<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission file number 0-23940
ALTERNATIVE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-2791069
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
75 Tri-State International, Suite 100, Lincolnshire, IL 60069
(Address of principal executive offices) (Zip code)
(847) 317-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
15,562,320 shares of Common Stock outstanding as of August 1, 1996.
Page 1 of 28
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
ALTERNATIVE RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
ASSETS
December 31, June 30,
1995 1996
------------ -----------
Current assets: (Unaudited)
Cash and cash equivalents $ 4,639 $ 4,236
Short-term investments 12,341 17,651
Trade accounts receivable, net
of allowance for doubtful accounts 24,621 27,293
Prepaid expenses 518 580
Other receivables 973 1,815
------------ -----------
Total current assets 43,092 51,575
------------ -----------
Property and equipment:
Office equipment 2,140 2,767
Furniture and fixtures 889 1,068
Software 363 360
Leasehold improvements 95 114
------------ -----------
3,487 4,309
Less accumulated depreciation
and amortization (1,433) (1,793)
------------ -----------
Net property and equipment 2,054 2,516
------------ -----------
Other assets:
Long-term investments 2,460 2,980
Other assets 205 202
------------ -----------
Total other assets 2,665 3,182
------------ -----------
Total assets $47,811 $57,273
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 437 $ 397
Payroll and related expenses 6,082 7,774
Accrued expenses 2,161 2,505
Income taxes payable 418 --
------------ -----------
Total current liabilities 9,098 10,676
Deferred rent payable 252 282
------------ -----------
Total liabilities 9,350 10,958
------------ -----------
Stockholders' equity:
Preferred Stock, $.01 par value,
1,000,000 shares authorized, none
issued and outstanding -- --
Common Stock, $.01 par value, 20,000,000
and 50,000,000 shares authorized at
December 31, 1995 and June 30, 1996,
respectively; 15,347,027 and 15,561,782
shares issued and outstanding at
December 31, 1995 and June 30, 1996,
respectively 153 156
Additional paid-in capital 19,052 20,826
Unrealized loss on
available-for-sale securities -- (35)
Cumulative translation adjustment (18) 1
Retained earnings 19,274 25,367
------------ -----------
Total stockholders' equity 38,461 46,315
------------ -----------
Total liabilities and stockholders' equity $47,811 $57,273
------------ -----------
------------ -----------
See accompanying Notes to Consolidated Financial Statements
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ALTERNATIVE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------- -------- -------- -------
1995 1996 1995 1996
-------- -------- -------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue $36,711 $48,674 $69,677 $94,508
Cost of services 23,112 30,049 44,032 59,118
-------- -------- -------- -------
Gross profit 13,599 18,625 25,645 35,390
Selling, general and administrative expenses 9,686 13,035 18,579 25,424
-------- -------- -------- -------
Income from operations 3,913 5,590 7,066 9,966
Other income, net 118 243 241 502
-------- -------- -------- -------
Income before income taxes 4,031 5,833 7,307 10,468
Income taxes 1,654 2,438 2,994 4,375
-------- -------- -------- -------
Net income $2,377 $3,395 $4,313 $6,093
-------- -------- -------- -------
-------- -------- -------- -------
Net earnings per share amounts:
Primary $0.15 $0.21 $0.28 $0.38
-------- -------- -------- -------
-------- -------- -------- -------
Fully diluted $0.15 $0.21 $0.27 $0.38
-------- -------- -------- -------
-------- -------- -------- -------
Weighted average common and common
equivalent shares outstanding:
Primary 15,690 16,315 15,602 16,117
-------- -------- -------- -------
-------- -------- -------- -------
Fully diluted 15,816 16,318 15,770 16,204
-------- -------- -------- -------
-------- -------- -------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements
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ALTERNATIVE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1995 1996
--------- ---------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,313 $ 6,093
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 310 360
Deferred income tax benefit (49) --
Allowance for doubtful accounts, net 360 28
Change in assets and liabilities:
Trade accounts receivable (4,282) (2,700)
Prepaid expenses and other current assets (988) (62)
Other receivables (49) (842)
Other assets (1) 22
Accounts payable (236) (40)
Payroll and related expenses 962 1,692
Accrued expenses 413 344
Income taxes payable (49) (418)
Deferred rent payable 41 30
--------- ---------
Net cash provided by operating activities 745 4,507
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (1,014) (822)
Purchase of short-term and long-term investments (10,672) (12,271)
Maturities of short-term investments 10,716 6,406
--------- ---------
Net cash used in investing activities (970) (6,687)
--------- ---------
Cash flows from financing activities:
Payments received on stock options exercised 244 1,886
Repurchase of common stock under employee
stock purchase plan (114) (724)
Issuance of common stock under employee
stock purchase plan 96 615
Issuance of common stock 7,210 --
--------- ---------
Net cash provided by financing activities 7,436 1,777
--------- ---------
Net increase (decrease) in cash and cash equivalents 7,211 (403)
Cash and cash equivalents at beginning of period 2,733 4,639
--------- ---------
Cash and cash equivalents at end of period $ 9,944 $ 4,236
--------- ---------
--------- ---------
Supplemental disclosures:
Cash paid for interest -- --
Cash paid for income taxes $ 3,749 $ 5,237
--------- ---------
Supplemental disclosure of noncash financing activities:
Cancelled stock registration rights $ 275 $ --
--------- ---------
</TABLE>
See accompanying Notes to Consolidated Financial Statements
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ALTERNATIVE RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
1. BASIS OF PRESENTATION
The interim consolidated financial statements presented are unaudited, but
in the opinion of management, have been prepared in conformity with generally
accepted accounting principles applied on a basis consistent with those of the
annual financial statements. Such interim consolidated financial statements
reflect all adjustments (consisting of normal recurring accruals) necessary for
a fair presentation of the financial position and the results of operations for
the interim periods presented. The results of operations for the interim
periods presented are not necessarily indicative of the results to be expected
for the year ending December 31, 1996. The interim consolidated financial
statements should be read in connection with the audited financial statements
for the year ended December 31, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The operations of Alternative Resources
Corporation (the "Company") are conducted through a parent holding company and
two operating subsidiaries, which reflects a natural division of the Company's
service lines. The accompanying financial statements include the consolidated
financial position and results of operations of the Company and its subsidiaries
with all intercompany transactions eliminated in their entirety.
COMPUTATION OF EARNINGS PER SHARE. Earnings per common and common
equivalent share is based on the average number of common shares and dilutive
common share equivalents outstanding for the three month and six month periods
ended June 30, 1995 and 1996. The amount of dilution is computed using the
treasury stock method.
