening of new profit centers in new
geographic locations.
Inflation has not had a significant effect on the Company's operating
results.
NEW ACCOUNTING PRONOUNCEMENTS
During June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information." During February 1998, the FASB issued SFAS No. 132
"Employers' Disclosures about Pensions and other Post Retirement Benefits".
Preliminary analysis of these new standards by the Company indicates that
they will not have a material effect on the Company's financial statements.
The standards are effective for financial statements for fiscal years
beginning after December 15,1997.
ACTUAL RESULTS MAY DIFFER FROM FORWARD-LOOKING STATEMENTS
Statements in this Quarterly Report on Form 10-Q that reflect
projections or expectations of future financial or economic performance of
the Company, and statements of the Company's plans and objectives for future
operations are "forward-looking" statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934,
as amended. No assurance can be given that actual results or events will not
differ materially from those projected, estimated, assumed or anticipated in
any such forward looking statements. Important factors (the "Cautionary
Disclosures") that could result in such differences include: general economic
conditions in the Company's markets, including inflation, recession, interest
rates and other economic factors; the availability of qualified personnel;
the level of competition experienced by the Company; the Company's ability to
implement its business strategies and to manage its growth; the level of
developmental expenses; those factors identified in the Company's Prospectus
dated September 30, 1997 as risk factors; and other factors that affect
businesses generally. Subsequent written and oral "forward-looking"
statements attributable to the Company or persons acting on its behalf are
expressly qualified by the Cautionary Disclosures.
<PAGE>
PART II OTHER INFORMATION
DIVERSIFIED CORPORATE RESOURCES, INC. AND SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
1. SHAREHOLDER RIGHTS PLAN
Effective May 1, 1998, the Company adopted a Shareholder Rights Plan (the
"Rights Plan"). Under the Rights Plan, Rights to purchase one one-thousandth
(1/1000th) of a share of a new Series A Junior Participating Preferred Stock
of the Company at a price of $70 per one one-thousandth of a Preferred Share
was distributed as a dividend at the rate of one Right for each share of the
Company's Common Stock held of record on May 11, 1998. The value of each one
one-thousandth of a share of Preferred Stock purchasable upon exercise of
each Right should approximate the value of one (1) share of the Company's
Common Stock.
A description of the Rights Plan (and a copy of the Rights Agreement) is
set forth in the Company's Form 8-K, which was filed with the Securities and
Exchange Commission on May 8, 1998.
The Rights contain provisions that are intended to protect shareholders
from abusive takeover tactics that may be used by an acquiror that the
Company's Board of Directors believes are not in the best interests of the
shareholders. Examples of such transactions include a gradual accumulation of
shares in the open market or a partial or two-tier tender offer that does not
treat all shareholders equally and other acquisition attempts that may
unfairly pressure shareholders by coercing them to relinquish their
investment and depriving the Company's Board and shareholders of any real
opportunity to determine the future of the Company and to realize the full
value of the shareholders' investment in the Company. The Rights are not
intended to prevent all takeovers of the Company and will not do so. The
Rights Plan increases the Board's ability to effectively represent the
interests of shareholders and other constituencies of the Company upon the
occurrence of an unfair acquisition proposal. While the Board is not aware
of any present effort to acquire control of the Company, it believes these
Rights represent a sound and reasonable means of safeguarding the interests
of its shareholders.
A summary of the Rights Plan will be mailed to each shareholder of record
as of the record date, May 11, 1998.
<PAGE>
2. ALLIANCE TRAINING CENTER ACQUISITION
Effective April 16, 1998, the Company entered into a letter of intent (the
"Letter of Intent") to acquire Alliance Training Center ("Alliance"), a
privately-held training center operating in Richardson and Irving, Texas,
both suburbs of Dallas, Texas. The Letter of Intent provides for a purchase
price equal to the fair market value of Alliance's assets to be determined by
the parties, plus an earn-out of eight percent (8%) of the annual after-tax
net income of Train International, Inc. ("Train"), a subsidiary of the
Company, in excess of certain base amounts through December 31, 2001, subject
to certain annual minimum earn-out payments and an aggregate maximum
earn-out. The Letter of Intent further provides that Ms. Christine Ploof
will become Vice President of Sales and Marketing for Train pursuant to an
employment agreement that provides, among other things, for an annual salary
and an incentive bonus of two percent (2%) of Train's annual after-tax net
income. The Letter of Intent also provides that prior to the termination of
the Letter of Intent, Alliance and its officers, directors, employees, agents
and stockholders will not solicit or encourage, directly or indirectly, in
any manner any discussion with, or furnish or cause to be furnished any
information to, any person other than the Company in connection with, or
negotiate for or otherwise pursue, the sale of Alliance common stock, all or
substantially all of the assets of Alliance or any portion or all of its
business, or any business combination or merger of Alliance with any other
party.
The consummation of the acquisition of Alliance is subject to certain
conditions, including the negotiation and execution of the definitive Asset
Purchase Agreement and employment agreement.
The acquisition, if consummated, will add two (2) new facilities with
eight (8) classrooms to Train's existing facilities.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS
3.2 Form of Certificate of Designation for Designating Series A Junior
Participating Preferred Stock, $.10 par value (Incorporated by
reference to Exhibit A of Exhibit 4.1 of the Company's Form 8-K filed
on May 8, 1998)
3.3 Bylaws of the Company (incorporated from Exhibit 3(b) to the Company's
Registration Statement on Form S-18 (Reg. No. 33-760 FW))
3.4 Amendment No. 1 to Bylaws of the Company*
4.1 Rights Agreement dated as of May 1, 1998 between Diversified Corporate
Resources, Inc. and Harris Trust and Savings Bank which includes the
form of Certificate of Designation for Designating Series A Junior
Participating Preferred Stock, $.10 par value, as Exhibit A, the form
of Right Certificate as Exhibit B and the Summary of Rights to
Purchase Series A Junior Participating Preferred Stock as Exhibit C.
(Incorporated by reference to Exhibit 4.1 of the Company's Form 8-K
filed on May 8, 1998)
10.1 Employment Agreement entered into as of January 1, 1998 between
Management Alliance Corporation, a wholly-owned subsidiary of the
Company, and Anthony J. Bruno.*
10.2 Employment Agreement entered into as of June 1, 1997 between the
Company and Douglas G. Furra.*
<PAGE>
10.3 Employment Agreement entered into as of January 1, 1998 between
Management Alliance Corporation and James Woo.*
10.4 The Company's Amended and Restated 1996 Nonqualified Stock Option
Plan, effective as of December 27, 1996 (Incorporated by reference
from Exhibit 10(2) to the Company's Form 10-K for the year ended
December 31, 1996)
10.5 Amendment No. 1 to the Company's Amended and Restated 1996
Nonqualified Stock Option Plan*
10.6 Stock Option granted to Anthony J. Bruno, effective November 13,
1997*
10.7 Stock Option granted to James Woo, effective November 13, 1997*
10.8 Stock Option granted to Scott Higby, effective January 14, 1998*
10.9 Stock Option granted to John Wilson, effective April 23, 1998*
10.10 Form of Stock Option granted to certain employees of the Company,
effective November 13, 1997*
10.11 Stock Option Agreement by and between the Company and Douglas G.
Furra, effective June 1, 1997*
10.12 Stock Option Agreement by and between the Company and Deborah A.
Farrington, effective November 13, 1997.*
10.13 First Amendment to Stock Option Agreement by and between the
Company and Samuel E. Hunter, effective March 20, 1998.*
10.14 The Company's 1998 Nonqualified Stock Option Plan, effective as of
January 1, 1998*
27 Financial Data Schedule*
(*Filed herewith)
b. REPORTS ON FORM 8-K
On May 8, 1998, the Company filed with the Securities and Exchange
Commission a Form 8-K with respect to the Shareholder Rights Plan adopted by
the Company, effective May 1, 1998. See "Item 5. Other Information" herein.
<PAGE>
SIGNATURES
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.
DIVERSIFIED CORPORATE RESOURCES, INC.
Registrant
DATE: May 15, 1998 By: /s/ J. Michael Moore
----------------------------
J. Michael Moore
CHIEF EXECUTIVE OFFICER
DATE: May 15, 1998 By: /s/ M. Ted Dillard
----------------------------
M. Ted Dillard
PRESIDENT AND SECRETARY
DATE: May 15, 1998 By: /s/ Douglas G. Furra
----------------------------
Douglas G. Furra
CHIEF FINANCIAL OFFICER
<PAGE>
DIVERSIFIED CORPORATION RESOURCES, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
EXHIBITS
3.2 Form of Certificate of Designation for Designating Series A Junior
Participating Preferred Stock, $.10 par value (Incorporated by
reference to Exhibit A of Exhibit 4.1 of the Company's Form 8-K filed
on May 8, 1998)
3.3 Bylaws of the Company (incorporated from Exhibit 3(b) to the Company's
Registration Statement on Form S-18 (Reg. No. 33-760 FW))
3.4 Amendment No. 1 to Bylaws of the Company*
4.1 Rights Agreement dated as of May 1, 1998 between Diversified Corporate
Resources, Inc. and Harris Trust and Savings Bank which includes the
form of Certificate of Designation for Designating Series A Junior
Participating Preferred Stock, $.10 par value, as Exhibit A, the form
of Right Certificate as Exhibit B and the Summary of Rights to
Purchase Series A Junior Participating Preferred Stock as Exhibit C.
(Incorporated by reference to Exhibit 4.1 of the Company's Form 8-K
filed on May 8, 1998)
10.1 Employment Agreement entered into as of January 1, 1998 between
Management Alliance Corporation, a wholly-owned subsidiary of the
Company, and Anthony J. Bruno.*
10.2 Employment Agreement entered into as of June 1, 1997 between the
Company and Douglas G. Furra.*
10.3 Employment Agreement entered into as of January 1, 1998 between
Management Alliance Corporation and James Woo.*
10.4 The Company's Amended and Restated 1996 Nonqualified Stock Option
Plan, effective as of December 27, 1996 (Incorporated by reference
from Exhibit 10(2) to the Company's Form 10-K for the year ended
December 31, 1996)
10.5 Amendment No. 1 to the Company's Amended and Restated 1996
Nonqualified Stock Option Plan*
10.6 Stock Option granted to Anthony J. Bruno, effective November 13,
1997*
10.7 Stock Option granted to James Woo, effective November 13, 1997*
10.8 Stock Option granted to Scott Higby, effective January 14, 1998*
10.9 Stock Option granted to John Wilson, effective April 23, 1998*
<PAGE>
10.10 Form of Stock Option granted to certain employees of the Company,
effective November 13, 1997*
10.11 Stock Option Agreement by and between the Company and Douglas G.
Furra, effective June 1, 1997*
10.12 Stock Option Agreement by and between the Company and Deborah A.
Farrington, effective November 13, 1997.*
10.13 First Amendment to Stock Option Agreement by and between the
Company and Samuel E. Hunter, effective March 20, 1998.*
10.14 The Company's 1998 Nonqualified Stock Option Plan, effective as of
January 1, 1998*
27 Financial Data Schedule*
(*Filed herewith)
<PAGE>
FIRST AMENDMENT TO BYLAWS
OF DIVERSIFIED CORPORATE RESOURCES, INC.
ARTICLE II, SECTION 5 OF THE BYLAWS IS HEREBY AMENDED TO READ AS FOLLOWS:
SECTION 5. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the Corporation may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, 60 days. If the stock transfer books shall be closed for
the purpose of determining shareholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than 60 days and, in the case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof except
where the determination has been made through the closing of stock transfer
books and the stated period of closing has expired.
<PAGE>
IN WITNESS WHEREOF, the foregoing amendment to the Bylaws of Diversified
Corporate Resources, Inc. was duly adopted by the Board of Directors on March
27, 1998.
/s/ M. Ted Dillard
------------------------------
M. Ted Dillard, Secretary
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT RE: BRUNO
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between Management Alliance Corporation, a Texas corporation (herein referred
to as the "Company"), and Anthony J. Bruno (herein referred to as the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive and the Executive
desires to be employed by the Company; and
WHEREAS, the purpose of this document is to set forth the terms and
conditions of such employment.
NOW THEREFORE, for and in consideration of the mutual advantages and
benefits accruing respectively to the parties hereto, the mutual promises
hereinafter made and the acts to be performed by the respective parties
hereto, the Company and the Executive do hereby contract and agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as the
President of the Company, and the Executive hereby accepts such employment,
to perform the duties and render services as herein set forth. Such
employment shall continue during the term of this Agreement.
2. TERM. Except in the case of earlier termination as herein
specifically provided, the term of this Agreement shall be for a two (2) year
period beginning on January 1, 1998 and ending December 31, 1999 (such date
being the "Termination Date").
3. COMPENSATION. As base compensation for the services of the
Executive during the term of this Agreement, the Company shall pay the
Executive a salary at an annual rate of $110,000.00, plus such additional
compensation, if any, which the Board of Directors of the Company (the
"Board") may from time to time determine. The Executive's salary hereunder
shall
<PAGE>
be paid in equal semi-monthly installments (subject to reduction for such
payroll and withholding deductions as may be required by law), and may be
paid, in whole or in part, by one or more of the subsidiaries of the Company.
In addition to the Executive's base salary, the Executive shall be
entitled to each of the following during the term of this Agreement (at the
Company's expense unless otherwise indicated): (a) the right to participate
in the Executive Bonus Plan, which shall entitle the Executive to such bonus
awards as will be determined by the Board and paid to the Executive by the
Company, (b) a monthly housing allowance of $2,500 per month from the date of
this Agreement until October 1, 1998, which allowance may be extended on a
year to year basis at the discretion of the Board, (c) payments for the
normal monthly lease rental obligations required to be paid for a vehicle to
be leased by the Executive during the term of this Agreement, subject to
extension on a year to year basis at the discretion of the Board, the make
and model of which will be chosen by the Board, (d) health insurance coverage
which shall provide for payment of health, dental and related expenses
incurred during the term of this Agreement with respect to the Executive, the
Executive's spouse and the Executive's children and which shall contain such
benefits and options as shall be made available to other employees of the
Company (the parties acknowledge that the Executive shall be responsible for
paying such portion of this coverage as shall be consistent with Company
policy for its employees in general), (e) the right to participate in any and
all 401(k) plans and Section 125 plans now in effect or hereafter adopted by
the Company, (f) the right to participate in any other benefit plans of the
Company to the extent the Board determines the Executive shall be a
participant in such plan(s), (g) the right to all fringe benefits generally
made available to other executives and/or employees of the Company
(including, but not by way of limitation, disability benefits if and to the
extent available) at the
2
<PAGE>
discretion of the Board, (h) such vacation and sick leave as shall be
permitted by the Company's standard policies for other senior executive
employees of the Company, and (i) options to purchase shares of stock of
Diversified Corporate Resources, Inc. ("DCRI"), a Texas corporation, which
owns all of the issued capital stock of the Company, to the extent that the
Board of Directors of DCRI determines that the Executive shall be a
participant in DCRI's stock option plan, including options to purchase up to
12,000 shares of stock of DCRI that have been previously granted to the
Executive.
4. DUTIES AND SERVICES. During the term of this Agreement, the
Executive agrees to (a) do his utmost to enhance and develop the best
interests and welfare of the Company, (b) give his best efforts and skill to
advancing and promoting the growth and success of the Company, and (c)
perform such duties or render such services as the Board may, from time to
time, reasonably confer upon or impose on the Executive.
5. TERMINATION.
a. The Company may terminate the Executive's employment
pursuant to this Agreement at any time for "cause" as herein defined.
The term "cause" shall mean any of the following events: (i) any act
or omission constituting fraud under the laws of the State of Texas or
the United States of America; or (ii) a finding of probable cause, or
a plea of NOLO CONTENDERE to, a felony or other crime involving moral
turpitude; or (iii) the negligent performance by the Executive of the
responsibilities of his position; or (iv) the failure by the Executive
to adhere to the Company's policies or directives, including those set
forth in its Employee Handbook and Company policy statement relating
to trading in DCRI's securities by the Company's personnel (the
"Insider Trading Policy"); or (v) the Executive's
3
<PAGE>
engagement in any act of dishonesty or theft within the scope of his
employment that, in the opinion of the Board, is detrimental to the
best interests of the Company; or (vi) the Executive's use and/or
distribution of alcohol or illegal substances while acting within the
scope of his employment; or (vii) the breach of any of the substantive
terms of this Agreement; or (viii) the failure of the Executive to meet
the performance goals established in an annual budget for the Company
prepared by the Executive and his staff and presented to and approved
by the Board as the annual budget for the Company. The determination
by the Board as to the matters covered by (iii), (iv), (v) or (viii)
above shall be conclusive; provided, however, that the Company will not
be entitled to terminate this Agreement for cause pursuant to (iii),
(iv) or (viii) above unless, prior to such termination, the Executive
has received a written reprimand detailing the acts or omissions
constituting such failure to perform the responsibilities of his
position, to adhere to the Company's policies or to meet his
performance goals, except that no prior reprimand is required with
respect to violations of the Insider Trading Policy.
b. The Company may terminate the Executive as an employee of
the Company at any time during the term of this Agreement, subject to
Paragraph 6 of this Agreement.
c. The Executive may terminate his employment with the Company
at any time by giving ninety (90) days' written notice to the Company.
