Document:

Exhibit 4.15

 

DIVERSIFIED CORPORATE RESOURCES,
INC.

COMMON STOCK WARRANT

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.

 

This certifies that, for good and valuable
consideration, receipt of which is hereby acknowledged, MicroCapital
Strategies, Inc. (“Holder”) is entitled to purchase, subject to the terms and
conditions of this Warrant, Common Shares of Diversified Corporate Resources,
Inc., a Texas corporation (the “Company”) This Warrant entitles Holder to
purchase up to 95,932 fully paid and non-assessable shares of the Common Stock
(“Common Stock”) of the Company, in accordance with Section 2 of this
document during the period commencing concurrent with the execution by all
parties of this Warrant Agreement (the “Effective Date”) and ending on the
third anniversary of the Effective Date at 
5:00 p.m. Dallas, Texas time, (the “Expiration Date”), at which time
this Warrant will expire and become void unless earlier terminated as provided
herein.  The shares of Common Stock of
the Company for which this Warrant is exercisable as adjusted from time to time
pursuant to the terms hereof, are hereinafter referred to as the “Shares.”

 

1.               EXERCISE PRICE. The purchase price for the shares
shall be $0.80 per share or the price as adjusted in attachment A. Such price
shall be subject to adjustment pursuant to the terms hereof (such prices, as
adjusted from time to time, is hereinafter referred to as the “Exercise Price”).

 

2.               EXERCISE AND PAYMENT.

 

(a)          CASH EXERCISE.  At any time after
the Effective Date, this Warrant may be exercised, in whole or in part, from
time to time by the Holder, during the term hereof, by surrender of this
Warrant and the Notice of Exercise annexed hereto duly completed and executed
by the Holder to the Company at the principal executive offices of the Company,
together with payment in the amount obtained by multiplying the Exercise Price
then in effect by the number of Shares thereby purchased, as designated in the
Notice of Exercise. Payment may be in cash or by check payable to the order of
the Company.

 

(b)         NET ISSUANCE.  In lieu of payment
of the Exercise Price described in Section 2(a), the Holder may elect to
receive, without the payment by the Holder of any additional consideration,
shares equal to the value of this Warrant or any portion hereof by the
surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto (the “Net Issuance Election Notice”) duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable shares of Common Stock
as is computed using the following formula:

 

where:
X = Y (A-B)

 

 

A

 

X =  the number of
shares to be issued to the Holder pursuant to this Section 2.

 

Y =  the number of
shares covered by this Warrant in respect of which the net issuance election is
made pursuant to this Section 2.

 

A =  the fair
market value of one share of Common Stock, as determined in accordance with the
provisions of this Section 2.

 

B =  the Exercise
Price in effect under this Warrant at the time the net issuance election is
made pursuant to this Section 2.

 

For
purposes of this Section 2, the “fair market value” per share of the
Company’s Common Stock shall mean:

 

i.                  If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading privileges on such an exchange,
or is listed on the Nasdaq National Market (the “NNM”) or other over-the-
counter quotation system, the fair market value shall be the last reported sale
price of the Common Stock on such exchange or on the NNM or other
over-the-counter quotation system on the last business day before the effective
date of exercise of the net issuance election or if no such sale is made on
such day, the mean of the closing bid and asked prices for such day on such
exchange, the NNM or over-the-counter quotation system; and

 

ii.               If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are not reported, the
fair market value shall be the price per share which the Company could obtain
from a willing buyer for shares sold by the Company from authorized but
unissued shares, as such price shall be determined by mutual agreement of the
Company and the Holder of this Warrant. If the Company and the Holder cannot
mutually agree on such price, the fair market value shall be made by an
appraiser of recognized standing selected by the Holder and the Company, or, if
they cannot agree on an appraiser, each of he Company and the Holder shall
select an appraiser of recognized standing and the two appraisers shall
designate a third appraiser of recognized standing, whose appraisal shall be
determinative of such value.

 

3.               DELIVERY OF STOCK CERTIFICATES.  Within a reasonable time after exercise, in
whole or in part, of this Warrant, the Company shall issue in the name of and
deliver to the Holder, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock which the Holder shall have
requested in the Notice of Exercise or Net Issuance Election Notice. If this
Warrant is exercised in part, the Company shall deliver to the Holder a new
Warrant for the unexercised portion of this Warrant at the time of delivery of
such stock certificate or certificates.

 

4.               NO FRACTIONAL SHARES.  No fractional shares or scrip representing
fractional shares will be issued upon exercise of this Warrant.  If upon any exercise of this Warrant a
fraction of a share results, the Company will pay the Holder the difference
between the cash value of the fractional share and the portion of the Exercise
Price allocable to the fractional share.

 

5.               CHARGES, TAXES AND EXPENSES.  The Holder shall pay all transfer taxes or
other incidental charges, if any, in connection with the transfer of the Shares
purchased pursuant to the exercise hereof from the Company to the Holder.

 

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6.               LOSS, THEFT, DESTRUCTION OR MUTILATION OF
WARRANT.  Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to the Company, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.

 

7.               SATURDAYS, SUNDAYS, HOLIDAYS, ETC.  If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
be a Saturday or a Sunday or shall be a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding weekday which is
not a legal holiday.

 

8.               ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF
SHARES.  The number of and kind of
securities purchasable upon exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time as follows:

 

(a)          SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES.  If the Company shall at any time after the
date hereof but prior to the expiration of this Warrant subdivide its
outstanding securities as to which purchase rights under this Warrant exist, by
split-up or otherwise, or combine its outstanding securities as to which
purchase rights under this Warrant exist, the number of Shares as to which this
Warrant is exercisable as of the date of such subdivision,  split-up or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments shall also be
made to the purchase price payable per share, but the aggregate purchase price
payable for the total number of Shares purchasable under this Warrant as of
such date shall remain the same.

 

(b)         STOCK DIVIDEND.  If at any time after
the date hereof the Company declares a dividend or other distribution on Common
Stock payable in Common Stock or other securities or rights convertible into
Common Stock  (“Common Stock Equivalents”)
without payment of any consideration by such holder for the additional shares
of Common Stock or the Common Stock Equivalents (including the additional
shares of Common Stock issuable upon exercise or conversion thereof), then the
number of shares of Common Stock for which this Warrant may be exercised shall
be increased as of the record date (or the date of such dividend distribution
if no record date is set) for determining which holders of Common Stock shall
be entitled to receive such dividend, in proportion to the increase in the
number of outstanding shares  (and shares
of Common Stock issuable upon conversion of all such securities convertible
into Common Stock) of Common Stock as a result of such dividend,  and the Exercise Price shall be adjusted so
that the aggregate amount payable for the purchase of all the Shares issuable hereunder
immediately after the record date (or on the date of such distribution, if
applicable), for such dividend shall equal the aggregate amount so payable
immediately before such record date (or on the date of such distribution, if
applicable).

