AGREEMENT AND PLAN
dated as of the 11th day of September, 1997
by and among
NATIONWIDE STAFFING, INC.
ALTERNATIVE SOLUTIONS, INC.
the STOCKHOLDERS
NEWBURY EMPLOYMENT, INC.
and
the NEWBURY STOCKHOLDERS
Page
INTRODUCTION AND RECITALS....................................................1
1. THE EXCHANGE..............................................................4
1.1 The Exchange.....................................................4
1.2 Board of Directors and Officers of the COMPANY and NEWBURY.......5
1.3 Certain Information With Respect to the Capital Stock of the
COMPANY, PARENT and NEWBURY......................................5
2. REGARDING THE PARENT STOCK................................................6
3. DELIVERY OF EXCHANGE CONSIDERATION........................................6
4. CLOSING...................................................................7
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
STOCKHOLDERS, NEWBURY AND NEWBURY STOCKHOLDERS............................7
5.1 Due Organization.................................................8
5.2 Authorization....................................................8
5.3 Capital Stock of the COMPANY.....................................8
5.4 Transactions in Capital Stock; Organization Accounting...........9
5.5 No Bonus Shares..................................................9
5.6 Subsidiaries.....................................................9
5.7 Predecessor Status; Etc..........................................9
5.8 Spin-off by the COMPANY..........................................9
5.9 Financial Statements, Etc.......................................10
5.10 Liabilities and Obligations.....................................10
5.11 Accounts and Notes Receivable...................................11
5.12 Permits and Intangibles.........................................11
5.13 Environmental Matters...........................................12
5.14 Personal Property...............................................13
5.15 Significant Customers; Material Contracts and Commitments.......13
5.16 Real Property...................................................14
5.17 Insurance.......................................................15
5.18 Compensation; Employment Agreements; Organized Labor Matters....15
5.19 Employee Plans..................................................16
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5.20 Compliance with ERISA...........................................17
5.21 Conformity with Law; Litigation.................................18
5.22 Taxes...........................................................18
5.23 No Violations...................................................19
5.24 Government Contracts............................................19
5.25 Absence of Changes..............................................19
5.26 Deposit Accounts; Powers of Attorney............................21
5.27 Validity of Obligations.........................................21
5.28 Relations with Governments......................................21
5.29 Disclosure......................................................21
5.30 Prohibited Activities...........................................22
5.31 Authority; Ownership............................................23
5.32 Preemptive Rights...............................................23
5.33 No Intention to Dispose of Parent Stock.........................23
5.34 Organization....................................................23
5.35 No Foreign Qualification........................................23
5.36 Taxes...........................................................23
5.37 Company Stock...................................................24
5.38 No Business.....................................................24
5.39 No Claims.......................................................24
5.40 Indemnity.......................................................24
5.41 Authority; Ownership............................................24
5.42 Preemptive Rights...............................................24
5.43 No Intention to Dispose of Parent Stock.........................25
6. REPRESENTATIONS OF PARENT................................................25
6.1 Due Organization................................................25
6.2 Authorization...................................................25
6.3 Capital Stock of PARENT.........................................25
6.4 Transactions in Capital Stock, Organization Accounting..........26
6.5 Subsidiaries....................................................26
6.6 Financial Statements............................................26
6.7 Liabilities and Obligations.....................................26
6.8 Conformity with Law; Litigation.................................26
6.9 No Violations...................................................27
6.10 Validity of Obligations.........................................27
6.11 Parent Stock....................................................27
6.12 No Side Agreements..............................................27
6.13 Business; Real Property; Material Agreements....................28
6.14 Taxes...........................................................28
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6.15 Absence of Changes. ...........................................28
6.16 Disclosure. ...................................................29
7. COVENANTS PRIOR TO CLOSING...............................................30
7.1 Access and Cooperation; Due Diligence...........................30
7.2 Conduct of Business Pending Closing.............................30
7.3 Prohibited Activities...........................................31
7.4 No Shop.........................................................33
7.5 Notice to Bargaining Agents.....................................33
7.6 Agreements......................................................33
7.7 Notification of Certain Matters.................................33
7.8 Amendment of Schedules..........................................34
7.9 Cooperation in Preparation of Registration Statement............35
7.10 Final Financial Statements......................................36
7.11 Further Assurances..............................................36
7.12 Authorized Capital..............................................36
7.13 Compliance with ▇▇▇▇-▇▇▇▇▇......................................36
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS,
COMPANY, NEWBURY AND NEWBURY STOCKHOLDERS................................36
8.1 Representations and Warranties; Performance of Obligations......37
8.2 Satisfaction....................................................37
8.3 No Litigation...................................................37
8.4 Opinion of Counsel..............................................37
8.5 Registration Statement..........................................38
8.6 Consents and Approvals..........................................38
8.7 Good Standing Certificates......................................38
8.8 No Material Adverse Effect......................................38
8.9 Closing of IPO..................................................38
8.10 Secretary's Certificate.........................................38
8.11 Employment Agreements...........................................38
8.12 Tax Matters. ..................................................38
8.13 Parallel Transfer Restrictions..................................39
8.14 Mergers.........................................................39
8.15 Listing.........................................................39
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT............................39
9.1 Representations and Warranties; Performance of Obligations......39
9.2 No Litigation...................................................40
9.3 Secretary's Certificate.........................................40
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9.4 No Material Adverse Effect......................................40
9.5 STOCKHOLDERS' and NEWBURY STOCKHOLDERS' Release.................40
9.6 Satisfaction....................................................40
9.7 Termination of Related Party Agreements.........................40
9.8 Opinion of Counsel..............................................41
9.9 Consents and Approvals..........................................41
9.10 Good Standing Certificates......................................41
9.11 Registration Statement..........................................41
9.12 Employment Agreements...........................................41
9.13 Closing of IPO..................................................41
9.14 FIRPTA Certificate..............................................41
10. COVENANTS OF PARENT, STOCKHOLDERS AND NEWBURY STOCKHOLDERS
AFTER CLOSING.........................................................42
10.1 Repayment of Certain Obligations................................42
10.2 Preservation of Tax Treatment...................................42
10.3 Preparation and Filing of Tax Returns...........................42
10.4 Directors.......................................................43
10.5 Preservation of Employee Benefit Plans..........................43
10.6 Dividends.......................................................43
11. INDEMNIFICATION.......................................................43
11.1 Indemnification by the STOCKHOLDERS and NEWBURY
STOCKHOLDERS....................................................43
11.2 Indemnification by PARENT.......................................44
11.3 Third Person Claims.............................................45
11.4 Exclusive Remedy................................................46
11.5 Limitations on Indemnification..................................46
12. TERMINATION OF AGREEMENT..............................................47
12.1 Termination.....................................................47
12.2 Liabilities in Event of Termination.............................48
13. NONCOMPETITION........................................................48
13.1 Prohibited Activities...........................................48
13.2 Damages.........................................................49
13.3 Reasonable Restraint............................................49
13.4 Severability; Reformation.......................................49
13.5 Independent Covenant............................................49
13.6 Materiality.....................................................50
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14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................50
14.1 STOCKHOLDERS and NEWBURY STOCKHOLDERS...........................50
14.2 PARENT..........................................................51
14.3 Damages.........................................................51
14.4 Survival........................................................51
15. TRANSFER RESTRICTIONS.................................................51
15.1 Transfer Restrictions...........................................52
16. FEDERAL SECURITIES ACT REPRESENTATIONS................................52
16.1 Compliance with Law.............................................52
16.2 Economic Risk; Sophistication...................................53
17. REGISTRATION RIGHTS...................................................53
17.1 Piggyback Registration Rights...................................53
17.2 Registration Procedures.........................................54
17.3 Underwriting Agreement..........................................54
17.4 Availability of Rule 144........................................54
18. GENERAL...............................................................54
18.1 Cooperation.....................................................54
18.2 Successors and Assigns..........................................55
18.3 Entire Agreement................................................55
18.4 Counterparts....................................................55
18.5 Brokers and Agents..............................................55
18.6 Expenses........................................................55
18.7 Notices.........................................................56
18.8 Governing Law...................................................57
18.9 Survival of Representations and Warranties......................58
18.10 Exercise of Rights and Remedies.................................58
18.11 Time............................................................58
18.12 Reformation and Severability....................................58
18.13 Remedies Cumulative.............................................58
18.14 Captions........................................................58
18.15 Amendments and Waivers..........................................58
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ANNEXES
ANNEX I
FORM OF CERTIFICATE OF INCORPORATION AND BY-LAWS OF PARENT
ANNEX II
CONSIDERATION TO BE PAID TO STOCKHOLDERS
CONSIDERATION TO BE PAID TO NEWBURY STOCKHOLDERS
ANNEX III
STOCKHOLDERS AND STOCK OWNERSHIP OF THE COMPANY
STOCKHOLDERS AND STOCK OWNERSHIP OF NEWBURY
ANNEX IV
STOCKHOLDERS AND STOCK OWNERSHIP OF PARENT
ANNEX V
FORM OF OPINION OF COUNSEL TO PARENT
ANNEX VI
FORM OF OPINION OF COUNSEL TO COMPANY, NEWBURY,
STOCKHOLDERS, AND NEWBURY STOCKHOLDERS
ANNEX VII
FORM OF EMPLOYMENT AGREEMENT
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SCHEDULES
COMPANY AND NEWBURY SCHEDULES: PARENT SCHEDULES:
SCHEDULE 5.1 SCHEDULE 6.4
SCHEDULE 5.3 SCHEDULE 6.6
SCHEDULE 5.4 SCHEDULE 6.7
SCHEDULE 5.5 SCHEDULE 6.8
SCHEDULE 5.5 SCHEDULE 6.9
SCHEDULE 5.6 SCHEDULE 6.13
SCHEDULE 5.7 SCHEDULE 6.14
SCHEDULE 5.8
SCHEDULE 5.9 JOINT SCHEDULES:
SCHEDULE 5.10
SCHEDULE 5.11 SCHEDULE 9.12
SCHEDULE 5.12 SCHEDULE 18.5
SCHEDULE 5.13
SCHEDULE 5.14
SCHEDULE 5.15
SCHEDULE 5.16
SCHEDULE 5.17
SCHEDULE 5.18
SCHEDULE 5.19
SCHEDULE 5.21
SCHEDULE 5.22
SCHEDULE 5.23
SCHEDULE 5.24
SCHEDULE 5.25
SCHEDULE 5.26
SCHEDULE 5.29
SCHEDULE 5.30
SCHEDULE 5.31
SCHEDULE 7.2
SCHEDULE 7.3
SCHEDULE 7.6/9.7
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AGREEMENT AND PLAN
THIS AGREEMENT AND PLAN (the "Agreement") is made as of the 11th day of
September, 1997, by and among NATIONWIDE STAFFING, INC., a Delaware corporation
("PARENT"), ALTERNATIVE SOLUTIONS, INC., a Massachusetts corporation (the
"COMPANY"), all of the COMPANY's stockholders specified on the attached Company
Stockholder Signature Page (the "STOCKHOLDERS"), NEWBURY EMPLOYMENT, INC., a
Massachusetts corporation ("NEWBURY"), and all of NEWBURY's stockholders
specified on the attached Newbury Stockholder Signature Page ("NEWBURY
STOCKHOLDERS"), who agree as follows:
WHEREAS, the STOCKHOLDERS are all of the stockholders of the
COMPANY; and
WHEREAS, the NEWBURY STOCKHOLDERS are all of the stockholders of
NEWBURY; and
WHEREAS, the respective Boards of Directors of the COMPANY and
NEWBURY deem it advisable and in the best interests of the COMPANY and
NEWBURY and their respective stockholders that such STOCKHOLDERS exchange
their shares of capital stock in the COMPANY and NEWBURY for cash and
capital stock of PARENT pursuant to this Agreement; and
WHEREAS, PARENT is entering into other separate agreements
substantially similar to this Agreement (the "Other Agreements"), each of
which is entitled "Agreement and Plan," with each of the other Founding
Companies (as defined herein) and their respective STOCKHOLDERS in order
to acquire additional temporary staffing, "PEO" or staff leasing,
permanent placement and human resource consulting service companies; and
WHEREAS, this Agreement, the Other Agreements and the IPO constitute
the "Consolidation Plan;" and
WHEREAS, the Consolidation Plan is an integrated plan pursuant to
which the Company and each of the other Founding Companies will be
acquired by the PARENT in separate mergers or share exchanges that are
intended to qualify as tax-free transfers of property under Section 351 of
the Internal Revenue Code of 1986, as amended ("Code"); and
WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the Board of Directors of the
COMPANY, the Board of Directors of NEWBURY, the STOCKHOLDERS and the
NEWBURY STOCKHOLDERS have approved this Agreement as part of the
Consolidation Plan in order for the PARENT to acquire the COMPANY and
NEWBURY; and
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WHEREAS, unless the context otherwise requires, capitalized terms
used in this Agreement or in any Schedule attached hereto and not
otherwise defined elsewhere herein shall have the following meanings:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means the COMPANY and NEWBURY, any subsidiary of the
COMPANY or NEWBURY and any member of a Relevant Group.
"Balance Sheet Date" means June 30, 1997.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"COMPANY" has the meaning set forth in the first paragraph of this
Agreement, and, unless the context expressly requires otherwise, shall include
all subsidiaries of the COMPANY.
"Company Stock" means the common capital stock of the COMPANY.
"Corporation Statute" has the meaning set forth in Section 1.5.
"Effective Time of the Exchange" shall mean the time as of which the
Exchange becomes effective, which shall occur on the Funding and Consummation
Date.
"Environmental Laws" has the meaning set forth in Section 5.13.
"Exchange" has the meaning set forth in Section 1.
"Expiration Date" has the meaning set forth in Section 5(A).
"Founding Companies" means:
Alternative Solutions, Inc., a Massachusetts corporation, and
Newbury Employment, Inc., a Massachusetts corporation
A.S.A.P. Services, Inc., an Arkansas corporation
Cardinal Services, Inc., an Oregon corporation
Employment Enterprises, Inc., a Virginia corporation
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▇▇▇▇▇ Personnel Group which consists of the following Texas
corporations: ▇▇▇▇▇ Personnel Consultants, Inc., ▇▇▇▇▇
Personnel Consultants, Inc. # One, ▇▇▇▇▇ Personnel
Consultants, Inc. # Two, Exceptional Resource Services, Inc.,
Excelsior Personnel Consultants, Inc., Excellent Personnel
Consultants, Inc., ▇▇▇▇▇ Personnel Consultants of Abilene,
Inc. and Elite Personnel Consultants, Inc.
Global Technical Services, Inc., a Texas corporation
HP Services, Inc., a Texas corporation
Technology Plus, Inc., a Kansas corporation
"Funding and Consummation Date" has the meaning set forth in Section 4.
"IPO" means the initial public offering of Parent Stock pursuant to the
Registration Statement.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Documents" has the meaning set forth in Section 5.23.
"NEWBURY" has the meaning set forth in the first paragraph of the
Agreement.