4
<PAGE>
d. The Executive's employment by the Company shall
automatically terminate on the date of the Executive's death if the
Executive dies during the term of this Agreement, subject to Paragraph
6 of this Agreement.
e. If the Executive is incapacitated by an accident, sickness
or otherwise, so as to render him mentally or physically incapable of
performing the services required of him pursuant to this Agreement,
Executive's employment by the Company shall terminate thirty (30) days
after the day on which the Board determines that the Executive is so
disabled and that this Agreement should be terminated by reason of
such disability, subject to Paragraph 6 of this Agreement.
Notwithstanding the foregoing, the Executive shall be notified in
writing if the Company determines that the Executive is disabled due
to mental or physical health; in such event, the Executive shall have
the right to contest any determination of disability by the Company.
In the event that the Executive does contest such determination, such
matter shall be resolved by arbitration pursuant to this Agreement.
6. SEVERANCE AND OTHER PAYMENTS.
a. If the Executive's employment pursuant to this Agreement is
terminated by the Executive, is terminated for "cause" (as herein
defined) or is terminated due to the death or disability (as
determined pursuant to Paragraph 5(e) of this Agreement) of the
Executive, the Company shall not be obligated to pay or provide any
severance compensation or benefits to the Executive.
b. If the Executive's employment with the Company is terminated
under Paragraph 5(b), (d) or (e) of this Agreement, the Company agrees
to pay to
5
<PAGE>
the Executive each month an amount equal to the base compensation
per month for the shorter of: (i) the period of six (6) months
following the date of termination of the Executive's employment
with the Company or (ii) the period from such termination to the
Termination Date. Notwithstanding the foregoing, the parties
acknowledge and agree that if such termination does occur, the
following shall be applicable: (i) the amount of monthly compensation
required to be paid by the Company to the Executive shall be reduced
by the amount of monthly compensation payable to the Executive by any
one or more entities with which the Executive is employed, and/or the
amount of self-employment income earned by the Executive during the
month involved, and (ii) the Executive shall use reasonable efforts to
secure reasonably comparable employment and/or generate self-employment
income to minimize or eliminate the Company's obligation to pay
severance compensation to the Executive.
c. If the Executive's employment is terminated during the term
of this Agreement, for any reason other than "cause," the Executive
shall be entitled to receive a pro rata share (based upon the number
of months employed during the calendar year in which employment with
the Company is terminated) of any bonus or incentive compensation
which the Executive would otherwise have been entitled to receive had
he remained employed for the entirety of the calendar year involved.
7. WORKING CONDITIONS. The Company will provide the Executive with a
private office and secretarial services.
8. TRAVEL AND ENTERTAINMENT. The Executive is authorized to incur
reasonable business expenses on behalf of the Company, including, but not by way
of limitation, expenditures of
6
<PAGE>
entertainment, gifts and travel; if any expenses are of a kind or a cost in
excess of the written policies established by the Board, such expenses must
be expressly authorized by the Board. The Company agrees to reimburse the
Executive for all such expenses upon the Executive's presentation of an
itemized account of such expenditures.
9. NONSOLICITATION AGREEMENT. In the event that the termination of
employment of the Executive pursuant to this Agreement is effectuated by the
Executive electing to terminate his employment pursuant to this Agreement, or
by Company for "cause" (as herein defined), the Executive agrees that the
Executive shall not, for a one (1) year period of time following the date of
termination of his employment, (a) solicit for employment or hire any
individual who was an executive or employee of the Company, or any of its
affiliates, on the date of termination of his employment or at any time
within the twelve (12) months preceding the date of termination of his
employment, or (b) solicit the business of any person or entity who is or was
a customer, client, agent or representative of the Company, or any of its
affiliates, at the date of termination of his employment, or at any time
during the twelve (12) months preceding the date of termination of his
employment. The covenants and agreements set forth in this Paragraph 9 shall
survive the termination of this Agreement.
10. NONCOMPETITION AGREEMENT. The Executive acknowledges that the
special relationship of trust and confidence between himself, the Company,
and its clients, customers, vendors and suppliers creates a high risk and
opportunity for the Executive to misappropriate the relationship and goodwill
existing between the Company and its clients, customers, vendors, and
suppliers. The Executive further acknowledges and agrees that it is fair and
reasonable for the Company to take steps to protect itself from the risk of
such misappropriation. The Executive further acknowledges that prior to and
during his employment with the Company, he will be
7
<PAGE>
provided with access to the Company's confidential and proprietary
information, that will enable him to benefit from the Company's goodwill and
know-how.
The Executive acknowledges that it would be inherent in the performance
of his duties as a director, officer, employee, agent or consultant of any
person, association, entity or company that competes with the Company to
disclose or use such information, as well as to misappropriate the Company's
goodwill and know-how for the benefit of such other person, association,
entity or company.
The Executive acknowledges that, in exchange for the execution of the
noncompetition restriction set forth below, he has received or will receive
substantial and valuable consideration. The Executive agrees that this
consideration constitutes fair and adequate consideration for the execution
of the noncompetition restriction.
Ancillary to the enforceable promises set forth in this Agreement, the
Executive agrees that during term of this Agreement and for a period of
twelve (12) months after the date of termination of his employment, for
whatever reason, the Executive shall not, without the prior written consent
of the Company, directly or indirectly, whether as a director, officer,
employee, agent, consultant or otherwise, engage in any of the following
activities in competition with the Company in the metropolitan areas (as
defined by the United States Census Bureau) of any city in which the Company
or DCRI maintains a place of business as of the date of termination of his
employment: (i) sell or solicit orders for any product or service for which
the Executive sold or solicited orders, or directed others to sell or solicit
orders, during the term of this Agreement; or (ii) sell, solicit or contact
with a view to selling any such product or service for, from or to any
person, firm or corporation from whom the Executive solicited any order, or
to whom the Executive sold any such product or service, or from whom the
Executive directed another to solicit any order or to sell any
8
<PAGE>
such product or service, at any time during Executive's employment with the
Company; provided however, that nothing contained herein shall prevent the
Executive from (i) accepting public-speaking engagements for which he is paid
and (ii) selling the products that he has developed independently from his
employment with the Company so long as the Company has no rights with respect
to such products.
The Executive agrees that the noncompetition restriction set forth above
is ancillary to an otherwise enforceable agreement and supported by
independent valuable. The Executive further agrees that the limitations as
to time, geographical area and scope of activity to be restrained by this
restriction are reasonable and acceptable and do not impose any greater
restraint than is reasonably necessary to protect the goodwill and other
business interests of the Company. The Executive further agrees that if, at
some later date, a court of competent jurisdiction determines that the
restriction set forth in this Paragraph does not meet such, this Paragraph
may be reformed by the court and enforced to the maximum extent permitted
under Texas law.
If the Executive is found to have violated any of the provisions of this
Paragraph, the Executive agrees that the restrictive period of each covenant
so violated shall be extended by a period of time equal to the period of such
violation by him. It is the intent of this Paragraph that the running of the
restrictive period of any covenant shall be tolled during any period of
violation of such covenant so that the Company may obtain the full and
reasonable protection for which it contracted and so that Executive may not
profit by his breach.
The Executive's obligations under Paragraph shall survive the
termination of this Agreement and shall not be assignable by Executive.
11. NONDISCLOSURE AGREEMENT. During the term of this Agreement, the
Company will provide to the Executive certain confidential and proprietary
information owned by the Company.
9
<PAGE>
The Executive acknowledges that he occupies or will occupy a position of
trust and confidence with the Company, and that the Company would be
irreparably damaged if Executive were to breach the covenants set forth in
this Paragraph. Accordingly, the Executive agrees that he will not, without
the prior written consent of the Company, at any time during the term of this
Agreement or any time thereafter, except as may be required by competent
legal authority or as required by the Company to be disclosed in the course
of performing the Executive's duties under this Agreement for the Company,
use or disclose to any person, firm or other legal entity, any confidential
records, secrets or information related to the Company or any parent,
subsidiary or affiliated person or entity (collectively, "Confidential
Information"). Confidential Information shall include, without limitation,
information about the Employer's customer lists, product pricing, data,
know-how, processes, ideas, product development, market studies, computer
software and programs, database technologies, strategic planning, and risk
management. The Executive acknowledges and agrees that all Confidential
Information of the Company and/or its affiliates that he has acquired, or may
acquire, were received, or will be received in confidence and as a fiduciary
of the Company. The Executive will exercise utmost diligence to protect and
guard such Confidential Information. The Executive agrees that he will not,
without the express written consent of the Board of Directors of the Company,
take with him upon the termination of this Agreement any document or paper,
or any photocopy or reproduction or duplication thereof, relating to any
Confidential Information.
12. NOTICES. All notices or other instruments or communications
provided for in this Agreement shall be in writing and signed by the party
giving same and shall be deemed properly given if delivered in person,
including delivery by overnight courier, or if sent by registered or
certified United States mail, postage pre-paid, addressed to such party at
the address listed below.
10
<PAGE>
Each party may, by notice to the other party, specify any other address for
the receipt of such notices, instruments or communications. Any notice,
instrument or communication sent by telegram shall be deemed properly given
only when received by the person to whom it is sent.
13. MISCELLANEOUS.
a. Subject to the condition that this Agreement is not
assignable by either party without the prior written consent of the
other party (except that the Company may assign this Agreement to an
affiliate), the terms and provisions of this Agreement shall inure to
the benefit of, and shall be binding on, the parties hereto and their
respective heirs, representatives, successors and assigns.
b. This Agreement supersedes all other agreements, either oral
or in writing, between the parties to this Agreement, with respect to
the employment of the Executive by the Company. This Agreement
contains the entire understanding of the parties and all of the
covenants and agreement between the parties with respect to such
employment. Any such prior agreements are hereby terminated without
obligation for any payments otherwise due thereunder. No waiver or
modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid, unless in writing and duly
executed by the party to be charged therewith, and no evidence of any
waiver or modification shall be offered or received in evidence of any
proceeding, arbitration, or litigation between the parties hereto
arising out of or affecting this Agreement, or the rights or
obligations of the parties hereunder, unless such waiver or
modification is in writing, duly executed as aforesaid, and the
parties further agree that the provisions of this paragraph may not be
waived except as herein set forth.
11
<PAGE>
c. All agreements and covenants contained herein are severable
and in the event any of them, with the exception of those contained in
Paragraph 1 hereof, shall be held to be invalid, as written pursuant
to the arbitration or judicial proceedings provided for in this
Agreement, this Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein.
d. Any controversy between the parties to this Agreement
involving the construction or application of any of the terms,
covenants, or conditions of this Agreement shall be submitted to
arbitration in Dallas County, Texas, if either party to this Agreement
shall request arbitration by notice in writing to the other party. In
such event, the parties to this Agreement shall, within thirty (30)
days after this Paragraph 12(d) is invoked, both appoint one person as
an arbitrator to hear and determine the dispute, then the two
arbitrators so chosen shall, within fifteen (15) days, select a third
impartial arbitrator; the majority decision of the arbitrators shall
be final and conclusive upon the parties to this Agreement. Each
party to the arbitration proceedings conducted pursuant to this
Agreement shall bear his or its own expenses, except that the expenses
of the arbitrators shall be borne equally by the Company and the
Executive.
e. In the event of any litigation between the parties related
to the compliance with the terms and conditions of this Agreement, the
parties hereto acknowledge and agree that (i) such litigation
proceedings must be held in Dallas County, Texas, and (ii) the
prevailing party in such litigation proceedings shall be entitled to
recover, from the non-prevailing party, reasonable attorneys' fees and
expenses incurred in connection with the dispute involved.
12
<PAGE>
f. This Agreement has been made under and shall be governed by
the laws of the State of Texas.
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of January 1, 1998.
COMPANY:
MANAGEMENT ALLIANCE CORPORATION
By:
---------------------------------------
Name:
---------------------------------
Title:
---------------------------------
Address: 12801 North Central Expressway
Suite 350
Dallas, Texas 75243
--------------------------------------------
Anthony J. Bruno
Address:
---------------------------------
---------------------------------
14
<PAGE>
EMPLOYMENT AGREEMENT RE: FURRA
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and between
Diversified Corporate Resources, Inc., a Texas corporation (herein referred to
as the "Company"), and Douglas G. Furra (herein referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive and the Executive
desires to be employed by the Company; and
WHEREAS, the purpose of this document is to set forth the terms and
conditions of such employment.
NOW THEREFORE, for and in consideration of the mutual advantages and
benefits accruing respectively to the parties hereto, the mutual promises
hereinafter made and the acts to be performed by the respective parties hereto,
the Company and the Executive do hereby contract and agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as the Chief
Financial Officer of the Company, and the Executive hereby accepts such
employment, to perform the duties and render services as herein set forth. Such
employment shall continue during the term of this Agreement.
2. TERM. Except in the case of earlier termination as herein
specifically provided, the Executive's employment with the Company pursuant to
this Agreement shall be for a period of one (1) year beginning June 1, 1997 and
ending May 31, 1998 (the "Initial Termination Date"). The parties agree that
this Agreement shall automatically renew for a one (1) year period unless or
until (a) the Agreement is terminated prior to the Initial Termination Date for
some reason
<PAGE>
permitted hereunder, or (b) one of the parties hereto shall give written
notice to the other at least one hundred and twenty (120) days prior to the
Initial Termination Date.
3. COMPENSATION. As base compensation for the services of Executive
during the term hereof, the Company shall pay the Executive a salary at an
annual rate of $99,600.00, plus such additional compensation, if any, which the
Board of Directors of the Company (the "Board") may from time to time determine.
Such annual salary shall be reviewed each year by the Compensation Committee of
the Board and may be increased for the renewal period, but shall not be
decreased. The Executive's salary hereunder shall be paid in equal semi-monthly
installments (subject to reduction for such payroll and withholding deductions
as may be required by law), and may be paid, in whole or in part, by one or more
of the subsidiaries of the Company.
In addition to the Executive's base salary, the Executive shall be entitled
to each of the following during the term of this Agreement (at the Company's
expenses unless otherwise indicated): (a) the right to participate in the
Executive Bonus Plan, which shall entitle the Executive to such bonus awards as
will be determined by the Compensation Committee and paid to the Executive by
the Company, (b) an automobile allowance of not less than $400.00 per month (the
obligation of the Company to pay this automobile allowance is understood to be
contingent upon approval of the Compensation Committee of the Board), (c) health
insurance coverage which shall provide for payment of health, dental and related
expenses incurred during the term of this Agreement with respect to the
Executive, the Executive's spouse and the Executive's children, and which shall
contain such benefits and options as shall be made available to other employees
of the Company, (d) the right to participate in any and all 401(k) plans and
Section 125 plans now in effect or hereafter adopted by the Company, (e) the
right to all fringe benefits generally made available to other executives and/or
employees of the Company (including, but not by way of
2
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limitation, disability benefits if and to the extent available) at the
discretion of management of the Company or the Compensation Committee of the
Board, (f) such vacation and sick leave as shall be permitted by the
Company's standard policies for other senior executive employees of the
Company, (g) options to purchase 30,000 shares of common stock (the "Common
Stock") of the Company pursuant to the Company's Amended and Restated 1996
Stock Option Plan (the "Stock Option Plan"), which option, shall be evidenced
by a separate option agreement executed by the Executive and the Company, and
(h) additional options to purchase shares of Common Stock pursuant to the
Stock Option Plan or other Company employee stock option plans as determined
in the sole discretion of the Compensation Committee of the Board of
Directors.
4. DUTIES AND SERVICES. During the term of this Agreement, the Executive
agrees to (a) do his utmost to enhance and develop the best interests and
welfare of the Company, (b) give his best efforts and skill to advancing and
promoting the growth and success of the Company, and (c) perform such duties or
render such services as the Board of Directors of the Company may, from time to
time, reasonably and lawfully confer upon or impose on the Executive. It is
understood that the Executive shall report directly to the President of the
Company.
5. TERMINATION.
a. The Company may terminate the Executive's employment
pursuant to this Agreement at any time for "cause" as herein defined.
The term "cause" shall mean any of the following events: (i) the
Executive's conviction or plea of guilty to a crime involving moral
turpitude, (ii) any act of dishonesty or theft on the part of the
Executive which involve the Company and which, in the opinion of the
Board, is detrimental to the best interests of the Company, (iii) a
material violation by the Executive of applicable laws (which for this
purpose shall include
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actions deemed by the Company's legal counsel to be unlawful or in
violation of those securities laws and regulations applicable to the
Company), any written policy of the Board, including the Company's
policy statement relating to trading in Company securities by Company
personnel, or the Company's employee handbook, (iv) the negligent
performance by the Executive of the responsibilities of his position, or
(v) the breach by the Executive in any material respect of any of the
substantive terms of this Agreement.
b. The Company may terminate the Executive as an employee of
the Company at any time during the term of this Agreement, subject to
Paragraph 6.
c. The Executive may terminate his employment with the Company
at any time by giving ninety (90) days' written notice to the Company.
d. The Executive's employment by the Company shall
automatically terminate on the date of the Executive's death if the
Executive dies during the term of this Agreement.
e. If the Executive is incapacitated by an accident, sickness
or otherwise, so as to render him mentally or physically incapable of
performing the services required of him pursuant to this Agreement,
Executive's employment by the Company shall terminate thirty (30) days
after the day on which the Board determines that the Executive is so
disabled and that this Agreement should be terminated by reason of
such disability. Notwithstanding the foregoing, the Executive shall
be notified in writing if the Company determines that the Executive is
disabled due to mental or physical health; in such event, the
Executive shall have the right to contest any determination of
disability by the Company. In the event
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that the Executive does contest such determination, such matter shall be
resolved by arbitration pursuant to this Agreement.
f. Upon termination of employment for any reason hereunder, the
Executive shall be entitled to receive any base compensation that has
been earned by him through the date of termination.