INVESTMENT SECURITIES. The Company classified all its investment
securities as "held-to-maturity" at December 31, 1995 under the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". As held-to-maturity securities
mature in 1996, the proceeds of such securities will be reinvested in "available
for sale" securities. The Company reports available-for-sale securities at fair
value, with unrealized gains and losses excluded from earnings and reported as a
separate component of stockholders' equity.
RECLASSIFICATION. Certain 1995 amounts have been reclassified to conform
with the 1996 presentation.
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Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The Company has experienced substantial growth in revenue and earnings
driven by industry trends toward outsourcing of Information Services
operations, increased penetration of existing clients and markets, increased
productivity of existing branch offices, the opening of new branch offices
and the introduction of new services. Essentially all of the Company's
revenue is generated from technical resource services (either Tactical or
Strategic) that offer the benefits of outsourcing while allowing Information
Services operations managers to retain strategic control of their operations.
Tactical Resources-SM- provides clients with maximum flexibility as clients
may start and stop projects at any time. Under Strategic Resources-SM-, the
Company provides a comprehensive benefits package to the technical employee
without increasing the client's hourly bill rate. Clients typically select
Strategic Resources on projects expected to extend one year or longer where
technical employee continuity is required. While the gross margin on
Strategic Resources is lower than Tactical Resources, because of the costs of
providing additional benefits, Strategic Resources projects carry lower
administrative costs because of the longer term commitments made by the
client. Historically, revenue from Tactical Resources services provided most
of the Company's revenue. The Company expects that Tactical Resources
services will continue to represent the majority of its revenue. Since 1992,
Strategic Resources services have increased as a percentage of total revenue,
however management expects the rate of this increase to slow.
The Company opened one new office in the three month period ended June 30,
1996, and five new offices in the first six months of 1996. As of June 30,
1996, the Company had 47 offices in the United States and Canada as compared to
40 offices at June 30, 1995.
SECOND QUARTER FISCAL 1996 COMPARED TO SECOND QUARTER FISCAL 1995
REVENUE. Revenue increased by 32.6% from $36.7 million in the second
quarter of 1995 to $48.7 million in the second quarter of 1996, primarily as a
result of an increase in the hours of service provided and, to a lesser extent,
from an increase in the average revenue per project hour. The increase in hours
of service was primarily due to increased productivity of existing branch
offices and hours of service provided by new branch offices. The increase in
average revenue per project hour reflects demand for Technical Employees with
higher skill levels.
Page 6 of 28
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GROSS PROFIT. Gross profit increased by 37.0% from $13.6 million in the
second quarter of 1995 to $18.6 million in the second quarter of 1996, again
primarily as a result of an increase in hours of service provided to clients.
Gross margin increased from 37.0% of revenue in the second quarter of 1995 to
38.3% in the second quarter of 1996, principally due to management's focus on
more profitable business opportunities.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $9.7 million in the second quarter of
1995 to $13.0 million in the second quarter of 1996, primarily due to increased
commissions, bonuses and staffing expenses associated with revenue and
profitability growth, an increased number of offices and their related operating
costs and start-up expenses associated with several new growth initiatives for
1996. Selling, general and administrative expenses increased as a percentage of
revenue from 26.4% in the second quarter of 1995 to 26.8% in the second quarter
of 1996.
INCOME FROM OPERATIONS. Income from operations increased from $3.9 million
in the second quarter of 1995, or 10.7% of total revenue, to $5.6 million in the
second quarter of 1996, or 11.5% of total revenue.
PROVISION FOR INCOME TAXES. The Company's provision for income taxes
increased from $1.7 million, or an effective tax rate of 41.0%, in the second
quarter of 1995 to $2.4 million, an effective tax rate of 41.8%, in the second
quarter of 1996.
NET INCOME. The Company's net income increased from $2.4 million in the
second quarter of 1995, or 6.5% of total revenue, to $3.4 million in the second
quarter of 1996, or 7.0% of total revenue.
FIRST SIX MONTHS FISCAL 1996 COMPARED TO FIRST SIX MONTHS FISCAL 1995
REVENUE. Revenue increased by 35.6% from $69.7 million in the first six
months of 1995 to $94.5 million in the first six months of 1996. Similar to the
results for the second quarter, the increase in revenue is primarily a result of
an increase in the hours of service provided and, to a lesser extent, from an
increase in the average revenue per project hour. The increase in hours of
service was primarily due to increased productivity of existing offices and
hours of service provided by new branch offices.
GROSS PROFIT. Gross profit increased by 38.0% from $25.6 million in the
first six months of 1995 to $35.4 million in the first six months of 1996,
primarily as a result of an increase in hours of service provided to clients.
Gross margin increased from 36.8% of revenue in the first six months of 1995 to
37.4% in the first six months of 1996, principally due to management's focus on
more profitable business opportunities.
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $18.6 million in the first six months
of 1995 to $25.4 million in the first six months of 1996, primarily due to
increased commissions, staffing expenses and bonuses associated with revenue
and profitability growth, an increased number of offices and their related
operating costs and start-up expenses associated with several new growth
initiatives for 1996. Selling, general and administrative expenses increased
as a percentage of revenue from 26.7% in the first six months of 1995 to
26.9% in the first six months of 1996.
INCOME FROM OPERATIONS. Income from operations increased from $7.1
million in the first six months of 1995, or 10.1% of total revenue, to $10.0
million in the first six months of 1996, or 10.5% of total revenue.
PROVISION FOR INCOME TAXES. The Company's provision for income taxes
increased from $3.0 million, or an effective tax rate of 41.0%, in the first
six months of 1995 to $4.4 million, or an effective tax rate of 41.8%, in the
first six months of 1996.
NET INCOME. The Company's net income increased from $4.3 million in the
first six months of 1995, or 6.2% of total revenue, to $6.1 million in the
first six months of 1996, or 6.4% of total revenue.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1996, cash flow generated from operations
was $4.5 million resulting primarily from increased earnings and accrued
payroll expenses, partially offset by a significant increase in accounts
receivable. The increase in accounts receivable reflects the significantly
increased volume of business during 1996. Working capital increased from
$34.0 million at December 31, 1995, to $40.9 million at June 30, 1996.
The Company believes its cash balances and funds from operations will be
sufficient to fund continued expansion of its office network and to meet all
of its anticipated cash requirements for at least the next twelve months.