 

(c)          OTHER DISTRIBUTIONS.  If at any
time after the date hereof the Company distributes to holders of its Common
Stock, other than as part of its dissolution or liquidation or the winding up
of its affairs, any shares of its capital stock, any evidence of indebtedness
or any of its assets (other than cash, Common Stock or securities convertible
into Common Stock), then the Company may, at its option, either (i) decrease
the per share Exercise Price of this Warrant by an appropriate amount based
upon the value distributed on each share of Common Stock as determined in good
faith by the Company’s Board of Directors or (ii) provide by resolution of the Company’s
Board of Directors that on exercise of this Warrant, the Holder hereof shall thereafter
be entitled to receive, in addition

 

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to the shares of Common Stock otherwise receivable on
exercise hereof, the number of shares or other securities or property which
would have been received had this Warrant at the time been exercised.

 

(d)         MERGER.  If at any time after the
date hereof there shall be a merger or consolidation of the Company with or
into another corporation when the Company is not the surviving corporation then
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the aggregate
Exercise Price then in effect, the number of shares or other securities or
property of the successor corporation resulting from such merger or
consolidation, which would have been received by Holder for the shares of stock
subject to this Warrant had this Warrant at such time been exercised.

 

(e)          RECLASSIFICATION, ETC.  If at any
time after the date hereof there shall be a change or reclassification of the
securities as to which purchase rights under this Warrant exist into the same
or a different number of securities of any other class or classes, then the
Holder shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Exercise Price then
in effect, the number of shares or other securities or property resulting from
such change or reclassification, which would have been received by Holder for
the shares of stock subject to this Warrant had this Warrant at such time been
exercised.

 

9.               NOTICE OF ADJUSTMENTS; NOTICES.  Whenever the Exercise Price or number of
Shares purchasable hereunder shall be adjusted pursuant to Section 8
hereof, the Company shall execute and deliver to the Holder a certificate
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the Holder.

 

10.         RIGHTS AS SHAREHOLDER.  Prior to
exercise of this Warrant, the Holder shall not be entitled to any rights as a
shareholder of the Company with respect to the Shares, including (without
limitation) the right to vote such Shares, receive dividends or other
distributions thereon, or be notified of shareholder meetings, and the Holder
shall not be entitled to any notice or other communication concerning the
business or affairs of the Company. 
However, in the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend)
or other distribution, any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property,
or to receive any other right, the Company shall mail to each Holder of this
Warrant, at least ten (10) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such dividend,
distribution or right.

 

11.         RESTRICTED SECURITIES.  The Holder
understands that this Warrant and the Shares purchasable hereunder constitute “restricted
securities” under the federal securities laws inasmuch as they are, or will be,
acquired from the Company in transactions not involving a public offering and
accordingly may not, under such laws and applicable regulations, be resold or
transferred without registration under the Securities Act of 1933, as amended
(the “1933 Act”) or an applicable exemption from such registration. In this
connection, the Holder acknowledges that Rule 144 of the Securities and
Exchange Commission (the “SEC”) is not now, and may not in the future be,
available for resales of the Warrant and the Shares purchasable hereunder.
Unless the Shares are subsequently registered pursuant to Section 14, the
Holder further acknowledges that the securities

 

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legend on Exhibit A to the Notice of Exercise attached
hereto shall be placed on any Shares issued to the Holder upon exercise of this
Warrant.

 

12.         CERTIFICATION OF INVESTMENT PURPOSE. 
Unless a current registration statement under the 1933 Act shall be in
effect with respect to the securities to be issued upon exercise of this
Warrant, the Holder covenants and agrees that, at the time of exercise hereof,
it will deliver to the Company a written certification executed by the Holder
that the securities acquired by him upon exercise hereof are for the account of
such Holder and acquired for investment purposes only and that such securities
are not acquired with a view to, or for sale in connection with, any
distribution thereof.

 

13.         DISPOSITION OF SHARES.  Holder
hereby agrees not to make any disposition of any Shares purchased hereunder
unless and until:

 

(a)          Holder shall have notified the Company of the proposed disposition and
provided a written summary of the terms and conditions of the proposed
disposition;

 

(b)         Holder shall have complied with all requirements of this Warrant
applicable to the disposition of the Shares; and

 

(c)          Holder shall have provided the Company with written assurances, in form
and substance satisfactory to legal counsel of the Company, that (i) the
proposed disposition does not require registration of the Shares under the 1933
Act or (ii) all appropriate action necessary for compliance with the
registration requirements of the 1933 Act or of any exemption from registration
available under the 1933 Act has been taken.

 

The Company shall NOT be required (i) to transfer on its
books any Shares which have been sold or transferred in violation of the
provisions of this Section 13, or (ii) to treat as the owner of the
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Shares have been transferred in contravention of the terms of this
Warrant.

 

14.         REGISTRATION RIGHTS.

 

(a)          PIGGYBACK REGISTRATION.  If at any
time during the five-year period commencing on the Effective Date and ending
five years hence, the Company shall determine to register for its own account
or the account of others under the 1933 Act any of its equity securities, other
than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business, or equity securities issuable in connection with stock option or
other employee benefit plans, the Company shall send to each Holder of Warrants
or Shares, who is entitled to registration rights under this Section 14(a)
written notice of such determination and, if within twenty (20) days after
receipt of such notice,  such Holder
shall so request in writing (hereafter a “Selling Holder”), the Company shall
include in such Registration Statement all or any part of the Shares issuable
upon exercise of the Warrants (the “Registrable Securities”)  such Selling Holder requests to be
registered. The obligations of the Company under this Section 14(a) may be
waived by Holders holding a majority in interest of the Registrable Securities.  In the event that the managing underwriter
for said offering advises the Company in writing that the inclusion of such
Registrable Securities in the offering would be materially detrimental to the
offering, then the Company shall be required to include in the offering only
that number of Registrable Securities which the managing underwriter determines
in its sole discretion will not jeopardize the success of the offering (the
Registrable Securities so included to be apportioned pro rata among all Selling
Holders according to the total amount of Registrable Securities entitled to be
included

 

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therein owned by each selling holder or in such other
proportions as shall mutually be agreed to by such selling holders); PROVIDED
HOWEVER, that in no event shall any Holder of Registrable Securities have the
number of shares of such securities reduced in such offer unless and until any
holders of non-Registrable Securities intending to participate in such offering
(which selling holders’ registration rights, if any, were granted by the
Company from and after the date hereof) first shall have had the number of
their shares of such securities reduced up to the amount of securities the
managing underwriter has determined in its sole discretion shall be excluded
from the offering; and PROVIDED FURTHER, that in no event shall any Shares
being sold by a Holder properly exercising a demand registration granted in Section 14(b)
be excluded from such offering.

 

(c)          OBLIGATIONS OF THE HOLDERS.  In
connection with the registration of the Registrable Securities pursuant to
either Sections 14(a), or (b), the Selling Holders shall have the following
obligations:

 

i.                  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to each Selling Holder that such Selling Holder shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable Securities held by
it as shall be reasonably required to effect the registration of the
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.  At least fifteen (15) days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Selling Holder of the information the Company requires from each such
Selling Holder (the “Requested Information”) in the case of a Registration Statement
being prepared pursuant to Section 14(b) or if such Selling Holder elects
to have any of such Selling Holder’s Registrable Securities included in the
Registration Statement in the case of a Registration Statement being prepared
pursuant to Section 14(a).