6. SEVERANCE AND OTHER PAYMENTS.
a. If the Executive's employment pursuant to this Agreement is
terminated by the Executive, terminated by the Company for "cause" (as
herein defined) or terminated due to the death or disability (as
determined pursuant to Paragraph 5(e) of this Agreement) of the
Executive, the Company shall not be obligated to pay or provide any
severance compensation or benefits to the Executive.
b. If the Executive's employment with the Company is terminated
without "cause" by the Company during the term of this Agreement, the
Company agrees to pay to the Executive an amount equal to the
Executive's then-current annual base compensation, payable over a one
year period. Notwithstanding the foregoing, the parties acknowledge
and agree that if such termination is subsequent to the Initial
Termination Date, the following shall be applicable: (i) the amount
of monthly compensation required to be paid by the Company to the
Executive shall be reduced by the amount of monthly compensation
payable to the Executive by any one or more entities with which the
Executive is employed, and/or the amount of net self-employment income
earned by the Executive during the month involved, and (ii) the
Executive shall use reasonable efforts to secure employment
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within the area of accounting and at a level of controller or better (if
the employment is not in the public accounting area) or manager or better
(if the employment is in the public accounting area), and/or generate
net self-employment income, to minimize or eliminate the Company's
obligation to pay severance compensation to the Executive.
c. If the Executive's employment is terminated during the term
of this Agreement, for any reason other than cause, the Executive
shall be entitled to receive a pro rata share (based upon the number
of months employed during the calendar year in which employment with
the Company is terminated) of any bonus or incentive compensation
which the Executive would otherwise have been entitled to receive had
he remained employed for the entirety of the calendar year involved.
7. WORKING CONDITIONS. The Company will provide the Executive with a
private office and secretarial services.
8. TRAVEL AND ENTERTAINMENT. The Executive is authorized to incur
reasonable business expenses on behalf of the Company, including, but not by way
of limitation, expenditures of entertainment, gifts and travel; if any expenses
are of a kind or a cost in excess of the written policies established by the
Board, such expenses must be expressly authorized by the Board. The Company
agrees to reimburse the Executive for all such expenses upon the Executive's
presentation of an itemized account of such expenditures. In addition to the
foregoing, the Executive is entitled to incur, and to be reimbursed by the
Company, various and sundry fees, costs and expenses in connection with the
Executive continuing to be licensed in Texas as a Certified Public Accountant.
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9. NON-SOLICITATION AGREEMENT. In the event that the termination of
employment of the Executive pursuant to this Agreement is effectuated by the
Executive electing to terminate his employment pursuant to this Agreement, or by
Company for "cause" (as herein defined), the Executive agrees that the Executive
shall not, for a one year period of time following the date of termination of
this Agreement, (a) solicit for employment or hire any individual who was an
executive or employee of the Company, or any of its affiliates, at the date of
termination of this Agreement or at any time within the twelve (12) months
preceding the date of termination of this Agreement, or (b) solicit the staffing
and/or recruiting business of any person or entity who is or was a customer,
client, agent or representative of the Company, or any of its affiliates, at the
date of termination of this Agreement, or at any time during the twelve (12)
months preceding the date of termination of this Agreement. The covenants and
agreements set forth in this Section 9 shall survive the termination of this
Agreement.
10. NOTICES. All notices or other instruments or communications provided
for in this Agreement shall be in writing and signed by the party giving same
and shall be deemed properly given if delivered in person, including delivery by
overnight courier, or if sent by registered or certified United States mail,
postage pre-paid, addressed to such party at the address listed below. Each
party may, by notice to the other party, specify any other address for the
receipt of such notices, instruments or communications. Any notice, instrument
or communication sent by telegram shall be deemed properly given only when
received by the person to whom it is sent.
11. MISCELLANEOUS.
a. Subject to the condition that this Agreement is not
assignable by either party without the prior written consent of the
other party (except that the Company may assign this Agreement to any
of its affiliates), the terms and
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provisions of this Agreement shall inure to the benefit of, and shall be
binding on, the parties hereto and their respective heirs, representatives,
successors and assigns.
b. This Agreement supersedes all other agreements, either oral
or in writing, between the parties to this Agreement, with respect to
the employment of the Executive by the Company. This Agreement
contains the entire understanding of the parties and all of the
covenants and agreement between the parties with respect to such
employment. Any such prior agreements are hereby terminated without
obligation for any payments otherwise due thereunder. No waiver or
modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid, unless in writing and duly
executed by the party to be charged therewith, and no evidence of any
waiver or modification shall be offered or received in evidence of any
proceeding, arbitration, or litigation between the parties hereto
arising out of or affecting this Agreement, or the rights or
obligations of the parties hereunder, less such waiver or modification
is in writing, duly executed as aforesaid, and the parties further
agree that the provisions of this paragraph may not be waived except
as herein set forth.
c. All agreements and covenants contained herein are severable
and in the event any of them, with the exception of those contained in
Section 1 hereof, shall be held to be invalid, as written pursuant to
the arbitration or judicial proceedings provided for in this
Agreement, this Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein.
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d. Any controversy between the parties to this Agreement
involving the construction or application of any of the terms,
covenants, or conditions of this Agreement shall be submitted to
arbitration in Dallas County, Texas, if either party to this Agreement
shall request arbitration by notice in writing to the other party. In
such event, the parties to this Agreement shall, within thirty (30)
days after this Paragraph 11(c) is invoked, both appoint one person as
an arbitrator to hear and determine the dispute, then the two
arbitrators so chosen shall, within fifteen (15) days, select a third
impartial arbitrator; the majority decision of the arbitrators shall
be final and conclusive upon the parties to this Agreement. The
decision of the arbitrators shall be rendered as soon as reasonably
possible. Each party to the arbitration proceedings conducted
pursuant to this Agreement shall bear his or its own expenses, except
that the expenses of the arbitrators shall be borne equally by the
Company and the Executive.
e. In the event of any litigation between the parties related
to the compliance with the terms and conditions of this Agreement, the
parties hereto acknowledge and agree that (i) such litigation
proceedings must be held in Dallas County, Texas, and (ii) the
prevailing party in such litigation proceedings shall be entitled to
recover, from the non-prevailing party, reasonable attorneys' fees and
expenses incurred in connection with the dispute involved.
f. This Agreement has been made under and shall be governed by
the laws of the State of Texas.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
June 1, 1997.
COMPANY:
DIVERSIFIED CORPORATE RESOURCES, INC.
By: /s/ M. Ted Dillard
-----------------------------------
Name: M. Ted Dillard
---------------------------------
Title: President
--------------------------------
Address: 12801 North Central Expressway
Suite 350
Dallas, Texas 75243
/s/ Douglas G. Furra
--------------------------------------
Douglas G. Furra
Address: 4211 Firebrick Ln.
------------------------------
Dallas, Texas 75287
------------------------------
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EMPLOYMENT AGREEMENT RE: WOO
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between Management Alliance Corporation, a Texas corporation (herein referred
to as the "Company"), and James Woo (herein referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive and the Executive
desires to be employed by the Company; and
WHEREAS, the purpose of this document is to set forth the terms and
conditions of such employment.
NOW THEREFORE, for and in consideration of the mutual advantages and
benefits accruing respectively to the parties hereto, the mutual promises
hereinafter made and the acts to be performed by the respective parties
hereto, the Company and the Executive do hereby contract and agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as the
Executive Vice President of the Company, and the Executive hereby accepts
such employment, to perform the duties and render services as herein set
forth. Such employment shall continue during the term of this Agreement.
2. TERM. Except in the case of earlier termination as herein
specifically provided, the term of this Agreement shall be for a one (1) year
period beginning on January 1, 1998 and ending December 31, 1998 (such date
being the "Initial Termination Date"). This Agreement shall automatically
renew for an additional one (1) year period unless or until (a) this
Agreement is terminated prior to the Initial Termination Date for some reason
permitted hereunder, or (b) one
<PAGE>
of the parties shall give written notice to the other at least ninety (90)
days prior to the Initial Termination Date that the Agreement shall not be
renewed.
3. COMPENSATION. As base compensation for the services of the
Executive during the term of this Agreement, the Company shall pay the
Executive a salary at an annual rate of $96,000.00, plus such additional
compensation, if any, which the Board of Directors of the Company (the
"Board") may from time to time determine. The Executive's salary hereunder
shall be paid in equal semi-monthly installments (subject to reduction for
such payroll and withholding deductions as may be required by law), and may
be paid, in whole or in part, by one or more of the subsidiaries of the
Company.
In addition to the Executive's base salary, the Executive shall be
entitled to each of the following during the term of this Agreement (at the
Company's expense unless otherwise indicated): (a) the right to participate
in the Executive Bonus Plan, which shall entitle the Executive to such bonus
awards as will be determined by the Board and paid to the Executive by the
Company, (b) health insurance coverage which shall provide for payment of
health, dental and related expenses incurred during the term of this
Agreement with respect to the Executive, the Executive's spouse and the
Executive's children and which shall contain such benefits and options as
shall be made available to other employees of the Company (the parties
acknowledge that the Executive shall be responsible for paying such portion
of this coverage as shall be consistent with Company policy for its employees
in general), (c) the right to participate in any and all 401(k) plans and
Section 125 plans now in effect or hereafter adopted by the Company, (d) the
right to participate in any other benefit plans of the Company to the extent
the Board determines the Executive shall be a participant in such plan(s),
(e) the right to all fringe benefits generally made available to other
executives and/or employees of the Company (including, but not by way of
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<PAGE>
limitation, disability benefits if and to the extent available) at the
discretion of the Board, (f) such vacation and sick leave as shall be
permitted by the Company's standard policies for other senior executive
employees of the Company, and (g) options to purchase shares of stock of
Diversified Corporate Resources, Inc. ("DCRI"), a Texas corporation, which
owns all of the issued capital stock of the Company, to the extent that the
Board of Directors of DCRI determines that the Executive shall be a
participant in DCRI's stock option plan, including options to purchase up to
10,000 shares of stock of DCRI that have been previously granted to the
Executive.
4. DUTIES AND SERVICES. During the term of this Agreement, the
Executive agrees to (a) do his utmost to enhance and develop the best
interests and welfare of the Company, (b) give his best efforts and skill to
advancing and promoting the growth and success of the Company, and (c)
perform such duties or render such services as the Board may, from time to
time, reasonably confer upon or impose on the Executive.
5. TERMINATION.
a. The Company may terminate the Executive's employment
pursuant to this Agreement at any time for "cause" as herein defined.
The term "cause" shall mean any of the following events: (i) any act
or omission constituting fraud under the laws of the State of Texas or
the United States of America; or (ii) a finding of probable cause, or
a plea of NOLO CONTENDERE to, a felony or other crime involving moral
turpitude; or (iii) the negligent performance by the Executive of the
responsibilities of his position; or (iv) the failure by the Executive
to adhere to the Company's policies or directives, including those set
forth in its Employee Handbook and Company policy statement relating
to trading in DCRI's securities by the Company's personnel (the
"Insider Trading Policy"); or (v) the Executive's
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<PAGE>
engagement in any act of dishonesty or theft within the scope of his
employment that, in the opinion of the Board, is detrimental to the best
interests of the Company; or (vi) the Executive's use and/or distribution
of alcohol or illegal substances while acting within the scope of his
employment; or (vii) the breach of any of the substantive terms of this
Agreement; or (viii) the failure of the Executive to meet the performance
goals for the operations for which the Executive is responsible,
established in the annual budget for the Company presented to and approved
by the Board. The determination by the Board as to the matters covered by
(iii), (iv), (v) or (viii) above shall be conclusive; provided,
however, that the Company will not be entitled to terminate this
Agreement for cause pursuant to (iii), (iv) or (viii) above unless,
prior to such termination, the Executive has received a written
reprimand detailing the acts or omissions constituting such failure to
perform the responsibilities of his position, to adhere to the
Company's policies or to meet his performance goals, except that no
prior reprimand is required with respect to violations of the Insider
Trading Policy.
b. The Company may terminate the Executive as an employee of
the Company at any time during the term of this Agreement, subject to
Paragraph 6 of this Agreement.
c. The Executive may terminate his employment with the Company
at any time by giving ninety (90) days' written notice to the Company.
d. The Executive's employment by the Company shall
automatically terminate on the date of the Executive's death if the
Executive dies during the term of this Agreement.
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e. If the Executive is incapacitated by an accident, sickness
or otherwise, so as to render him mentally or physically incapable of
performing the services required of him pursuant to this Agreement,
Executive's employment by the Company shall terminate thirty (30) days
after the day on which the Board determines that the Executive is so
disabled and that this Agreement should be terminated by reason of
such disability. Notwithstanding the foregoing, the Executive shall
be notified in writing if the Company determines that the Executive is
disabled due to mental or physical health; in such event, the
Executive shall have the right to contest any determination of
disability by the Company. In the event that the Executive does
contest such determination, such matter shall be resolved by
arbitration pursuant to this Agreement.
6. SEVERANCE AND OTHER PAYMENTS.
a. If the Executive's employment pursuant to this Agreement is
terminated by the Executive, is terminated for "cause" (as herein
defined) or is terminated due to the death or disability (as
determined pursuant to Paragraph 5(e) of this Agreement) of the
Executive, the Company shall not be obligated to pay or provide any
severance compensation or benefits to the Executive.
b. If the Executive's employment with the Company is terminated
under Paragraph 5(b) of this Agreement, the Company agrees to pay to
the Executive each month an amount equal to the base compensation per
month as follows: (i) if such termination occurs before the Initial
Termination Date, the longer of (x) the period of six (6) months
following the date of termination of the Executive's employment with
the Company or (y) the period from such termination
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<PAGE>
to the Initial Termination Date or (ii) if such termination occurs after
the Initial Termination Date, the shorter of (x) the period of six (6)
months following the date of termination of the Executive's employment with
the Company or (y) the period from such termination to December 31,
1999. Notwithstanding the foregoing, the parties acknowledge and
agree that if such termination does occur, the following shall be
applicable: (i) the amount of monthly compensation required to be
paid by the Company to the Executive shall be reduced by the amount of
monthly compensation payable to the Executive by any one or more
entities with which the Executive is employed, and/or the amount of
self-employment income earned by the Executive during the month
involved, and (ii) the Executive shall use reasonable efforts to
secure reasonably comparable employment and/or generate self-employment
income to minimize or eliminate the Company's obligation to pay severance
compensation to the Executive.
c. If the Executive's employment is terminated during the term
of this Agreement, for any reason other than "cause," the Executive
shall be entitled to receive a pro rata share (based upon the number
of months employed during the calendar year in which employment with
the Company is terminated) of any bonus or incentive compensation
which the Executive would otherwise have been entitled to receive had
he remained employed for the entirety of the calendar year involved.
7. WORKING CONDITIONS. The Company will provide the Executive with a
private office and secretarial services.
8. TRAVEL AND ENTERTAINMENT. The Executive is authorized to incur
reasonable business expenses on behalf of the Company, including, but not by
way of limitation, expenditures of
6
<PAGE>
entertainment, gifts and travel; if any expenses are of a kind or a cost in
excess of the written policies established by the Board, such expenses must
be expressly authorized by the Board. The Company agrees to reimburse the
Executive for all such expenses upon the Executive's presentation of an
itemized account of such expenditures.
9. NONSOLICITATION AGREEMENT. In the event that the termination of
employment of the Executive pursuant to this Agreement is effectuated by the
Executive electing to terminate his employment pursuant to this Agreement, or
by Company for "cause" (as herein defined), the Executive agrees that the
Executive shall not, for a one (1) year period of time following the date of
termination of his employment, (a) solicit for employment or hire any
individual who was an executive or employee of the Company, or any of its
affiliates, on the date of termination of his employment or at any time
within the twelve (12) months preceding the date of termination of his
employment, or (b) solicit the business of any person or entity who is or was
a customer, client, agent or representative of the Company, or any of its
affiliates, at the date of termination of his employment, or at any time
during the twelve (12) months preceding the date of termination of his
employment. The covenants and agreements set forth in this Paragraph 9 shall
survive the termination of this Agreement.
10. NONCOMPETITION AGREEMENT. The Executive acknowledges that the
special relationship of trust and confidence between himself, the Company,
and its clients, customers, vendors and suppliers creates a high risk and
opportunity for the Executive to misappropriate the relationship and goodwill
existing between the Company and its clients, customers, vendors, and
suppliers. The Executive further acknowledges and agrees that it is fair and
reasonable for the Company to take steps to protect itself from the risk of
such misappropriation. The Executive further acknowledges that prior to and
during his employment with the Company, he will be
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<PAGE>
provided with access to the Company's confidential and proprietary
information, that will enable him to benefit from the Company's goodwill and
know-how.