Page 8 of 28
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PART II - OTHER INFORMATION
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders of Alternative Resources
Corporation was held on April 26, 1996.
(c) Set forth below is the tabulation of the votes with respect to the
election of Larry I. Kane and Bruce R. Smith as Class II Directors:
Withhold
Director For Authority
------------ --------- ---------
Larry I. Kane 12,231,996 418,567
Bruce R. Smith 12,232,014 418,549
Set forth below is the tabulation of the vote on approval of an
amendment to the Company's Amended and Restated Certificate of
Incorporation to increase the number of shares of common stock
authorized from 20,000,000 to 50,000,000.
Broker
For Against Abstain Nonvotes
--------- --------- ------- --------
8,903,669 3,548,808 9,786 138,300
Set forth below is the tabulation of votes on approval of an amendment
to the Company's Amended and Restated Incentive Stock Option Plan
increasing the number of shares of common stock available for grant
thereunder by 1,200,000 shares to a total of 3,264,000 shares.
Broker
For Against Abstain Nonvotes
--------- --------- ------- --------
7,287,977 3,835,672 18,583 1,508,331
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are furnished as an exhibit and numbered
pursuant to Item 601 of Regulation S-K:
Exhibit Number Description
-------------- -----------
3 Amended and Restated Certificate of Incorporation
of Alternative Resources Corporation, as amended.
10 Amended and Restated Incentive Stock Option Plan
27 Financial Data Schedule
(b) The registrant was not required to file any reports on Form 8-K for
the quarter.
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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.
ALTERNATIVE RESOURCES CORPORATION
/s/ Larry I. Kane
---------------------------------
Larry I. Kane
President, Chief Executive Officer, and
Chairman of the Board
Date: August 13, 1996
/s/ Bradley K. Lamers
---------------------------------
Bradley K. Lamers
Vice President, Chief Financial Officer,
Secretary, and Treasurer
Page 10 of 28
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EXHIBIT INDEX
Exhibit Page
Number Description Number
------ ----------- -------
3 Amended and Restated Certificate 12
of Incorporation of Alternative
Resources Corporation, as amended
10 Amended and Restated Incentive 20
Stock Option Plan
27 Financial Data Schedule N/A
Page 11 of 28
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AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ALTERNATIVE RESOURCES CORP.
The original Certificate of Incorporation of the corporation was filed
with the Secretary of State of Delaware on March 7, 1988. The name of the
corporation under which it was originally incorporated was Alternative Resources
Corp. This Amended and Restated Certificate of Incorporation not only restates
and integrates the original Certificate of Incorporation and all amendments
thereto, but also includes amendments adopted by the stockholders of the
corporation on the date hereof. This Amended and Restated Certificate of
Incorporation was duly adopted in accordance with the applicable provisions of
Sections 228, 242 and 245 of the General Corporation Law of Delaware and shall
become effective upon filing with the Secretary of State of the State of
Delaware.
FIRST: The name of the corporation is ALTERNATIVE RESOURCES
CORPORATION.
SECOND: The corporation's registered office in the State of Delaware
is located at 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of the corporation's registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business and the objects and purposes to be
transacted, promoted and carried on are to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have the authority to issue is 21,000,000 shares, consisting
of (i) 20,000,000 shares of common stock, $0.01 par value per share ("Common
Stock"), and (ii) 1,000,000 shares of preferred stock, $0.01 par value per share
("Preferred Stock").
The designations, powers, preferences and relative participating,
optional or other special rights and the qualifications, limitations and
restrictions thereof in respect of each class of capital stock of the
corporation are as follows:
A. COMMON STOCK
1. VOTING. Except as otherwise provided by law, each share of Common
Stock shall entitle the holder thereof to one vote in any matter which is
submitted to a vote of stockholders of the corporation.
2. DIVIDENDS. Subject to the express terms of the Preferred Stock
outstanding from time to time, such dividend or distribution as may be
determined by the Board of Directors of the corporation may from time to time be
declared and paid or made upon the Common Stock out of any source at the time
lawfully available for the payment of dividends.
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3. LIQUIDATION. The holders of Common Stock shall be entitled to
share ratably upon any liquidation, dissolution or winding up of the affairs of
the corporation (voluntary of involuntary) of all assets of the corporation
which are legally available for distribution, if any, remaining after payment of
all debts and other liabilities and subject to the prior rights of any holders
of Preferred Stock of the preferential amounts, if any, to which they are
entitled.
4. PURCHASES. Subject to any applicable provisions of this Article
Fourth, the corporation may at any time or from time to time purchase or
otherwise acquire shares of its Common Stock in any manner now or hereafter
permitted by law, publicly or privately, or pursuant to any agreement.
B. PREFERRED STOCK
Subject to the terms contained in any designation of a series of
Preferred Stock, the Board of Directors is expressly authorized, at any time and
from time to time, to fix, by resolution or resolutions, the following
provisions for shares of any class or classes of Preferred Stock of the
corporation or any series of any class of Preferred Stock:
1. the designation of such class or series, the number of shares to
constitute such class or series which may be increased or decreased (but not
below the number of shares of that class or series then outstanding) by
resolution of the Board of Directors, and the stated value thereof if different
from the par value thereof;
2. whether the shares of such class or series shall have voting
rights, in addition to any voting rights provided by law, and, if so, the terms
of such voting rights;
3. the dividends, if any, payable on such class or series, whether any
such dividends shall be cumulative, and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, and the preference or
relation which such dividends shall bear to the dividends payable on any shares
of stock of any other class or any other series of the same class;
4. whether the shares of such class or series shall be subject to
redemption by the corporation, and, if so, the times, prices and other
conditions of such redemption;
5. the amount or amounts payable upon shares of such series upon, and
the rights of the holders of such class or series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any distribution of
the assets, of the corporation;
6. whether the shares of such class or series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and manner
in which any such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such class or
Page 13 of 28
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series for retirement or other corporate purposes and the terms and
provisions relative to the operation thereof;
7. whether the shares of such class or series shall be convertible
into, or exchangeable for, shares of stock of any other class or any other
series of the same class or any other securities and, if so, the price or prices
or the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of conversion or
exchange;
8. the limitations and restrictions, if any, to be effective while any
shares of such class or series are outstanding upon the payment of dividends or
the making of other distributions on, and upon the purchase, redemption or other
acquisition by the corporation of the Common Stock or shares of stock of any
other class or any other series of the same class;
9. the conditions or restrictions, if any, upon the creation of
indebtedness of the corporation or upon the issue of any additional stock,
including additional shares of such class or series or of any other series of
the same class or of any other class;
10. the ranking (be it PARI PASSU, junior or senior) of each class or
series vis-a-vis any other class or series of any class of Preferred Stock as to
the payment of dividends, the distribution of assets and all other matters; and
11. any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof, insofar as they are not inconsistent with the provisions
of this Amended and Restated Certificate of Incorporation, to the full extent
permitted in accordance with the laws of the State of Delaware.