 

ii.               Each Selling Holder by such Selling Holder’s
acceptance of the Registrable Securities agrees to cooperate with the Company
as reasonably requested by the Company in connection with the preparation and
filing of the Registration Statement hereunder, unless such Selling Holder has
notified the Company in writing of such Selling Holder’s election to exclude
all of such Selling Holder’s Registrable Securities from the Registration
Statement; and

 

iii.            No Selling Holder may participate in any underwritten
registration hereunder unless such Selling Holder (i) agrees to sell such
Selling Holder’s Registrable Securities on the basis provided in any
underwriting arrangements, (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and
(iii) agrees to pay its pro rata share of all underwriting discounts and
commissions and other fees and expenses of investment bankers and any manager
or managers of such underwriting, except as provided in Section 14(d)
below.

 

(d)         EXPENSES OF REGISTRATION.  All
expenses, other than underwriting discounts and commissions and other fees and
expenses of investment bankers and other than brokerage commissions, incurred
in connection with registrations, filings or qualifications pursuant to Section 
14(a) or 14(b), including, without limitation, all registration, listing and
qualifications fees, printers for the Company and the Selling Holders, shall be
borne by the Company; the Company shall not be required to bear the fees and
out-of-pocket expenses of legal counsel and accountants selected by the Selling
Holders in connection with each such registration.

 

6

 

(e)          INDEMNIFICATION.  In the event any
Registrable Securities are included in a Registration Statement under this
Agreement:

 

i.                  To the extent permitted by law, the Company will
indemnify and hold harmless each Selling Holder who holds such Registrable
Securities, the directors, if any, of such Selling Holder, the officers, if
any, of such Selling Holder, each person, if any, who controls any Selling
Holder within the meaning of the 1933 Act, any underwriter (as defined in the
1933 Act) for the Selling Holders, the directors, if any, of such underwriter and
the officers, if any, of such underwriter, and each person, if any, who controls
any such underwriter within the meaning of the 1933 Act (each, an “Indemnified
Person”), against any losses, claims, damages, expenses or liabilities (joint
or several) (collectively, “Claims”) to which any of them may become subject
under the 1933 Act or otherwise, insofar as such Claims  (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement when it first became effective, or any related final
prospectus, amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements therein were made, not misleading (a “Violation”).  The Company shall reimburse the Selling
Holders and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or defending
any such Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 14(e)(i) shall not
apply in such case to the extent any such Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, and shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld.

 

ii.               In connection with any Registration Statement in
which a Selling Holder is participating, each such Selling Holder agrees to
indemnify and hold harmless, to the same extent and in the same manner set
forth in Section 14(e)(i), the Company, each of its directors, each of its
officers who signs the Registration Statement, each person, if any, who
controls the Company within the meaning of the 1933 Act, any underwriter and
any other shareholder selling securities pursuant to the Registration Statement
or any of its directors or officers or any person who controls such shareholder
or underwriter within the meaning of the 1933 Act (collectively and together
with an Indemnified Person, an “Indemnified Party”), against any Claim to which
any of them may become subject, under the 1933 Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Selling
Holder expressly for use in connection with such Registration Statement, and
such Selling Holder will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
PROVIDED, HOWEVER,  that the indemnity
agreement contained in this Section 14(e)(ii) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Selling Holder, which consent shall not be
unreasonably withheld.

 

iii.            The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution to the same
extent as provided above, with respect to information furnished in writing by
such persons expressly for inclusion in the Registration Statement.

 

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iv.           Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 14(e) of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is made against any indemnifying
party under this Section 14(e), deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying parties; PROVIDED, HOWEVER, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party,  if, in the reasonable opinion of counsel
retained by the indemnifying party,  the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding. The
Indemnifying Party shall pay for only one separate legal counsel for the
Indemnified Parties; such legal counsel shall be selected by the Indemnified
Parties holding a majority in interest of the Registrable Securities. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under
this Section 14(e), except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.  The indemnification required by this Section 14(e)
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.

 

v.              Notwithstanding any of the foregoing, if, in
connection with an underwritten public offering of Registrable Securities, the
Company, the Selling Holders and the underwriter(s) enter into an underwriting
or purchase agreement relating to such offering which contains provisions
covering indemnification and contribution among the parties, the
indemnification and contribution provisions of this Section 14(e) shall be
deemed inoperative for purposes of such offering.

 

(e)          CONTRIBUTION.  To the extent any
indemnification by an indemnifying party is prohibited or limited by law, the
indemnifying party agrees to make the maximum contribution with respect to any
amounts for which it would otherwise be liable under Section 14(e) to the
fullest extent permitted by law; PROVIDED, HOWEVER, that (i) no contribution
shall be made under circumstances where the maker would not have been liable
for indemnification under the fault standards set forth in Section 14(e),
(ii) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.

 

(f)            REPORTS UNDER EXCHANGE ACT.  With a view to making available to the
Holders the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit the Holders
to sell securities of the Company to the public without registration (“Rule 144”),
the Company agrees to:

 

i.                  use its best efforts to make and keep public
information available, as those terms are understood and defined in Rule 144;
and

 

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ii.               use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
1933 Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”);
and

 

iii.            furnish to each Holder so long as such Holder
owns Registrable Securities, promptly upon request, (i) a written statement by
the Company with respect to its compliance with the reporting requirements of
Rule 144, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Holders to
sell such securities without registration pursuant to Rule 144.

 

(g)         ASSIGNMENT OF THE REGISTRATION RIGHTS. 
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assigned by the Holders to transferees
or assignees of all or any portion of such securities only if:  (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of the name and address of such transferee or assignee (iii) such
assignment is in accordance with and permitted by law and all other agreements
between the transferor or assignor and the Company, including without
limitation, shareholder’s agreements, warrants and subscription agreements, and
the transferor or assignor otherwise is not in material default of any
obligation to the Company under any such other agreement, and (iv) at or before
the time the Company received the written notice contemplated by clause (ii) of
this sentence the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein.

 

(h)         TERMINATION OF REGISTRATION RIGHTS. 
No Holder of Warrants or Shares shall be entitled to exercise any right
provided for in this Section 14 at such time as such Holder would be able
to dispose of all of its Registrable Securities in any three (3) month period
under SEC Rule 144 or any successor rule thereto.

 

15.         TRANSFERABILITY.

 

1.               GENERAL. 
This Warrant shall be transferable only on the books of the Company
maintained at its principal office in Dallas, Texas or wherever its principal
office may then be located, upon delivery thereof duly endorsed by the Holder
or by its duly authorized attorney or representative, accompanied by proper
evidence of succession, assignment or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver new Warrants to
the person entitled thereto.

 

2.               LIMITATIONS ON TRANSFER. This Warrant shall not
be sold, transferred, assigned or hypothecated by the Holder without the
company’s express written consent except to; (i) one or more persons, each of
whom on the date of transfer is an officer of the Holder; (ii) a general
partnership or general partnerships, the general partners of which are the
Holder and one or more persons, each of whom on the date of transfer is an
officer of the Holder; (iii) a successor to the Holder in any merger or
consolidation; (iv) a purchaser of all or substantially all of the Holder’s
assets; or (v) any person receiving this Warrant from one or more of the
persons listed in this Section 15(b) at such person’s or persons’ death
pursuant to will, trust or the laws of intestate succession.  This Warrant may be divided or combined, upon
request to the Company by the Holder, into a certificate or certificates
representing the right to purchase the same aggregate number of Shares.