The Executive acknowledges that it would be inherent in the performance
of his duties as a director, officer, employee, agent or consultant of any
person, association, entity or company that competes with the Company to
disclose or use such information, as well as to misappropriate the Company's
goodwill and know-how for the benefit of such other person, association,
entity or company.
The Executive acknowledges that, in exchange for the execution of the
noncompetition restriction set forth below, he has received or will receive
substantial and valuable consideration. The Executive agrees that this
consideration constitutes fair and adequate consideration for the execution
of the noncompetition restriction.
Ancillary to the enforceable promises set forth in this Agreement, the
Executive agrees that during term of this Agreement and for a period of
twelve (12) months after the date of termination of his employment, for
whatever reason, the Executive shall not, without the prior written consent
of the Company, directly or indirectly, whether as a director, officer,
employee, agent, consultant or otherwise, engage in any of the following
activities in competition with the Company in the metropolitan areas (as
defined by the United States Census Bureau) of any city in which the Company
or DCRI maintains a place of business as of the date of termination of his
employment: (i) sell or solicit orders for any product or service for which
the Executive sold or solicited orders, or directed others to sell or solicit
orders, during the term of this Agreement; or (ii) sell, solicit or contact
with a view to selling any such product or service for, from or to any
person, firm or corporation from whom the Executive solicited any order, or
to whom the Executive sold any such
8
<PAGE>
product or service, or from whom the Executive directed another to solicit
any order or to sell any such product or service, at any time during
Executive's employment with the Company.
The Executive agrees that the noncompetition restriction set forth above
is ancillary to an otherwise enforceable agreement and supported by
independent valuable. The Executive further agrees that the limitations as
to time, geographical area and scope of activity to be restrained by this
restriction are reasonable and acceptable and do not impose any greater
restraint than is reasonably necessary to protect the goodwill and other
business interests of the Company. The Executive further agrees that if, at
some later date, a court of competent jurisdiction determines that the
restriction set forth in this Paragraph does not meet such, this Paragraph
may be reformed by the court and enforced to the maximum extent permitted
under Texas law.
If the Executive is found to have violated any of the provisions of this
Paragraph, the Executive agrees that the restrictive period of each covenant
so violated shall be extended by a period of time equal to the period of such
violation by him. It is the intent of this Paragraph that the running of the
restrictive period of any covenant shall be tolled during any period of
violation of such covenant so that the Company may obtain the full and
reasonable protection for which it contracted and so that Executive may not
profit by his breach.
The Executive's obligations under Paragraph shall survive the
termination of this Agreement and shall not be assignable by Executive.
11. NONDISCLOSURE AGREEMENT. During the term of this Agreement, the
Company will provide to the Executive certain confidential and proprietary
information owned by the Company. The Executive acknowledges that he
occupies or will occupy a position of trust and confidence with the Company,
and that the Company would be irreparably damaged if Executive were to breach
the covenants set forth in this Paragraph. Accordingly, the Executive agrees
that he will
9
<PAGE>
not, without the prior written consent of the Company, at any time during the
term of this Agreement or any time thereafter, except as may be required by
competent legal authority or as required by the Company to be disclosed in
the course of performing the Executive's duties under this Agreement for the
Company, use or disclose to any person, firm or other legal entity, any
confidential records, secrets or information related to the Company or any
parent, subsidiary or affiliated person or entity (collectively,
"Confidential Information"). Confidential Information shall include, without
limitation, information about the Company's customer lists, product pricing,
data, know-how, processes, ideas, product development, market studies,
computer software and programs, database technologies, strategic planning,
and risk management. The Executive acknowledges and agrees that all
Confidential Information of the Company and/or its affiliates that he has
acquired, or may acquire, were received, or will be received in confidence
and as a fiduciary of the Company. The Executive will exercise utmost
diligence to protect and guard such Confidential Information. The Executive
agrees that he will not, without the express written consent of the Board of
Directors of the Company, take with him upon the termination of this
Agreement any document or paper, or any photocopy or reproduction or
duplication thereof, relating to any Confidential Information.
12. NOTICES. All notices or other instruments or communications
provided for in this Agreement shall be in writing and signed by the party
giving same and shall be deemed properly given if delivered in person,
including delivery by overnight courier, or if sent by registered or
certified United States mail, postage pre-paid, addressed to such party at
the address listed below. Each party may, by notice to the other party,
specify any other address for the receipt of such notices, instruments or
communications. Any notice, instrument or communication sent by telegram
shall be deemed properly given only when received by the person to whom it is
sent.
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13. MISCELLANEOUS.
a. Subject to the condition that this Agreement is not
assignable by either party without the prior written consent of the
other party (except that the Company may assign this Agreement to an
affiliate), the terms and provisions of this Agreement shall inure to
the benefit of, and shall be binding on, the parties hereto and their
respective heirs, representatives, successors and assigns.
b. This Agreement supersedes all other agreements, either oral
or in writing, between the parties to this Agreement, with respect to
the employment of the Executive by the Company. This Agreement
contains the entire understanding of the parties and all of the
covenants and agreement between the parties with respect to such
employment. Any such prior agreements are hereby terminated without
obligation for any payments otherwise due thereunder. No waiver or
modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid, unless in writing and duly
executed by the party to be charged therewith, and no evidence of any
waiver or modification shall be offered or received in evidence of any
proceeding, arbitration, or litigation between the parties hereto
arising out of or affecting this Agreement, or the rights or
obligations of the parties hereunder, unless such waiver or
modification is in writing, duly executed as aforesaid, and the
parties further agree that the provisions of this paragraph may not be
waived except as herein set forth.
c. All agreements and covenants contained herein are severable
and in the event any of them, with the exception of those contained in
Paragraph 1 hereof, shall be held to be invalid, as written pursuant
to the arbitration or judicial
11
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proceedings provided for in this Agreement, this Agreement shall be
interpreted as if such invalid agreements or covenants were not contained
herein.
d. Any controversy between the parties to this Agreement
involving the construction or application of any of the terms,
covenants, or conditions of this Agreement shall be submitted to
arbitration in Dallas County, Texas, if either party to this Agreement
shall request arbitration by notice in writing to the other party. In
such event, the parties to this Agreement shall, within thirty (30)
days after this Paragraph 12(d) is invoked, both appoint one person as
an arbitrator to hear and determine the dispute, then the two
arbitrators so chosen shall, within fifteen (15) days, select a third
impartial arbitrator; the majority decision of the arbitrators shall
be final and conclusive upon the parties to this Agreement. Each
party to the arbitration proceedings conducted pursuant to this
Agreement shall bear his or its own expenses, except that the expenses
of the arbitrators shall be borne equally by the Company and the
Executive.
e. In the event of any litigation between the parties related
to the compliance with the terms and conditions of this Agreement, the
parties hereto acknowledge and agree that (i) such litigation
proceedings must be held in Dallas County, Texas, and (ii) the
prevailing party in such litigation proceedings shall be entitled to
recover, from the non-prevailing party, reasonable attorneys' fees and
expenses incurred in connection with the dispute involved.
f. This Agreement has been made under and shall be governed by
the laws of the State of Texas.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of January 1, 1998.
COMPANY:
MANAGEMENT ALLIANCE CORPORATION
By: /s/ M. Ted Dillard
-----------------------------------
Name: M. Ted Dillard
---------------------------------
Title: Secretary
--------------------------------
Address: 12801 North Central Expressway
Suite 350
Dallas, Texas 75243
/s/ James Woo
--------------------------------------
James Woo
Address: 5941 Henley
------------------------------
Plano, Texas 75093
------------------------------
13
<PAGE>
FIRST AMENDMENT
TO THE
DIVERSIFIED CORPORATE RESOURCES, INC.
AMENDED AND RESTATED 1996 NONQUALIFIED STOCK OPTION PLAN
This First Amendment to the Diversified Corporate Resources, Inc.
Amended and Restated 1996 Stock Option Plan ("Plan") made and entered into
effective as of the 13th day of November, 1997.
W I T N E S S E T H:
WHEREAS, Diversified Corporate Resources, Inc. ("Company") established
the Plan effective December 27, 1996; and
WHEREAS, the Board of Directors ("Board") has the right under Article
VIII to amend the Plan at any time and in any respect, except that some
amendments are subject to the approval of shareholders; and
WHEREAS, the Board has determined that it will better serve the
interests of the Company if the Plan is amended (i) to increase the number of
Shares subject to grant under the Plan by 50,000, principally in order to
provide sufficient Shares to satisfy all of the Stock Options granted under
the Plan, and (ii) to authorize the Compensation Committee to exercise its
discretion in setting the transferability limitations (and to amend existing
Stock Option agreements) with respect to each Stock Option granted under the
Plan; and
WHEREAS, such amendments require the concurrence and approval of the
shareholders of the Company; and
WHEREAS, the Board has authorized the President, acting at the direction
and on behalf of the Board, to evidence the Board's action by executing this
First Amendment.
NOW THEREFORE, The Plan Is Hereby Amended As Follows:
I. Article IV is amended effective November 13, 1997 by deleting
"450,000" and substituting therefore "500,000".
II. Section 9.4 is amended effective November 13, 1997 by adding to the
first sentence thereof the words "Except as otherwise provided in any Stock
Option agreement,"
IN WITNESS WHEREOF, the undersigned has executed this First Amendment as
of this 29th day of April, 1998, but effective as of November 13, 1997;
provided, however, without limitation, that this Amendment, and the portion
of any Stock Options granted under the Plan to
-1-
<PAGE>
the minimum extent it requires the effectiveness of this First Amendment,
will be null and void ab initio unless, on or before November 13, 1998, this
First Amendment is approved by the affirmative vote of the holders of a
majority of the shares present in person or represented by proxy at the
shareholder meeting of reference and entitled to vote on the matter in
question.
DIVERSIFIED CORPORATE RESOURCES, INC.
BY: /s/ M. Ted Dillard
---------------------------------------------------
NAME: M. Ted Dillard
---------------------------------------------------
TITLE: President
---------------------------------------------------
-2-
<PAGE>
KEY EMPLOYEE ANTHONY BRUNO NUMBER OF SHARES 12,000
NONQUALIFIED STOCK OPTION
UNDER THE
DIVERSIFIED CORPORATE RESOURCES, INC.
AMENDED AND RESTATED 1996 NONQUALIFIED STOCK OPTION PLAN
THIS OPTION AGREEMENT ("Option") is executed by Diversified Corporate
Resources, Inc., a Texas corporation (herein called "Company") to evidence the
grant, effective November 13, 1997 to Anthony Bruno (herein called "Optionee")
of a stock option under and pursuant to the Diversified Corporate Resources,
Inc. Amended and Restated 1996 Nonqualified Stock Option Plan ("Plan").
WHEREAS, the Optionee is an key employee of the Company; and
WHEREAS, the Company considers it desirable and in its best interests that
Optionee be given an opportunity to acquire an equity interest in the Company in
the form of an option to purchase shares of common stock of the Company (the
"Common Stock"); and
WHEREAS, this Option is granted under, and pursuant to the terms of the
Diversified Corporate Resources, Inc. Amended and Restated 1996 Nonqualified
Stock Option Plan (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
1. GRANT OF OPTION. The Company shall and does hereby grant to Optionee
the option to purchase 12,000 shares (the "Shares") of Common Stock; provided,
however, that notwithstanding any provision of the Plan and this Option to the
contrary, in the event the shareholders of the Company fail to approve the
50,000 increase in the number of shares of Common Stock available for grant
under the Plan at the next Company Annual Meeting of Shareholders ("Meeting"),
effective on the date of the Meeting the number of Shares described in this
Section 1 as subject to this Option shall automatically, and without further
action, be reduced for all purposes to that number of shares (rounded to the
next lower whole number) which is equal to the product of (i) the number of
Shares set forth above in this Section 1, multiplied by (ii) a fraction (x)
whose numerator is the aggregate number of shares under the Plan which are not
subject to an option (excluding only options granted on November 13, 1997)
granted under the Plan and remaining outstanding and unexercised on the date of
the Meeting, and (y) whose denominator is 145,500.
2. EXERCISE PRICE. The Exercise Price is $10.00 for each Share.
3. VESTING OF OPTION. Without limitation, the Shares subject to this
Option shall vest ("Vest", "Vesting" and similar) in accordance with the
following Vesting schedule:
<PAGE>
(i) Forty percent (40%) of the Shares on December 31, 1998.
(ii) Twenty Percent (20%) % of the Shares on December 31, 1999.
(iii) Twenty percent (20%) of the Shares on the December 31, 2000.
(iv) The remaining Twenty percent (20%) of the Shares on the
December 31, 2001.
4. METHOD OF EXERCISE. (a) In order to exercise this Option, in whole or
in part, the Optionee shall deliver to the Company at its principal place of
business, or at such other offices as shall be designated by the Company (i) a
written notice of such Optionee's election to exercise this Option, which notice
shall specify the number of Shares to be purchased pursuant to such exercise and
(ii) either (A) cash or a check payable to the order of the Company, (B) if, and
to the extent, authorized by the Committee (which, without limitation, may grant
or withhold such approval in its sole discretion), notice that the Exercise
Price is satisfied by reduction of the number of Shares to be received by
Optionee upon exercise of this Option, with the amount of such reduction
specified in such notice, (C) if, and to the extent, authorized by the Committee
(which, without limitation may grant or withhold such approval in its sole
discretion) with shares of Common Stock, or (D) a combination of the above. The
Company shall undertake to make prompt delivery of the stock certificate(s)
evidencing the Shares to be transferred, provided that if any law or regulation
requires the Company to take any action with respect to the Shares specified in
such notice before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to take such action; and
provided further, and without limitation, Shares will not be issued unless and
until each matter described in Section 9.5 is satisfied.
(b) Upon the exercise of an Option, and before the transfer of Shares, the
Optionee shall be required to pay to the Company in cash or, to the extent
authorized by the Committee (which, without limitation may grant or withhold
such approval in its sole discretion) with Shares in the manner described in
subsections (a)(B) or (a)(C) of this Section, the amount which the Company
reasonably determines to be necessary in order for the Company to comply with
applicable federal and state tax withholding requirements, and the collection of
employment taxes.
(c) For all purposes relating to the surrender or delivery of Shares in
satisfaction of obligations described in subsection (a) and (b) of this Section,
the fair market value of the shares of Common Stock delivered or surrendered
shall be determined as of the business day next preceding the date of their
surrender or delivery, and shall mean the price at which such shares would
exchange hands between a willing buyer and willing seller, neither of whom are
under compulsion to buy or sell, as reasonably determined by the Committee;
provided, however, that so long as such shares are listed on a national stock
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), it shall mean the closing sale price (or, if no
closing sale price is quoted, the mean between the closing bid and sale price)
of such shares on such exchange or on NASDAQ on such next business day, or, if
no such shares were traded on such business day, the closing sale price (or, if
no closing sale price is quoted, the mean between the closing bid and sale
price) on the next preceding business day on which such shares were traded.
<PAGE>
5. TERMINATION OF OPTION. To the extent not previously exercised, this
Option shall terminate with respect to Shares which have not Vested immediately
upon Optionee's termination of employment for any reason, and shall terminate
with respect to Vested Shares on the earlier of (a) November 13, 2007, (b)
ninety (90) days from the date on which Optionee's employment with the Company
is terminated for any reason other than the death or disability of the Optionee,
and (c) one (1) year from the date on which Optionee's employment with the
Company is terminated if such termination is due to death or disability of the
Optionee. The determination of whether the Optionee is disabled for all
purposes of this Option shall be left to the reasonable discretion of the
Committee.
6. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option herein granted is
nontransferable by Optionee except that it may be exercised by his or her legal
representative following his death or during a period of his disability with
respect to Shares which are Vested, at any time prior to the termination of the
Option.
7. BINDING EFFECT. Without limitation, this Option is issued under, and
granted in all respects subject to all of the provisions of, the Plan, all of
which provisions of the Plan are incorporated herein by reference; provided,
however, without limitation, that the provisions of this Option will determine
the agreement of the parties with respect to each matter set forth herein to the
extent the provisions of the Option do not require a result that is inconsistent
with the Plan; and provided, finally, that the parties expressly agree that no
inference shall be drawn with respect to the intent of the parties based on the
inclusion of, or reference to, some provisions of the Plan in this Option, and
the omission of such inclusion or reference with respect to other provisions of
the Plan in this Option; and provided, finally, that this Option shall be
binding upon and inure to the benefit of the Company, and its representatives,
successors and assigns, and the Optionee and his or her legal representative (to
the extent expressly permitted).
8. MULTIPLE ORIGINALS. This Option may be executed in multiple
counterparts with each counterpart constituting an original for all purposes.
9. AMENDMENT. This Option may not be amended or revised in such a manner
as to impair the rights of the Optionee without Optionee's written consent.
10. COMMITTEE AUTHORITY. Any questions concerning the interpretation of
this Option, including without limitation the incorporated provisions of the
Plan, shall be determined by the Committee in its sole discretion.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
and hereby is granted effective as of November 13, 1997.
DIVERSIFIED CORPORATE RESOURCES, INC.