"NEWBURY Agreements" has the meaning set forth in Section 5(C).
"NEWBURY Stock" means the common capital stock of NEWBURY.
"NEWBURY STOCKHOLDERS" has the meaning set forth in the first paragraph of
this Agreement.
"Other Agreements" has the meaning set forth in the fourth recital of this
Agreement.
"Other Founding Companies" means all of the Founding Companies other than
the COMPANY.
"PARENT" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Charter Documents" has the meaning set forth in Section 6.1.
"Parent Stock" means the common stock, par value $.01 per share, of
PARENT.
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"Pricing" means the date of determination by PARENT and the Underwriters
of the public offering price of the shares of Parent Stock in the IPO; the
parties to this Agreement contemplate that the Pricing shall take place on the
Closing Date.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Registration Statement" means that certain registration statement on Form
S-1 to be filed with the SEC covering the shares of Parent Stock to be issued in
the IPO.
"Relevant Group" means the COMPANY or NEWBURY, as the case may be, and any
affiliated, combined, consolidated, unitary or similar group of which the
COMPANY or NEWBURY is or was a member.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto, which shall reference the
relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"STOCKHOLDERS" has the meaning set forth in the first paragraph of this
Agreement.
"Tax" or "Taxes" means all federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, payroll, employment, excise, property, deed, stamp,
alternative or add on minimum, environmental or other taxes, assessments,
duties, fees, levies or other governmental charges of any nature whatever,
whether disputed or not, together with any interest, penalties, additions to tax
or additional amounts with respect thereto.
"Underwriters" means the prospective underwriters identified in the
Registration Statement.
1. THE EXCHANGE
1.1 THE EXCHANGE. On the Closing Date, but effective as of the Effective
Date of the Exchange, the STOCKHOLDERS and the NEWBURY STOCKHOLDERS will deliver
all Company Stock and Newbury Stock to PARENT for exchange pursuant to this
Agreement.
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On the Effective Date of the Exchange, PARENT shall deliver to the
STOCKHOLDERS and the NEWBURY STOCKHOLDERS the number of shares of Parent Stock
and the amount of cash set forth in Annex II.
The exchange of Company Stock and Newbury Stock for Parent Stock and cash,
in accordance with this Agreement, is referred to as the "Exchange."
1.2 BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY AND NEWBURY. At the
Effective Time of the Exchange:
(i) the Boards of Directors of the COMPANY and NEWBURY shall consist
of the persons who are on the Boards of Directors of the COMPANY and
NEWBURY immediately prior to the Effective Time of the Exchange, provided
that (x) ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall be elected as an additional director of the
COMPANY and NEWBURY as of the Effective Time of the Exchange and (y) the
number of directors shall be reduced to take into account any directors
who choose to resign as of the Effective Time of the Exchange; the members
of the Boards of Directors of the COMPANY and NEWBURY shall be entitled to
hold office until the next annual meeting of STOCKHOLDERS, subject to the
provisions of the Corporation Statute and of the Articles or Certificate
of Incorporation and By-laws of the COMPANY and NEWBURY, as the case may
be; and
(ii) the officers of the COMPANY and NEWBURY immediately prior to
the Effective Time of the Exchange shall continue as the officers of the
COMPANY and NEWBURY in the same capacity or capacities, and effective upon
the Effective Time of the Exchange, ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall be appointed as a
Vice President of both the COMPANY and NEWBURY and ▇▇▇▇ ▇. ▇▇▇▇▇ shall be
appointed as an Assistant Secretary of both the COMPANY and NEWBURY, each
of such officers to serve, subject to the provisions of the Articles or
Certificate of Incorporation and By-laws of the COMPANY and NEWBURY, until
their respective successors are duly elected and qualified.
1.3 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE COMPANY,
PARENT AND NEWBURY. The respective designations and numbers of outstanding
shares of each class of outstanding capital stock of the COMPANY, PARENT and
NEWBURY as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and outstanding
capital stock of the COMPANY is as set forth on Schedule 5.3 hereto;
(ii) immediately prior to the Funding and Consummation Date, the
authorized capital stock of PARENT will consist of 60,000,000 shares of
capital stock, of which
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55,000,00 shares are common stock, the number of issued and outstanding
shares of which will be set forth in the Registration Statement, and
5,000,000 shares of preferred stock, $.01 par value, of which no shares
will be issued and outstanding; and
(iii) as of the date of this Agreement, the authorized capital stock
of NEWBURY consists of 1,000 shares of common stock no par value per
share, of which 1,000 shares are issued and outstanding and owned as set
forth in Annex III.
2. REGARDING THE PARENT STOCK
All Parent Stock received by the STOCKHOLDERS and the NEWBURY
STOCKHOLDERS pursuant to this Agreement shall, except for restrictions on resale
or transfer described in Sections 15 and 16 hereof, have the same rights as all
the other shares of outstanding Parent Stock by reason of the provisions of the
Certificate of Incorporation of PARENT or as otherwise provided by the Delaware
General Corporation Law. All voting rights of such Parent Stock received by the
STOCKHOLDERS and the NEWBURY STOCKHOLDERS shall be fully exercisable by the
STOCKHOLDERS and the NEWBURY STOCKHOLDERS and the STOCKHOLDERS and the NEWBURY
STOCKHOLDERS shall not be deprived nor restricted in exercising those rights. At
the Effective Time of the Exchange, PARENT shall have no class of capital stock
issued and outstanding other than Parent Stock.
3. DELIVERY OF EXCHANGE CONSIDERATION
3.1 On the Closing Date, the STOCKHOLDERS and the NEWBURY STOCKHOLDERS
shall deliver to PARENT the certificates representing Company Stock and Newbury
Stock, duly endorsed in blank by the STOCKHOLDERS and the NEWBURY STOCKHOLDERS,
or accompanied by blank stock powers, with signatures guaranteed by a national
or state chartered bank or other financial institution, and with all necessary
transfer tax and other revenue stamps, acquired at the STOCKHOLDERS' and NEWBURY
STOCKHOLDERS' expense, affixed and canceled. The STOCKHOLDERS and the NEWBURY
STOCKHOLDERS agree promptly to cure any deficiencies with respect to the
endorsement of the stock certificates or other documents of conveyance with
respect to such Company Stock and Newbury Stock or with respect to the stock
powers accompanying any Company Stock or Newbury Stock.
3.2 At the Effective Time of the Exchange and on the Funding and
Consummation Date, the STOCKHOLDERS and the NEWBURY STOCKHOLDERS, who are all
the holders of all outstanding certificates representing shares of Company Stock
and Newbury Stock, shall, upon surrender of such certificates, receive the
number of shares of Parent Stock and the amount of cash determined in accordance
with Annex II, said cash to be payable by certified check or wire transfer, at
the option of the respective STOCKHOLDERS and NEWBURY STOCKHOLDERS.
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4. CLOSING
At or prior to the Pricing, the parties shall take all actions necessary
to prepare to (i) effect the Exchange and (ii) effect the delivery of shares
referred to in Sections 2 and 3 hereof; provided, that such actions shall not
include the actual completion of the Exchange or the exchange and delivery of
the shares and certified check(s) or the initiation of wire transfer(s) referred
to in Section 3 hereof, each of which actions shall only be taken upon the
Funding and Consummation Date. The taking of the actions described in clauses
(i) and (ii) above (the "Closing") shall take place on the closing date (the
"Closing Date") at the offices of Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P., South Tower
Pennzoil Place, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. On the Funding
and Consummation Date, (y) all transactions contemplated by this Agreement,
including the exchange and delivery of shares, the delivery of a certified check
or checks or the initiation of a wire transfer or transfers in an amount equal
to the cash portion of the consideration which the STOCKHOLDERS and NEWBURY
STOCKHOLDERS shall be entitled to receive pursuant to the Exchange and (z) the
closing with respect to the IPO shall occur and be deemed to be completed. The
date on which the actions described in the preceding clauses (y) and (z) occurs
shall be referred to as the "Funding and Consummation Date." Except as otherwise
provided in Section 12, during the period from the Closing Date to the Funding
and Consummation Date, this Agreement may only be terminated by the parties if
the underwriting agreement in respect of the IPO is terminated pursuant to the
terms of such agreement. This Agreement shall in any event terminate if the
Funding and Consummation Date has not occurred within 15 business days of the
Closing Date. Time is of the essence.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
STOCKHOLDERS, NEWBURY AND NEWBURY STOCKHOLDERS
(A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY, STOCKHOLDERS AND
NEWBURY STOCKHOLDERS.
The COMPANY, STOCKHOLDERS, NEWBURY and the NEWBURY STOCKHOLDERS
jointly and severally represent and warrant that all of the following
representations and warranties in this Section 5(A) are true at the date of this
Agreement and, subject to Section 7.8 hereof, shall be true on the Closing Date
and on the Funding and Consummation Date, and that such representations and
warranties shall survive the Funding and Consummation Date for a period of 12
months (the last day of such period being the "Expiration Date"), except that
(i) the warranties and representations set forth in Section 5.22 hereof shall
survive until such time as the limitations period has run for all Tax periods
ended on or prior to the Funding and Consummation Date, which shall be deemed to
be the Expiration Date for Section 5.22, (ii) solely for purposes of determining
whether a claim for indemnification under Section 11.1(iii) hereof has been made
on a timely basis, and solely to the extent that in connection with the IPO,
PARENT actually incurs liability under the 1933
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Act, the 1934 Act, or any other federal or state securities laws, the
representations and warranties set forth herein shall survive until the
expiration of any applicable limitations period, which shall be deemed to be the
Expiration Date for such purposes, and (iii) the Newbury Agreements shall never
expire. For purposes of this Section 5, the term COMPANY includes any and all of
its subsidiaries unless the context expressly requires otherwise.
5.1 DUE ORGANIZATION. The COMPANY is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has the corporate power and authority to carry on its business as it is now
being conducted. The COMPANY is duly qualified to do business and is in good
standing in the jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except (i) as set forth on Schedule 5.1 or (ii) where the failure to be so
authorized or qualified would not have a material adverse effect on the
business, operations, affairs, prospects, properties, assets or condition
(financial or otherwise), of the COMPANY and its subsidiaries taken as a whole
(as used herein with respect to the COMPANY, or with respect to any other
person, a "Material Adverse Effect"). Schedule 5.1 sets forth each jurisdiction
in which the COMPANY is incorporated and contains a list of all jurisdictions in
which the COMPANY is authorized or qualified to do business. True, complete and
correct copies of the Certificate or Articles of Incorporation and By-laws, as
amended, of the COMPANY (the "Charter Documents") are all attached hereto as
Schedule 5.1. The stock records of the COMPANY, as heretofore made available to
PARENT, are correct and complete in all material respects. There are no minutes
in the possession of the COMPANY or the STOCKHOLDERS or NEWBURY STOCKHOLDERS
which have not been made available to PARENT, and all of such minutes are
correct and complete in all respects. The most recent minutes of the COMPANY,
which are dated no earlier than ten business days prior to the date hereof,
affirm and ratify all prior acts of the COMPANY, and of its officers and
directors on behalf of the COMPANY.
5.2 AUTHORIZATION. The representatives of the COMPANY executing this
Agreement have the authority to enter into and bind the COMPANY to the terms of
this Agreement. The COMPANY has the corporate power and authority to enter into
this Agreement. All requisite approval of the shareholders of the COMPANY has
been given and is confirmed by the signatures on the Stockholder Signature Page.
5.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
COMPANY is as set forth on Schedule 5.3. All of the issued and outstanding
shares of the capital stock of the COMPANY and NEWBURY are owned by the
STOCKHOLDERS and the NEWBURY STOCKHOLDERS, respectively, in the amounts set
forth in Annex III (or are owned by the Company in the case of any subsidiary)
and further, except as set forth on Schedule 5.3, are owned free and clear of
all liens, security interests, pledges, charges, voting trusts, restrictions,
encumbrances and claims of every kind. All of the issued and outstanding shares
of the capital stock
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of the COMPANY have been duly authorized and validly issued, are fully paid and
nonassessable, are owned of record and beneficially by the STOCKHOLDERS and the
NEWBURY STOCKHOLDERS, respectively, and such shares were offered, issued, sold
and delivered in compliance with all applicable state and Federal laws
concerning the issuance and distribution of securities. Further, none of such
shares were issued in violation of any preemptive rights of any past or present
stockholder.
5.4 TRANSACTIONS IN CAPITAL STOCK; ORGANIZATION ACCOUNTING. Except as set
forth on Schedule 5.4, the COMPANY and NEWBURY have not acquired any Company
Stock or Newbury Stock. Except as set forth on Schedule 5.4, (i) no option,
warrant, call, conversion right or commitment of any kind exists which obligates
the COMPANY or NEWBURY to issue any of its capital stock, and (ii) the COMPANY
and NEWBURY have no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. Schedule 5.4 also
includes complete and accurate copies of all stock option or stock purchase
plans, including a list of all outstanding options, warrants or other rights to
acquire shares of the COMPANY's or NEWBURY's capital stock.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of Company Stock was issued pursuant to awards, grants or bonuses.
5.6 SUBSIDIARIES. Except as set forth on Schedule 5.6, the COMPANY has no
subsidiaries. Except as set forth in Schedule 5.6, the COMPANY does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, limited liability company, association or business
entity nor is the COMPANY, directly or indirectly, a participant in any joint
venture, partnership or other non-corporate entity.
5.7 PREDECESSOR STATUS; ETC. Set forth in Schedule 5.7 is a listing of all
names of all predecessor companies and names of the COMPANY and NEWBURY,
including the names of any entities or businesses acquired by the COMPANY (by
stock purchase, asset purchase, merger or otherwise) or owned by the COMPANY or
from whom the COMPANY previously acquired material assets. Except as disclosed
on Schedule 5.7, the COMPANY has not been a subsidiary or division of another
corporation or a part of an acquisition which was later rescinded.
5.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of either the
COMPANY or any other person or entity that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the COMPANY.
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5.9 FINANCIAL STATEMENTS, ETC.
(a) FINANCIAL STATEMENTS. Attached hereto as Schedule 5.9 are copies of
the following financial statements of the COMPANY (the "Company Financial
Statements"): the COMPANY's audited and unaudited Balance Sheets as of April 30,
1996 and 1997, December 31, 1996, and June 30, 1997, and Statements of Income,
Shareholders' Equity and Cash Flows for all periods therein stated. The date of
June 30, 1997 is hereinafter referred to as the "Balance Sheet Date." Such
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated (except as noted therein or on Schedule 5.9). Except as set forth on
Schedule 5.9, such Balance Sheets as of April 30, 1996 and 1997, December 31,
1996, and June 30, 1997 present fairly the financial position of the COMPANY as
of the dates indicated thereon, and such Statements of Income, Shareholders'
Equity and Cash Flows present fairly the results of operations and cash flows
for the periods indicated thereon.