 

9

 

3.               Any transfer made except in strict compliance
with Section 15 above, notwithstanding the fact that such transfers maybe
made to bone fide third party purchasers, shall be null and void and shall not
be recognized by the Company.

 

16.         MISCELLANEOUS.

 

(a)          CONSTRUCTION.  Unless the context
indicates otherwise, the term “Holder” shall include any transferee or
transferees of this Warrant pursuant to Section 15(b), and the term “Warrant”
shall include any and all warrants outstanding pursuant to this Agreement,
including those evidenced by a certificate or certificates issued upon
division, exchange, substitution or transfer pursuant to Section 15(b).

 

(b)         RESTRICTIONS.  By receipt of this
Warrant, the Holder makes the same representations with respect to the
acquisition of this Warrant as the Holder is required to make upon the exercise
of this Warrant and acquisition of the Shares purchasable hereunder as set
forth in the Form of Investment Letter attached as Exhibit A to the Notice of
Exercise attached hereto.

 

(c)          NOTICES.  Unless otherwise
provided, any notice required or permitted under this Warrant shall be given in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or three (3) days following deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified (or one (1) day following timely deposit with a
reputable overnight courier with next day delivery instructions), or upon
confirmation of receipt by the sender of any notice by facsimile transmission,
at the address indicated below or at such other address as such party may
designate by ten (10) days’ advance written notice to the other parties.

 

To Holder:

 

MicroCapital Strategies, Inc.

3425 Asbury

Dallas, Texas 75205

 

To the Company:

 

Diversified Corporate Resources, Inc. 

10670 North Central Expressway, Suite 600 

Dallas, Texas 75231 

Attention: President

 

(d)         GOVERNING LAW.  This Warrant shall
be governed by and construed under the laws of the State of Texas as applied to
agreements among Texas residents entered into and to be performed entirely
within Texas.

 

(e)          ENTIRE AGREEMENT. This Warrant, the exhibits and schedules hereto, and
the documents referred to herein, constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous agreements and understandings,
whether oral or written, between the parties hereto with respect to the subject
matter hereof.

 

(f)            BINDING EFFECT. This Warrant and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the Company and its successors and assigns, and Holder and its
successors and assigns.

 

10

 

(g)         WAIVER; CONSENT. This Warrant may not be changed, amended, terminated,
augmented, rescinded or discharged (other than by performance), in whole or in
part, except by a writing executed by the parties hereto, and no waiver of any
of the provisions or conditions of this Warrant or any of the rights of a party
hereto shall be effective or binding unless such waiver shall be in writing and
signed by the party claimed to have given or consented thereto.

 

(h)         SEVERABILITY.  If one or more
provisions of this Warrant are held to be unenforceable under applicable law,
such provision shall be excluded from this Warrant and the balance of the
Warrant shall be interpreted as if such provision were so excluded and the
balance shall be enforceable in accordance with its terms.

 

Executed this 19th day of March, 2004.

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  Diversified Corporate Resources, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ J. Michael Moore

  	
   

  
	
   

  	
  Name: J. Michael Moore

  
	
   

  	
  Title: C.E.O.

  
	
   

  	
   

  
	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
  MicroCapital Strategies, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Robert A. Shuey, III

  	
   

  
						

 

11

 

NOTICE OF EXERCISE

 

To:  DIVERSIFIED CORPORATE RESOURCES, INC.

 

The undersigned hereby elects to purchase                   
shares of Common Stock (“STOCK”) of Diversified Corporate Resources, Inc., a
Texas corporation (the “COMPANY”) pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price pursuant to the
terms of the Warrant.

 

Attached as Exhibit A is an investment representation
letter addressed to the Company and executed by the undersigned as required by Section 12
of the Warrant.

 

Please issue certificates representing the shares of
Stock purchased hereunder in the names and in the denominations indicated on
Exhibit A attached hereto.

 

Please issue a new Warrant for the unexercised portion
of the attached Warrant, if any, in the name of the undersigned.

 

Dated:

 

Name:

 

Title:

 

12

 

NET ISSUANCE ELECTION NOTICE

 

To:  DIVERSIFIED CORPORATE RESOURCES, INC.

 

Date:

 

The undersigned hereby elects under Section 2 of
the attached Warrant to surrender the right to purchase                   
shares of Common Stock pursuant to the attached Warrant.  The Certificate(s) for the shares issuable
upon such net issuance election shall be issued in the name of the undersigned
or as otherwise indicated below.

 

Attached as Exhibit A is an investment representation
letter addressed to the Company and executed by the undersigned as required by Section 12
of the Warrant.

 

Please issue certificates representing the shares of
Stock purchased hereunder in the names and in the denominations indicated on
Exhibit A attached hereto.

 

Please issue a new Warrant for the unexercised portion
of the attached Warrant, if any, in the name of the undersigned.

 

Signature

 

Name for Registration

 

Mailing Address

 

13

 

EXHIBIT A

 

To:  DIVERSIFIED CORPORATE RESOURCES, INC.

 

In connection with the purchase by the undersigned of             
shares of the Common Stock (the “STOCK”) of Diversified Corporate Resources,
Inc., a Texas corporation (the “COMPANY”), upon exercise of that certain Common
Stock Warrant dated as of April     , 2003, the
undersigned hereby represents and warrants as follows:

 

The shares of Stock to be received by the undersigned
upon exercise of the Warrant are being acquired for its own account, not as a
nominee or agent, and not with a view to resale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same.  The undersigned further represents that it
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock.  The
undersigned believes it has received all the information it considers necessary
or appropriate for deciding whether to purchase the Stock.

 

The undersigned understands that the shares of Stock are
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the “ACT”), only in certain limited circumstances.  In this connection, the undersigned
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.

 

Without in any way limiting the representations set
forth above, the undersigned agrees not to make any disposition of all or any
portion of the Stock unless and until:

 

There is then in effect a registration statement under
the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

 

(i) The undersigned shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
if requested, the undersigned shall have furnished the Company with an opinion
of counsel, reasonably satisfactory to the Company that such disposition will
not require registration of such shares under the Act.  The Company will not require an opinion of
counsel for sales made pursuant to Rule 144 except in unusual circumstances.

 

The undersigned understands the instruments evidencing
the Stock may bear the following legend:

 

THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED AND MAY NOT BE SOLD,  OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS THERE  IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR THE COMPANY
RECEIVES  AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH SALE OR TRANSFER IS  EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT.

 

14

 

Dated:

 

DIVERSIFIED
CORPORATE RESOURCES, INC.

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  J. Michael Moore
  Chairman & CEO

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MicroCapital
  Strategies, Inc.

  

 

15Exhibit 4.16

 

DIVERSIFIED CORPORATE RESOURCES,
INC.

COMMON STOCK WARRANT

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.