The powers, preferences and relative, participating, optional and
other special rights of each class or series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding.
C. MISCELLANEOUS
1. PREEMPTIVE RIGHTS. No holder of any share of any class of stock of
the corporation shall have any preemptive right to subscribe for or acquire
additional shares of stock of any class of the corporation or warrants or
options to purchase, or securities convertible into, shares of any class of
stock of the corporation.
2. ISSUANCE OF STOCK. Shares of capital stock of the corporation may
be issued by the corporation from time to time in such amounts and proportions
and for such consideration (not less than the par value thereof in the case of
capital stock having par value)
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<PAGE>
as may be fixed and determined from time to time by the Board of Directors and
as shall be permitted by law.
3. UNCLAIMED DIVIDENDS. Any and all right, title, interest and claim
in or to any dividends declared by the corporation, whether in cash, stock or
otherwise, which are unclaimed by the stockholder entitled thereto for a period
of six years after the close of business on the payment date, shall be and shall
be deemed to be extinguished and abandoned; and such unclaimed dividends in the
possession of the corporation, its transfer agents or other agents or
depositories, shall at such time become the absolute property of the
corporation, free and clear of any and all claims of any persons whatsoever.
D. STOCK SPLIT
Notwithstanding anything in this Amended and Restated Certificate of
Incorporation to the contrary, each share of Common Stock of the corporation
issued and outstanding immediately prior to the effective date of this Amended
and Restated Certificate of Incorporation shall be automatically converted,
without further action, into seven (7) shares of the Common Stock authorized
herein. On such effective date, outstanding certificates representing shares of
Common Stock shall thereafter automatically be deemed to represent certificates
for the number of shares of Common Stock determined as set forth in the
preceding sentence; provided, however, that the holders thereof shall be
entitled to present such certificates to the corporation for replacement with
certificates reflecting such number of shares of Common Stock.
SIXTH: A. NUMBER, ELECTION AND TERMS OF DIRECTORS. The number of
Directors shall be fixed from time to time exclusively by the Board of Directors
pursuant to a resolution adopted by the Board of Directors. The Directors of
the corporation shall be divided into three classes: Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the whole number of the Board of Directors. If the Board of Directors is not
evenly divisible by three, the Board of Directors shall determine the number of
Directors to be elected to each class. The initial member of Class I shall be
Christopher R. Joseph and he shall hold office for a term to expire at the
annual meeting of the stockholders to be held in 1995; the initial members of
Class II shall be Larry I. Kane and Bruce R. Smith and they shall hold office
for a term to expire at the annual meeting of the stockholders to be held in
1996; and the initial member of Class III shall be Robert L. Cummings and he
shall hold office for a term to expire at the annual meeting of the stockholders
to be held in 1997, and in the case of each class, until their respective
successors are duly elected and qualified. At each annual election held
commencing with the annual election in 1994, the Directors elected to succeed
those whose terms expire shall be identified as being of the same class as the
Directors they succeed and shall be elected to hold office for a term to expire
at the third annual meeting of the stockholders after their election and until
their respective successors are duly elected and qualified. Any vacancy on the
Board of Directors that results from an increase in the number of directors may
be filled by a majority
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of the Board of Directors then in office, provided that a quorum is present, and
any other vacancy occurring in the Board of Directors may be filled by a
majority of the directors then in office, even if less than a quorum, or by the
sole remaining director. If the number of Directors changes, any increase or
decrease in Directors shall be apportioned among the classes so as to maintain
all classes as equal in number as possible, and any additional Director elected
to any class shall hold office for a term which shall coincide with the terms of
the other Directors in such class and until his successor is duly elected and
qualified.
B. STOCKHOLDER NOMINATION OF A DIRECTOR CANDIDATE AND INTRODUCTION OF
NEW BUSINESS. Advance notice of stockholder nominations for the election of
Directors and of new business to be brought by stockholders before any meeting
of the stockholders of the corporation shall be given in a manner provided by
the By-laws of the corporation.
C. REMOVAL. Any Director may be removed from office as a Director at
any time, but only for cause, and only by the affirmative vote of stockholders
of record holding not less than two-thirds (66 2/3%) of the total outstanding
voting stock of the corporation given at a meeting of the stockholders called
for that purpose.
SEVENTH: A. SPECIAL MEETINGS OF STOCKHOLDERS. Special meetings of
the stockholders, for any purpose or purposes (except to the extent otherwise
provided by law or this Amended and Restated Certificate of Incorporation), may
only be called by the Chairman of the Board, the President or a majority of the
Board of Directors then in office.
B. WRITTEN CONSENT BY STOCKHOLDERS WITHOUT A MEETING. No action
required or permitted to be taken at any annual meeting or special meeting of
stockholders of the corporation may be taken by written consent without a
meeting of such stockholders.
EIGHTH: A. AMENDMENT OF BY-LAWS. The Board of Directors of the
corporation is authorized to adopt, amend or repeal the By-laws of the
corporation, subject to applicable law and any applicable provisions in any
resolution of the Board of Directors, except that any By-law provision adopted
by the stockholders amending the By-laws after their initial adoption may be
amended or repealed only by the holders of not less than two-thirds (66 2/3%) of
the total outstanding voting stock of the corporation.
B. ELECTION OF DIRECTORS. Elections of Directors need not be by
written ballot unless the By-laws of the corporation shall so provide.
C. MEETINGS OF STOCKHOLDERS. Meetings of stockholders may be held
within or without the State of Delaware, as the by-laws of the corporation may
provide.
D. BOOKS OF CORPORATION. The books of the corporation may be kept at
such place within or without the State of Delaware as the By-laws of the
corporation may provide or as may be designated from time to time by the Board
of Directors of the corporation.
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<PAGE>
NINTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or the stockholders or class of stockholders of the corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
TENTH: No Director of the corporation shall be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, provided that this Article TENTH shall not eliminate or
limit the liability of a Director: (i) for any breach of the Director's duty of
loyalty to the corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the General Corporation Law of the State of
Delaware (or the corresponding provision of any successor act or law); or (iv)
for any transaction from which the Director derived an improper personal
benefit. This Article TENTH shall not eliminate or limit the liability of a
Director for any act or omission occurring prior to the date this Article TENTH
becomes effective. Neither the amendment nor repeal of this Article TENTH, nor
the adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article TENTH, shall eliminate or reduce
the effect of this Article TENTH in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article TENTH, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent provision.