(b) RESERVES FOR WORKERS' COMPENSATION AND HEALTH CARE. Except as set
forth on Schedule 5.9, the COMPANY's reserves for workers' compensation and
health care costs reflected on the Balance Sheet as of the Balance Sheet Date
are adequate and appropriate and have been accrued in accordance with generally
accepted accounting principles. The COMPANY has not received any report
(including, without limitation, a report from any actuary, insurance company or
accountant) which suggests that any of the reserves reflected on any of the
Balance Sheets may be inadequate.
5.10 LIABILITIES AND OBLIGATIONS. The COMPANY has delivered to PARENT an
accurate list (which is set forth on Schedule 5.10) as of the Balance Sheet Date
of (i) all liabilities of the COMPANY which are not reflected on the balance
sheet of the COMPANY at the Balance Sheet Date or otherwise reflected in the
Company Financial Statements at the Balance Sheet Date, (ii) any material
liabilities of the COMPANY (including all liabilities in excess of $10,000 which
are not reflected in the balance sheet as of the Balance Sheet Date) and (iii)
all loan agreements, indemnity or guaranty agreements, bonds, mortgages, liens,
pledges or other security agreements. Except as set forth on Schedule 5.10,
since the Balance Sheet Date the COMPANY has not incurred any material
liabilities of any kind, character and description, whether accrued, absolute,
secured or unsecured, contingent or otherwise, other than nonmaterial
liabilities incurred in the ordinary course of business. The COMPANY has also
delivered to PARENT on Schedule 5.10, in the case of those contingent
liabilities related to pending or, to the COMPANY's knowledge, threatened
litigation, or other liabilities which are not fixed or otherwise accrued or
reserved, a good faith and reasonable estimate of the maximum amount which may
be payable. For any such contingent liability or liability for which the amount
is not fixed or is contested, the COMPANY has provided to PARENT the following
information:
(i) a summary description of the liability together with the
following:
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(a) copies of all relevant documentation relating thereto;
(b) amounts claimed and any other action or relief sought; and
(c) name of claimant and all other parties to the claim, suit
or proceeding; and
(ii) the name of the court or agency before which such claim, suit
or proceeding is pending; and
(iii) the date such claim, suit or proceeding was instituted; and
(iv) either (x) a good faith and reasonable estimate of the maximum
amount, if any, which is likely to become payable with respect to the such
liability, or (y) a specific description of any related reserve that may
have been reflected in the Balance Sheet as of the Balance Sheet Date,
with respect to such liability. If no estimate is provided or no specific
reserve is reflected in the Balance Sheet as of the Balance Sheet Date,
the estimate shall for purposes of this Agreement be deemed to be zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. The COMPANY has delivered to PARENT an
accurate list (which is set forth on Schedule 5.11) of the accounts and notes
receivable of the COMPANY, as of August 25, 1997, including any such amounts
which are not reflected in the balance sheet as of the Balance Sheet Date, and
including receivables from and advances to employees and the STOCKHOLDERS. The
COMPANY shall also provide PARENT (x) an accurate list of all receivables
obtained subsequent to August 25, 1997 and (y) an aging of all accounts and
notes receivable showing amounts due in 30 day aging categories, and such list
and such aging report (the "A/R Aging Reports") shall be current as of August
25, 1997. Except to the extent reflected on Schedule 5.11 or as disclosed by the
COMPANY to PARENT in a writing accompanying the A/R Aging Reports, such
accounts, notes and other receivables are collectible in the amounts shown on
Schedule 5.11, and shall be collectible in the amounts shown on the A/R Aging
Reports, net of reserves reflected in the Balance Sheet as of the Balance Sheet
Date and as of the date of the A/R Aging Reports, respectively.
5.12 PERMITS AND INTANGIBLES. The COMPANY and its employees (for the
benefit of the COMPANY) hold all licenses, registrations, franchises, permits
and other governmental authorizations the absence of any of which could have a
Material Adverse Effect on the COMPANY. The COMPANY and its employees (for the
benefit of the COMPANY) are licensed or registered as professional employer
organizations and/or as control persons thereof, as appropriate, in each
jurisdiction in which their activities require such licensing or registration,
except where failure to be so licensed or registered could not have a Material
Adverse Effect on the COMPANY. The COMPANY has delivered to PARENT an accurate
list and summary description (which is set forth on Schedule 5.12) of all such
licenses, registrations, franchises, permits and other governmental
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authorizations, including permits, titles (including motor vehicle titles and
current registrations), fuel permits, licenses, registrations, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the COMPANY or any of its employees (including
interests in software or other technology systems, programs and intellectual
property) (it being understood and agreed that a list of all environmental
permits and other environmental approvals is set forth on Schedule 5.13). To the
knowledge of the COMPANY, the licenses, registrations, franchises, permits and
other governmental authorizations listed on Schedules 5.12 and 5.13 are valid,
and the COMPANY has not received any notice that any governmental authority
intends to cancel, terminate or not renew any such license, franchise, permit or
other governmental authorization. The COMPANY has conducted and is conducting
its business in compliance with the requirements, standards, criteria and
conditions set forth in the licenses, registrations, franchises, permits and
other governmental authorizations listed on Schedules 5.12 and 5.13 and is not
in violation of any of the foregoing except where such non-compliance or
violation would not have a Material Adverse Effect on the COMPANY. Except as
specifically provided in Schedule 5.12, the transactions contemplated by this
Agreement will not result in a material default under or a material breach or
violation of, or materially adversely affect the rights and benefits afforded to
the COMPANY by, any such licenses, registrations, franchises, permits or
government authorizations.
5.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.13, (i) the
COMPANY has complied with and is in compliance with all Federal, state, local
and foreign statutes (civil and criminal), laws, ordinances, regulations, rules,
notices, permits, judgments, orders and decrees applicable to any of them or any
of their properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes and
Hazardous Substances (as such terms are defined in any applicable Environmental
Law) including petroleum and petroleum products; (ii) the COMPANY has obtained
and adhered to all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes and Hazardous
Substances, a list of all of which permits and approvals is set forth on
Schedule 5.13, and have reported to the appropriate authorities, to the extent
required by all Environmental Laws, all past and present sites owned and
operated by the COMPANY where Hazardous Wastes or Hazardous Substances have been
treated, stored, disposed of or otherwise handled; (iii) there have been no
releases or threats of releases (as defined in Environmental Laws) at, from, in
or on any property owned or operated by the COMPANY except as permitted by
Environmental Laws; (iv) the COMPANY knows of no on-site or off-site location to
which the COMPANY has transported or disposed of Hazardous Wastes and Hazardous
Substances or arranged for the transportation of Hazardous Wastes and Hazardous
Substances, which site is the subject of any Federal, state, local or foreign
enforcement action or any other investigation which could lead to any claim
against the COMPANY or PARENT for any clean-up cost, remedial work, damage to
natural resources, property damage or personal injury, including, but not
limited to, any claim under the
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Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended; and (v) the COMPANY has no contingent liability in connection with any
release of any Hazardous Waste or Hazardous Substance into the environment.
5.14 PERSONAL PROPERTY.
(a) The COMPANY has delivered to PARENT an accurate list (which is set
forth on Schedule 5.14) of (x) all personal property included (or that will be
included) in on the balance sheet of the COMPANY, (y) all other personal
property owned by the COMPANY with a value in excess of $10,000 (i) as of the
Balance Sheet Date or (ii) acquired since the Balance Sheet Date and (z) all
leases and agreements in respect of personal property, including, in the case of
the of (x), (y) and (z), (1) true, complete and correct copies of all such
leases and (2) an indication as to which assets are currently owned, or were
formerly owned, by STOCKHOLDERS or NEWBURY STOCKHOLDERS, relatives of
STOCKHOLDERS or NEWBURY STOCKHOLDERS, or affiliates of the COMPANY or NEWBURY.
Except as set forth on Schedule 5.14, (i) all personal property used by the
COMPANY in its business is either owned by the COMPANY or leased by the COMPANY
pursuant to a lease included on Schedule 5.14, (ii) all of the personal property
listed on Schedule 5.14 is in good working order and condition, ordinary wear
and tear excepted and (iii) all leases and agreements included on Schedule 5.14
are in full force and effect and constitute valid and binding agreements of the
parties (and their successors) thereto in accordance with their terms.
(b) The COMPANY owns, licenses or possesses the right to use all material
patents, patents pending, trademarks, servicemarks, trade names, service names,
slogans, registered copyrights, trade secrets, computer software and other
intellectual property rights it currently uses, without any conflict or, to the
knowledge of the COMPANY, alleged conflict with the rights of others or in
violation of any license or other agreement with respect thereto. Each item of
intellectual property owned or used by the COMPANY prior to the Closing will be
owned or available for use by the Surviving Corporation on the same terms and
conditions immediately following the Closing. Except as described in Schedule
5.14, the COMPANY has taken all such actions as are reasonably necessary to
maintain and protect such of its intellectual property as is material to the
operations and results of the COMPANY's business. Schedule 5.14 lists all of the
material intellectual property rights used by the COMPANY as well as any
material intellectual property rights owned by third parties and used by the
COMPANY pursuant to licenses, sublicenses, agreements or permissions; all of the
foregoing licenses, sublicenses, agreements and permissions are valid, binding
and in full force and effect and no default has occurred and no notice of
default has been received with respect thereto.
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. The
COMPANY has delivered to PARENT an accurate list (which is set forth on Schedule
5.15) of all significant customers, or persons or entities that are sources of a
significant number of customers, it being
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understood and agreed that a "significant customer," for purposes of this
Section 5.15, means a customer (or person or entity) representing 5% or more of
the COMPANY's annual revenues as of the Balance Sheet Date. Except to the extent
set forth on Schedule 5.15, none of the COMPANY's significant customers (or
persons or entities that are sources of a significant number of customers) have
canceled or substantially reduced or, to the knowledge of the COMPANY, are
currently attempting or threatening to cancel a contract or substantially reduce
utilization of the services provided by the COMPANY.
The COMPANY has listed on Schedule 5.15 all material contracts,
commitments and similar agreements to which the COMPANY is a party or by which
it or any of its properties are bound (including, but not limited to, contracts
with significant customers, joint venture or partnership agreements, contracts
with any labor organizations, strategic alliances and options to purchase land),
other than agreements listed on Schedule 5.10, 5.14 or 5.16, (a) in existence as
of the Balance Sheet Date and (b) entered into since the Balance Sheet Date, and
in the case has delivered true, complete and correct copies of such agreements
to PARENT. The COMPANY has complied with all material commitments and
obligations pertaining to it, and is not in default under any contracts or
agreements listed on Schedule 5.15 and no notice of default under any such
contract or agreement has been received. The COMPANY has also indicated on
Schedule 5.15 a summary description of all plans or projects involving the
opening of new operations, expansion of existing operations, the acquisition of
any personal property, business or assets requiring, in any event, the payment
of more than $50,000 by the COMPANY.
5.16 REAL PROPERTY. Schedule 5.16 includes a list of all real property
owned or leased by the COMPANY (i) as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date, and all other real property, if any, used
by the COMPANY in the conduct of its business. The COMPANY has good and
insurable title to the real property owned by it, including those reflected on
Schedule 5.14, subject to no mortgage, pledge, lien, conditional sales
agreement, encumbrance or charge, except for:
(i) liens reflected on Schedules 5.10 or 5.15 as securing specified
liabilities (with respect to which no material default exists);
(ii) liens for current taxes not yet payable and assessments not in
default;
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other exceptions to
title shown of record in the office of the County Clerks in which the
properties, assets and leasehold estates are located which do not
materially and adversely affect the current use of the property.
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Schedule 5.16 contains, without limitation, true, complete and correct copies of
all title reports and title insurance policies currently in possession of the
COMPANY with respect to real property owned by the COMPANY.
The COMPANY has also delivered to the Parent an accurate list of real
property leased by the COMPANY (which list is set forth on Schedule 5.16),
together with true, complete and correct copies of all leases and agreements in
respect of such real property leased by the COMPANY (which copies are attached
to Schedule 5.16), and an indication as to which such properties, if any, are
currently owned, or were formerly owned, by STOCKHOLDERS or NEWBURY STOCKHOLDERS
or business or personal affiliates of the COMPANY or NEWBURY. Except as set
forth on Schedule 5.16, all of such leases included on Schedule 5.16 are in full
force and effect and constitute valid and binding agreements of the parties (and
their successors) thereto in accordance with their terms.
5.17 INSURANCE. The COMPANY has delivered to PARENT, as set forth on and
attached to Schedule 5.17, (i) an accurate list as of the Balance Sheet Date of
all insurance policies carried by the COMPANY, (ii) an accurate list of all
insurance loss runs or workers compensation claims received for the past three
(3) policy years, and (iii) true, complete and correct copies of all insurance
policies currently in effect. Such insurance policies evidence all of the
insurance that the COMPANY is required to carry pursuant to all of its contracts
and other agreements and pursuant to all applicable laws. All of such insurance
policies are currently in full force and effect and shall remain in full force
and effect through the Funding and Consummation Date. Since January 1, 1993, no
insurance carried by the COMPANY has been canceled by an insurer and, to the
knowledge of the COMPANY, the COMPANY has not been denied coverage. No insurance
carried by the Company has ever been underwritten or reinsured with any
insurance company in which the COMPANY, NEWBURY, any STOCKHOLDER, any NEWBURY
STOCKHOLDER or any affiliate of the COMPANY, NEWBURY, any NEWBURY STOCKHOLDER or
any STOCKHOLDER has any financial or ownership interest.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS. The
COMPANY has delivered to PARENT an accurate list (which is set forth on Schedule
5.18) showing all officers, directors and key employees of the COMPANY, listing
all employment agreements with such officers, directors and key employees and
the rate of compensation (and the portions thereof attributable to salary, bonus
and other compensation, respectively) of each of such persons as of (i) the
Balance Sheet Date and (ii) the date hereof. The COMPANY has provided to PARENT
true, complete and correct copies of any employment agreements for persons
listed on Schedule 5.18. Except as set forth on Schedule 5.18, since June 30,
1997 there have been no increases in the compensation payable or any special
bonuses to any officer, director, key employee or other employee, except
ordinary salary increases implemented on a basis consistent with past practices.
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Except as set forth on Schedule 5.18, (i) the COMPANY is not bound
by or subject to (and none of its assets or properties is bound by or subject
to) any arrangement with any labor union, (ii) no employees of the COMPANY are
represented by any labor union or covered by any collective bargaining
agreement, (iii) to the knowledge of the COMPANY, no campaign to establish such
representation is in progress and (iv) there is no pending or, to the COMPANY's
knowledge, threatened labor dispute involving the COMPANY and any group of its
employees nor has the COMPANY experienced any labor interruptions over the past
three years. The COMPANY believes its relationship with employees to be good.