 

This certifies that, for good and valuable
consideration, receipt of which is hereby acknowledged, MicroCapital
Strategies, Inc. (“Holder”) is entitled to purchase, subject to the terms and
conditions of this Warrant, Common Shares of Diversified Corporate Resources,
Inc., a Texas corporation (the “Company”) This Warrant entitles Holder to
purchase up to 145,554 fully paid and non-assessable shares of the Common Stock
(“Common Stock”) of the Company, in accordance with Section 2 of this
document during the period commencing concurrent with the execution by all
parties of this Warrant Agreement (the “Effective Date”) and ending on the
third anniversary of the Effective Date at 5:00 p.m. Dallas, Texas time, (the “Expiration
Date”), at which time this Warrant will expire and become void unless earlier terminated
as provided herein.  The shares of Common
Stock of the Company for which this Warrant is exercisable as adjusted from
time to time pursuant to the terms hereof, are hereinafter referred to as the “Shares.”

 

1.               EXERCISE PRICE. The purchase price for the shares
shall be $2.00 per share or the price as adjusted in attachment A. Such price
shall be subject to adjustment pursuant to the terms hereof (such prices, as
adjusted from time to time, is hereinafter referred to as the “Exercise Price”).

 

2.               EXERCISE AND PAYMENT.

 

(a)          CASH EXERCISE.  At any time after
the Effective Date, this Warrant may be exercised, in whole or in part, from
time to time by the Holder, during the term hereof, by surrender of this
Warrant and the Notice of Exercise annexed hereto duly completed and executed
by the Holder to the Company at the principal executive offices of the Company,
together with payment in the amount obtained by multiplying the Exercise Price
then in effect by the number of Shares thereby purchased, as designated in the
Notice of Exercise. Payment may be in cash or by check payable to the order of
the Company.

 

(b)         NET ISSUANCE.  In lieu of payment
of the Exercise Price described in Section 2(a), the Holder may elect to
receive, without the payment by the Holder of any additional consideration,
shares equal to the value of this Warrant or any portion hereof by the
surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto (the “Net Issuance Election Notice”) duly
executed, at the office of the Company. Thereupon, the Company shall issue to
the Holder such number of fully paid and nonassessable shares of Common Stock
as is computed using the following formula:

 

where:
X = Y (A-B)

 

 

A

 

X =  the number of
shares to be issued to the Holder pursuant to this Section 2.

 

Y =  the number of
shares covered by this Warrant in respect of which the net issuance election is
made pursuant to this Section 2.

 

A =  the fair
market value of one share of Common Stock, as determined in accordance with the
provisions of this Section 2.

 

B =  the Exercise
Price in effect under this Warrant at the time the net issuance election is
made pursuant to this Section 2.

 

For
purposes of this Section 2, the “fair market value” per share of the
Company’s Common Stock shall mean:

 

i.                  If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading privileges on such an exchange,
or is listed on the Nasdaq National Market (the “NNM”) or other over-the-
counter quotation system, the fair market value shall be the last reported sale
price of the Common Stock on such exchange or on the NNM or other
over-the-counter quotation system on the last business day before the effective
date of exercise of the net issuance election or if no such sale is made on
such day, the mean of the closing bid and asked prices for such day on such
exchange, the NNM or over-the-counter quotation system; and

 

ii.               If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are not reported, the
fair market value shall be the price per share which the Company could obtain
from a willing buyer for shares sold by the Company from authorized but
unissued shares, as such price shall be determined by mutual agreement of the
Company and the Holder of this Warrant. If the Company and the Holder cannot
mutually agree on such price, the fair market value shall be made by an
appraiser of recognized standing selected by the Holder and the Company, or, if
they cannot agree on an appraiser, each of he Company and the Holder shall
select an appraiser of recognized standing and the two appraisers shall
designate a third appraiser of recognized standing, whose appraisal shall be
determinative of such value.

 

3.               DELIVERY OF STOCK CERTIFICATES.  Within a reasonable time after exercise, in
whole or in part, of this Warrant, the Company shall issue in the name of and
deliver to the Holder, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock which the Holder shall have
requested in the Notice of Exercise or Net Issuance Election Notice. If this
Warrant is exercised in part, the Company shall deliver to the Holder a new
Warrant for the unexercised portion of this Warrant at the time of delivery of
such stock certificate or certificates.

 

4.               NO FRACTIONAL SHARES.  No fractional shares or scrip representing
fractional shares will be issued upon exercise of this Warrant.  If upon any exercise of this Warrant a
fraction of a share results, the Company will pay the Holder the difference
between the cash value of the fractional share and the portion of the Exercise
Price allocable to the fractional share.

 

5.               CHARGES, TAXES AND EXPENSES.  The Holder shall pay all transfer taxes or
other incidental charges, if any, in connection with the transfer of the Shares
purchased pursuant to the exercise hereof from the Company to the Holder.

 

2

 

6.               LOSS, THEFT, DESTRUCTION OR MUTILATION OF
WARRANT.  Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to the Company, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.

 

7.               SATURDAYS, SUNDAYS, HOLIDAYS, ETC.  If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
be a Saturday or a Sunday or shall be a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding weekday which is
not a legal holiday.

 

8.               ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF
SHARES.  The number of and kind of
securities purchasable upon exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time as follows:

 

(a)          SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES.  If the Company shall at any time after the
date hereof but prior to the expiration of this Warrant subdivide its
outstanding securities as to which purchase rights under this Warrant exist, by
split-up or otherwise, or combine its outstanding securities as to which
purchase rights under this Warrant exist, the number of Shares as to which this
Warrant is exercisable as of the date of such subdivision,  split-up or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments shall also be
made to the purchase price payable per share, but the aggregate purchase price
payable for the total number of Shares purchasable under this Warrant as of
such date shall remain the same.

 

(b)         STOCK DIVIDEND.  If at any time after
the date hereof the Company declares a dividend or other distribution on Common
Stock payable in Common Stock or other securities or rights convertible into
Common Stock  (“Common Stock Equivalents”)
without payment of any consideration by such holder for the additional shares
of Common Stock or the Common Stock Equivalents (including the additional
shares of Common Stock issuable upon exercise or conversion thereof), then the
number of shares of Common Stock for which this Warrant may be exercised shall
be increased as of the record date (or the date of such dividend distribution
if no record date is set) for determining which holders of Common Stock shall
be entitled to receive such dividend, in proportion to the increase in the
number of outstanding shares  (and shares
of Common Stock issuable upon conversion of all such securities convertible
into Common Stock) of Common Stock as a result of such dividend,  and the Exercise Price shall be adjusted so
that the aggregate amount payable for the purchase of all the Shares issuable
hereunder immediately after the record date (or on the date of such distribution,
if applicable), for such dividend shall equal the aggregate amount so payable
immediately before such record date (or on the date of such distribution, if
applicable).

 

(c)          OTHER DISTRIBUTIONS.  If at any
time after the date hereof the Company distributes to holders of its Common
Stock, other than as part of its dissolution or liquidation or the winding up
of its affairs, any shares of its capital stock, any evidence of indebtedness
or any of its assets (other than cash, Common Stock or securities convertible
into Common Stock), then the Company may, at its option, either (i) decrease
the per share Exercise Price of this Warrant by an appropriate amount based
upon the value distributed on each share of Common Stock as determined in good
faith by the Company’s Board of Directors or (ii) provide by resolution of the Company’s
Board of Directors that on exercise of this Warrant, the Holder hereof shall thereafter
be entitled to receive, in addition to the shares of Common Stock otherwise
receivable on exercise hereof, the number of

 

3

 

shares or other securities or property which would have
been received had this Warrant at the time been exercised.