By: /s/ M. Ted Dillard
-----------------------------------
M. Ted Dillard
<PAGE>
KEY EMPLOYEE JIM WOO NUMBER OF SHARES 10,000
NONQUALIFIED STOCK OPTION
UNDER THE
DIVERSIFIED CORPORATE RESOURCES, INC.
AMENDED AND RESTATED 1996 NONQUALIFIED STOCK OPTION PLAN
THIS OPTION AGREEMENT ("Option") is executed by Diversified Corporate
Resources, Inc., a Texas corporation (herein called "Company") to evidence the
grant, effective November 13, 1997 to Jim Woo (herein called "Optionee") of a
stock option under and pursuant to the Diversified Corporate Resources, Inc.
Amended and Restated 1996 Nonqualified Stock Option Plan ("Plan").
WHEREAS, the Optionee is an key employee of the Company; and
WHEREAS, the Company considers it desirable and in its best interests that
Optionee be given an opportunity to acquire an equity interest in the Company in
the form of an option to purchase shares of common stock of the Company (the
"Common Stock"); and
WHEREAS, this Option is granted under, and pursuant to the terms of the
Diversified Corporate Resources, Inc. Amended and Restated 1996 Nonqualified
Stock Option Plan (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
1. GRANT OF OPTION. The Company shall and does hereby grant to Optionee
the option to purchase 10,000 shares (the "Shares") of Common Stock; provided,
however, that notwithstanding any provision of the Plan and this Option to the
contrary, in the event the shareholders of the Company fail to approve the
50,000 increase in the number of shares of Common Stock available for grant
under the Plan at the next Company Annual Meeting of Shareholders ("Meeting"),
effective on the date of the Meeting the number of Shares described in this
Section 1 as subject to this Option shall automatically, and without further
action, be reduced for all purposes to that number of shares (rounded to the
next lower whole number) which is equal to the product of (i) the number of
Shares set forth above in this Section 1, multiplied by (ii) a fraction (x)
whose numerator is the aggregate number of shares under the Plan which are not
subject to an option (excluding only options granted on November 13, 1997)
granted under the Plan and remaining outstanding and unexercised on the date of
the Meeting, and (y) whose denominator is 145,500.
2. EXERCISE PRICE. The Exercise Price is $10.00 for each Share.
3. VESTING OF OPTION. Without limitation, the Shares subject to this
Option shall vest ("Vest", "Vesting" and similar) in accordance with the
following Vesting schedule:
<PAGE>
(i) Forty percent (40%) of the Shares on December 31, 1998.
(ii) Twenty Percent (20%) of the Shares on December 31, 1999.
(iii) Twenty percent (20%) of the Shares on the December 31, 2000.
(iv) The remaining Twenty percent (20%) of the Shares on the
December 31, 2001.
4. METHOD OF EXERCISE. (a) In order to exercise this Option, in whole or
in part, the Optionee shall deliver to the Company at its principal place of
business, or at such other offices as shall be designated by the Company (i) a
written notice of such Optionee's election to exercise this Option, which notice
shall specify the number of Shares to be purchased pursuant to such exercise and
(ii) either (A) cash or a check payable to the order of the Company, (B) if, and
to the extent, authorized by the Committee (which, without limitation, may grant
or withhold such approval in its sole discretion), notice that the Exercise
Price is satisfied by reduction of the number of Shares to be received by
Optionee upon exercise of this Option, with the amount of such reduction
specified in such notice, (C) if, and to the extent, authorized by the Committee
(which, without limitation may grant or withhold such approval in its sole
discretion) with shares of Common Stock, or (D) a combination of the above. The
Company shall undertake to make prompt delivery of the stock certificate(s)
evidencing the Shares to be transferred, provided that if any law or regulation
requires the Company to take any action with respect to the Shares specified in
such notice before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to take such action; and
provided further, and without limitation, Shares will not be issued unless and
until each matter described in Section 9.5 is satisfied.
(b) Upon the exercise of an Option, and before the transfer of Shares, the
Optionee shall be required to pay to the Company in cash or, to the extent
authorized by the Committee (which, without limitation may grant or withhold
such approval in its sole discretion) with Shares in the manner described in
subsections (a)(B) or (a)(C) of this Section, the amount which the Company
reasonably determines to be necessary in order for the Company to comply with
applicable federal and state tax withholding requirements, and the collection of
employment taxes.
(c) For all purposes relating to the surrender or delivery of Shares in
satisfaction of obligations described in subsection (a) and (b) of this Section,
the fair market value of the shares of Common Stock delivered or surrendered
shall be determined as of the business day next preceding the date of their
surrender or delivery, and shall mean the price at which such shares would
exchange hands between a willing buyer and willing seller, neither of whom are
under compulsion to buy or sell, as reasonably determined by the Committee;
provided, however, that so long as such shares are listed on a national stock
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), it shall mean the closing sale price (or, if no
closing sale price is quoted, the mean between the closing bid and sale price)
of such shares on such exchange or on NASDAQ on such next business day, or, if
no such shares were traded on such business day, the closing sale price (or, if
no closing sale price is quoted, the mean between the closing bid and sale
price) on the next preceding business day on which such shares were traded.
<PAGE>
5. TERMINATION OF OPTION. To the extent not previously exercised, this
Option shall terminate with respect to Shares which have not Vested immediately
upon Optionee's termination of employment for any reason, and shall terminate
with respect to Vested Shares on the earlier of (a) November 13, 2007, (b)
ninety (90) days from the date on which Optionee's employment with the Company
is terminated for any reason other than the death or disability of the Optionee,
and (c) one (1) year from the date on which Optionee's employment with the
Company is terminated if such termination is due to death or disability of the
Optionee. The determination of whether the Optionee is disabled for all
purposes of this Option shall be left to the reasonable discretion of the
Committee.
6. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option herein granted is
nontransferable by Optionee except that it may be exercised by his or her legal
representative following his death or during a period of his disability with
respect to Shares which are Vested, at any time prior to the termination of the
Option.
7. BINDING EFFECT. Without limitation, this Option is issued under, and
granted in all respects subject to all of the provisions of, the Plan, all of
which provisions of the Plan are incorporated herein by reference; provided,
however, without limitation, that the provisions of this Option will determine
the agreement of the parties with respect to each matter set forth herein to the
extent the provisions of the Option do not require a result that is inconsistent
with the Plan; and provided, finally, that the parties expressly agree that no
inference shall be drawn with respect to the intent of the parties based on the
inclusion of, or reference to, some provisions of the Plan in this Option, and
the omission of such inclusion or reference with respect to other provisions of
the Plan in this Option; and provided, finally, that this Option shall be
binding upon and inure to the benefit of the Company, and its representatives,
successors and assigns, and the Optionee and his or her legal representative (to
the extent expressly permitted).
8. MULTIPLE ORIGINALS. This Option may be executed in multiple
counterparts with each counterpart constituting an original for all purposes.
9. AMENDMENT. This Option may not be amended or revised in such a manner
as to impair the rights of the Optionee without Optionee's written consent.
10. COMMITTEE AUTHORITY. Any questions concerning the interpretation of
this Option, including without limitation the incorporated provisions of the
Plan, shall be determined by the Committee in its sole discretion.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
and hereby is granted effective as of November 13, 1997.
DIVERSIFIED CORPORATE RESOURCES, INC.
By: /s/ M. Ted Dillard
-----------------------------------
M. Ted Dillard
<PAGE>
SCOTT HIGBY NUMBER OF SHARES 7,500
NONQUALIFIED STOCK OPTION
UNDER THE
DIVERSIFIED CORPORATE RESOURCES, INC.
1998 NONQUALIFIED STOCK OPTION PLAN
THIS OPTION AGREEMENT ("Option") is executed by Diversified Corporate
Resources, Inc., a Texas corporation (herein called "Company") to evidence the
grant, effective January 14, 1998 to Scott Higby (herein called "Optionee") of
a stock option under and pursuant to the Diversified Corporate Resources, Inc.
1998 Nonqualified Stock Option Plan ("Plan").
WHEREAS, the Optionee is an key employee of the Company; and
WHEREAS, the Company considers it desirable and in its best interests that
Optionee be given an opportunity to acquire an equity interest in the Company in
the form of an option to purchase shares of common stock of the Company (the
"Common Stock"); and
WHEREAS, this Option is granted under, and pursuant to the terms of the
Diversified Corporate Resources, Inc. 1998 Nonqualified Stock Option Plan (the
"Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
1. GRANT OF OPTION. The Company shall and does hereby grant to Optionee
the option to purchase 7,500 shares (the "Shares") of Common Stock.
2. EXERCISE PRICE. The Exercise Price is $8.00 for each Share.
3. VESTING OF OPTION. Without limitation, the Shares subject to this
Option shall vest ("Vest", "Vesting" and similar) in accordance with the
following Vesting schedule:
(i) Twenty percent (20%) of the Shares immediately upon Grant.
(ii) Twenty Percent (20%) of the Shares on December 31, 1998.
(iii) Twenty percent (20%) of the Shares on the December 31, 1999.
(iv) Twenty percent (20%) of the Shares on the December 31, 2000.
(v) The remaining Twenty percent (20%) of the Shares on the
December 31, 2001.
4. METHOD OF EXERCISE. (a) In order to exercise this Option, in whole or
in part, the Optionee shall deliver to the Company at its principal place of
business, or at such other offices as shall be designated by the Company (i) a
written notice of such Optionee's election to exercise this Option, which notice
shall specify the number of Shares to be purchased pursuant to such exercise and
(ii) either (A) cash or a check payable to the order of the Company, (B) if, and
to the extent, authorized by the Committee (which, without limitation, may grant
or withhold such approval in its sole discretion), notice that the Exercise
Price is satisfied by reduction of the
<PAGE>
number of Shares to be received by Optionee upon exercise of this Option,
with the amount of such reduction specified in such notice, (C) if, and to
the extent, authorized by the Committee (which, without limitation may grant
or withhold such approval in its sole discretion) with shares of Common
Stock, or (D) a combination of the above. The Company shall undertake to
make prompt delivery of the stock certificate(s) evidencing the Shares to be
transferred, provided that if any law or regulation requires the Company to
take any action with respect to the Shares specified in such notice before
the issuance thereof, then the date of delivery of such Shares shall be
extended for the period necessary to take such action; and provided further,
and without limitation, Shares will not be issued unless and until each
matter described in Section 9.5 is satisfied.
(b) Upon the exercise of an Option, and before the transfer of Shares, the
Optionee shall be required to pay to the Company in cash or, to the extent
authorized by the Committee (which, without limitation may grant or withhold
such approval in its sole discretion) with Shares in the manner described in
subsections (a)(B) or (a)(C) of this Section, the amount which the Company
reasonably determines to be necessary in order for the Company to comply with
applicable federal and state tax withholding requirements, and the collection of
employment taxes.
(c) For all purposes relating to the surrender or delivery of Shares in
satisfaction of obligations described in subsection (a) and (b) of this Section,
the fair market value of the shares of Common Stock delivered or surrendered
shall be determined as of the business day next preceding the date of their
surrender or delivery, and shall mean the price at which such shares would
exchange hands between a willing buyer and willing seller, neither of whom are
under compulsion to buy or sell, as reasonably determined by the Committee;
provided, however, that so long as such shares are listed on a national stock
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), it shall mean the closing sale price (or, if no
closing sale price is quoted, the mean between the closing bid and sale price)
of such shares on such exchange or on NASDAQ on such next business day, or, if
no such shares were traded on such business day, the closing sale price (or, if
no closing sale price is quoted, the mean between the closing bid and sale
price) on the next preceding business day on which such shares were traded.
(d) Without limitation, this Option may not be exercised in whole or in
part until the date on which the Plan is approved by Shareholders as required
under Section 11.
5. TERMINATION OF OPTION. To the extent not previously exercised, this
Option shall terminate with respect to Shares which have not Vested immediately
upon Optionee's termination of employment for any reason, and shall terminate
with respect to Vested Shares on the earlier of (a) January 14, 2008, (b)
ninety (90) days from the date on which Optionee's employment with the Company
is terminated for any reason other than the death or disability of the Optionee,
and (c) one (1) year from the date on which Optionee's employment with the
Company is terminated if such termination is due to death or disability of the
Optionee. The determination of whether the Optionee is disabled for all
purposes of this Option shall be left to the reasonable discretion of the
Committee.
6. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option herein granted is
nontransferable by Optionee except that it may be exercised by his or her legal
representative
<PAGE>
following his death or during a period of his disability with respect to
Shares which are Vested, at any time prior to the termination of the Option.
7. BINDING EFFECT. Without limitation, this Option is issued under, and
granted in all respects subject to all of the provisions of, the Plan, all of
which provisions of the Plan are incorporated herein by reference; provided,
however, without limitation, that the provisions of this Option will determine
the agreement of the parties with respect to each matter set forth herein to the
extent the provisions of the Option do not require a result that is inconsistent
with the Plan; and provided, finally, that the parties expressly agree that no
inference shall be drawn with respect to the intent of the parties based on the
inclusion of, or reference to, some provisions of the Plan in this Option, and
the omission of such inclusion or reference with respect to other provisions of
the Plan in this Option; and provided, finally, that this Option shall be
binding upon and inure to the benefit of the Company, and its representatives,
successors and assigns, and the Optionee and his or her legal representative (to
the extent expressly permitted).
8. MULTIPLE ORIGINALS. This Option may be executed in multiple
counterparts with each counterpart constituting an original for all purposes.
9. AMENDMENT. This Option may not be amended or revised in such a manner
as to impair the rights of the Optionee without Optionee's written consent.
10. COMMITTEE AUTHORITY. Any questions concerning the interpretation of
this Option, including without limitation the incorporated provisions of the
Plan, shall be determined by the Committee in its sole discretion.
11. CANCELLATION OF OPTION. Notwithstanding any provision of this Option
or the Plan to the contrary, this Option shall be canceled, and deemed void ab
initio, on the day following the next Company Annual Meeting of Shareholders
("Meeting") unless, at such Meeting, the shareholders approve the Plan.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
and hereby is granted effective as of January 14, 1998.
DIVERSIFIED CORPORATE RESOURCES, INC.
By: /s/ M. Ted Dillard
-----------------------------------
M. Ted Dillard
/s/ Scott Higby
-----------------------------------
Scott Higby
<PAGE>
JOHN WILSON NUMBER OF SHARES 12,500
NONQUALIFIED STOCK OPTION
UNDER THE
DIVERSIFIED CORPORATE RESOURCES, INC.
1998 NONQUALIFIED STOCK OPTION PLAN
THIS OPTION AGREEMENT ("Option") is executed by Diversified Corporate
Resources, Inc., a Texas corporation (herein called "Company") to evidence the
grant, effective April 23, 1998 to John Wilson (herein called "Optionee") of a
stock option under and pursuant to the Diversified Corporate Resources, Inc.
1998 Nonqualified Stock Option Plan ("Plan").
WHEREAS, the Optionee is an key employee of the Company; and
WHEREAS, the Company considers it desirable and in its best interests that
Optionee be given an opportunity to acquire an equity interest in the Company in
the form of an option to purchase shares of common stock of the Company (the
"Common Stock"); and
WHEREAS, this Option is granted under, and pursuant to the terms of the
Diversified Corporate Resources, Inc. 1998 Nonqualified Stock Option Plan (the
"Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
1. GRANT OF OPTION. The Company shall and does hereby grant to Optionee
the option to purchase 12,500 shares (the "Shares") of Common Stock.
2. EXERCISE PRICE. The Exercise Price is $10.00 for each Share.
3. VESTING OF OPTION. Without limitation, the Shares subject to this
Option shall vest ("Vest", "Vesting" and similar) in accordance with the
following Vesting schedule:
(i) Twenty percent (20%) of the Shares on December 31, 1998.
(ii) Twenty Percent (20%) of the Shares on December 31, 1999.
(iii) Twenty percent (20%) of the Shares on the December 31, 2000.
(iv) Twenty percent (20%) of the Shares on the December 31, 2001.
(v) The remaining Twenty percent (20%) of the Shares on the
December 31, 2002.
4. METHOD OF EXERCISE. (a) In order to exercise this Option, in whole or
in part, the Optionee shall deliver to the Company at its principal place of
business, or at such other offices as shall be designated by the Company (i) a
written notice of such Optionee's election to exercise this Option, which notice
shall specify the number of Shares to be purchased pursuant to such exercise and
(ii) either (A) cash or a check payable to the order of the Company, (B) if, and
to the extent, authorized by the Committee (which, without limitation, may grant
or withhold such approval in its sole discretion), notice that the Exercise
Price is satisfied by reduction of the
<PAGE>
number of Shares to be received by Optionee upon exercise of this Option,
with the amount of such reduction specified in such notice, (C) if, and to
the extent, authorized by the Committee (which, without limitation may grant
or withhold such approval in its sole discretion) with shares of Common
Stock, or (D) a combination of the above. The Company shall undertake to
make prompt delivery of the stock certificate(s) evidencing the Shares to be
transferred, provided that if any law or regulation requires the Company to
take any action with respect to the Shares specified in such notice before
the issuance thereof, then the date of delivery of such Shares shall be
extended for the period necessary to take such action; and provided further,
and without limitation, Shares will not be issued unless and until each
matter described in Section 9.5 is satisfied.