5.19 EMPLOYEE PLANS. The STOCKHOLDERS and NEWBURY STOCKHOLDERS have
delivered to PARENT an accurate schedule (Schedule 5.19) showing all employee
benefit and employee welfare plans of the COMPANY (including COMPANY's
subsidiaries), including all employment agreements and other agreements or
arrangements containing "golden parachute" or other similar provisions, and
deferred compensation agreements, together with true, complete and correct
copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, described on Schedule 5.19,
COMPANY (including a COMPANY subsidiary) does not sponsor, maintain or
contribute to any plan program, fund or arrangement that constitutes an
"employee pension benefit plan," nor has COMPANY or any subsidiary any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning as is given that term in Section 3(2) of ERISA. Neither COMPANY
nor any subsidiary has sponsored, maintained or contributed to any employee
pension benefit plan other than the plans set forth on Schedule 5.19, nor is
COMPANY or any subsidiary required to contribute to any retirement plan pursuant
to the provisions of any collective bargaining agreement establishing the terms
and conditions or employment of any of COMPANY's or any subsidiary's employees.
Neither the COMPANY nor any subsidiary is now, or can as a result of its
past activities become, liable to the Pension Benefit Guaranty Corporation
("PBGC") or to any multiemployer employee pension benefit plan under the
provisions of Title IV of ERISA.
All employee benefit plans listed on Schedule 5.19 and the administration
thereof are in substantial compliance with their terms and all applicable
provisions of ERISA and the regulations issued thereunder, as well as with all
other applicable federal, state and local statutes, ordinances and regulations.
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All accrued contribution obligations of COMPANY or any subsidiary with
respect to any plan listed on Schedule 5.19 have either been fulfilled in their
entirety or are fully reflected on the balance sheet of the COMPANY as of the
Balance Sheet Date.
5.20 COMPLIANCE WITH ERISA. All such plans listed on Schedule 5.19 that
are intended to qualify (the "Qualified Plans") under Section 401(a) of the Code
are, and have been so qualified and have been determined by the Internal Revenue
Service to be so qualified, and copies of such determination letters are
included as part of Schedule 5.19. Except as disclosed on Schedule 5.20, all
reports and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof are included as part of Schedule 5.19. None of
any STOCKHOLDERS, any NEWBURY STOCKHOLDERS any such plan listed in Schedule
5.19, or COMPANY (including a COMPANY subsidiary) or NEWBURY has engaged in any
transaction prohibited under the provisions of Section 4975 of the Code or
Section 406 of ERISA. No such Plan listed in Schedule 5.19 has incurred an
accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(1) of ERISA; and COMPANY (including a COMPANY subsidiary) has not
incurred any liability for excise tax or penalty due to the Internal Revenue
Service nor any liability to the PBGC. In addition,
(i) there have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and approval by
the Internal Revenue Service;
(ii) no such plan listed in Schedule 5.19 subject to the provisions
of Title IV of ERISA has been terminated;
(iii) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any such plan listed in
Schedule 5.19;
(iv) COMPANY (including a COMPANY subsidiary) has not incurred
liability under Section 4062 of ERISA; and
(v) no circumstances exist pursuant to which the COMPANY (including
a COMPANY subsidiary) could have any direct or indirect liability
whatsoever (including, but not limited to, any liability to any
multiemployer plan or the PBGC under Title IV of ERISA or to the Internal
Revenue Service for any excise tax or penalty, or being subject to any
statutory lien to secure payment of any such liability) with respect to
any plan now or heretofore maintained or contributed to by any entity
other than the COMPANY that is, or at any time was, a member of a
"controlled group" (as defined in Section 412(n)(6)(B) of the Code) that
includes the COMPANY.
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5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 5.21 or 5.13, neither the COMPANY nor, to the knowledge of the COMPANY,
any client of the COMPANY is in violation of, or has violated, any law or
regulation or any order of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them which would have a Material Adverse Effect
on the COMPANY; and except to the extent set forth on Schedule 5.10 or 5.13,
there are no material claims, actions, suits or proceedings, commenced or, to
the knowledge of the COMPANY, threatened, against or affecting the COMPANY, at
law or in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them and no notice of any claim, action, suit or
pro ceeding, whether pending or threatened, has been received. The COMPANY has,
and, to the knowledge of the COMPANY, each of its clients has, conducted and is
conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable Federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, vari ances,
rules and regulations, including all such permits, licenses, orders and other
governmental approvals set forth on Schedules 5.12 and 5.13, and is not in
violation of any of the foregoing which might have a Material Adverse Effect on
the COMPANY.
5.22 TAXES. Except as set forth on schedule 5.22, the COMPANY (including
each COMPANY subsidiary) has timely filed all requisite federal, state and other
Tax returns or extension requests for all fiscal periods ended on or before the
Balance Sheet Date; and except as set forth on Schedule 5.22, to the knowledge
of the COMPANY, there are no examinations in progress or claims against any of
them for federal, state and other taxes (including penalties and interest) for
any period or periods prior to and including the Balance Sheet Date and no
notice of any claim for taxes, whether pending or threatened, has been received.
Except as set forth on Schedule 5.22, all Taxes, including interest and
penalties (whether or not shown on any Tax return) owed by the COMPANY, any of
the COMPANY's subsidiaries, any member of an affiliated or consolidated group
which includes or included the COMPANY or any of the COMPANY's subsidiaries, or
with respect to any payment made or deemed made by the COMPANY or any of the
COMPANY's subsidiaries, have been paid. The amounts shown as accruals for Taxes
on the Company Financial Statements are sufficient for the payment of all Taxes
of the kinds indicated (including penalties and interest) for all fiscal
periods. Copies of (i) any Tax examinations, (ii) extensions of statutory
limitations and (iii) the federal and local income Tax returns and franchise Tax
returns of COMPANY (including the COMPANY subsidiaries) for their last three (3)
fiscal years, or such shorter period of time as any of them shall have existed,
are attached hereto as Schedule 5.22. The COMPANY has a taxable year ended April
30 and has not made an election to retain a fiscal year other than April 30
under Section 444 of the Code. The COMPANY's methods of accounting have not
changed in the past five years. The COMPANY is not an investment company as
defined in Section 351(e)(1) of the Code.
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5.23 NO VIOLATIONS. The COMPANY is not in violation of any Charter
Document. Neither the COMPANY nor, to the knowledge of the COMPANY, any other
party thereto is in default under any lease, instrument, agreement, license, or
permit set forth on Schedule 5.12, 5.13, 5.14, 5.15 or 5.16, or any other
material agreement to which it is a party or by which its properties are bound
(the "Material Documents") in any manner that could result in a Material Adverse
Effect; and, except as set forth in Schedule 5.23, (a) the rights and benefits
of the COMPANY under the Material Documents will not be materially adversely
affected by the transactions contemplated hereby and (b) the execution of this
Agreement and the performance of the obligations hereunder and the consummation
of the transactions contemplated hereby will not result in any material
violation or breach or constitute a default under, any of the terms or
provisions of the Material Documents or the Charter Documents. Except as set
forth on Schedule 5.23, none of the Material Documents requires notice to, or
the consent or approval of, any governmental agency or other third party with
respect to any of the transactions contemplated hereby in order to remain in
full force and effect and consummation of the transactions contemplated hereby
will not give rise to any right to termination, cancellation or acceleration or
loss of any right or benefit. Except as set forth on Schedule 5.23, none of the
Material Documents prohibits the use or publication by the COMPANY, the PARENT
of the name of any other party to such Material Document, and none of the
Material Documents prohibits or restricts the COMPANY from freely providing
services to any other customer or potential customer of the COMPANY, the PARENT
or any Other Founding Company.
5.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.24, the
COMPANY is not now a party to any governmental contracts subject to price
redetermination or renegotiation.
5.25 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
on Schedule 5.25, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of the COMPANY;
or
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the COMPANY; or
(iii) any change in the authorized capital of the COMPANY or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
or
(iv) except as contemplated in Section 10.6, any declaration or
payment of any dividend or distribution in respect of the capital stock or
any direct or indirect redemption, purchase or other acquisition of any of
the capital stock of the COMPANY; or
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(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the COMPANY to any
officers, directors, STOCKHOLDERS, NEWBURY STOCKHOLDERS, employees,
consultants or agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice; or
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the COMPANY; or
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of COMPANY to any person,
including, without limitation, the STOCKHOLDERS, NEWBURY STOCKHOLDERS, or
any affiliate thereof; or
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the COMPANY, including without limitation any
indebtedness or obligation of any STOCKHOLDERS, NEWBURY STOCKHOLDERS, or
any affiliate thereof; or
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the COMPANY or requiring consent of any party to the transfer
and assignment of any such assets, property or rights; or
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the COMPANY's business; or
(xi) any waiver of any material rights or claims of the COMPANY; or
(xii) any material breach, amendment or termination of any contract,
agreement, license, permit or other right to which the COMPANY is a party;
or
(xiii)any transaction by the COMPANY outside the ordinary course of
its businesses; or
(xiv) any cancellation or termination of a material contract with a
customer or client prior to the scheduled termination date; or
(xv) any other distribution of property or assets by the COMPANY; or
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(xvi) except as contemplated in Section 10.6, any incurrence,
drawing, borrowing or deferral of or under any debt or credit arrangement
so as to result in an aggregate amount of debt outstanding greater than as
set forth in the COMPANY's Balance Sheet on the Balance Sheet Date.
5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The COMPANY has delivered to
the PARENT an accurate schedule (which is set forth on Schedule 5.26) as of the
date of this Agreement of:
(i) the name of the financial institution in which the COMPANY or
NEWBURY has accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of the person authorized to draw thereon or have
access thereto.
Schedule 5.26 also sets forth the name of the person, corporation, firm or other
entity holding a general or special power of attorney from the COMPANY or
NEWBURY and a description of the terms of such power.
5.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by the COMPANY and NEWBURY and the performance of the transactions contemplated
herein have been duly and validly authorized by (i) the Board of Directors and
the STOCKHOLDERS of the COMPANY, and (ii) the Board of Directors and the NEWBURY
STOCKHOLDERS of NEWBURY and this Agreement has been duly and validly authorized
by all necessary corporate action and is a legal, valid and binding obligation
of the COMPANY and the STOCKHOLDERS and of NEWBURY and the NEWBURY STOCKHOLDERS.
5.28 RELATIONS WITH GOVERNMENTS. The COMPANY has not made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for government office.
5.29 DISCLOSURE. (a) This Agreement, including the schedules hereto,
together with the completed Directors and Officers Questionnaires attached
hereto as Schedule 5.29 and all other documents and information made available
to PARENT and its representatives in writing pursuant hereto or thereto, present
fairly the business and operations of the COMPANY for the time periods with
respect to which such information was requested. The COMPANY's rights under the
documents delivered pursuant hereto would not be materially adversely affected
by, and no
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statement made herein would be rendered untrue in any material respect by, any
other document to which the COMPANY is a party, or to which its properties are
subject, or by any other fact or circumstance regarding the COMPANY (which fact
or circumstance was, or should reasonably, after due inquiry, have been known to
the COMPANY) that is not disclosed pursuant hereto or thereto. If, prior to the
25th day after the date of the final prospectus of PARENT utilized in connection
with the IPO, the COMPANY, the STOCKHOLDERS, NEWBURY or the NEWBURY STOCKHOLDERS
become aware of any fact or circumstance which would change (or, if after the
Funding and Consummation Date, would have changed) a representation or warranty
of COMPANY, STOCKHOLDERS, NEWBURY or the NEWBURY STOCKHOLDERS in this Agreement
or would affect any document delivered pursuant hereto in any material respect,
the COMPANY and the STOCKHOLDERS shall immediately give notice of such fact or
circumstance to PARENT. However, subject to the provisions of Section 7.8, such
notification shall not relieve either the COMPANY or the STOCKHOLDERS of their
obligations under this Agreement, and, subject to the provisions of Section 7.8,
at the sole option of PARENT, the truth and accuracy of any and all warranties
and representations of the COMPANY, or on behalf of the COMPANY and of
STOCKHOLDERS at the date of this Agreement and on the Closing Date and on the
Funding and Consummation Date, shall be a precondition to the consummation of
this transaction.
(b) PARENT shall use reasonable commercial efforts to file the
Registration Statement and to have it declared effective; however, the COMPANY,
NEWBURY, the STOCKHOLDERS and the NEWBURY STOCKHOLDERS acknowledge and agree (i)
that there exists no firm commitment, binding agreement, or promise or other
assurance of any kind, whether express or implied, oral or written, that a
Registration Statement will become effective or that the IPO pursuant thereto
will occur at a particular price or within a particular range of prices or occur
at all; (ii) that neither PARENT or any of its officers, directors, agents or
representatives nor any Underwriter shall have any liability to the COMPANY,
NEWBURY, the STOCKHOLDERS, the NEWBURY STOCKHOLDERS or any other person
affiliated or associated with the COMPANY or NEWBURY for any failure of the
Registration Statement to become effective, the IPO to occur at a particular
price or within a particular range of prices or to occur at all; and (iii) that
the decision of STOCKHOLDERS and NEWBURY STOCKHOLDERS to enter into this
Agreement, or to vote in favor of or consent to the proposed Exchange, has been
or will be made independent of, and without reliance upon, any statements,
opinions or other communications, or due diligence investigations which have
been or will be made or performed by any prospective Underwriter, relative to
PARENT or the prospective IPO; provided, however, that the COMPANY, NEWBURY, the
STOCKHOLDERS and the NEWBURY STOCKHOLDERS retain their right to insist that the
IPO Stock Price be no lower than the minimum price specified in Annex II.
5.30 PROHIBITED ACTIVITIES. Except as set forth on Schedule 5.30, the
COMPANY has not, between the Balance Sheet Date and the date hereof, taken any
of the actions (Prohibited Activities) set forth in Section 7.3.
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(B) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each STOCKHOLDER severally represents and warrants that the
representations and warranties set forth below are true as of the date of this
Agreement and, subject to Section 7.8, shall be true on the Closing Date and on
the Funding and Consummation Date, and that the representations and warranties
set forth in Sections 5.31 and 5.32 shall survive until the first anniversary of
the Funding and Consummation Date, which shall be the Expiration Date for
purposes of Sections 5.31 and 5.32.
5.31 AUTHORITY; OWNERSHIP. Such STOCKHOLDER has the full legal right,
power and authority to enter into this Agreement. Such STOCKHOLDER owns
beneficially and of record all of the shares of the Company Stock identified on
Annex III as being owned by such STOCKHOLDER, and, except as set forth on
Schedule 5.31, such Company Stock is owned free and clear of all liens,
encumbrances and claims of every kind.
5.32 PREEMPTIVE RIGHTS. Such STOCKHOLDER does not have, or hereby waives,
any preemptive or other right to acquire shares of Company Stock or Parent Stock
that such STOCKHOLDER has or may have had other than rights of any STOCKHOLDER
to acquire Parent Stock pursuant to (i) this Agreement or (ii) any written
option granted by PARENT.
5.33 NO INTENTION TO DISPOSE OF PARENT STOCK. Such STOCKHOLDER is not
under any binding commitment or contract to sell, exchange or otherwise dispose
of shares of Parent Stock received as described in Section 3.1.
(C) NEWBURY AGREEMENTS.