If the Delaware General Corporation Law is amended after the effective date of
this Article to further eliminate or limit, or to authorize further elimination
or limitation of, the personal liability of directors for breach of fiduciary
duty as a director, then the personal liability of a director to the corporation
or its stockholders shall be eliminated or limited to the full extent permitted
by the Delaware General Corporation Law, as amended. For purposes of this
Article, "fiduciary duty as a director" shall include any fiduciary duty arising
out of serving at the request of the corporation as a director of another
corporation, partnership, joint venture, trust or other enterprise, and
"personally liable to the corporation" shall include any liability to such other
corporation, partnership, joint venture, trust or other enterprise, and any
liability to the corporation in its capacity as security holder, joint venturer,
partner, beneficiary, creditor or
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<PAGE>
investor of or in any such other corporation, partnership, joint venture, trust
or other enterprise. Any repeal or modification of the foregoing paragraph by
the stockholders of the corporation shall not adversely affect the elimination
or limitation of the personal liability of a director for any act or omission
occurring prior to the effective date of such repeal or modification. This
provision shall not eliminate or limit the liability of a director for any act
or omission occurring prior to the effective date of this Article.
ELEVENTH: The corporation is to have perpetual existence.
TWELFTH: Article Ten of the corporation's original Certificate of
Incorporation is hereby deleted in its entirety and the corporation expressly
elects to be governed by Section 203 of the Delaware General Corporation Law.
THIRTEENTH: Notwithstanding any other provisions of this Amended and
Restated Certificate of Incorporation or the By-laws of the corporation or the
fact that a lesser percentage may be specified by law, this Amended and Restated
Certificate of Incorporation or the By-laws of the corporation, the affirmative
vote of the holders of not less than two-thirds (66 2/3%) of the total voting
power of the outstanding stock of the corporation entitled to vote generally in
the election of Directors, voting together as a single class, shall be required
to amend, alter, adopt any provision inconsistent with or to repeal
Article SIXTH or Article SEVENTH of this Amended and Restated Certificate of
Incorporation. Furthermore, the corporation reserves the right to amend or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon a stockholder herein are granted subject to this
reservation.
IN WITNESS WHEREOF, the corporation has caused this Amended and
Restated Certificate to be signed by its duly authorized officers this 25th day
of April, 1994.
ALTERNATIVE RESOURCES
CORPORATION
By: /S/ Larry Kane
-------------------------------------
Its: President
-------------------------------------
Attest:
/s/ Michael E. Harris
- ----------------------------------------
Secretary
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<PAGE>
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ALTERNATIVE RESOURCES CORPORATION
* * * * *
ALTERNATIVE RESOURCES CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Company"), DOES HEREBY CERTIFY THAT:
FIRST: The Board of Directors of the Company approved and adopted the
following resolution to amend its Amended and Restated Certificate of
Incorporation declaring it advisable and recommended that the amendment be
submitted to the stockholders for their consideration:
RESOLVED, that the first paragraph of ARTICLE FOURTH of the
Company's Amended and Restated Certificate of Incorporation be
and hereby is amended to read in its entirety as follows:
FOURTH: The total number of shares of all classes of
stock which the corporation shall have the authority to
issue is 51,000,000 shares, consisting of (i) 50,000,000
shares of common stock, $0.01 par value per share ("Common
Stock"), and (ii) 1,000,000 shares of preferred stock, $0.01
par value per share ("Preferred Stock").
SECOND: The amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware by the
affirmative vote of the holders of a majority of the outstanding shares of stock
entitled to vote at a meeting of stockholders.
IN WITNESS WHEREOF, ALTERNATIVE RESOURCES CORPORATION has caused this
certificate to be signed by its Vice President, Chief Financial Officer,
Secretary and Treasurer this 9th day of May, 1996.
ALTERNATIVE RESOURCES CORPORATION
By: /s/ Bradley K. Lamers
-------------------------------------
Name: Bradley K. Lamers
Title: Vice President, Chief Financial
Officer, Secretary and
Treasurer
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<PAGE>
ALTERNATIVE RESOURCES CORPORATION
AMENDED AND RESTATED
INCENTIVE STOCK OPTION PLAN
1. PURPOSE. The Alternative Resources Corporation Incentive Stock Option
Plan (the "PLAN"), as amended and restated, is intended to provide incentives
which will attract and retain highly competent persons as officers, key
employees and independent contractor consultants of Alternative Resources
Corporation and its subsidiaries (the "COMPANY"), by providing them
opportunities to acquire shares of Common Stock of the Company ("COMMON STOCK")
or to receive monetary payments based on the value of such shares pursuant to
the Awards described herein.
2. ADMINISTRATION. The Plan will be administered by the Compensation
Committee (the "COMMITTEE") appointed by the Board of Directors of the Company
from among its members which shall be comprised of not less than two
non-employee members of the Board; PROVIDED, HOWEVER, that as long as the Common
Stock of the Company is registered under the Securities Exchange Act of 1934,
members of the Committee must qualify as disinterested persons within the
meaning of Securities and Exchange Commission Regulation Section 240.16b-3. The
Committee is authorized, subject to the provisions of the Plan, to establish
such rules and regulations as it deems necessary for the proper administration
of the Plan and to make such determinations and interpretations and to take such
action in connection with the Plan and any Awards granted hereunder as it deems
necessary or advisable. All determinations and interpretations made by the
Committee shall be binding and conclusive on all participants and their legal
representatives. No member of the Board, no member of the Committee and no
employee of the Company shall be liable for any act or failure to act hereunder,
by any other member or employee or by any agent to whom duties in connection
with the administration of this Plan have been delegated or, except in
circumstances involving his or her bad faith, gross negligence or fraud, for any
act or failure to act by such member of the Board or employee.
3. PARTICIPANTS. Participants will consist of such officers, key
employees and independent contractor consultants of the Company as the Committee
in its sole discretion determines to be significantly responsible for the
success and future growth and profitability of the Company and whom the
Committee may designate from time to time to receive Awards under the Plan.
Designation of a participant in any year shall not require the Committee to
designate such person to receive an Award in any other year or, once designated,
to receive the same type or amount of Awards as granted to the participant in
any year. The Committee shall consider such factors as it deems pertinent in
selecting participants and in determining the amount and type of their
respective Awards. In addition, non-employee directors of the Company shall
have the benefits provided in Section 6(h) hereof.