 

(d)         MERGER.  If at any time after the
date hereof there shall be a merger or consolidation of the Company with or
into another corporation when the Company is not the surviving corporation then
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the aggregate
Exercise Price then in effect, the number of shares or other securities or
property of the successor corporation resulting from such merger or
consolidation, which would have been received by Holder for the shares of stock
subject to this Warrant had this Warrant at such time been exercised.

 

(e)          RECLASSIFICATION, ETC.  If at any
time after the date hereof there shall be a change or reclassification of the
securities as to which purchase rights under this Warrant exist into the same
or a different number of securities of any other class or classes, then the
Holder shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Exercise Price then
in effect, the number of shares or other securities or property resulting from
such change or reclassification, which would have been received by Holder for
the shares of stock subject to this Warrant had this Warrant at such time been
exercised.

 

9.               NOTICE OF ADJUSTMENTS; NOTICES.  Whenever the Exercise Price or number of
Shares purchasable hereunder shall be adjusted pursuant to Section 8
hereof, the Company shall execute and deliver to the Holder a certificate
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the Holder.

 

10.         RIGHTS AS SHAREHOLDER.  Prior to
exercise of this Warrant, the Holder shall not be entitled to any rights as a
shareholder of the Company with respect to the Shares, including (without
limitation) the right to vote such Shares, receive dividends or other
distributions thereon, or be notified of shareholder meetings, and the Holder
shall not be entitled to any notice or other communication concerning the
business or affairs of the Company. 
However, in the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash dividend)
or other distribution, any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property,
or to receive any other right, the Company shall mail to each Holder of this
Warrant, at least ten (10) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.

 

11.         RESTRICTED SECURITIES.  The Holder
understands that this Warrant and the Shares purchasable hereunder constitute “restricted
securities” under the federal securities laws inasmuch as they are, or will be,
acquired from the Company in transactions not involving a public offering and
accordingly may not, under such laws and applicable regulations, be resold or
transferred without registration under the Securities Act of 1933, as amended
(the “1933 Act”) or an applicable exemption from such registration. In this
connection, the Holder acknowledges that Rule 144 of the Securities and
Exchange Commission (the “SEC”) is not now, and may not in the future be,
available for resales of the Warrant and the Shares purchasable hereunder.
Unless the Shares are subsequently registered pursuant to Section 14, the
Holder further acknowledges that the securities legend on Exhibit A to the
Notice of Exercise attached hereto shall be placed on any Shares issued to the
Holder upon exercise of this Warrant.

 

4

 

12.         CERTIFICATION OF INVESTMENT PURPOSE. 
Unless a current registration statement under the 1933 Act shall be in
effect with respect to the securities to be issued upon exercise of this
Warrant, the Holder covenants and agrees that, at the time of exercise hereof,
it will deliver to the Company a written certification executed by the Holder
that the securities acquired by him upon exercise hereof are for the account of
such Holder and acquired for investment purposes only and that such securities
are not acquired with a view to, or for sale in connection with, any
distribution thereof.

 

13.         DISPOSITION OF SHARES.  Holder
hereby agrees not to make any disposition of any Shares purchased hereunder
unless and until:

 

(a)          Holder shall have notified the Company of the proposed disposition and
provided a written summary of the terms and conditions of the proposed
disposition;

 

(b)         Holder shall have complied with all requirements of this Warrant
applicable to the disposition of the Shares; and

 

(c)          Holder shall have provided the Company with written assurances, in form
and substance satisfactory to legal counsel of the Company, that (i) the
proposed disposition does not require registration of the Shares under the 1933
Act or (ii) all appropriate action necessary for compliance with the
registration requirements of the 1933 Act or of any exemption from registration
available under the 1933 Act has been taken.

 

The Company shall NOT be required (i) to transfer on its
books any Shares which have been sold or transferred in violation of the
provisions of this Section 13, or (ii) to treat as the owner of the
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Shares have been transferred in contravention of the terms of this
Warrant.

 

14.         REGISTRATION RIGHTS.

 

(a)          PIGGYBACK REGISTRATION.  If at any
time during the five-year period commencing on the Effective Date and ending
five years hence, the Company shall determine to register for its own account
or the account of others under the 1933 Act any of its equity securities, other
than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business, or equity securities issuable in connection with stock option or
other employee benefit plans, the Company shall send to each Holder of Warrants
or Shares, who is entitled to registration rights under this Section 14(a)
written notice of such determination and, if within twenty (20) days after
receipt of such notice,  such Holder
shall so request in writing (hereafter a “Selling Holder”), the Company shall
include in such Registration Statement all or any part of the Shares issuable
upon exercise of the Warrants (the “Registrable Securities”)  such Selling Holder requests to be
registered. The obligations of the Company under this Section 14(a) may be
waived by Holders holding a majority in interest of the Registrable Securities.  In the event that the managing underwriter
for said offering advises the Company in writing that the inclusion of such
Registrable Securities in the offering would be materially detrimental to the
offering, then the Company shall be required to include in the offering only
that number of Registrable Securities which the managing underwriter determines
in its sole discretion will not jeopardize the success of the offering (the
Registrable Securities so included to be apportioned pro rata among all Selling
Holders according to the total amount of Registrable Securities entitled to be
included therein owned by each selling holder or in such other proportions as
shall mutually be agreed to by such selling holders); PROVIDED HOWEVER, that in
no event shall any Holder of Registrable Securities have the number of shares
of such securities reduced in such offer unless and until any holders of
non-Registrable Securities intending to participate in such

 

5

 

offering (which selling holders’ registration rights, if
any, were granted by the Company from and after the date hereof) first shall
have had the number of their shares of such securities reduced up to the amount
of securities the managing underwriter has determined in its sole discretion
shall be excluded from the offering; and PROVIDED FURTHER, that in no event
shall any Shares being sold by a Holder properly exercising a demand registration
granted in Section 14(b) be excluded from such offering.

 

(c)          OBLIGATIONS OF THE HOLDERS.  In
connection with the registration of the Registrable Securities pursuant to
either Sections 14(a), or (b), the Selling Holders shall have the following
obligations:

 

i.                  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to each Selling Holder that such Selling Holder shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable Securities held by
it as shall be reasonably required to effect the registration of the
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.  At least fifteen (15) days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Selling Holder of the information the Company requires from each such
Selling Holder (the “Requested Information”) in the case of a Registration Statement
being prepared pursuant to Section 14(b) or if such Selling Holder elects
to have any of such Selling Holder’s Registrable Securities included in the
Registration Statement in the case of a Registration Statement being prepared
pursuant to Section 14(a).

 

ii.               Each Selling Holder by such Selling Holder’s
acceptance of the Registrable Securities agrees to cooperate with the Company
as reasonably requested by the Company in connection with the preparation and
filing of the Registration Statement hereunder, unless such Selling Holder has
notified the Company in writing of such Selling Holder’s election to exclude
all of such Selling Holder’s Registrable Securities from the Registration
Statement; and

 

iii.            No Selling Holder may participate in any underwritten
registration hereunder unless such Selling Holder (i) agrees to sell such
Selling Holder’s Registrable Securities on the basis provided in any
underwriting arrangements, (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and
(iii) agrees to pay its pro rata share of all underwriting discounts and
commissions and other fees and expenses of investment bankers and any manager
or managers of such underwriting, except as provided in Section 14(d)
below.