The NEWBURY STOCKHOLDERS jointly and severally represent, warrant and
agree, without expiration, as follows (the "Newbury Agreements"):
5.34 ORGANIZATION. NEWBURY is a Massachusetts corporation which is duly
formed and organized and in good standing in Massachusetts.
5.35 NO FOREIGN QUALIFICATION. NEWBURY is not required to be qualified to
do business as a foreign corporation in any State.
5.36 TAXES. NEWBURY has paid all Taxes owed by it and has filed all Tax
returns. There are no claims, damages, actions, suits, proceedings, demands,
liabilities, debts, assessments, adjustments, costs or expenses owed or due by,
or pending or threatened against or relating to,
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NEWBURY (collectively "Newbury Claims") with respect to Taxes or any Tax matter,
nor is there any basis for any Newbury Claims with respect to Taxes or any Tax
matter.
5.37 COMPANY STOCK. NEWBURY owns 5,000 shares of outstanding Company
Common Stock, constituting 50% of all outstanding shares of Company Common
Stock.
5.38 NO BUSINESS. Except for owning 5,000 shares of Company Common Stock,
NEWBURY has never had any business, has never conducted any operations and has
never had any employees.
5.39 NO CLAIMS. There are no existing, pending or threatened Newbury
Claims with respect to any condition, occurrence, matter, event or circumstance
whatsoever; and there is no basis for any Newbury Claims with respect to any
condition, occurrence, matter, event or circumstance.
5.40 INDEMNITY. Jointly and severally the NEWBURY STOCKHOLDERS will
defend, indemnify and hold harmless NEWBURY, COMPANY and PARENT from and against
(i) any existing, pending or threatened Newbury Claims of any nature and arising
out of any condition, occurrence, matter, event or circumstance whatsoever and
(ii) any breach, inaccuracy or noncompliance of or in any respect of any of the
Newbury Agreements.
(D) REPRESENTATIONS AND WARRANTIES OF NEWBURY STOCKHOLDERS
Each NEWBURY STOCKHOLDER severally represents and warrants that the
representations and warranties set forth below are true as of the date of this
Agreement and, subject to Section 7.8, shall be true on the Closing Date and on
the Funding and Consummation Date, and that the representations and warranties
set forth in Sections 5.41 and 5.42 shall survive until the first anniversary of
the Funding and Consummation Date, which shall be the Expiration Date for
purposes of Sections 5.41 and 5.42.
5.41 AUTHORITY; OWNERSHIP. Such NEWBURY STOCKHOLDER has the full legal
right, power and authority to enter into this Agreement. Such NEWBURY
STOCKHOLDER owns beneficially and of record all of the shares of the Newbury
Stock identified on Annex III as being owned by such STOCKHOLDER, and, except as
set forth on Schedule 5.41, such NEWBURY Stock is owned free and clear of all
liens, encumbrances and claims of every kind.
5.42 PREEMPTIVE RIGHTS. Such NEWBURY STOCKHOLDER does not have, or hereby
waives, any preemptive or other right to acquire shares of Newbury Stock or
Parent Stock that such NEWBURY STOCKHOLDER has or may have had other than rights
of any NEWBURY STOCKHOLDER to acquire Parent Stock pursuant to (i) this
Agreement or (ii) any written option granted by PARENT.
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5.43 NO INTENTION TO DISPOSE OF PARENT STOCK. Such NEWBURY STOCKHOLDER is
not under any binding commitment or contract to sell, exchange or otherwise
dispose of shares of Parent Stock received as described in Section 3.1.
6. REPRESENTATIONS OF PARENT
PARENT represents and warrants that all of the following
representations and warranties in this Section 6 are true at the date of this
Agreement and, subject to Section 7.8 hereof, shall be true on the Closing Date
and the Funding and Consummation Date, and that such representations and
warranties shall survive the Funding and Consummation Date for a period of
twelve months (the last day of such period being the "Expiration Date"), except
that (i) the warranties and representations set forth in Section 6.14 hereof
shall survive until such time as the limitations period has run for all Tax
periods ended on or prior to the Funding and Consummation Date, which shall be
deemed to be the Expiration Date for Section 6.14 and (ii) solely for purposes
of determining whether a claim for indemnification under Section 11.2(iv) hereof
has been made on a timely basis, and solely to the extent that, in connection
with the IPO, PARENT actually incurs liability under the 1933 Act, the 1934 Act,
or any other federal or state securities laws, the representations and
warranties set forth herein shall survive until the expiration of any applicable
limitations period, which shall be deemed to be the Expiration Date for such
purposes.
6.1 DUE ORGANIZATION. PARENT is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted except where the
failure to be so authorized or qualified would not have a Material Adverse
Effect. True, complete and correct copies of the Certificate of Incorporation
and By-laws, as amended, of PARENT (the "Parent Charter Documents") are attached
hereto as Annex I.
6.2 AUTHORIZATION. The representatives of PARENT executing this Agreement
have the authority to enter into and bind PARENT to the terms of this Agreement.
PARENT has the corporate power and authority to enter into this Agreement and
the Exchange.
6.3 CAPITAL STOCK OF PARENT. The authorized capital stock of PARENT is as
set forth in Sections 1.3(ii) and (iii), respectively. All of the issued and
outstanding shares of the capital stock of PARENT are owned as set forth on
Annex IV. All of the issued and outstanding shares of the capital stock of
PARENT have been duly authorized and validly issued, are fully paid and
nonassessable. Further, none of such shares were issued in violation of the
preemptive rights of any past or present stockholder of PARENT.
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On the Funding and Consummation Date, PARENT shall have outstanding only
one class of common stock (Parent Common Stock) and the shares of Parent Common
Stock owned by the Founding Companies and the purchasers of stock in the IPO
will not possess less than 80% of the total voting power of Parent Common Stock
entitled to vote. For this purpose, the outstanding Parent Common Stock shall
include, without limitation, the shares to be held by the stockholders of all
Founding Companies and by purchasers in the IPO.
6.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except for the
Other Agreements and except as set forth on Schedule 6.4, (i) no option,
warrant, call, conversion right or commitment of any kind exists which obligates
PARENT to issue any of their authorized but unissued capital stock; and (ii)
PARENT has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. Schedule 6.4 also
includes complete and accurate copies of all stock option or stock purchase
plans, including a list, accurate as of the date hereof, of all outstanding
options, warrants or other rights to acquire shares of the stock of PARENT.
6.5 SUBSIDIARIES. PARENT has no subsidiaries except for the companies
identified as "ACQUISITION CORP." in the Other Agreements. PARENT does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity, and PARENT,
directly or indirectly, is not a participant in any joint venture, partnership
or other non-corporate entity.
6.6 FINANCIAL STATEMENTS. Attached hereto as Schedule 6.6 are copies of
the following financial statements (the "Parent Financial Statements") of
PARENT, which reflect the results of its operations from inception in February
1997: PARENT's audited Balance Sheet as of June 30, 1997 and Statements of
Income, Cash Flows and Retained Earnings for the period from inception through
June 30 , 1997. Such Parent Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as noted thereon or on Schedule
6.6). Except as set forth on Schedule 6.6, such Balance Sheet as of June 30,
1997 presents fairly the financial position of PARENT as of such date, and such
Statements of Income, Cash Flows and Retained Earnings present fairly the
results of operations and cash from for the period indicated.
6.7 LIABILITIES AND OBLIGATIONS. Except as set forth on Schedule 6.7,
PARENT has no material liabilities, contingent or otherwise, except as set forth
in or contemplated by this Agreement and the Other Agreements and except for
fees incurred in connection with the transactions contemplated hereby and
thereby.
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6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 6.8, PARENT is not in violation of any law or regulation or any order
of any court or Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
either of them which would have a Material Adverse Effect; and except to the
extent set forth in Schedule 6.8, there are no material claims, actions, suits
or proceedings, pending or, to the knowledge of PARENT, threatened, against or
affecting PARENT, at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over either of them and no notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received. PARENT has conducted and is conducting its businesses in substantial
compliance with the requirements, standards, criteria and conditions set forth
in applicable federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, variances, rules and regulations and are not in violation of
any of the foregoing which might have a Material Adverse Effect.
6.9 NO VIOLATIONS. PARENT is not in violation of any Parent Charter
Document. None of PARENT, or, to the knowledge of PARENT, any other party
thereto, is in default under any lease, instrument, agreement, license, or
permit to which PARENT is a party, or by which PARENT or any of its properties,
are bound (collectively, the "Parent Documents"); and (a) the rights and
benefits of PARENT under the Parent Documents will not be adversely affected by
the transactions contemplated hereby and (b) the execution of this Agreement and
the performance of the obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any material violation or
breach or constitute a default under, any of the terms or provisions of the
Parent Documents or the Parent Charter Documents. Except as set forth on
Schedule 6.9, none of the Parent Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and effect
and consummation of the transactions contemplated hereby will not give rise to
any right to termination, cancellation or acceleration or loss of any right or
benefit.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by PARENT and the performance of the transactions contemplated herein have been
duly and validly authorized by the Board of Directors of PARENT and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of PARENT.
6.11 PARENT STOCK. At the time of issuance thereof, the Parent Stock to be
delivered to the STOCKHOLDERS and the NEWBURY STOCKHOLDERS pursuant to this
Agreement will constitute valid and legally issued shares of PARENT, fully paid
and nonassessable, and with the exception of restrictions upon resale set forth
in Sections 15 and 16 hereof, will be identical in all substantive respects
(which do not include the form of certificate upon which it is printed or the
presence or absence of a CUSIP number on any such certificate) to the Parent
Stock issued and outstanding as of the date hereof. The shares of Parent Stock
to be issued to the STOCKHOLDERS
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and the NEWBURY STOCKHOLDERS pursuant to this Agreement will not be registered
under the 1933 Act, except as provided in Section 17 hereof.
6.12 NO SIDE AGREEMENTS. PARENT has not entered or will enter into any
agreement with any of the Founding Companies or any of the STOCKHOLDERS of the
Founding Companies other than the Other Agreements and the agreements
contemplated by the Other Agreements, including the employment agreements
referred to therein.
6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. PARENT was organized in
February 1997 and has conducted limited operations since that time. PARENT has
not conducted any material business since the date of its inception, except in
connection with this Agreement, the Other Agreements and the IPO. PARENT does
not own and has not at any time owned any real property or any material personal
property and is not a party to any other agreement, except as listed on Schedule
6.13 and except that PARENT is a party to the Other Agreements and the
agreements contemplated thereby and to such agreements as will be filed as
Exhibits to the Registration Statement.
Except (i) as described in Schedule 6.13 and (ii) for the information
included in the Annexes and Schedules this Agreement and the Other Agreements
are in substantially the same form and copies of the Other Agreements are
available for review by COMPANY, NEWBURY, the STOCKHOLDERS and the NEWBURY
STOCKHOLDERS. In arriving at the consideration to be paid to STOCKHOLDERS and
the NEWBURY STOCKHOLDERS specified in Annex II, PARENT utilized with the COMPANY
and NEWBURY substantially the same methodologies as PARENT utilized with each of
the Other Founding Companies.
6.14 TAXES. PARENT has timely filed all requisite federal, state and other
Tax returns or extension requests for all fiscal periods ended on or before the
Balance Sheet Date; and except as set forth on Schedule 6.14, there are no
examinations in progress or claims against PARENT for federal, state and other
Taxes (including penalties and interest) for any period or periods prior to and
including the Balance Sheet Date and no notice of any claim for taxes, whether
pending or threatened, has been received. All Tax, including interest and
penalties (whether or not shown on any tax return) owed by PARENT, any member of
an affiliated or consolidated group which includes or included PARENT, or with
respect to any payment made or deemed made by PARENT herein has been paid. The
amounts shown as accruals for taxes on Parent Financial Statements are
sufficient for the payment of all Taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that date.
PARENT is not an investment company as defined in Section 351(e)(1) of the Code.
PARENT will not make an election to treat the transaction as a
purchase of assets under Section 338 of the Code.
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6.15 ABSENCE OF CHANGES. Since June 30, 1997, except as set forth in the
drafts of the Registration Statement delivered to the STOCKHOLDERS and the
NEWBURY STOCKHOLDERS, and except as contemplated by this Agreement and the Other
Agreements, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of PARENT;
(ii) any damage destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
PARENT;
(iii) any change in the authorized capital of PARENT or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of PARENT;
(v) any work interruptions, labor grievances or claims filed, or any
event or condition of any character, materially adversely affecting the
business of PARENT;
(vi) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of PARENT to any person;
(vii) any cancellation or agreement to cancel, any indebtedness or
other obligation owing PARENT;
(viii)any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of PARENT or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(ix) any waiver of any material rights or claims of PARENT;
(x) any amendment or termination of any material contract agreement,
license, permit or other right to which PARENT is a party;
(xi) any transaction by PARENT outside the ordinary course of its
business; or
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(xii) any other distribution of property or assets by PARENT other
than in the ordinary course of business.
6.16 DISCLOSURE. The most recent draft of the Registration Statement
delivered to the COMPANY, NEWBURY, the STOCKHOLDERS, and the NEWBURY
STOCKHOLDERS, together with this Agreement and the information furnished to the
COMPANY, NEWBURY, the STOCKHOLDERS and the NEWBURY STOCKHOLDERS in connection
herewith, does not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing does not apply to statements contained in or omitted from any
of such documents made or omitted in reliance upon information furnished by the
COMPANY, NEWBURY, the STOCKHOLDERS or the NEWBURY STOCKHOLDERS.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of this
Agreement and the Funding and Consummation Date, the COMPANY and NEWBURY will
afford to the officers and authorized representatives of PARENT access to all of
the COMPANY's and NEWBURY's sites, properties, books and records and will
furnish PARENT with such additional financial and operating data and other
information as to the business and properties of the COMPANY and NEWBURY as
PARENT may from time to time reasonably request. The COMPANY and NEWBURY will
cooperate with PARENT, its representatives, auditors and counsel in the
preparation of any documents or other material which may be reasonably required
in connection with any documents or materials required by this Agreement.
PARENT, NEWBURY, the STOCKHOLDERS, the NEWBURY STOCKHOLDERS and the COMPANY will
treat all information obtained in connection with the negotiation and
performance of this Agreement as confidential in accordance with the provisions
of Section 14 hereof. In addition, PARENT will cause each of the Other Founding
Companies to enter into a provision similar to this Section 7.1 requiring each
Other Founding Company, its STOCKHOLDERS, directors, officers, representatives,
employees and agents to keep confidential any information obtained by such Other
Founding Company.
(b) Between the date of this Agreement and the Funding and Consummation
Date, PARENT will afford to the officers and authorized representatives of the
COMPANY and NEWBURY access to all of PARENT's sites, properties, books and
records and will furnish the COMPANY and NEWBURY with such additional financial
and operating data and other information as to the business and properties of
PARENT as the COMPANY and NEWBURY may from time to time reasonably request.