(b) Upon the exercise of an Option, and before the transfer of Shares, the
Optionee shall be required to pay to the Company in cash or, to the extent
authorized by the Committee (which, without limitation may grant or withhold
such approval in its sole discretion) with Shares in the manner described in
subsections (a)(B) or (a)(C) of this Section, the amount which the Company
reasonably determines to be necessary in order for the Company to comply with
applicable federal and state tax withholding requirements, and the collection of
employment taxes.
(c) For all purposes relating to the surrender or delivery of Shares in
satisfaction of obligations described in subsection (a) and (b) of this Section,
the fair market value of the shares of Common Stock delivered or surrendered
shall be determined as of the business day next preceding the date of their
surrender or delivery, and shall mean the price at which such shares would
exchange hands between a willing buyer and willing seller, neither of whom are
under compulsion to buy or sell, as reasonably determined by the Committee;
provided, however, that so long as such shares are listed on a national stock
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), it shall mean the closing sale price (or, if no
closing sale price is quoted, the mean between the closing bid and sale price)
of such shares on such exchange or on NASDAQ on such next business day, or, if
no such shares were traded on such business day, the closing sale price (or, if
no closing sale price is quoted, the mean between the closing bid and sale
price) on the next preceding business day on which such shares were traded.
(d) Without limitation, this Option may not be exercised in whole or in
part until the date on which the Plan is approved by Shareholders as required
under Section 11.
5. TERMINATION OF OPTION. To the extent not previously exercised, this
Option shall terminate with respect to Shares which have not Vested immediately
upon Optionee's termination of employment for any reason, and shall terminate
with respect to Vested Shares on the earlier of (a) April 23, 2008, (b) ninety
(90) days from the date on which Optionee's employment with the Company is
terminated for any reason other than the death or disability of the Optionee,
and (c) one (1) year from the date on which Optionee's employment with the
Company is terminated if such termination is due to death or disability of the
Optionee. The determination of whether the Optionee is disabled for all
purposes of this Option shall be left to the reasonable discretion of the
Committee.
6. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option herein granted is
nontransferable by Optionee except that it may be exercised by his or her legal
representative
<PAGE>
following his death or during a period of his disability with respect to
Shares which are Vested, at any time prior to the termination of the Option.
7. BINDING EFFECT. Without limitation, this Option is issued under, and
granted in all respects subject to all of the provisions of, the Plan, all of
which provisions of the Plan are incorporated herein by reference; provided,
however, without limitation, that the provisions of this Option will determine
the agreement of the parties with respect to each matter set forth herein to the
extent the provisions of the Option do not require a result that is inconsistent
with the Plan; and provided, finally, that the parties expressly agree that no
inference shall be drawn with respect to the intent of the parties based on the
inclusion of, or reference to, some provisions of the Plan in this Option, and
the omission of such inclusion or reference with respect to other provisions of
the Plan in this Option; and provided, finally, that this Option shall be
binding upon and inure to the benefit of the Company, and its representatives,
successors and assigns, and the Optionee and his or her legal representative (to
the extent expressly permitted).
8. MULTIPLE ORIGINALS. This Option may be executed in multiple
counterparts with each counterpart constituting an original for all purposes.
9. AMENDMENT. This Option may not be amended or revised in such a manner
as to impair the rights of the Optionee without Optionee's written consent.
10. COMMITTEE AUTHORITY. Any questions concerning the interpretation of
this Option, including without limitation the incorporated provisions of the
Plan, shall be determined by the Committee in its sole discretion.
11. CANCELLATION OF OPTION. Notwithstanding any provision of this Option
or the Plan to the contrary, this Option shall be canceled, and deemed void ab
initio, on the day following the next Company Annual Meeting of Shareholders
("Meeting") unless, at such Meeting, the shareholders approve the Plan.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
and hereby is granted effective as of April 23, 1998.
DIVERSIFIED CORPORATE RESOURCES, INC.
By: /s/ M. Ted Dillard
-----------------------------------
M. Ted Dillard
/s/ John Wilson
-----------------------------------
John Wilson
<PAGE>
KEY EMPLOYEE NUMBER OF SHARES
NONQUALIFIED STOCK OPTION
UNDER THE
DIVERSIFIED CORPORATE RESOURCES, INC.
AMENDED AND RESTATED 1996 NONQUALIFIED STOCK OPTION PLAN
THIS OPTION AGREEMENT ("Option") is executed by Diversified Corporate
Resources, Inc., a Texas corporation (herein called "Company") to evidence the
grant, effective November 13, 1997 to _____________ (herein called "Optionee")
of a stock option under and pursuant to the Diversified Corporate Resources,
Inc. Amended and Restated 1996 Nonqualified Stock Option Plan ("Plan").
WHEREAS, the Optionee is an key employee of the Company; and
WHEREAS, the Company considers it desirable and in its best interests that
Optionee be given an opportunity to acquire an equity interest in the Company in
the form of an option to purchase shares of common stock of the Company (the
"Common Stock"); and
WHEREAS, this Option is granted under, and pursuant to the terms of the
Diversified Corporate Resources, Inc. Amended and Restated 1996 Nonqualified
Stock Option Plan (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
1. GRANT OF OPTION. The Company shall and does hereby grant to Optionee
the option to purchase ____________ shares (the "Shares") of Common Stock;
provided, however, that notwithstanding any provision of the Plan and this
Option to the contrary, in the event the shareholders of the Company fail to
approve the 50,000 increase in the number of shares of Common Stock available
for grant under the Plan at the next Company Annual Meeting of Shareholders
("Meeting"), effective on the date of the Meeting the number of Shares described
in this Section 1 as subject to this Option shall automatically, and without
further action, be reduced for all purposes to that number of shares (rounded to
the next lower whole number) which is equal to the product of (i) the number of
Shares set forth above in this Section 1, multiplied by (ii) a fraction (x)
whose numerator is the aggregate number of shares under the Plan which are not
subject to an option (excluding only options granted on November 13, 1997)
granted under the Plan and remaining outstanding and unexercised on the date of
the Meeting, and (y) whose denominator is 145,500.
2. EXERCISE PRICE. The Exercise Price is $10.00 for each Share.
3. VESTING OF OPTION. Without limitation, the Shares subject to this
Option shall vest ("Vest", "Vesting" and similar) in accordance with the
following Vesting schedule:
<PAGE>
(i) Forty percent (40%) of the Shares on December 31, 1998.
(ii) Twenty Percent (20%) of the Shares on December 31, 1999.
(iii) Twenty percent (20%) of the Shares on the December 31, 2000.
(iv) The remaining Twenty percent (20%) of the Shares on the
December 31, 2001.
4. METHOD OF EXERCISE. (a) In order to exercise this Option, in whole or
in part, the Optionee shall deliver to the Company at its principal place of
business, or at such other offices as shall be designated by the Company (i) a
written notice of such Optionee's election to exercise this Option, which notice
shall specify the number of Shares to be purchased pursuant to such exercise and
(ii) either (A) cash or a check payable to the order of the Company, (B) if, and
to the extent, authorized by the Committee (which, without limitation, may grant
or withhold such approval in its sole discretion), notice that the Exercise
Price is satisfied by reduction of the number of Shares to be received by
Optionee upon exercise of this Option, with the amount of such reduction
specified in such notice, (C) if, and to the extent, authorized by the Committee
(which, without limitation may grant or withhold such approval in its sole
discretion) with shares of Common Stock, or (D) a combination of the above. The
Company shall undertake to make prompt delivery of the stock certificate(s)
evidencing the Shares to be transferred, provided that if any law or regulation
requires the Company to take any action with respect to the Shares specified in
such notice before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to take such action; and
provided further, and without limitation, Shares will not be issued unless and
until each matter described in Section 9.5 is satisfied.
(b) Upon the exercise of an Option, and before the transfer of Shares, the
Optionee shall be required to pay to the Company in cash or, to the extent
authorized by the Committee (which, without limitation may grant or withhold
such approval in its sole discretion) with Shares in the manner described in
subsections (a)(B) or (a)(C) of this Section, the amount which the Company
reasonably determines to be necessary in order for the Company to comply with
applicable federal and state tax withholding requirements, and the collection of
employment taxes.
(c) For all purposes relating to the surrender or delivery of Shares in
satisfaction of obligations described in subsection (a) and (b) of this Section,
the fair market value of the shares of Common Stock delivered or surrendered
shall be determined as of the business day next preceding the date of their
surrender or delivery, and shall mean the price at which such shares would
exchange hands between a willing buyer and willing seller, neither of whom are
under compulsion to buy or sell, as reasonably determined by the Committee;
provided, however, that so long as such shares are listed on a national stock
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), it shall mean the closing sale price (or, if no
closing sale price is quoted, the mean between the closing bid and sale price)
of such shares on such exchange or on NASDAQ on such next business day, or, if
no such shares were traded on such business day, the closing sale price (or, if
no closing sale price is quoted, the mean between the closing bid and sale
price) on the next preceding business day on which such shares were traded.
<PAGE>
5. TERMINATION OF OPTION. To the extent not previously exercised, this
Option shall terminate with respect to Shares which have not Vested immediately
upon Optionee's termination of employment for any reason, and shall terminate
with respect to Vested Shares on the earlier of (a) November 13, 2007, (b)
ninety (90) days from the date on which Optionee's employment with the Company
is terminated for any reason other than the death or disability of the Optionee,
and (c) one (1) year from the date on which Optionee's employment with the
Company is terminated if such termination is due to death or disability of the
Optionee. The determination of whether the Optionee is disabled for all
purposes of this Option shall be left to the reasonable discretion of the
Committee.
6. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option herein granted is
nontransferable by Optionee except that it may be exercised by his or her legal
representative following his death or during a period of his disability with
respect to Shares which are Vested, at any time prior to the termination of the
Option.
7. BINDING EFFECT. Without limitation, this Option is issued under, and
granted in all respects subject to all of the provisions of, the Plan, all of
which provisions of the Plan are incorporated herein by reference; provided,
however, without limitation, that the provisions of this Option will determine
the agreement of the parties with respect to each matter set forth herein to the
extent the provisions of the Option do not require a result that is inconsistent
with the Plan; and provided, finally, that the parties expressly agree that no
inference shall be drawn with respect to the intent of the parties based on the
inclusion of, or reference to, some provisions of the Plan in this Option, and
the omission of such inclusion or reference with respect to other provisions of
the Plan in this Option; and provided, finally, that this Option shall be
binding upon and inure to the benefit of the Company, and its representatives,
successors and assigns, and the Optionee and his or her legal representative (to
the extent expressly permitted).
8. MULTIPLE ORIGINALS. This Option may be executed in multiple
counterparts with each counterpart constituting an original for all purposes.
9. AMENDMENT. This Option may not be amended or revised in such a manner
as to impair the rights of the Optionee without Optionee's written consent.
10. COMMITTEE AUTHORITY. Any questions concerning the interpretation
of this Option, including without limitation the incorporated provisions of the
Plan, shall be determined by the Committee in its sole discretion.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
and hereby is granted effective as of November 13, 1997.
DIVERSIFIED CORPORATE RESOURCES, INC.
By:
-----------------------------------
M. Ted Dillard
<PAGE>
DOUGLAS G. FURRA NUMBER OF SHARES 30,000
NONQUALIFIED STOCK OPTION
UNDER THE
DIVERSIFIED CORPORATE RESOURCES, INC.
AMENDED AND RESTATED 1996 NONQUALIFIED STOCK OPTION PLAN
THIS AGREEMENT is executed by Diversified Corporate Resources, Inc., a
Texas corporation (herein called "Company") to evidence the grant to Douglas G.
Furra (herein called "Optionee") of a stock option effective as of May 31, 1997.
WHEREAS, the Optionee is an key employee of the Company; and
WHEREAS, the Company considers it desirable and in its best interests that
Optionee be given an opportunity to acquire an equity interest in the Company in
the form of an option to purchase shares of common stock of the Company (the
"Common Stock"); and
WHEREAS, this Option is granted under, and pursuant to the terms of the
Diversified Corporate Resources, Inc. Amended and Restated 1996 Nonqualified
Stock Option Plan (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
1. GRANT OF OPTION. The Company shall and does hereby grant to Optionee
the option to purchase 30,000 shares (the "Shares") of Common Stock for the
prices per share in the manner and subject to the conditions hereinafter
provided.
2. TIME OF EXERCISE AND PRICES OF OPTION. Subject to the terms hereof,
the option herein granted must be exercised in whole or in part at any time
or times prior to May 31, 2002. The option herein granted (a) shall become
exercisable as to 10,000 shares of Common Stock if the Optionee is still an
officer of the Company on May 31,
1
<PAGE>
1998; the exercise price of this portion of the option shall be $4.00 per
share, (b) shall become exercisable as to an additional 10,000 shares of
Common Stock if the Optionee is still an officer of the Company on May 31,
1999; the exercise price of this portion of the option shall be $8.00 per
share, and (c) shall become exercisable as to an additional 10,000 shares
of Common Stock if the Optionee is still an officer of the Company on May
31, 2000, to the exercise price of this portion of the option shall be
$8.00 per share. The parties hereto acknowledge and agree that (A),
except as set forth below, vesting is contingent upon the Optionee being
an officer of the Company regardless of the reason that the Optionee may
cease to be an officer of the Company, and (B) subject to the restrictions
herein as to when the option is exercisable, the Optionee shall have the
right to select the portion of the option, and the related option price,
if and when the Optionee exercises any of this option.
If
(i) a "Special Change in Control" occurs, and
(ii) Optionee's employment with the Company terminates for any
reason other than Voluntary Termination or Termination for
Cause, during the twenty-four (24) month period immediately
following the Effective Date (as reasonably determined by
the Committee) of such Change in Control,
then, notwithstanding the vesting schedule above, and any other provision
of this Agreement to the contrary, this Option will become exercisable with
respect to all of the Shares subject to this Option at the exercise prices
at which the Option would have been exercisable if the Optionee had
continued in employment through the dates set forth in the
2
<PAGE>
preceding paragraph on which the Option would have been exercisable with
respect to all of the Shares, subject to this option and will terminate
as provided herein.
For the purposes hereof, "Voluntary Termination" shall mean the
optionee's resignation from the Company unless such resignation is as a direct
proximate result of (iii) without optionee's express written consent, the
assignment to optionee of any duties materially inconsistent with his positions,
duties, responsibilities and status with the Company on the Effective Date of
the Special Change in Control; (iv) a reduction of optionee's base compensation
and bonus to an amount which is greater than ten percent (10%) lower than such
compensation on the Effective Date of the Special Change In Control; (v)
relocation of optionee's principal location of work to any location which is
both (x) in excess of fifty (50) miles from the location of optionee's principal
location of work on the Effective Date of the Special Change in Control, and (y)
in excess of the sum of the distance from optionee's principal residence on such
Effective Date to the location of the optionee's principal location of work on
such Effective Date, plus 50 miles; (vi) failure by the Company to require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance reasonably satisfactory to the
optionee, expressly to assume the obligations of the Company under this
Agreement.
For all purposes hereof, "Termination For Cause" shall mean Optionee's
(vii) violation of any provision of this Agreement; (viii) conviction of a
felony, or a misdemeanor involving moral turpitude; (ix) engagement in any act
or omission constituting fraud under the law of the State of Texas; (x)
engagement in gross misconduct in the course and scope of Optionee's employment
with the Company, including, without limitation, indecency, immorality,
in-subordination, dishonesty, unlawful harassment, abuse of alcohol or
controlled substances, or
3
<PAGE>
fighting, or (xi) Optionee's intentional failure to perform material stated
duties (but only after receiving written notice thereof and being given a
reasonable period, not less than 30 days, to cure said intentional failure by
taking such reasonable corrective action as shall be reasonably within his
power at the time of reference), all as reasonably determined by the
Committee in its sole discretion.
For all purposes hereof "Special Change in Control" means (i) any person or
entity, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), other than the Company, a
majority-owned subsidiary thereof or J. Michael Moore ("MOORE") and any
affiliate of Moore, becomes the beneficial owner (as defined in Schedule 13(d)
under the Exchange Act) of the Company's securities having 25% or more of the
combined voting power of the then outstanding securities of the Company that may
be cast for the election of directors of the Company; or (ii) as the result of,
or in connection with, any cash tender or exchange offer, merger or other
business combination, sales of assets or contested election, or any combination
of the foregoing transactions, less than a majority of the combined voting power
of the then outstanding securities of the Company or any successor corporation
or entity entitled to vote generally in the election of the directors of the
Company or such other corporation or entity after such transaction are
beneficially owned (as defined in Section 13(d) of the Exchange Act) in the
aggregate by the holders of the Company's securities entitled to vote generally
in the election of directors of the Company immediately prior to such
transaction; or (iii) during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Board of Directors of
the Company cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, of each director of the Company first elected during such period
was approved by
4
<PAGE>
a vote of at least two-thirds of the directors of the Company then still in
office who were directors of the Company at the beginning of any such period.
The "Effective Date" of such Special Change in Control shall be the earlier
of the date on which an event described in (i), (ii), or (iii) occurs, or if
earlier, the date of the occurrence of (iv) the approval by shareholders of
an Agreement by the Company, the consummation of which would result in an
event described in (i), (ii), or (iii), or (v) the acquisition of beneficial
ownership, directly or indirectly, by any entity, person or group (other than
the Company or a subsidiary of the Company) of securities of the Company
representing 5% or more of the combined voting power of the Company's
outstanding securities, provided, however, that the events described in (iv)
and (v) will be considered the Effective Date of a Special Change in Control
only if they are followed within six (6) months by an event described in (i),
(ii) or (iii).