 

(d)         EXPENSES OF REGISTRATION.  All
expenses, other than underwriting discounts and commissions and other fees and
expenses of investment bankers and other than brokerage commissions, incurred
in connection with registrations, filings or qualifications pursuant to Section 
14(a) or 14(b), including, without limitation, all registration, listing and
qualifications fees, printers for the Company and the Selling Holders, shall be
borne by the Company; the Company shall not be required to bear the fees and
out-of-pocket expenses of legal counsel and accountants selected by the Selling
Holders in connection with each such registration.

 

(e)          INDEMNIFICATION.  In the event any
Registrable Securities are included in a Registration Statement under this
Agreement:

 

i.                  To the extent permitted by law, the Company will
indemnify and hold harmless each Selling Holder who holds such Registrable
Securities, the directors, if any, of such

 

6

 

Selling Holder, the officers, if any, of such Selling
Holder, each person, if any, who controls any Selling Holder within the meaning
of the 1933 Act, any underwriter (as defined in the 1933 Act) for the Selling
Holders, the directors, if any, of such underwriter and the officers, if any,
of such underwriter, and each person, if any, who controls any such underwriter
within the meaning of the 1933 Act (each, an “Indemnified Person”), against any
losses, claims, damages, expenses or liabilities (joint or several)
(collectively, “Claims”) to which any of them may become subject under the 1933
Act or otherwise, insofar as such Claims 
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement when it first became
effective, or any related final prospectus, amendment or supplement thereto, or
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which the statements therein were made, not misleading (a “Violation”).  The Company shall reimburse the Selling
Holders and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or defending
any such Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 14(e)(i) shall not
apply in such case to the extent any such Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, and shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld.

 

ii.               In connection with any Registration Statement in
which a Selling Holder is participating, each such Selling Holder agrees to
indemnify and hold harmless, to the same extent and in the same manner set
forth in Section 14(e)(i), the Company, each of its directors, each of its
officers who signs the Registration Statement, each person, if any, who
controls the Company within the meaning of the 1933 Act, any underwriter and
any other shareholder selling securities pursuant to the Registration Statement
or any of its directors or officers or any person who controls such shareholder
or underwriter within the meaning of the 1933 Act (collectively and together
with an Indemnified Person, an “Indemnified Party”), against any Claim to which
any of them may become subject, under the 1933 Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Selling
Holder expressly for use in connection with such Registration Statement, and
such Selling Holder will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
PROVIDED, HOWEVER,  that the indemnity
agreement contained in this Section 14(e)(ii) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Selling Holder, which consent shall not be
unreasonably withheld.

 

iii.            The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution to the same
extent as provided above, with respect to information furnished in writing by
such persons expressly for inclusion in the Registration Statement.

 

iv.           Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 14(e) of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is made against any indemnifying
party under this Section 14(e), deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall
have

 

7

 

the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying parties; PROVIDED, HOWEVER, that an Indemnified
Person or Indemnified Party shall have the right to retain its own counsel,
with the fees and expenses to be paid by the indemnifying party,  if, in the reasonable opinion of counsel
retained by the indemnifying party,  the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding. The
Indemnifying Party shall pay for only one separate legal counsel for the
Indemnified Parties; such legal counsel shall be selected by the Indemnified
Parties holding a majority in interest of the Registrable Securities. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under
this Section 14(e), except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.  The indemnification required by this Section 14(e)
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.

 

v.              Notwithstanding any of the foregoing, if, in
connection with an underwritten public offering of Registrable Securities, the
Company, the Selling Holders and the underwriter(s) enter into an underwriting
or purchase agreement relating to such offering which contains provisions
covering indemnification and contribution among the parties, the
indemnification and contribution provisions of this Section 14(e) shall be
deemed inoperative for purposes of such offering.

 

(e)          CONTRIBUTION.  To the extent any
indemnification by an indemnifying party is prohibited or limited by law, the
indemnifying party agrees to make the maximum contribution with respect to any
amounts for which it would otherwise be liable under Section 14(e) to the
fullest extent permitted by law; PROVIDED, HOWEVER, that (i) no contribution
shall be made under circumstances where the maker would not have been liable
for indemnification under the fault standards set forth in Section 14(e),
(ii) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.

 

(f)            REPORTS UNDER EXCHANGE ACT.  With a view to making available to the
Holders the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit the Holders
to sell securities of the Company to the public without registration (“Rule 144”),
the Company agrees to:

 

i.                  use its best efforts to make and keep public
information available, as those terms are understood and defined in Rule 144;
and

 

ii.               use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
1933 Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”);
and

 

iii.            furnish to each Holder so long as such Holder
owns Registrable Securities, promptly upon request, (i) a written statement by
the Company with respect to its compliance with the reporting requirements of
Rule 144, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed

 

8

 

by the Company, and (iii) such other information as may
be reasonably requested to permit the Holders to sell such securities without registration
pursuant to Rule 144.

 

(g)         ASSIGNMENT OF THE REGISTRATION RIGHTS. 
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assigned by the Holders to transferees
or assignees of all or any portion of such securities only if:  (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of the name and address of such transferee or assignee (iii) such
assignment is in accordance with and permitted by law and all other agreements
between the transferor or assignor and the Company, including without
limitation, shareholder’s agreements, warrants and subscription agreements, and
the transferor or assignor otherwise is not in material default of any
obligation to the Company under any such other agreement, and (iv) at or before
the time the Company received the written notice contemplated by clause (ii) of
this sentence the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein.

 

(h)         TERMINATION OF REGISTRATION RIGHTS. 
No Holder of Warrants or Shares shall be entitled to exercise any right
provided for in this Section 14 at such time as such Holder would be able
to dispose of all of its Registrable Securities in any three (3) month period
under SEC Rule 144 or any successor rule thereto.

 

15.         TRANSFERABILITY.

 

1.               GENERAL. 
This Warrant shall be transferable only on the books of the Company
maintained at its principal office in Dallas, Texas or wherever its principal
office may then be located, upon delivery thereof duly endorsed by the Holder
or by its duly authorized attorney or representative, accompanied by proper
evidence of succession, assignment or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver new Warrants to
the person entitled thereto.

 

2.               LIMITATIONS ON TRANSFER. This Warrant shall not
be sold, transferred, assigned or hypothecated by the Holder without the
company’s express written consent except to; (i) one or more persons, each of
whom on the date of transfer is an officer of the Holder; (ii) a general
partnership or general partnerships, the general partners of which are the
Holder and one or more persons, each of whom on the date of transfer is an
officer of the Holder; (iii) a successor to the Holder in any merger or
consolidation; (iv) a purchaser of all or substantially all of the Holder’s assets;
or (v) any person receiving this Warrant from one or more of the persons listed
in this Section 15(b) at such person’s or persons’ death pursuant to will,
trust or the laws of intestate succession. 
This Warrant may be divided or combined, upon request to the Company by
the Holder, into a certificate or certificates representing the right to
purchase the same aggregate number of Shares.

 

3.               Any transfer made except in strict compliance
with Section 15 above, notwithstanding the fact that such transfers maybe
made to bone fide third party purchasers, shall be null and void and shall not
be recognized by the Company.