PARENT will cooperate with the COMPANY and NEWBURY, their representatives,
auditors and counsel in the preparation of any documents or other material which
may be required in connection with any documents or materials required by this
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Agreement. The COMPANY and NEWBURY will cause all information obtained in
connection with the negotiation and performance of this Agreement to be treated
as confidential in accordance with the provisions of Section 14 hereof.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Funding and Consummation Date, the COMPANY and NEWBURY will,
except as set forth on Schedule 7.2:
(i) carry on their businesses in substantially the same manner as
they have heretofore and not introduce any material new method of
management, operation or accounting; and
(ii) maintain their properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted; and
(iii) perform in all material respects all of their obligations
under agreements relating to or affecting their assets, properties or
rights; and
(iv) keep in full force and effect present insurance policies or
other comparable insurance coverage; and
(v) use their reasonable best efforts to maintain and preserve their
business organization intact, retain their present key employees and
maintain its relationships with suppliers, customers and others having
business relations with the COMPANY and NEWBURY; and
(vi) maintain compliance with all material permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities; and
(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments, except as permitted in Section
10.6, or as disclosed on Schedule 5.10, or without the prior knowledge and
written consent of PARENT; and maintain all debt and lease obligations at
levels no greater than the levels in effect on the Balance Sheet Date; and
(viii)maintain or reduce present salaries and commission levels for
all officers, directors, employees and agents except for ordinary and
customary bonus and salary increases for employees in accordance with past
practices.
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7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3, and except
as expressly permitted by Section 10.6, between the date hereof and the Funding
and Consummation Date, the COMPANY and NEWBURY will not, without prior written
consent of PARENT:
(i) make any change in their Certificates or Articles of
Incorporation or By-laws; or
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to their securities of any kind other than
in connection with the exercise of options or warrants listed in Schedule
5.4; or
(iii) declare or pay any dividend, or make any distribution in
respect of their stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of their stock;
or
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except if it is in
the normal course of business (consistent with past practice) or involves
an amount not in excess of $50,000; or
(v) create, assume or permit to exist any borrowing, debt, mortgage,
pledge or other lien or encumbrance upon any assets or properties whether
now owned or hereafter acquired, except (1) debt in an aggregate amount
not to exceed the amount of debt outstanding on the Balance Sheet Date,
(2) with respect to purchase money liens incurred in connection with the
acquisition of equipment with an aggregate cost not in excess of $50,000
necessary or desirable for the conduct of the businesses of the COMPANY,
(3) (A) liens for taxes either not yet due or being contested in good
faith and by appropriate proceedings (and for which contested taxes
adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other like
liens arising in the ordinary course of business (the liens set forth in
clause (3) being referred to herein as "Statutory Liens"), or (4) liens
set forth on Schedule 5.10 and/or 5.15 hereto; or
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business; or
(vii) negotiate for the acquisition of any business or the start-up
of any new business; or
(viii)merge or consolidate or agree to merge or consolidate with or
into any other corporation; or
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(ix) waive any material rights or claims of the COMPANY or NEWBURY,
provided that the COMPANY may negotiate and adjust bills in the course of
good faith disputes with customers in a manner consistent with past
practice, provided, further, that such adjustments shall not be deemed to
be included in Schedule 5.11 unless specifically listed thereon; or
(x) commit a material breach or amend or terminate any material
agreement, permit, license or other right of the COMPANY or NEWBURY; or
(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
7.4 NO SHOP. None of the STOCKHOLDERS, the NEWBURY STOCKHOLDERS, the
COMPANY, NEWBURY, or any agent, officer, director, trustee or any representative
of any of the foregoing will, during the period commencing on the date of this
Agreement and ending with the earlier to occur of the Funding and Consummation
Date or the termination of this Agreement in accordance with its terms, directly
or indirectly:
(i) solicit or initiate the submission of proposals or offers from
any person for, or
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than PARENT or its
authorized agents relating to,
any acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, the COMPANY or NEWBURY or a merger, acquisition,
consolidation, share exchange or business combination of or with the COMPANY or
NEWBURY.
7.5 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the COMPANY
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements, and shall
provide PARENT on Schedule 7.5 with proof that any required notice has been
sent.
7.6 AGREEMENTS. Prior to the Closing Date, the STOCKHOLDERS, the NEWBURY
STOCKHOLDERS, the COMPANY and NEWBURY shall terminate (i) any stockholders
agreements, voting agreements, voting trusts, options, warrants, (ii) any
employment agreements between the COMPANY or NEWBURY and any employee listed on
Schedule 9.12 hereto, and (iii) any existing agreement between the COMPANY or
NEWBURY, on the one hand, and any
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STOCKHOLDER or any NEWBURY STOCKHOLDER, on the other hand, other than those
expressly disclosed on Schedule 7.6/9.7 as not being terminated.
7.7 NOTIFICATION OF CERTAIN MATTERS. The STOCKHOLDERS, the NEWBURY
STOCKHOLDERS, NEWBURY and the COMPANY shall give prompt notice to PARENT of (i)
the occurrence or non-occurrence of any event the occurrence or non-occurrence
of which would be likely to cause any representation or warranty of the COMPANY,
the NEWBURY STOCKHOLDERS, NEWBURY or the STOCKHOLDERS contained herein to be
untrue or inaccurate in any material respect at or prior to the Closing Date or
the Funding and Consummation Date and (ii) any material failure of any
STOCKHOLDER, any NEWBURY STOCKHOLDER, NEWBURY or the COMPANY to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
such person hereunder. PARENT shall give prompt notice to the COMPANY and
NEWBURY of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
of PARENT contained herein to be untrue or inaccurate in any material respect at
or prior to the Closing Date or the Funding and Consummation Date and (ii) any
material failure of PARENT to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder. The delivery of any
notice pursuant to this Section 7.7 shall not be deemed to (i) modify the
representations or warranties hereunder of any party, which modification may
only be made pursuant to Section 7.8, (ii) modify the conditions set forth in
Sections 8 and 9, or (iii) limit or otherwise affect the remedies available
hereunder to any party receiving such notice.
7.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation, until 24 hours prior to the
anticipated effectiveness of the Registration Statement, to supplement or amend
promptly the Schedules hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules, provided however,
that supplements and amendments to Schedules 5.10, 5.11, 5.14 and 5.15 shall
only have to be delivered at the Closing Date, unless such Schedule is to be
amended to reflect an event occurring other than in the ordinary course of
business. Notwithstanding the foregoing sentence, no amendment or supplement to
a Schedule prepared by the COMPANY or NEWBURY that constitutes or reflects an
event or occurrence that would have a Material Adverse Effect may be made unless
PARENT and a majority of the Founding Companies other than the COMPANY and
NEWBURY consent to such amendment or supplement; and provided further, that no
amendment or supplement to a Schedule prepared by PARENT that constitutes or
reflects an event or occurrence that would have a Material Adverse Effect may be
made unless a majority of the Founding Companies consent to such amendment or
supplement. For all purposes of this Agreement, including without limitation for
purposes of determining whether the conditions set forth in Sections 8.1 and 9.1
have been fulfilled, the Schedules hereto shall be deemed to be the Schedules as
amended or supplemented pursuant to this
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Section 7.8. In the event that one of the Other Founding Companies seeks to
amend or supplement a Schedule pursuant to Section 7.8 of one of the Other
Agreements, and such amendment or supplement constitutes or reflects an event or
occurrence that would have a Material Adverse Effect on such Other Founding
Company, PARENT shall give the COMPANY and NEWBURY notice promptly after it has
knowledge thereof. If PARENT and a majority of the Founding Companies consent to
such amendment or supplement, which consent shall have been deemed given by
PARENT or any Founding Company if no response is received within 24 hours
following receipt of notice of such amendment or supplement (or sooner if
required by the circumstances under which such consent is requested), but the
COMPANY and NEWBURY do not give their consent, the COMPANY and NEWBURY may
terminate this Agreement pursuant to Section 12.1(iv). In the event that COMPANY
or NEWBURY seeks to amend or supplement a Schedule pursuant to this Section 7.8,
and PARENT and a majority of the Other Founding Companies do not consent to such
amendment or supplement, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 12.1(i). In the event that PARENT seeks to amend
or supplement a Schedule pursuant to this Section 7.8 and a majority of the
Founding Companies do not consent to such amendment or supplement, this
Agreement shall be deemed terminated by mutual consent as set forth in Section
12.1(i). No party to this Agreement shall be liable to any other party if this
Agreement shall be terminated pursuant to the provisions of this Section 7.8. No
amendment of or supplement to a Schedule shall be made later than 24 hours prior
to the anticipated effectiveness of the Registration Statement.
7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The COMPANY,
NEWBURY, the STOCKHOLDERS and the NEWBURY STOCKHOLDERS shall furnish or cause to
be furnished to PARENT and the Underwriters all of the information concerning
the COMPANY, NEWBURY, the STOCKHOLDERS and the NEWBURY STOCKHOLDERS required for
inclusion in, and will cooperate with PARENT and the Underwriters in the
preparation of, the Registration Statement and the prospectus included therein
(including audited and unaudited financial statements, prepared in accordance
with generally accepted accounting principles, in form suitable for inclusion in
the Registration Statement). The COMPANY, NEWBURY, the STOCKHOLDERS and the
NEWBURY STOCKHOLDERS agree promptly to advise PARENT if at any time during the
period in which a prospectus relating to the offering is required to be
delivered under the 1933 Act, any information contained in the prospectus
concerning the COMPANY, NEWBURY, the STOCKHOLDERS or the NEWBURY STOCKHOLDERS
becomes incorrect or incomplete in any material respect, and to provide the
information needed to correct such inaccuracy. Insofar as the information
relates solely to the COMPANY, NEWBURY, the STOCKHOLDERS or the NEWBURY
STOCKHOLDERS, the COMPANY and NEWBURY, respectively, represent and warrant as to
such information with respect to themselves, and the STOCKHOLDERS and the
NEWBURY STOCKHOLDERS represent and warrant, as to such information with respect
to the COMPANY and NEWBURY and himself or herself, that the Registration
Statement will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. PARENT will keep the COMPANY, NEWBURY and
the Other Founding Companies advised as to the status of the Registration
Statement, including receipt of SEC comments, PARENT'S response thereto, and the
anticipated date and time of its effectiveness.
7.10 FINAL FINANCIAL STATEMENTS. The COMPANY shall provide prior to the
Funding and Consummation Date, and PARENT shall have had sufficient time to
review, the unaudited consolidated balance sheets of the COMPANY as of the end
of all fiscal quarters following the Balance Sheet Date, and the unaudited
consolidated statement of income, cash flows and retained earnings of the
COMPANY for all fiscal quarters ended after the Balance Sheet Date, disclosing
no material adverse change in the financial condition of the COMPANY or the
results of its operations or cash flows from the financial statements as of the
Balance Sheet Date. Such financial statements must be prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as noted therein). Except as noted in
such financial statements, all of such financial statements will present fairly
the results of operations or cash flows of the COMPANY for the periods indicated
therein.
7.11 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
7.12 AUTHORIZED CAPITAL. PARENT shall maintain its authorized capital
stock as set forth in the Registration Statement filed with the SEC except for
such changes in authorized capital stock as are made to respond to comments made
by the SEC or requirements of any exchange or automated trading system for which
application is made to register the Parent Stock.
7.13 COMPLIANCE WITH ▇▇▇▇-▇▇▇▇▇. All parties to this Agreement hereby
recognize that one or more filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "▇▇▇▇-▇▇▇▇▇ Act") may be required in
connection with the transactions contemplated herein. If it is determined by the
parties to this Agreement that filings under the ▇▇▇▇-▇▇▇▇▇ Act are required,
then: (i) each of the parties hereto agrees to cooperate and use its best
efforts to comply with the ▇▇▇▇-▇▇▇▇▇ Act, (ii) such compliance by the
STOCKHOLDERS, the NEWBURY STOCKHOLDERS, the COMPANY and NEWBURY shall be deemed
a condition precedent in addition to the conditions precedent set forth in
Section 9 of this Agreement, and such compliance by PARENT shall be deemed a
condition precedent in addition to the conditions precedent set forth in Section
8 of this Agreement, and (iii) the parties agree to cooperate and use their best
efforts to cause all filings required under the ▇▇▇▇-▇▇▇▇▇ Act to be made.
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS,
COMPANY, NEWBURY AND NEWBURY STOCKHOLDERS
The obligations of STOCKHOLDERS, NEWBURY STOCKHOLDERS, the COMPANY and
NEWBURY with respect to actions to be taken on the Closing Date are subject to
the satisfaction or waiver on or prior to the Closing Date of all of the
following conditions. The obligations of the STOCKHOLDERS, NEWBURY STOCKHOLDERS,
COMPANY and NEWBURY with respect to the actions to be taken in the Funding and
Consummation Date are subject to the satisfaction or waiver on or prior to the
Funding and Consummation Date of the conditions set forth in Sections 8.1, 8.8,
8.9 and 8.12. As of the Closing Date or, with respect to the conditions set
forth in Sections 8.1, 8.8, 8.9 and 8.12, as of the Funding and Consummation
Date, all conditions not satisfied or objected to shall be deemed to have been
waived, except that no such waiver shall be deemed to affect the survival of the
representations and warranties of PARENT contained in Section 6 hereof:
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of PARENT contained in Section 6 shall be true
and correct in all material respects as of the Closing Date and the Funding and
Consummation Date as though such representations and warranties had been made on
and as of such dates; all of the terms, covenants and conditions of this
Agreement to be complied with and performed by PARENT on or before the Closing
Date and the Funding and Consummation Date shall have been duly complied with
and performed in all material respects; and certificates to the foregoing effect
dated the Closing Date and the Funding and Consummation Date, respectively, and
signed by the President or any Vice President of PARENT shall have been
delivered to the COMPANY, NEWBURY, the STOCKHOLDERS and the NEWBURY
STOCKHOLDERS.
8.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be satisfactory to the COMPANY and NEWBURY and their
counsel. The STOCKHOLDERS, the NEWBURY STOCKHOLDERS, NEWBURY and the COMPANY
shall not have determined that the Registration Statement and the prospectus
forming a part thereof, including any amendments thereof or supplements thereto,
contain any untrue statement of a material fact, or omit to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, provided that the condition contained in this sentence
shall be deemed satisfied if the COMPANY, NEWBURY, STOCKHOLDERS or NEWBURY
STOCKHOLDERS shall have failed to inform PARENT in writing prior to the
effectiveness of the Registration Statement of the existence of an untrue
statement of a material fact or the omission of such a statement of a material
fact.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Exchange or the
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IPO and no governmental agency or body shall have taken any other action or made
any request of the COMPANY and NEWBURY as a result of which the management of
the COMPANY and NEWBURY deems it inadvisable to proceed with the transactions
hereunder.
8.4 OPINION OF COUNSEL. The COMPANY and NEWBURY shall have received an
opinion from counsel for PARENT, dated the Funding and Consummation Date, in the
form annexed hereto as Annex V.
8.5 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC and the Underwriters shall have agreed to acquire
on a firm commitment basis, subject to the conditions set forth in the
underwriting agreement, on terms such that the aggregate value of the cash and
the number of shares of Parent Stock to be received by the STOCKHOLDERS and the
NEWBURY STOCKHOLDERS is not less than the Minimum Value set forth on Annex II.