3. METHOD OF EXERCISE. (a) In order to exercise this Option, in whole or
in part, the Optionee shall deliver to the Company at its principal place
of business, or at such other offices as shall be designated by the Company
(i) a written notice of such Optionee's election to exercise this Option,
which notice shall specify the number of Shares to be purchased pursuant to
such exercise and (ii) either (A) cash or a check payable to the order of
the Company, (B) notice that the exercise price is satisfied by reduction
of the number of Shares to be received by Optionee upon exercise of this
Option as provided in Section (b) below, with the amount of such reduction
specified in such notice, (C) shares of Common Stock having a fair market
value equal to the Exercise Price, or (D) a combination of the above. The
Company shall undertake to make prompt delivery of the stock certificate(s)
evidencing such part of the Shares, provided that if any law or regulation
requires the Company to take any action with respect to the Shares
specified in
5
<PAGE>
such notice before the issuance thereof, then the date of delivery of such
Shares shall be extended for the period necessary to take such action.
(b) At the election of the Optionee, the Optionee may exercise this Option
without a cash payment of the exercise price by designating that the number of
Shares issuable to Optionee upon such exercise shall be reduced by the number of
Shares having a fair market value equal to the amount of the total Exercise
Price for such exercise. In such instance, no cash or other consideration will
be paid by the Optionee in connection with such exercise and no commission or
other remuneration will be paid or given by the Optionee or the Company in
connection with such exercise.
(c) For all purposes relating to the surrender or delivery of Shares in
satisfaction of obligations described in subsection (a) and (b) of this Section,
the fair market value of the shares of Common Stock delivered or surrendered
shall be determined as of the business day next preceding the date of their
surrender or delivery, and shall mean the price at which such shares would
exchange hands between a willing buyer and willing seller, neither of whom are
under compulsion to buy or sell, as reasonably determined by the Committee;
provided, however, that so long as such shares are listed on a national stock
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), it shall mean the closing sale price (or, if no
closing sale price is quoted, the mean between the closing bid and sale price)
of such shares on such exchange or on NASDAQ on such next business day, or, if
no such shares were traded on such business day, the closing sale price (or, if
no closing sale price is quoted, the mean between the closing bid and sale
price) on the next preceding business day on which such shares were traded.
6
<PAGE>
(d) Upon the exercise of an Option, and before the transfer of Shares, the
Optionee shall be required to pay to the Company, in cash or in Shares
(including, but not limited to, the reservation to the Company of the requisite
number of Shares otherwise payable to such person with respect to such Option in
the manner described in (b)) the amount which the Company reasonably determines
to be necessary in order for the Company to comply with applicable federal or
state tax withholding requirements, and the collection of employment taxes;
provided, further, that the Committee may require that such payment be made in
cash.
4. TERMINATION OF OPTION. To the extent not theretofore exercised, the
Option herein granted shall terminate with respect to Shares which have not
vested immediately upon Optionee's termination of employment for any
reason, and shall terminate with respect to Vested Shares on the earlier
of (a) May 31, 2002 (b) 180 days from the date on which Optionee's
employment with the Company is terminated for any reason other than the
death or disability of the Optionee, and (c) one (1) year from the date on
which Optionee's employment with the Company is terminated if such
termination is due to death or disability of the Optionee.
5. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option herein granted is
nontransferable by Optionee except as herein otherwise provided. Unless the
Optionee is deceased or disabled, with the determination of the existence or
nonexistence of such disability such disability left to the reasonable
discretion of the Committee, the Option herein may only be exercised by the
Optionee. If the Optionee dies during the period of time that all or any of
part of this Option is exercisable, the Optionee's executor or legal
representative may exercise all or any part of this Option with respect to the
Shares which are vested, at any time or times prior to the termination of the
Option. If the Optionee is disabled, as aforesaid, the Optionee's legal
7
<PAGE>
representative may exercise all or any part of this Option with respect to the
Shares which are Vested, at any time or times prior to the termination of the
Option. Optionee shall have no rights as a stockholder with respect to the
Shares until payment of the Exercise Price for the Shares purchased by exercise
of the Option, and the issuance of the Shares involved.
6. BINDING EFFECT. Without limitation, the option herein granted is
issued under, and granted in all respects subject to all of the provisions of,
the Plan, all of which provisions of the Plan are incorporated herein by
reference; provided, however, without limitation, that the provisions of this
Agreement will determine the agreement of the parties with respect to each
matter set forth herein to the extent the provisions of this Agreement do not
require a result that is inconsistent with the Plan; and provided, finally, that
the parties expressly agree that no inference shall be drawn with respect to the
intent of the parties based on the inclusion of, or reference to, some
provisions of the Plan in this Agreement, and the omission of such inclusion or
reference with respect to other provisions of the Plan in this Agreement; and
provided, finally, that this Agreement shall be binding upon and inure to the
benefit of the Company, and its representatives, successors and assigns, and the
Optionee and his or her legal representative (to the extent expressly
permitted).
7. MULTIPLE ORIGINALS. This Agreement may be executed in multiple
counterparts with each counterpart constituting an original for all purposes.
8. AMENDMENT. This Agreement may not be amended or revised in such a
manner as to impair the rights of the Optionee without Optionee's written
consent.
9. TOTAL AGREEMENT. This Agreement may not be amended or revised except
by a written instrument executed by both of the parties to this Agreement.
8
<PAGE>
10. COMMITTEE AUTHORITY. Any questions concerning the interpretation of
this Agreement, including without limitation the incorporated provisions of the
Plan, shall be determined by the Committee in its reasonable discretion.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
this ___ day of May, 1998, but effective as of the May 31, 1997.
DIVERSIFIED CORPORATE RESOURCES, INC.
By: /s/ M. Ted Dillard
----------------------------------
Name: M. Ted Dillard
--------------------------------
Title: President
-------------------------------
/s/ Douglas G. Furra
-------------------------------------
Douglas G. Furra
10
<PAGE>
STOCK OPTION AGREEMENT RE: FARRINGTON
THIS AGREEMENT is executed by Diversified Corporate Resources, Inc., a
Texas corporation (herein called "Company"), and Deborah A. Farrington (herein
called "Optionee") on the date set forth on the signature page hereof, but
effective as of November 12, 1997.
WHEREAS, the Optionee is a director of the Company; and
WHEREAS, the Company considers it desirable and in its best interests that
Optionee be given an opportunity to acquire an equity interest in the Company in
the form of an option to purchase shares of common stock of the Company (the
"Common Stock"); and
WHEREAS, the options covered by this Agreement are issued pursuant to the
Company's 1996 Amended and Restated Nonqualified Stock Option Plan (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
1. GRANT OF OPTION. The Company shall and does hereby grant to Optionee
the right, privilege and option to purchase 30,000 shares (the "Shares") of
Common Stock for the prices per share in the manner and subject to the
conditions hereinafter provided.
2. TIME OF EXERCISE AND PRICES OF OPTION. Subject to the terms hereof,
the option herein granted must be exercised in whole or in part at any time or
times prior to November 12, 2002. The option herein granted shall become
exercisable as to 2,500 shares of Common Stock if the Optionee is a director of
the Company on the last day of each calendar quarter (which shall end during the
months of March, June, September and December) during the years in which this
option is exercisable. The exercise price for shall be $10.00 per share. The
parties hereto acknowledge and agree that (a), except as set forth below,
vesting is contingent upon the Optionee being a director of the Company
regardless of the reason that the Optionee may cease to be a director of the
Company, and (b) subject to the restrictions herein as to when the option
<PAGE>
is exercisable, the Optionee shall have the right to select the portion of
the option if and when the Optionee exercises any of this option.
If a "Special Change in Control" occurs, and whether or not Optionee
continues as a director of the Company following the Effective Date of such
Special Change in Control, then, notwithstanding any provision of this Agreement
to the contrary, and without limitation, this option will become exercisable
with respect to all of the Shares subject to this option, at the exercise price
set forth in the preceding paragraph as may be adjusted pursuant to Section 5(a)
hereof, and will terminate as provided herein.
3. METHOD OF EXERCISE.
(a) In order to exercise this option, in whole or in part, the
Optionee shall deliver to the Company at its principal place of
business, or at such other offices as shall be designated by the
Company (i) a written notice of such holder's election to exercise
this option, which notice shall specify the number of shares of Common
Stock to be purchased pursuant to such exercise and (ii) either
(A) cash or a check payable to the order of the Company, (B) notice
that the exercise price is satisfied by reduction of the number of
shares to be received by holder upon exercise of this option as
provided in Section (b) below, with the amount of such reduction
specified in such notice, (C) shares of Common Stock having a fair
market value equal to the exercise price, or (D) a combination of the
above. The Company shall undertake to make prompt delivery of the
stock certificate(s) evidencing such part of the Shares, provided that
if any law or regulation requires the Company to take any action with
respect to the Shares specified in such notice
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before the issuance thereof, then the date of delivery of such Shares
shall be extended for the period necessary to take such action.
(b) At the election of the Optionee, the Optionee may exercise
this option without a cash payment of the exercise price by
designating that the number of shares of Common Stock issuable to
Optionee upon such exercise shall be reduced by the number of shares
having a fair market value equal to the amount of the total exercise
price for such exercise. In such instance, no cash or other
consideration will be paid by the holder in connection with such
exercise and no commission or other remuneration will be paid or given
by the Optionee or the Company in connection with such exercise.
(c) For this purpose, the fair market value of the shares of
Common Stock with respect to the exercise of an option shall be
determined as of the last business day prior to such exercise of the
option.
4. TERMINATION OF OPTION. To the extent not theretofore exercised, the
option herein granted shall terminate on the earlier of (a) November 12, 2002,
(b) six (6) months from the date on which Optionee ceases to be a director of
the Company for any reason other than death or disability of the Optionee, and
(c) one (1) year from the date on which Optionee ceases to be a director of the
Company if such event is due to death or disability of the Optionee.
5. RECLASSIFICATION, CONSOLIDATION, MERGER, AND SPECIAL CHANGE IN
CONTROL.
(a) If and to the extent that the number of shares of Common
Stock of the Company shall be increased or reduced by change in par
value, split-up, reclassification, distribution of a dividend payable
in stock, or the like, the number
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of shares of Common Stock subject to the option herein granted, and the
option price therefor shall be appropriately adjusted.
(b) For all purposes hereof "Special Change in Control" means
(i) any person or entity, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than the Company, a majority-owned subsidiary
thereof, or J. Michael Moore ("Moore") and any affiliate of Moore,
becomes the beneficial owner (as defined pursuant to Schedule 13(d)
under the Exchange Act) of the Company's securities having twenty-five
percent (25%) or more of the combined voting power of the then
outstanding securities of the Company that may be cast for the
election of directors of the Company; or (ii) as the result of, or in
connection with, any cash tender or exchange offer, merger or other
business combination, sales of assets or contested election, or any
combination of the foregoing transactions, less than a majority of the
combined voting power of the then outstanding securities of the
Company or any successor corporation or entity entitled to vote
generally in the election of the directors of the Company or such
other corporation or entity after such transaction are beneficially
owned (as defined pursuant to Section 13(d) of the Exchange Act) in
the aggregate by the holders of the Company's securities entitled to
vote generally in the election of directors of the Company immediately
prior to such transaction; or (iii) during any period of two
consecutive years, individuals who at the beginning of any such period
constitute the Board of Directors of the Company cease for any reason
to constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of each
director of the
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Company first elected during such period was approved by a vote of at
least two-thirds of the directors of the Company then still in office who
were directors of the Company at the beginning of any such period. The
"Effective Date" of such Special Change in Control shall be the earlier
of the date on which an event described in (i), (ii), or (iii) occurs, or
if earlier, the date of the occurrence of (iv) the approval by
shareholders of an agreement by the Company, the consummation of which
would result in an event described in (i), (ii), or (iii), or (v) the
acquisition of beneficial ownership (as defined pursuant to Section 13(d)
of the Exchange Act), directly or indirectly, by any entity, person or
group (other than the Company, a majority-owned subsidiary of the Company,
or Moore and any affiliate of Moore) of securities of the Company
representing five percent (5%) or more of the combined voting power of
the Company's outstanding securities, provided, however, that the events
described in (iv) and (v) will be considered the Effective Date of a
Special Change in Control if they are followed within six (6) months by
an event described in (i), (ii) or (iii)."
6. RIGHTS PRIOR TO EXERCISE OF OPTION. The option herein granted is
nontransferable by Optionee except as herein otherwise provided. Unless the
Optionee is deceased or disabled, with the determination of the existence or
nonexistence of such disability such disability left to the reasonable
discretion of the Board of Directors of the Company, the option herein may only
be exercised by the Optionee. If the Optionee dies during the period of time
that all or any of part of this option is exercisable, the Optionee's executor
or legal representative may exercise all or any part of this option at any time
or times during the period of time in which the option herein is granted. If
the Optionee is disabled, as aforesaid, the Optionee's legal
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representative shall have the right to exercise all or any part of this
option at any time or times during the period of time in which the Optionee
is disabled and the option herein granted has not expired by the terms of
this Agreement. With respect to the shares of stock which are subject to the
option herein granted, Optionee shall have no rights as a stockholder until
payment of the option price for the shares being purchased by exercise of the
option herein granted, and the issuance of the shares involved.
7. BINDING EFFECT. Without limitation, the option herein granted is
issued under, and granted in all respects subject to all of the provisions of,
the Plan, all of which provisions of the Plan are incorporated herein by
reference; provided, however, without limitation, that the provisions of this
Agreement will determine the agreement of the parties with respect to each
matter set forth herein to the extent the provisions of the Agreement do not
require a result that is inconsistent with the Plan; and provided, finally, that
the parties expressly agree that no inference shall be drawn with respect to the
intent of the parties based on the inclusion of, or reference to, some
provisions of the Plan in this Agreement, and the omission of such inclusion or
reference with respect to other provisions of the Plan in this Agreement; and
provided, finally, that this Agreement shall be binding upon and inure to the
benefit of the Company, and its representatives, successors and assigns, and the
Optionee and his or her legal representative (to the extent expressly
permitted).
8. MULTIPLE ORIGINALS. This Agreement may be executed in multiple
counterparts with each counterpart constituting an original for all purposes.
9. TOTAL AGREEMENT. This Agreement may not be amended or revised except
by a written instrument executed by both of the parties to this Agreement.
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10. BOARD AUTHORITY. Any questions concerning the interpretation of this
Agreement, including the incorporated provisions of the Plan, shall be
determined by the Board in its reasonable discretion.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on May _____, 1998, but effective as November 12, 1997.
DIVERSIFIED CORPORATE RESOURCES, INC.
By: /s/ M. Ted Dillard
----------------------------------
Name: M. Ted Dillard
--------------------------------
Title: President
-------------------------------
OPTIONEE:
/s/ Deborah A. Farrington
-------------------------------------
Deborah A. Farrington
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FIRST AMENDMENT
TO
AMENDED AND RESTATED STOCK OPTION AGREEMENT
This First Amendment (the "Amendment") to the Amended and Restated Stock
Option Agreement between Diversified Corporate Resources, Inc. (the "Company")
and the person listed below ("Optionee") is adopted pursuant to the terms of
Article VIII of the Diversified Corporate Resources, Inc. Amended and Restated
1996 Stock Option Plan ("Plan").
WHEREAS, the Company has granted Optionee an option (the "Option") the
terms of which are set forth in an Amended and Restated Stock Option Agreement
to purchase a certain number of shares (individually and collectively, "Shares")
of the Company's common stock; and
WHEREAS, the Board has proposed that the vesting provisions of the Option
should provide for acceleration of its vesting in the event of a change in
control of the Company and has further proposed that the same provisions should
apply to the Option; and
WHEREAS, the Board therefor has proposed to amend the Option to provide
that, upon a "Special Change in Control" (as described below) Optionee will
become fully vested in his Shares prior to the final vesting date under the
terms of the Option; and
WHEREAS, the Board has approved this First Amendment; and
WHEREAS, the Optionee desires to enter into this First Amendment.
NOW, THEREFORE, in consideration of the premises, the Option is amended as
follows:
1. Paragraph 2 is amended by adding to the end thereof a new
paragraph as follows:
"If a "Special Change in Control" occurs, and whether or not
Optionee continues as a director of the Company following
the Effective Date of such Special Change in Control, then,
notwithstanding any provision of this Agreement to the
contrary, and without limitation, this Option will become
exercisable with respect to all of the Shares subject to
this Option, at the exercise prices set forth in the
preceding paragraph at which the Option would have become
exercisable if Optionee had continued as a director of the
Company through the date set forth in the preceding
paragraph on which the Option would have been exercisable
with respect to all of the Shares subject to this Option and
will terminate as provided herein.