 

16.         MISCELLANEOUS.

 

(a)          CONSTRUCTION.  Unless the context
indicates otherwise, the term “Holder” shall include any transferee or
transferees of this Warrant pursuant to Section 15(b), and the term “Warrant”
shall include any and all warrants outstanding pursuant to this Agreement,
including those evidenced by a certificate or certificates issued upon
division, exchange, substitution or transfer pursuant to Section 15(b).

 

9

 

(b)         RESTRICTIONS.  By receipt of this
Warrant, the Holder makes the same representations with respect to the
acquisition of this Warrant as the Holder is required to make upon the exercise
of this Warrant and acquisition of the Shares purchasable hereunder as set
forth in the Form of Investment Letter attached as Exhibit A to the Notice of
Exercise attached hereto.

 

(c)          NOTICES.  Unless otherwise
provided, any notice required or permitted under this Warrant shall be given in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or three (3) days following deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified (or one (1) day following timely deposit with a
reputable overnight courier with next day delivery instructions), or upon
confirmation of receipt by the sender of any notice by facsimile transmission,
at the address indicated below or at such other address as such party may
designate by ten (10) days’ advance written notice to the other parties.

 

To Holder:

 

MicroCapital Strategies, Inc.

3425 Asbury

Dallas, Texas 75205

 

To the Company:

 

Diversified Corporate Resources, Inc. 

10670 North Central Expressway, Suite 600 

Dallas, Texas 75231 

Attention: President

 

(d)         GOVERNING LAW.  This Warrant shall
be governed by and construed under the laws of the State of Texas as applied to
agreements among Texas residents entered into and to be performed entirely
within Texas.

 

(e)          ENTIRE AGREEMENT. This Warrant, the exhibits and schedules hereto, and
the documents referred to herein, constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous agreements and understandings,
whether oral or written, between the parties hereto with respect to the subject
matter hereof.

 

(f)            BINDING EFFECT. This Warrant and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the Company and its successors and assigns, and Holder and its
successors and assigns.

 

(g)         WAIVER; CONSENT. This Warrant may not be changed, amended, terminated,
augmented, rescinded or discharged (other than by performance), in whole or in
part, except by a writing executed by the parties hereto, and no waiver of any
of the provisions or conditions of this Warrant or any of the rights of a party
hereto shall be effective or binding unless such waiver shall be in writing and
signed by the party claimed to have given or consented thereto.

 

(h)         SEVERABILITY.  If one or more
provisions of this Warrant are held to be unenforceable under applicable law,
such provision shall be excluded from this Warrant and the balance of the
Warrant shall be interpreted as if such provision were so excluded and the
balance shall be enforceable in accordance with its terms.

 

Executed this 19th day of February, 2004.

 

10

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  Diversified Corporate Resources, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ J. Michael Moore

  	
   

  
	
   

  	
  Name: J. Michael Moore

  
	
   

  	
  Title: C.E.O.

  
	
   

  	
   

  
	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
  MicroCapital Strategies, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Robert A. Shuey, III

  	
   

  
					

 

11

 

NOTICE OF EXERCISE

 

To:  DIVERSIFIED CORPORATE RESOURCES, INC.

 

The undersigned hereby elects to purchase                    
shares of Common Stock (“STOCK”) of Diversified Corporate Resources, Inc., a
Texas corporation (the “COMPANY”) pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price pursuant to the
terms of the Warrant.

 

Attached as Exhibit A is an investment representation
letter addressed to the Company and executed by the undersigned as required by Section 12
of the Warrant.

 

Please issue certificates representing the shares of
Stock purchased hereunder in the names and in the denominations indicated on
Exhibit A attached hereto.

 

Please issue a new Warrant for the unexercised portion
of the attached Warrant, if any, in the name of the undersigned.

 

Dated:

 

Name:

 

Title:

 

12

 

NET ISSUANCE ELECTION NOTICE

 

To:  DIVERSIFIED CORPORATE RESOURCES, INC.

 

Date:

 

The undersigned hereby elects under Section 2 of
the attached Warrant to surrender the right to purchase                   shares
of Common Stock pursuant to the attached Warrant.  The Certificate(s) for the shares issuable
upon such net issuance election shall be issued in the name of the undersigned
or as otherwise indicated below.

 

Attached as Exhibit A is an investment representation
letter addressed to the Company and executed by the undersigned as required by Section 12
of the Warrant.

 

Please issue certificates representing the shares of
Stock purchased hereunder in the names and in the denominations indicated on
Exhibit A attached hereto.

 

Please issue a new Warrant for the unexercised portion
of the attached Warrant, if any, in the name of the undersigned.

 

Signature

 

Name for Registration

 

Mailing Address

 

13

 

EXHIBIT A

 

To:  DIVERSIFIED CORPORATE RESOURCES, INC.

 

In connection with the purchase by the undersigned of                
shares of the Common Stock (the “STOCK”) of Diversified Corporate Resources,
Inc., a Texas corporation (the “COMPANY”), upon exercise of that certain Common
Stock Warrant dated as of April       ,
2003, the undersigned hereby represents and warrants as follows:

 

The shares of Stock to be received by the undersigned
upon exercise of the Warrant are being acquired for its own account, not as a
nominee or agent, and not with a view to resale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same.  The undersigned further represents that it
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock.  The
undersigned believes it has received all the information it considers necessary
or appropriate for deciding whether to purchase the Stock.

 

The undersigned understands that the shares of Stock are
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the “ACT”), only in certain limited circumstances.  In this connection, the undersigned
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.

 

Without in any way limiting the representations set
forth above, the undersigned agrees not to make any disposition of all or any
portion of the Stock unless and until:

 

There is then in effect a registration statement under
the Act covering such proposed disposition and such disposition is made in accordance
with such registration statement; or

 

(i) The undersigned shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii)
if requested, the undersigned shall have furnished the Company with an opinion
of counsel, reasonably satisfactory to the Company that such disposition will
not require registration of such shares under the Act.  The Company will not require an opinion of
counsel for sales made pursuant to Rule 144 except in unusual circumstances.

 

The undersigned understands the instruments evidencing
the Stock may bear the following legend:

 

THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED AND MAY NOT BE SOLD,  OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS THERE  IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR THE COMPANY
RECEIVES  AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH SALE OR TRANSFER IS  EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT.

 

Dated:

 

14

 

DIVERSIFIED
CORPORATE RESOURCES, INC.

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  J. Michael Moore
  Chairman & CEO

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MicroCapital
  Strategies, Inc.

  

 

15

 

Attachment A

 

1.               If
DCRI’s net pre-tax income, as reported in its audited financial statements
included in its Annual Report on Form 10K for the fiscal year ended December 31,
2004 is at least $3,000,000, less dividends paid, the exercise price of the
Warrants will be $2.00 per share; but

 

2.               If
the Net Pre-Tax income is less than $2.500,000, less dividends paid, the
exercise price of the Warrants will be $1.50 per share.

 

3.               If
the net pre-tax income is less than $2,000,000, less dividends paid, the
exercise price of the Warrants will be $.50 per share multiplied by a fraction
where the Numerator is the Company’s reported Net Pre-Tax income and the
Denominator of which is $2,000,000.

 

16

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