8.6 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the transaction
contemplated herein shall have been obtained and made and no action or
proceeding shall have been instituted or threatened to restrain or prohibit the
Exchange and no governmental agency or body shall have taken any other action or
made any request of COMPANY or NEWBURY as a result of which COMPANY and NEWBURY
deems it inadvisable to proceed with the transactions hereunder.
8.7 GOOD STANDING CERTIFICATES. PARENT shall have delivered to the COMPANY
and NEWBURY a certificate, dated as of a date no later than ten days prior to
the Closing Date, duly issued by the Secretary of State Delaware and Texas and
in each state in which PARENT is authorized to do business, showing that each of
PARENT is in good standing and authorized to do business.
8.8 NO MATERIAL ADVERSE EFFECT No event or circumstance shall have
occurred with respect to PARENT which would constitute a Material Adverse
Effect.
8.9 CLOSING OF IPO. The closing of the sale of the Parent Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
8.10 SECRETARY'S CERTIFICATE. The COMPANY and NEWBURY shall have received
a certificate or certificates, dated the Closing Date and signed by the
secretary of PARENT, certifying the truth and correctness of attached copies of
the PARENT's Certificate of Incorporation (including amendments thereto),
By-Laws (including amendments thereto), and resolutions of the Board of
Directors and, if required, the STOCKHOLDERS of PARENT approving PARENT's
entering into this Agreement and the consummation of the transactions
contemplated hereby.
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8.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 9.12
shall have been afforded the opportunity to enter into an employment agreement
substantially in the form of Annex VIII hereto.
8.12 TAX MATTERS. The STOCKHOLDERS and NEWBURY STOCKHOLDERS shall have
been advised a tax advisor reasonably acceptable to the STOCKHOLDERS and NEWBURY
STOCKHOLDERS that the Exchange should qualify as a tax-free transfer of property
under Section 351 of the Code; provided that this shall not constitute a
condition precedent under this Section 8 or otherwise unless the STOCKHOLDERS
and NEWBURY STOCKHOLDERS have complied with every reasonable request designed or
intended to enable the Exchange to so qualify.
8.13 PARALLEL TRANSFER RESTRICTIONS. WJG Capital, L.L.C. ("WJG") and the
PARENT's other stockholders and option and warrant holders shall have agreed in
writing to restrict the transfers of their shares of Parent Stock on
substantially the same terms as specified in Section 15.1; provided, that
nothing shall restrict WJG from distributing shares of Parent Stock to the
members of WJG so long as such members are subject to the referenced
restrictions on transfer.
8.14 MERGERS. PARENT's acquisitions of the Other Founding Companies shall
occur on the Funding and Consummation Date pursuant to the Other Agreements.
8.15 LISTING. PARENT shall have caused the Parent Stock to be listed on
the New York Stock Exchange or traded or quoted on the NASDAQ National Market
System, subject to official notice of issuance.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT
The obligations of PARENT with respect to actions to be taken on the
Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions. The obligations of PARENT with
respect to actions to be taken on the Funding and Consummation Date are subject
to the satisfaction or waiver on or prior to the Funding and Consummation Date
of the conditions set forth in Sections 9.1, 9.4 and 9.13. As of the Closing
Date or, with respect to the conditions set forth in Sections 9.1, 9.4 and 9.13,
as of the Funding and Consummation Date, all conditions not satisfied shall be
deemed to have been waived, except that no such waiver shall be deemed to affect
the survival of the representations and warranties of the COMPANY, NEWBURY,
STOCKHOLDERS and NEWBURY STOCKHOLDERS contained in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the STOCKHOLDERS, NEWBURY STOCKHOLDERS,
NEWBURY and the COMPANY contained in this Agreement shall be true and correct in
all material respects as of the Closing Date and the Funding and Consummation
Date with the same
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effect as though such representations and warranties had been made on and as of
such dates; all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the STOCKHOLDERS, NEWBURY STOCKHOLDERS, NEWBURY
and the COMPANY on or before the Closing Date or the Funding and Consummation
Date, as the case may be, shall have been duly performed or complied with in all
material respects; and the STOCKHOLDERS and NEWBURY STOCKHOLDERS shall have
delivered to PARENT certificates dated the Closing Date and the Funding and
Consummation Date, respectively, and signed by them to such effect.
9.2 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Exchange or the IPO and no governmental agency or body shall
have taken any other action or made any request of PARENT as a result of which
the management of PARENT deems it inadvisable to proceed with the transactions
hereunder.
9.3 SECRETARY'S CERTIFICATE. PARENT shall have received a certificate,
dated the Closing Date and signed by the secretary of the COMPANY and NEWBURY,
certifying the truth and correctness of attached copies of such COMPANY's and
NEWBURY's Certificates or Articles of Incorporation (including amendments
thereto), By-Laws (including amendments thereto), and resolutions of the Boards
of Directors and the STOCKHOLDERS and NEWBURY STOCKHOLDERS, respectively,
approving the COMPANY's and NEWBURY's entering into this Agreement and the
consummation of the transactions contemplated hereby.
9.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the COMPANY or NEWBURY which would constitute a
Material Adverse Effect, and neither the COMPANY nor NEWBURY shall have suffered
any material loss or damages to any of its properties or assets, whether or not
covered by insurance, which change, loss or damage materially affects or impairs
the ability of the COMPANY or NEWBURY to conduct its business.
9.5 STOCKHOLDERS' AND NEWBURY STOCKHOLDERS' RELEASE. The STOCKHOLDERS and
NEWBURY STOCKHOLDERS shall have delivered to PARENT, the COMPANY and NEWBURY an
instrument dated the Closing Date releasing the COMPANY and NEWBURY (including
all subsidiaries) from (i) any and all claims of the STOCKHOLDERS and NEWBURY
STOCKHOLDERS against the COMPANY, NEWBURY and PARENT and (ii) any and all
obligations of the COMPANY, NEWBURY and PARENT to the STOCKHOLDERS and the
NEWBURY STOCKHOLDERS, except for (x) items specifically identified on Schedules
5.10, 5.15 or 7.6/9.7 as being claims of or obligations to the STOCKHOLDERS or
NEWBURY STOCKHOLDERS which are to survive after Closing, (y) any obligations
arising after the Funding and Consummation Date to a NEWBURY STOCKHOLDER
relating to his or her employment by the COMPANY and (z) obligations arising
under this Agreement or the transactions contemplated hereby.
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9.6 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been approved
by counsel to PARENT.
9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as otherwise
specifically set forth on Schedule 7.6/9.7, all existing agreements between
COMPANY or NEWBURY (including all their subsidiaries) and the STOCKHOLDERS,
NEWBURY STOCKHOLDERS and their affiliates shall have been canceled effective
prior to or as of the Funding and Consummation Date.
9.8 OPINION OF COUNSEL. PARENT shall have received an opinion from counsel
to the COMPANY, NEWBURY, the STOCKHOLDERS and NEWBURY STOCKHOLDERS, dated the
Closing Date, substantially in the form annexed as Annex VI, and the
Underwriters shall have received a copy of the same opinion addressed to them.
9.9 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all consents
and approvals of third parties listed on Schedule 5.23 shall have been obtained;
and no action or proceeding shall have been instituted or threatened to restrain
or prohibit the Exchange and no governmental agency or body shall have taken any
other action or made any request of PARENT as a result of which PARENT deems it
inadvisable to proceed with the transactions hereunder.
9.10 GOOD STANDING CERTIFICATES. The COMPANY and NEWBURY shall have
delivered to PARENT a certificate, dated as of a date no earlier than ten days
prior to the Closing Date, duly issued by the appropriate governmental authority
in the COMPANY's and NEWBURY'S (and each subsidiary's) state of incorporation
and, unless waived by PARENT, in the state in which the COMPANY and NEWBURY (and
each subsidiary) is authorized to do business, showing the COMPANY and NEWBURY
are in good standing and authorized to do business and that all state franchise
and/or income Tax returns and Taxes for the COMPANY and NEWBURY (and each
subsidiary) for all periods prior to the Closing have been filed and paid.
9.11 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC.
9.12 EMPLOYMENT AGREEMENTS. The COMPANY and each of the persons listed on
Schedule 9.12 shall have entered into an employment agreement substantially in
the form of Annex VII hereto.
9.13 CLOSING OF IPO. The closing of the sale of the Parent Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
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9.14 FIRPTA CERTIFICATE. Each of the STOCKHOLDERS and the NEWBURY
STOCKHOLDERS shall have delivered to PARENT a certificate to the effect that he
or she is not a foreign person pursuant to Section 1.1445-2(b) of the Treasury
regulations.
10. COVENANTS OF PARENT, STOCKHOLDERS AND NEWBURY
STOCKHOLDERS AFTER CLOSING
10.1 REPAYMENT OF CERTAIN OBLIGATIONS. On the Funding and Consummation
Date, PARENT shall pay off or cause to be paid off all of the COMPANY's funded
indebtedness which either (i) has been disclosed pursuant to Schedule 5.10 of
this Agreement and is issued and outstanding consistent with this Agreement or
(ii) is incurred in accordance with Section 10.6. After the Funding and
Consummation Date, PARENT shall provide the COMPANY with the working capital
required for operations.
10.2 PRESERVATION OF TAX TREATMENT. Except as contemplated by this
Agreement or the Registration Statement, after the Funding and Consummation
Date, PARENT shall not and shall not permit any of its subsidiaries to undertake
any act that would jeopardize the tax status of the Consolidation Plan as
qualifying under Section 351 of the Code.
10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) The COMPANY and NEWBURY shall, if possible, file or cause to be
filed all separate Returns of any Acquired Party for all taxable periods
that end on or before the Funding and Consummation Date. Notwithstanding
the foregoing, the STOCKHOLDERS and NEWBURY STOCKHOLDERS shall file or
cause to be filed all separate federal income Tax Returns of any Acquired
Party for all taxable periods that end on or before the Funding and
Consummation Date. The STOCKHOLDERS and NEWBURY STOCKHOLDERS shall pay or
cause to be paid all Tax liabilities (in excess of all amounts already
paid with respect thereto or properly accrued or reserved with respect
thereto on the Company Financial Statements) shown by such Returns to be
due.
(ii) PARENT shall file or cause to be filed all separate Returns of,
or that include, any Acquired Party for all taxable periods ending after
the Funding and Consummation Date.
(iii) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to the of the other parties hereto such cooperation
and information as any of them reasonably may request in filing any
Return, amended Return or claim for refund, determining a liability for
Taxes or a right to refund of Taxes or in conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall
include providing copies of all relevant portions of relevant Returns,
together with relevant accompanying schedules and relevant work papers,
relevant documents relating to rulings
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or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a
mutually convenient basis at its cost to provide explanation of any
documents or information so provided. Subject to the preceding sentence,
the party required to file Returns pursuant to this Agreement shall bear
all costs of filing such Returns.
(iv) Each of the COMPANY, NEWBURY, PARENT, NEWBURY STOCKHOLDERS and
the STOCKHOLDERS shall comply with the Tax reporting requirements of the
Treasury Regulations promulgated under the Code, and treat the transaction
as a tax-free contribution under Section 351 of the Code.
10.4 DIRECTORS. The persons named in the Registration Statement shall be
appointed as directors and elected as officers of PARENT, as and to the extent
set forth in the Registration Statement, promptly following the Funding and
Consummation Date.
10.5 PRESERVATION OF EMPLOYEE BENEFIT PLANS. Following the Funding and
Consummation Date, PARENT shall not terminate any health insurance, life
insurance or 401(k) plan in effect at the COMPANY until such time as PARENT is
able to replace such plan with a plan that is applicable to PARENT and all of
its then existing subsidiaries, provided that PARENT shall have no obligation to
provide replacement plans that have the same terms and provisions as the
existing plans, provided, further, that any new health insurance plan shall
provide for coverage for preexisting conditions. Nothing herein shall in any way
limit the management rights of PARENT to assess the COMPANY'S workforce needs
and make appropriate adjustments as necessary or desirable within their
discretion subject to applicable laws and collective bargaining agreements).
10.6 DIVIDENDS. The COMPANY may pay to the STOCKHOLDERS as dividends the
amount of the COMPANY's net income after accruals for federal and state income
taxes for the period after the Balance Sheet Date to the Funding and
Consummation Date. The COMPANY may borrow funds to the extent necessary to make
the payments contemplated by this Section 10.6 and to the extent necessary to
ensure that the COMPANY has cash on hand to adequately fund operations on the
Funding and Consummation Date. NEWBURY may pay to the NEWBURY STOCKHOLDERS as
dividends the amount of NEWBURY'S net income after accruals for federal and
state income taxes for the period after the Balance Sheet Date to the Funding
and Consummation Date. NEWBURY may not borrow to make such payments.
11. INDEMNIFICATION
The STOCKHOLDERS (other than NEWBURY), the NEWBURY STOCKHOLDERS and PARENT
each make the following covenants that are applicable to them, respectively:
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11.1 INDEMNIFICATION BY THE STOCKHOLDERS AND NEWBURY
STOCKHOLDERS. The STOCKHOLDERS (other than NEWBURY) and the NEWBURY
STOCKHOLDERS covenant and agree that they, jointly and severally, will
indemnify, defend, protect and hold harmless PARENT, the COMPANY and NEWBURY at
all times, from and after the date of this Agreement until the applicable
Expiration Date, from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by PARENT, the COMPANY or NEWBURY as a result of or
arising from (i) any breach of the representations and warranties of the
STOCKHOLDERS, the NEWBURY STOCKHOLDERS, NEWBURY or the COMPANY set forth herein
or on the Schedules or certificates delivered in connection herewith, (ii) any
breach of any agreement on the part of the STOCKHOLDERS, the NEWBURY
STOCKHOLDERS, NEWBURY or the COMPANY under this Agreement, or (iii) any
liability under the 1933 Act, the 1934 Act or other federal or state law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact relating to the
COMPANY, NEWBURY, the NEWBURY STOCKHOLDERS or the STOCKHOLDERS, and provided to
PARENT or its counsel by the COMPANY, NEWBURY, the NEWBURY STOCKHOLDERS or the
STOCKHOLDERS (but in the case of the STOCKHOLDERS and the NEWBURY STOCKHOLDERS,
only if such statement was provided in writing) contained in the Registration
Statement or any prospectus forming a part thereof, or any amendment thereof or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact relating to the COMPANY, NEWBURY, the
NEWBURY STOCKHOLDERS or the STOCKHOLDERS required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
such indemnity shall not inure to the benefit of PARENT, NEWBURY, the COMPANY to
the extent that such untrue statement (or alleged untrue statement) was made in,
or omission (or alleged omission) occurred in, any preliminary prospectus and
the STOCKHOLDERS or NEWBURY STOCKHOLDERS provided, in writing, corrected
information to PARENT's counsel and to PARENT for inclusion in the final
prospectus, and such information was not so included or properly delivered.