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<PAGE>
4. TYPES OF AWARDS. Awards under the Plan may be granted in any one or a
combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock
Awards, and (d) Performance Units, all as described below (collectively
"AWARDS").
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved for issuance
under the Plan an aggregate of three million two hundred sixty-four thousand
(3,264,000) shares of Common Stock, which may be authorized but unissued or
treasury shares. Any shares subject to an Award hereunder may thereafter be
subject to new Awards under this Plan if there is a lapse, cancellation,
expiration, or termination of any such Awards prior to issuance of the shares or
if shares are issued under such Awards and thereafter are reacquired by the
Company pursuant to rights reserved by the Company upon issuance thereof.
6. STOCK OPTIONS. "STOCK OPTIONS" will consist of awards from the
Company, in the form of agreements, which will enable the holder to purchase a
specific number of shares of Common Stock, at set terms and at a fixed purchase
price. Stock Options may be "INCENTIVE STOCK OPTIONS" within the meaning of
Section 422 of the Internal Revenue Code ("INCENTIVE STOCK OPTIONS") or Stock
Options which do not constitute Incentive Stock Options ("NONQUALIFIED STOCK
OPTIONS"). The Committee will have the authority to grant to any participant
one or more Incentive Stock Options, Nonqualified Stock Options, or both types
of Stock Options (in each case with or without Stock Appreciation Rights). Each
Stock Option shall be subject to such terms and conditions consistent with the
Plan as the Committee may impose from time to time, subject to the following
limitations:
(a) EXERCISE PRICE. Each Stock Option granted hereunder shall have
such per-share exercise price as the Committee may determine at the date of
grant provided, however, that the per-share exercise price for Incentive Stock
Options shall not be less than 100% of the Fair Market Value of the Common Stock
on the date the option is granted and provided further that the per-share
exercise price for Nonqualified Stock Options shall not be less than 85% of the
Fair Market Value of the Common Stock on the date the option is granted.
(b) PAYMENT OF EXERCISE PRICE. The option exercise price may be
paid by check or, in the discretion of the Committee, by the delivery of shares
of Common Stock of the Company then owned by the participant; provided, however,
that option agreements may provide that payment of the exercise price by
delivery of shares of Common Stock of the Company then owned by the participant
may be made only if such payment does not result in a charge to earnings for
financial accounting purposes as determined by the Committee. In the discretion
of the Committee, payment may also be made by delivering a properly executed
exercise notice to the Company together with a copy of irrevocable instructions
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<PAGE>
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the exercise price. To facilitate the foregoing, the Company
may enter into agreements for coordinated procedures with one or more brokerage
firms.
(c) EXERCISE PERIOD. Stock Options granted under the Plan shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee, PROVIDED, HOWEVER that no Stock Options
shall be exercisable earlier than six months after the date they are granted.
In addition, Stock Options shall not be exercisable later than ten years after
the date they are granted. All Stock Options shall terminate at such earlier
times and upon such conditions or circumstances as the Committee shall in its
discretion set forth in such option at the date of grant, provided however that
if a participant's employment or engagement with the Company is terminated other
than by reason of the participant's death or disability, the participant's
option will terminate thirty (30) days after such termination, and in the event
of a termination due to death or disability, the participant's option will
terminate six (6) months after such termination.
(d) LIMITATIONS ON STOCK OPTIONS. Incentive Stock Options may be
granted only to participants who are employees of the Company or one of its
subsidiaries (within the meaning of Section 424(f) of the Internal Revenue
Code) at the date of grant. The aggregate Fair Market Value (determined as
of the time the option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by a participant
during any calendar year (under all option plans of the Company) shall not
exceed $100,000. Stock Options may not be granted to any participant who, at
the time of grant, owns stock possessing (after the application of the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company, unless the
option price is fixed at not less than 110% of the Fair Market Value of the
Common Stock on the date of grant and the exercise of such option is
prohibited by its terms after the expiration of five years from the date of
grant of such option.
(e) REDESIGNATION AS NON-QUALIFIED STOCK OPTIONS. Options designated
as "INCENTIVE STOCK OPTIONS" that fail to continue to meet the requirements of
Section 422 of the Internal Revenue Code shall be redesignated as non-qualified
options for Federal income tax purposes automatically without further action by
the Committee on the date of such failure to continue to meet the requirements
of Section 422 of the Code.
(f) LIMITATION OF RIGHTS IN SHARES. The recipient of a Stock Option
shall not be deemed for any purpose to be a stockholder of the Company with
respect to any of the shares subject thereto except to the extent that the Stock
Option shall have been exercised and, in addition, a certificate shall have been
issued and delivered to the participant.
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<PAGE>
(g) INDIVIDUAL LIMITATION ON NUMBER OF SHARES. The number of shares
subject to Stock Options which may be granted during any calendar year to any
one participant shall not exceed two hundred six thousand four hundred (206,400)
shares.
(h) AUTOMATIC GRANT TO NON-EMPLOYEE DIRECTORS. Each non-employee
director of the Company who is a member of the Board on the date of the
Company's annual meeting of shareholders, beginning with the 1995 annual meeting
and continuing for each annual meeting thereafter, and each non-employee
director of the Company who becomes a member of the Board for the first time
other than at the time of the Company's annual meeting of shareholders, shall
automatically receive, on the date of such annual meeting, or on the date such
person first becomes a member of the Board, as the case may be, a Nonqualified
Stock Option to purchase 5,000 shares of Common Stock, at an exercise price per
share equal to 100% of the Fair Market Value of the Common Stock on the date of
receipt of such option. Any options granted under this Section 6(h) shall not
be exercisable for a period of one year from the date of grant and will
terminate upon the earlier of (i) ninety (90) days after the date on which the
director ceases to serve on the Board or (ii) ten (10) years after the date of
grant of the option. For purposes of this Plan, a non-employee director is any
person who is a member of the Board of the Company and who is neither an
employee of the Company nor affiliated with a controlling shareholder of the
Company.
7. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant Stock Appreciation Rights to the holders of any Stock Options granted
hereunder. In addition, Stock Appreciation Rights may be granted
independently of and without relation to options. Each Stock Appreciation
Right shall be subject to such terms and conditions consistent with the Plan
as the Committee shall impose from time to time, including the following:
(a) A Stock Appreciation Right relating to a Nonqualified Stock
Option may be made part of such option at the time of its grant or at any time
thereafter up to six months prior to its expiration, and a Stock Appreciation
Right relating to an Incentive Stock Option may be made part of such option only
at the time of its grant.