<PAGE>
2. Paragraph 5 is amended by renaming it "RECLASSIFICATION,
CONSOLIDATION, MERGER AND SPECIAL CHANGE IN CONTROL", and deleting the
second sentence and adding in lieu thereof the following:
"(b) For all purposes hereof "Special Change in Control" means
(i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), other than the Company, a
majority-owned subsidiary thereof, or J. Michael Moore ("Moore")
and any affiliate of Moore, becomes the beneficial owner (as defined
pursuant to Schedule 13(d) under the Exchange Act) of the
Company's securities having 25% or more of the combined voting
power of the then outstanding securities of the Company that may
be cast for the election of directors of the Company; or (ii) as
the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sales of assets or
contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power
of the then outstanding securities of the Company or any
successor corporation or entity entitled to vote generally in the
election of the directors of the Company or such other
corporation or entity after such transaction are beneficially
owned (as defined pursuant to Section 13(d) of the Exchange Act)
in the aggregate by the holders of the Company's securities
entitled to vote generally in the election of directors of the
Company immediately prior to such transaction; or (iii) during
any period of two consecutive years, individuals who at the
beginning of any such period constitute the Board of Directors
of the Company cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the Company's shareholders, of each director of the
Company first elected during such period was approved by a vote
of at least two-thirds of the directors of the Company then still
in office who were directors of the Company at the beginning of
any such period. The "Effective Date" of such Special Change in
Control shall be the earlier of the date on which an event
described in (i), (ii), or (iii) occurs, or if earlier, the date
of the occurrence of (iv) the approval by shareholders of an
agreement by the Company, the consummation of which would result
in an event described in (i), (ii), or (iii), or (v) the
acquisition of beneficial ownership (as defined pursuant to
Section 13(d) of the Exchange Act), directly or indirectly, by
any entity, person or group (other than the Company, a majority-owned
subsidiary of the Company, or Moore and any affiliate of Moore) of
securities of the Company representing 5% or more of the combined
voting power of the Company's outstanding securities, provided,
however, that the events described in (iv) and (v) will be considered
the Effective Date of a Special Change in Control if they are followed
within six (6) months by an event described in (i), (ii) or (iii)."
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3. Paragraph 7 is renamed PLAN PROVISIONS AND BINDING EFFECT and is
amended and restated to read as follows:
The Agreement is in all respects subject to the terms,
definitions and provisions of the Plan, all of which
are incorporated herein by reference. This Agreement
shall be binding upon and inure to the benefit of the
Company, the Optionee, and their respective heirs,
representatives, successors, and assigns.
4. A new paragraph 10 will be added as follows:
BOARD AUTHORITY. Any questions concerning the
interpretation of this Agreement shall be determined by
the Board in its reasonable discretion.
5. The effective date of the First Amendment shall be March 20, 1998.
6. Except as amended by the First Amendment, the terms of the Option
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed as of March 20, 1998.
DIVERSIFIED CORPORATE RESOURCES, INC.
By: /s/ M. Ted Dillard
-----------------------------------
M. Ted Dillard, President
OPTIONEE
/s/ Samuel E. Hunter
--------------------------------------
Samuel E. Hunter
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<PAGE>
DIVERSIFIED CORPORATE RESOURCES, INC.
1998 NONQUALIFIED STOCK OPTION PLAN
ARTICLE I. GENERAL PURPOSE OF PLAN
The name of this plan is the 1998 Nonqualified Stock Option Plan (the
"Plan") of Diversified Corporate Resources, Inc., a Texas corporation (the
"Company"). The purpose of the Plan is to enable the Company to obtain and
retain the services of the types of employees, officers and directors who will
contribute to the Company's long range success, and to provide incentives which
are linked directly to increases in share value which will inure to the benefit
of all shareholders of the Company.
ARTICLE II. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below:
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
"COMMITTEE" means the Compensation Committee of the Company or, in the
absence of a Compensation Committee, a committee composed of one or more
officers of the Company as selected from time to time by the Board of Directors
of the Company.
"COMPANY" means Diversified Corporate Resources, Inc. (or any successor
business entity) and all of its subsidiaries.
"DATE OF GRANT" means the date on which the Board of Directors adopts a
resolution expressly granting a Stock Option to a Participant.
"ELIGIBLE PERSON" means any person who is a key employee (including
officers) of the Company or entity which is the parent of, or a subsidiary of,
the Company, or a director of the Company.
"EXERCISE PRICE" means the price at which the Shares subject to a Stock
Option may be purchased.
"PARTICIPANT" means any Eligible Person selected by the Board of Directors
to receive grants of Stock Options.
"PLAN" means the Company's 1998 Nonqualified Stock Option Plan.
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"RETIREMENT" means retirement from active employment with the Company, or
any parent or subsidiary of the Company.
"SHARES" means shares of Common Stock of the Company.
"STOCK OPTION" means any option to purchase Shares granted pursuant to the
Plan.
ARTICLE III. ADMINISTRATION
SECTION 3.1 THE ADMINISTRATOR.
a. The Plan shall be administered by the Committee.
b. Only the Committee shall have the power and authority to grant
Stock Options to Eligible Persons, pursuant to the terms of the Plan. The
Committee shall determine (i) those Eligible Persons to whom Stock Options
are to be granted, (ii) the number of Shares to be made subject to each
Stock Option, and (iii) the terms and conditions of each Stock Option,
including, without limitation, the exercise price and the medium of
payment.
c. All decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on the Company and the Participants.
ARTICLE IV. SHARES SUBJECT TO THE PLAN
Subject to adjustment as herein provided, the total number of Shares
reserved and available for issuance under the Plan shall be 300,000 Shares which
shall consist, in whole or in part, of authorized and unissued shares of Common
Stock of the Company. Shares covered by Stock Options which are forfeited or
terminated for any reason, which expire unexercised, or which are exchanged for
other Stock Options, shall again be available for grant hereunder. Shares
received by the Company in connection with the exercise of Stock Options by
delivery of other shares, or by surrender of Shares subject to such Stock
Option, and shares received in connection with payment of withholding taxes,
shall again be available for grant hereunder.
ARTICLE V. ELIGIBILITY
All persons who are Eligible Persons shall be eligible to be granted Stock
Options hereunder subject to the limitations set forth in this Plan. Without
limitation, in no case may an Eligible Person be granted a Stock Option covering
more than 200,000 Shares during any calendar year.
ARTICLE VI. STOCK OPTIONS
SECTION 6.1 GENERAL. The Plan provides for the grant of Stock Options to
Eligible Persons selected by the Committee for participation in the Plan. Each
grant of Stock Options pursuant to the Plan shall be evidenced by a Stock Option
agreement between the Participant and
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the Company in the form from time to time adopted by the Committee and
containing such terms and conditions which the Committee deems appropriate. The
provisions of the various Stock Option agreements entered into under the Plan
need not be identical.
SECTION 6.2 TERMS AND CONDITIONS OF THE STOCK OPTIONS. Each Stock Option
granted pursuant to the Plan shall be evidenced by a written Stock Option
agreement between the Company and the Participant, which agreement shall comply
with and be subject to the following terms and conditions:
a. NUMBER OF SHARES. Each Stock Option agreement shall state the
number of Shares which may be purchased upon exercise of the Stock Option.
b. EXERCISE PRICE. Each Stock Option agreement shall state the
Exercise Price.
c. MEDIUM AND TIME OF PAYMENT. To the extent permitted under the
Texas law, as currently in effect, the Exercise Price shall be paid in
full, at the time of exercise, in cash or, with the approval of the
Committee, in Shares which have a fair market value equal to the Exercise
Price or in a combination of cash and such Shares.
d. RESTRICTIONS ON TRANSFER OF SHARES. Each Stock Option agreement
may contain such restrictions on the transfer of Shares sold under the Plan
as the Committee may determine, including, without limitation, rights of
repurchase and rights of first refusal.
e. TERM AND EXERCISE OF STOCK OPTION. Stock Options shall be
exercisable over the exercise period at the times the Committee may
determine, as reflected in the related Stock Option agreements. The
exercise period of any Stock Option shall not exceed ten (10) years from
the Date of Grant. The exercise period shall be subject to earlier
termination as provided in this Plan. A Stock Option may be exercised, as
to any or all full Shares as to which the Stock Option has become
exercisable, by giving written notice of such exercise to the Company.
ARTICLE VII. ADJUSTMENTS
SECTION 7.1 EFFECT OF CERTAIN CHANGES.
a. If there is any change in the number of Shares outstanding
through the distribution of Shares or through a recapitalization resulting
in Share splits or combinations or exchanges of the Shares outstanding, (i)
the number of Shares covered by Stock Options outstanding; (ii) the number
of Shares reserved and available for issuance under the Plan; and (iii)
the Exercise Price in effect prior to such change shall be proportionately
adjusted by the Committee to reflect any increase or decrease in the number
of Shares issued; PROVIDED, that any fractional Shares resulting from the
adjustment shall be eliminated.
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<PAGE>
b. In the event of the proposed dissolution or liquidation of the
Company, or in the event of any corporate separation or division,
including, but not limited to, a split-up, split-off or spin-off (each, a
"liquidating event"), the Committee may provide that the holder of any
Stock Option then exercisable shall have the right to exercise such Stock
Option subsequent to the liquidating event, at the price provided in the
Stock Option agreement, for the total number of Shares to which the Stock
Option relates (less the number of Shares, if any, previously purchased
pursuant to the Plan), and for the balance of its term, solely for the kind
and amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such liquidating event by a holder of
the number of Shares for or with respect to which such Stock Option might
have been exercised immediately prior to such liquidating event; or the
Committee may provide, in the alternative, that each Stock Option granted
under the Plan shall terminate as of a date to be fixed by the Committee;
PROVIDED, that not less than thirty (30) days written notice of the date so
fixed shall be given to each Participant and if such notice is given, each
Participant shall have the right, during the period of thirty (30) days
preceding such termination, to exercise the Stock Option as to all or any
part of the Shares covered thereby, on the condition, however, that the
liquidating event actually occurs; and if the liquidating event actually
occurs, such exercise shall be deemed effective (and, if applicable, the
Participant shall be deemed a shareholder with respect to Stock Options
exercised immediately preceding the occurrence of the liquidating event) on
the date of record for shareholders entitled to share in such liquidating
event, if a record date is set.
c. Each Stock Option outstanding shall terminate upon (i) a merger
or consolidation in which the Company is not the surviving entity, or (ii)
a sale or transfer of all or substantially all of the capital stock or
assets of the Company to any entity or person that is not a parent or
subsidiary and the Company is not the surviving entity ((i) and (ii) shall
be collectively referred to as a "Change of Control") provided that (A)
each Participant to whom no Stock Options have been tendered by the
surviving entity pursuant to the terms of item (B) immediately below shall
have the right, exercisable during a ten-day period ending on the fifth
business day prior to such Change of Control in which the Company is not
the surviving entity, to exercise his or her Stock Option in whole or in
part with respect to the total number of Shares to which the Stock Option
relates (less the number of Shares, if any, previously purchased pursuant
to the Plan), on the condition, however, that the Change of Control is
actually effected; and if the Change of Control is actually effected, such
exercise shall be deemed effective (and, if applicable, the Participant
shall be deemed a shareholder with respect to the Stock Option exercised)
immediately preceding the effective time of such Change of Control (on the
date of record for shareholders entitled to share in the securities or
property distributed in such Change of Control, if a record date is set);
and (B) in its sole and absolute discretion, the surviving entity may, but
shall not be obligated to, tender to any Participant share options with
respect to the surviving entity, and such new share options shall contain
such terms and provisions as shall substantially preserve the rights and
benefits of any Stock Options then outstanding under the Plan.
Notwithstanding the foregoing, in the event of a Change of Control in which
the Company is not the surviving entity, the Committee shall have the right
in its sole discretion to pay to each Participant possessing unexercised
Stock Options, as soon as practicable following consummation of such Change
of Control, an amount
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<PAGE>
equal to the fair market value of all Shares purchasable (without regard to
vesting provisions) under the unexercised Stock Options LESS the Exercise
Price of such unexercised Stock Options (the "Net Value").
If the Committee elects to pay each Participant the Net Value rather
than grant the Participants the rights described in this Section 7.1(c),
the Participants shall not be entitled to prior notice of such Change of
Control. Upon payment of the Net Value, all Stock Options outstanding
under this Plan shall be null and void and the Participants shall have no
further rights thereunder. The Company shall have the right to withhold
all applicable taxes from the Net Value prior to making payment to the
Participants.
d. Section 7.1(c) shall not apply to a Change of Control in which
the Company is the surviving entity.
e. The determination as to which party to a Change of Control is the
"surviving entity" shall be made by the Board of Directors.
f. In the event of a change in the Shares of the Company as
presently constituted which is limited to a change of all of its authorized
shares with par value into the same number of shares without par value, or
a change in the par value, the shares resulting from any such change shall
be "Shares" within the meaning of the Plan.
g. To the extent that the foregoing adjustments relate to shares or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
h. Except as hereinbefore expressly provided in this Article VII, no
Participant shall have any rights by reason of any subdivision or
consolidation of Shares or the payment of any dividend or any other
increase or decrease in the number of Shares of any class or by reason of
any liquidating event, Change of Control of assets or equity securities of
another equity, or any other issue by the Company of shares of any class,
or securities convertible into shares of any class; and except as provided
in this Article VII, none of the foregoing events shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of Shares subject to Stock Options. The grant of a Stock Option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structures or to effect a Change of Control or
to dissolve, liquidate or sell, or transfer all of part of its business or
assets.
i. Except as specifically provided in this Article VII, a
Participant or a transferee of a Stock Option shall have no rights as a
shareholder with respect to any Shares covered by the Stock Options until
the date of the issuance of a Share certificate to him or her for such
Shares, and no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions of other rights for which the record date is prior to the
date such Share certificate is issued, except as herein provided.
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ARTICLE VIII. AMENDMENT AND TERMINATION
The Board of Directors may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of the Participant under any Stock Option theretofore granted without
such Participant's consent, or which without the approval of the shareholders
would (a) except as provided in Article VII, materially increase the total
number of Shares reserved for the purposes of the Plan, (b) materially increase
the benefits accruing to Participants or Eligible Persons under the Plan, or (c)
materially modify the requirements for eligibility under the Plan.
The Board of Directors may amend the terms of any award theretofore
granted, prospectively or retroactively, but, subject to the terms of the Plan,
no such amendment shall impair the rights of any holder without his or her
consent.
ARTICLE IX. GENERAL PROVISIONS
SECTION 9.1 GENERAL PROVISIONS.
a. The Committee may require each person purchasing Shares pursuant
to the Plan to represent to and agree with the Company in writing that such
person is acquiring the Shares without a view to distribution thereof. The
certificates for such Shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.
b. All certificates for Shares delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the
Committee may deem advisable.
SECTION 9.2 OTHER COMPENSATION ARRANGEMENTS. Nothing contained in this
Plan shall prevent the Company from adopting other or additional compensation
arrangements, subject to shareholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific areas.
SECTION 9.3 TERMINATION OF EMPLOYMENT. Except as herein provided or in
any Stock Option agreement, no Stock Option may be exercised unless the
Participant is then in the employ of the Company, or any parent or any
subsidiary of the Company, and unless he or she has remained continuously so
employed since the Date of Grant. If the employment or services of a
Participant shall terminate, unless otherwise provided in the Stock Option
agreement, all Stock Options previously granted to the Participant shall
terminate on the date notice is given or received regarding such termination.
Nothing in the Plan or in any Stock Option granted pursuant to the Plan shall
confer upon an employee any right to continue in the employ of the Company, or
any parent or any subsidiary of the Company, or interfere in any way with the
right of the Company to terminate such employment at any time.
SECTION 9.4 NONTRANSFERABILITY OF STOCK OPTIONS. Except as otherwise
provided in any Stock Option agreement, Stock Options granted under the Plan
shall not be transferable otherwise than by will or by the laws of descent and
distribution, and Stock Options may be exercised,
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during the lifetime of the Participant, only by the Participant or by his or her
guardian or legal representative.
SECTION 9.5 REGULATORY MATTERS. Each Stock Option agreement shall provide
that no Shares shall be purchased or sold thereunder unless and until (a) any
then applicable requirements of state or federal laws and regulatory agencies
shall have been fully complied with to the satisfaction of the Company and its
counsel, and (b) if required to do so by the Company, the Participant shall have
executed and delivered to the Company a letter of investment intent in such form
and containing such provisions as the Committee may require.
SECTION 9.6 DELIVERY. Upon exercise of a Stock Option granted under this
Plan, the Company shall issue a Share certificate on the date of exercise, which
will be delivered to the Participant exercising the Stock Option as promptly as
practicable thereafter.
SECTION 9.7 OTHER PROVISIONS. The Stock Option agreements authorized
under the Plan may contain such other provisions not inconsistent with the Plan,
including, without limitation, restrictions upon the exercise of the Stock
Option, as the Board of Directors may deem advisable.
ARTICLE X. EFFECTIVE DATE OF THE PLAN
The Plan is effective January 1, 1998, provided that the Plan, and any
Stock Options granted hereunder, will be null and void ab initio unless on or
before January 1, 1999 the Plan is approved by the affirmative vote of the
holders of a majority of the shares present in person or represented by proxy at
the shareholder meeting of reference and entitled to vote on the matter in
question.
ARTICLE XI. TERM OF THE PLAN
No Stock Option shall be granted pursuant to the Plan after December 31,
2007, but Stock Options theretofore granted may extend beyond that date.
7
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