(b) Each Stock Appreciation Right will entitle the holder to elect to
receive the appreciation in the Fair Market Value of the shares subject thereto
up to the date the right is exercised. In the case of a right issued in
relation to a Stock Option, such appreciation shall be measured from not less
than the option price and in the case of a right issued independently of any
Stock Option, such appreciation shall be measured from not less than 85% of the
Fair Market Value of the Common Stock on the date the right is granted. Payment
of such appreciation shall be made in cash or in Common Stock, or a combination
thereof, as set forth in the award, but no Stock Appreciation Right shall
entitle the holder to receive, upon exercise thereof, more than the number of
shares of Common Stock (or cash of equal value) with respect to which the right
is granted.
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<PAGE>
(c) Each Stock Appreciation Right will be exercisable at the times
and to the extent set forth therein, but no Stock Appreciation Right may be
exercisable earlier than six months after the date it was granted or later
than the earlier of (i) the term of the related option, if any, or (ii)
fifteen years after it was granted. Exercise of a Stock Appreciation Right
shall reduce the number of shares issuable under the Plan (and the related
option, if any) by the number of shares with respect to which the right is
exercised.
(d) The number of shares subject to Stock Appreciation Rights which
may be granted during any calendar year to any one participant shall not exceed
two hundred six thousand four hundred (206,400) shares.
8. STOCK AWARDS. Stock Awards will consist of Common Stock transferred
to participants without other payment therefor as additional compensation for
services rendered or to be rendered to the Company. Stock Awards shall be
subject to such terms and conditions as the Committee determines appropriate,
including, without limitation, restrictions on the sale or other disposition
of such shares and rights of the Company to reacquire such shares for no
consideration upon termination of the participant's employment within
specified periods. The Committee may require the participant to deliver a
duly signed stock power, endorsed in blank, relating to the Common Stock
covered by such an Award. The Committee may also require that the stock
certificates evidencing such shares be held in custody until the restrictions
thereon shall have lapsed. Except as otherwise provided in the written Stock
Award, each participant shall have, with respect to the shares of Common
Stock subject to a Stock Award, all of the rights of a holder of shares of
Common Stock of the Company, including the right to receive dividends and to
vote the shares.
9. PERFORMANCE UNITS. Performance Units may be awarded either alone or in
addition to other Awards granted under this Plan and shall consist of the right
to receive Common Stock or cash of an equivalent value at the end of a specified
Performance Period (defined below). The Committee shall determine the
participants to whom and the time or times at which shall be awarded, the
number of Performance Units to be awarded to any person, the duration of the
period (the "PERFORMANCE PERIOD") during which, and the conditions under which,
receipt of the Shares will be deferred, and the other terms and conditions of
the Award in addition to those set forth in this Section 9. The Committee may
condition the grant of Performance Units upon the attainment of specified
performance goals or such other factors or criteria as the Committee shall
determine. Performance Units awarded pursuant to this Section 9 shall be
subject to the following terms and conditions:
(a) DIVIDENDS. Unless otherwise determined by the Committee at the
time of the grant of the Award, amounts equal to any dividends declared during
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<PAGE>
the Performance Period with respect to the number of shares of Common Stock
covered by a Performance Unit Award will not be paid to the participant.
(b) PAYMENT. Subject to the provisions of the written Award and this
Plan, at the expiration of the Performance Period, share certificates and/or
cash of an equivalent value (as the Committee may determine) shall be delivered
to the participant, or his or her legal representative, in a number or amount
equal to the vested shares covered by the Performance Unit Award.
(c) TERMINATION OF EMPLOYMENT. Subject to the applicable provisions
of the written Award and this Plan, upon termination of a participant's
employment with the Company for any reason during the Performance Period for a
given Award, the Performance Units in question will vest or be forfeited in
accordance with the terms and conditions established by the Committee.
10. ADJUSTMENT PROVISIONS.
(a) If the Company shall at any time change the number of issued
shares of Common Stock without new consideration to the Company (such as by
stock dividend, stock split, recapitalization, reorganization, exchange of
shares, liquidation, combination or other change in corporate structure
affecting the Common Stock) or make a distribution of cash or property which has
a substantial impact on the value of issued Common Stock, the total number of
shares available for Awards under this Plan shall be appropriately adjusted and
the number of shares covered by each outstanding Award and the reference price
or Fair Market Value for each outstanding Award shall be adjusted so that the
net value of such Award shall not be changed.
(b) In the case of any sale of assets, merger, consolidation,
combination or other corporate reorganization or restructuring of the Company
with or into another corporation which results in the outstanding Common Stock
being converted into or exchanged for different securities, cash or other
property, or any combination thereof (an "ACQUISITION"), subject to the
provisions of this Plan and any limitation applicable to the Award:
(i) any Participant to whom a Stock Option has been granted
shall have the right thereafter and during the term of the Stock
Option, to receive upon exercise thereof the Acquisition Consideration
(as defined below) receivable upon the Acquisition by a holder of the
number of shares of Common Stock which might have been obtained upon
exercise of the Stock Option or portion thereof, as the case may be,
immediately prior to the Acquisition;
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(ii) any Participant to whom a Stock Appreciation Right has
been granted shall have the right thereafter and during the term of
such right to receive upon exercise thereof the difference on the
exercise date between the aggregate Fair Market Value of the
Acquisition Consideration receivable upon such acquisition by a holder
of the number of shares of Common Stock which are covered by such
right and the aggregate reference price of such right; and
(iii) any Participant to whom Performance Units have been
awarded shall have the right thereafter and during the term of such
Award, upon fulfillment of the term of the Award, to receive on the
date or dates set forth in the Award, the Acquisition Consideration
receivable upon such acquisition by a holder of the number of shares
of Common Stock which are covered by such Award.
The term "ACQUISITION CONSIDERATION" shall mean the kind and amount of
securities, cash or other property or any combination thereof receivable in
respect of one share of Common Stock upon consummation of an Acquisition.
(c) Notwithstanding any other provision of this Plan, the Committee
may authorize the issuance, continuation or assumption of Awards or provide for
other equitable adjustments after changes in the Common Stock resulting from any
other merger, consolidation, sale of assets, acquisition of property or stock,
recapitalization, reorganization or similar occurrence upon such terms and
conditions as it may deem equitable and appropriate.
(d) In the event that another corporation or business entity is being
acquired by the Company, and the Company assumes outstanding employee stock
options and/or stock appreciation rights and/or the obligation to make future
grants of options or rights to employees of the acquired entity, the aggregate
number of shares of Common Stock available for Awards under this Plan shall be
increased accordingly.
11. NONTRANSFERABILITY.
(a) Each Award granted under the Plan to a participant shall not be
transferable by him otherwise than by law or by will or the laws of descent and
distribution, and shall be exercisable, during his lifetime, only by him. In
the event of the death of a participant while the participant is rendering
services to the Company, each Award theretofore granted to him shall be
exercisable during the period of six (6) months after his death (but not beyond
the stated duration of the Award) and then only: (i) by the executor or
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administrator of the estate of the deceased participant or the person or persons
to whom the deceased participant's rights under the Award shall pass by will or
the laws of descent and distribution; and (ii) to the extent that the deceased
participant was entitled to do so at the date of his death.
(b) Notwithstanding Section 11(a), in the discretion of the
Committee, Awards granted hereunder may be transferred to members of the
participant's immediate family (which for purposes of this Plan shall be limited
to the participant's children, grandchildren and spouse), or to one or more
trusts for the benefit of such family members or partnerships in which such
family members and/or trusts are the only partners, but only if the Award
expressly so provides.
12. OTHER PROVISIONS. Awards under the Plan may also be subject to such
other provisions (whether or not applicable to the Award granted to any other
participant) as the Committee determines appropriate, including without
limitation, provisions for the installment purchase of Common Stock under Stock
Options, provisions for the installment exercise of Stock Appreciation Rights,
provisions to assist the participant in financing the acquisition of Common
Stock, provisions for the forfeiture of, or restrictions on resale or other
disposition of Shares acquired under any form of Award, provisions for the
acceleration of vesting and/or the payment of the value of Awards to
participants in the event of a change of control of the Company, provisions for
the forfeiture of, or provisions to comply with Federal and state securities
laws, or understandings or conditions as to the participant's employment in
addition to those specifically provided for under the Plan.
13. FAIR MARKET VALUE. For purposes of this Plan and any Benefits awarded
hereunder, Fair Market Value of Common Stock shall be the mean between the
highest and lowest sale prices for the Company's Common Stock as reported in THE
WALL STREET JOURNAL under the heading "NASDAQ National Market" (or equivalent
recognized source of quotations) on the date of calculation (or on the next
preceding trading date if Common Stock was not traded on the date of
calculation), provided, however, that if the Company's Common Stock is not at
any time listed for trading on the NASDAQ National Market System, Fair Market
Value shall mean the amount determined in good faith by the Committee as the
fair market value of the Common Stock of the Company.
14. WITHHOLDING. All payments or distributions made pursuant to the Plan
shall be net of any amounts required to be withheld pursuant to applicable
federal, state and local tax withholding requirements. If the Company proposes
or is required to distribute Common Stock pursuant to the Plan, it may require
the recipient to remit to it an amount sufficient to satisfy applicable federal,
state and local tax withholding requirements, if any, prior to the delivery of
any certificates for such Common Stock. The Committee may, in its discretion
and subject to such rules as it may adopt, permit an optionee or award holder to
(i) pay all or a portion of the federal, state and local withholding taxes
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arising in connection with the exercise of a Stock Option, or (ii) the receipt
of a Stock Award, by electing to have the Company withhold shares of Common
Stock having a Fair Market Value equal to the amount to be withheld.
15. TENURE. A participant's right, if any, to continue to serve the
Company as an officer, employee, independent contractor consultant or otherwise,
shall not be enlarged or otherwise affected by his or her designation as a
participant under the Plan, nor shall this Plan in any way interfere with the
right of the Company, subject to the terms of any separate employment agreement
or other agreement to the contrary, at any time to terminate such employment or
engagement or to increase or decrease the compensation of the participant from
the rate in existence at the time of the grant of an Award.
16. DURATION, AMENDMENT AND TERMINATION. No Award shall be granted
after December 31, 2003; provided, however, that the terms and conditions
applicable to any Award granted prior to such date may thereafter be amended
or modified by mutual agreement between the Company and the participant or
such other persons as may then have an interest therein. Also, by mutual
agreement between the Company and a participant hereunder or under any other
present or future plan of the Company, Awards may be granted to such
participant in substitution and exchange for, and in cancellation of, any
Awards previously granted such participant under this Plan, or any other
present or future plan of the Company. The Board of Directors may amend the
Plan from time to time or terminate the Plan at any time PROVIDED, HOWEVER,
that Section 6(h) of this Plan may not be amended more frequently than once
every six months. However, no action authorized by this paragraph shall
change the terms and conditions of any existing Award without the
participant's consent. No amendment of the Plan shall, without approval of
the stockholders of the Company, (i) materially increase the total number of
shares which may be issued under the Plan; (ii) materially modify the
requirements as to eligibility for Awards under the Plan; (iii) result in any
member of the Committee losing his or her status as a disinterested person
under Securities and Exchange Commission Regulation Section 240.16b-3 to the
extent applicable; (iv) result in the Plan losing its status as a protected
plan under Securities and Exchange Commission Rule 16b-3 to the extent
applicable; or (v) extend the term of this Plan.
17. GOVERNING LAW. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the State of
Illinois (regardless of the law that might otherwise govern under applicable
Illinois principles of conflict of laws).
18. STOCKHOLDER APPROVAL. The Plan was adopted by the Board of Directors
of the Company and the stockholders on April 29, 1994 and was amended by the
Board of Directors of the Company on December 21, 1995, February 14, 1996 and
April 16, 1996 and by the stockholders on April 26, 1996.
Page 28 of 28
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND
ON PAGES 2 AND 3 OF THE COMPANY'S FORM 10-Q FOR THE 6 MONTH PERIOD ENDING
JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,236
<SECURITIES> 17,651
<RECEIVABLES> 27,293
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,575
<PP&E> 4,309
<DEPRECIATION> 1,793
<TOTAL-ASSETS> 57,273
<CURRENT-LIABILITIES> 10,676
<BONDS> 0
0
0
<COMMON> 156
<OTHER-SE> 46,159
<TOTAL-LIABILITY-AND-EQUITY> 57,273
<SALES> 0
<TOTAL-REVENUES> 94,508
<CGS> 0
<TOTAL-COSTS> 59,118
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,468
<INCOME-TAX> 4,375
<INCOME-CONTINUING> 6,093
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,093
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