11.2 INDEMNIFICATION BY PARENT. PARENT covenants and agrees that it will
indemnify, defend, protect and hold harmless the STOCKHOLDERS (other than
NEWBURY) and the NEWBURY STOCKHOLDERS at all times from and after the date of
this Agreement until the Expiration Date, from and against all claims, damages,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) incurred by the STOCKHOLDERS (other than
NEWBURY) or NEWBURY STOCKHOLDERS as a result of or arising from (i) any breach
by PARENT of its representations and warranties set forth herein or on the
Schedules or certificates attached hereto, (ii) any breach of any agreement on
the part of PARENT under this Agreement, or (iii) any liabilities which the
STOCKHOLDERS (other than NEWBURY) or the ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇▇▇ may incur due to PARENT's failure to be responsible for the
liabilities and obligations of the COMPANY (except to the extent that PARENT has
claims against the STOCKHOLDERS (other than NEWBURY) or the NEWBURY STOCKHOLDERS
by reason of such liabilities); (iv) any liability under the 1933 Act, the 1934
Act or other federal or state law or regulation, at common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact relating to PARENT or any of the Other Founding Companies
contained in any preliminary prospectus, the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact relating to PARENT or any of the Other Founding
Companies required to be stated therein or necessary to make the statements
therein not misleading.
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any criminal proceeding
without the written consent of the Indemnified Party. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records or information reasonably
requested by the Indemnifying Party that are in the Indemnified Party's
possession or control. All Indemnified Parties shall use the same counsel, which
shall be the counsel selected by Indemnifying Party, provided that if counsel to
the Indemnifying Party shall have a conflict of interest that prevents counsel
for the Indemnifying Party from representing an Indemnified Party, then the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and Indemnifying Party will reimburse the
Indemnified Party for the reasonable expenses of its counsel. An Indemnified
Party shall also have the right, at its sole expense, to have counsel of its
choice participate in (but never to control) the defense of any such claim.
After the Indemnifying Party has notified the Indemnified Party of its intention
to undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except (i) as set forth in the preceding sentence and (ii) to the
extent such participation is requested by the
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Indemnifying Party, in which event the Indemnified Party shall be reimbursed by
the Indemnifying Party for reasonable additional legal expenses and
out-of-pocket expenses. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person. Upon agreement as to
such settlement between said Third Person and the Indemnifying Party, the
Indemnifying Party shall, in exchange for a complete release from the
Indemnified Party, promptly pay to the Indemnified Party the amount agreed to in
such settlement and the Indemnified Party shall, from that moment on, bear full
responsibility for any additional costs of defense which it subsequently incurs
with respect to such claim and all additional costs of settlement or judgment.
If the Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, however, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
All settlements hereunder shall effect a complete release of the Indemnified
Party, unless the Indemnified Party otherwise agrees in writing. The parties
hereto will make appropriate adjustments for insurance proceeds in determining
the amount of any indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this Section 11
shall (except as prohibited by ERISA) be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party, provided that, (i) nothing herein shall be
construed to limit the right of a party, in a proper case, to seek injunctive
relief for a breach of this Agreement and (ii) the Newbury Agreements shall be
fully enforceable in all respects and all remedies at law or in equity shall be
available.
11.5 LIMITATIONS ON INDEMNIFICATION. PARENT and the other persons or
entities indemnified pursuant to Section 11.1 or 11.2 shall not assert any claim
for indemnification hereunder against the STOCKHOLDERS (other than NEWBURY) or
the NEWBURY STOCKHOLDERS until such time as, and solely to the extent that, the
aggregate of all claims which all such persons may have against all such
STOCKHOLDERS (other than NEWBURY) and NEWBURY STOCKHOLDERS shall exceed 1.0% of
(i) the sum of the cash paid to STOCKHOLDERS (other than NEWBURY) and to the
NEWBURY STOCKHOLDERS plus (ii) the value of the Parent Stock delivered to
STOCKHOLDERS (other than NEWBURY) and to the NEWBURY STOCKHOLDERS (calculated as
provided below) (the "Indemnification Threshold"). STOCKHOLDERS (other than
NEWBURY) and NEWBURY STOCKHOLDERS shall not assert
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any claim for indemnification hereunder against PARENT until such time as, and
solely to the extent that, the aggregate of all claims which all STOCKHOLDERS
and all NEWBURY STOCKHOLDERS may have against PARENT shall exceed the amount of
the Indemnification Threshold.
No person shall be entitled to indemnification under this Section 11 if
and to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.
Notwithstanding any other term of this Agreement, no STOCKHOLDER or
NEWBURY STOCKHOLDER shall be liable under this Section 11 for an amount which
exceeds the amount of proceeds received by such STOCKHOLDER (other than NEWBURY)
or NEWBURY STOCKHOLDER in connection with the Exchange. For purposes of
calculating the value of the Parent Stock received by STOCKHOLDERS (other than
NEWBURY) and NEWBURY STOCKHOLDERS, Parent Stock shall be valued at its initial
public offering price as set forth in the Registration Statement. It is hereby
understood and agreed that a STOCKHOLDER or NEWBURY STOCKHOLDER may satisfy an
indemnification obligation through payment of a combination of stock and cash in
proportion equal to the proportion of stock and cash received by such
STOCKHOLDER or NEWBURY STOCKHOLDER in connection with the Exchange, valued as
described immediately above.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION.This Agreement may be terminated at any time prior to the
Funding and Consummation Date solely:
(i) by mutual consent of the boards of directors of PARENT, NEWBURY and
the COMPANY; or
(ii) by the COMPANY and NEWBURY (acting through their boards of directors)
if, by September 30, 1997, the PARENT shall not have filed the Registration
Statement with the SEC reflecting an estimated minimum price for Parent Stock of
at least $10.50 per share; or
(iii) by the COMPANY and NEWBURY (acting through their boards of
directors), on the one hand, or by PARENT (acting through its board of
directors), on the other hand, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been consummated by
December 31, 1997, unless the failure of such transactions to be consummated is
due to the willful failure of the party seeking to terminate this Agreement to
perform any of its obligations under this Agreement to the extent required to be
performed by it prior to or on the Funding and Consummation Date; or
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(iv) by the COMPANY and NEWBURY (acting through their boards of directors)
on the one hand, or by PARENT (acting through its board of directors), on the
other hand, if a material breach or default shall be made by any party in the
observance or in the due and timely performance of any of the covenants,
agreements or conditions contained herein, and the curing of such default shall
not have been made on or before the Funding and Consummation Date; or
(v) pursuant to Section 7.8 hereof; or
(vi) pursuant to Section 4 hereof.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in Section
7.8 hereof, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement, including, but not limited
to, legal and audit costs and expenses.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. The NEWBURY STOCKHOLDERS will not, for a
period of five (5) years following the Funding and Consummation Date, for any
reason whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner, joint
venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, in any
temporary staffing, "PEO" or staff leasing, permanent placement or human
resource consulting or outsourcing business in competition with PARENT or any of
the subsidiaries thereof, within 100 miles of where the COMPANY or any of its
subsidiaries conducted business prior to the effectiveness of the Exchange (the
"Territory");
(ii) call upon any person who is, at that time, within the Territory, an
employee of PARENT (including the subsidiaries thereof) in a sales
representative or managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of PARENT (including the
subsidiaries thereof);
(iii) call upon any person or entity which is, at that time, or which has
been, within one (1) year prior to the Funding and Consummation Date, a client
or customer of PARENT (including the subsidiaries thereof), or the COMPANY or of
any of the Other Founding Companies within the Territory for the purpose of
soliciting or selling products or services in competition with PARENT within the
Territory;
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(iv) call upon any prospective acquisition candidate, on any NEWBURY
STOCKHOLDER's behalf or on behalf of any competitor in the temporary staffing,
"PEO" or staff leasing, permanent placement or human resource consulting or
outsourcing business, which candidate, to the actual knowledge of such NEWBURY
STOCKHOLDER, was called upon by PARENT (including the subsidiaries thereof) or
for which, to the knowledge of such NEWBURY STOCKHOLDER, PARENT (or any
subsidiary thereof) made an acquisition analysis, for the purpose of acquiring
such entity; or
(v) disclose clients or customers, whether in existence or proposed, of
the COMPANY to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever except to the extent that the COMPANY has in the
past disclosed such information to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any NEWBURY STOCKHOLDER from acquiring as an investment not more than
one percent (1%) of the capital stock of a competing business whose stock is
traded on a national securities exchange or in the over-the-counter market.
13.2 DAMAGES. Because of the difficulty of measuring economic losses to
PARENT (including its subsidiaries) as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to PARENT (including its subsidiaries) for which it would have no other
adequate remedy, each NEWBURY STOCKHOLDERS agree that the foregoing covenant may
be enforced by PARENT (including its subsidiaries) in the event of breach by any
such NEWBURY STOCKHOLDER, by injunctions and restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
NEWBURY STOCKHOLDERS in light of the activities and business of the COMPANY
(including the subsidiaries thereof) on the date of the execution of this
Agreement and the current plans of the COMPANY.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any NEWBURY
STOCKHOLDER against PARENT (including the
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subsidiaries thereof), whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by PARENT (or any subsidiary) of
such covenants. It is specifically agreed that the period of five (5) years
stated at the beginning of this Section 13, during which the agreements and
covenants of the NEWBURY STOCKHOLDERS made in this Section 13 shall be
effective, shall be computed by excluding from such computation any time during
which a NEWBURY STOCKHOLDER is in violation of any provision of this Section 13.
The covenants contained in Section 13 shall not be affected by any breach of any
other provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
13.6 MATERIALITY. The COMPANY, NEWBURY, the STOCKHOLDERS and the NEWBURY
STOCKHOLDERS hereby agree that this covenant is a material and substantial part
of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDERS AND NEWBURY STOCKHOLDERS. Each
STOCKHOLDER and NEWBURY STOCKHOLDER recognizes and acknowledges that he had in
the past, currently has, and in the future may possibly have, access to certain
confidential information of the COMPANY, NEWBURY, the Other Founding Companies,
and/or PARENT, such as operational policies, pricing and cost policies, and
insurance costs that are valuable, special and unique assets of the COMPANY's,
NEWBURY's, the Other Founding Companies' and/or PARENT's businesses. Each
STOCKHOLDER and NEWBURY STOCKHOLDER agrees that he will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except (a) to authorized
representatives of PARENT, (b) following the Closing, such information may be
disclosed by a NEWBURY STOCKHOLDER as is required in the course of performing
his duties for PARENT (or any subsidiary) and (c) to counsel and other advisers,
provided that such advisers (other than counsel) agree to the confidentiality
provisions of this Section 14.1, unless (i) such information becomes known to
the public generally through no fault of a STOCKHOLDER or NEWBURY STOCKHOLDER,
(ii) disclosure is required by law or the order of any governmental authority
under color of law, provided, that prior to disclosing any information pursuant
to this clause (ii), a STOCKHOLDER or NEWBURY STOCKHOLDER shall give prior
written notice thereof to PARENT and provide PARENT with the opportunity to
contest such disclosure, or (iii) the disclosing party reasonably believes that
such disclosure is required in connection with the defense of a lawsuit against
the disclosing party. In the event of a breach or threatened breach by the any
STOCKHOLDER or NEWBURY STOCKHOLDER of the provisions of this Section, PARENT
shall be entitled to an injunction restraining such STOCKHOLDER or NEWBURY
STOCKHOLDER from disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting
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PARENT from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
14.2 PARENT. PARENT recognizes and acknowledges that they had in the past
and currently have access to certain confidential information of the COMPANY,
such as operational policies, pricing and cost policies, and insurance costs
that are valuable, special and unique assets of the COMPANY's business. PARENT
agrees that, prior to the Closing, or if the transactions contemplated by this
Agreement are not consummated, they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of
the COMPANY, (b) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section
14.2, (c) to the Other Founding Companies and their representatives pursuant to
Section 7.1(a), unless (i) such information becomes known to the public
generally through no fault of PARENT, (ii) disclosure is required by law or the
order of any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), PARENT shall, if
possible, give prior written notice thereof to the COMPANY and the STOCKHOLDERS
and provide the COMPANY and the STOCKHOLDERS with the opportunity to contest
such disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, and (d) to the public to the extent necessary or advisable in
connection with the filing of the Registration Statement and the IPO and the
securities laws applicable thereto and to the operation of PARENT as a publicly
held entity after the IPO. In the event of a breach or threatened breach by
PARENT of the provisions of this Section, the COMPANY and the STOCKHOLDERS shall
be entitled to an injunction restraining PARENT from disclosing, in whole or in
part, such confidential information. Nothing herein shall be construed as
prohibiting the COMPANY and the STOCKHOLDERS from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
14.3 DAMAGES. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article 14 shall
survive the Closing or the termination of this Agreement, for a period of five
(5) years from the Closing Date or the date of termination, as the case may be.
15. TRANSFER RESTRICTIONS
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15.1 TRANSFER RESTRICTIONS. Except for transfers to immediate family
members who agree to be bound by the restrictions set forth in this Section 15.1
(or trusts for the benefit of the STOCKHOLDERS or NEWBURY STOCKHOLDERS or
immediate family members, the trustees of which so agree), for a period of one
year from the Closing Date, except pursuant to Section 17 hereof, the
STOCKHOLDERS and NEWBURY STOCKHOLDERS shall not sell, assign, exchange,
transfer, encumber, pledge, distribute, appoint, or otherwise dispose of any
shares of Parent Stock received by the STOCKHOLDERS or NEWBURY STOCKHOLDERS in
the Exchange. The certificates evidencing the Parent Stock delivered to the
STOCKHOLDERS and NEWBURY STOCKHOLDERS pursuant to Section 3 of this Agreement
will bear a legend substantially in the form set forth below and containing such
other information as PARENT may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED
OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION PRIOR TO [FIRST ANNIVERSARY OF CLOSING DATE].
UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO
REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
AGENT) AFTER THE DATE SPECIFIED ABOVE.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
16.1 COMPLIANCE WITH LAW. The STOCKHOLDERS and NEWBURY STOCKHOLDERS
acknowledge that the shares of Parent Stock to be delivered to the STOCKHOLDERS
and NEWBURY STOCKHOLDERS pursuant to this Agreement have not been and will not
be registered under the 1933 Act and therefore may not be resold without
compliance with the 1933 Act. The Parent Stock to be acquired by the
STOCKHOLDERS and NEWBURY STOCKHOLDERS pursuant to this Agreement is being
acquired solely for their own accounts, for investment purposes only, and with
no present intention of distributing, selling or otherwise disposing of it in
connection with a distribution. Each STOCKHOLDER and NEWBURY STOCKHOLDER
covenants, warrants and represents that none of the shares of Parent Stock
issued to such STOCKHOLDER or NEWBURY STOCKHOLDER will be offered, sold,
assigned, pledged, hypothecated, transferred or otherwise disposed of except
after full compliance with all of the applicable provisions of the 1933 Act and
the rules and regulations of the SEC. All the Parent Stock shall bear the
following legend in addition to the legend required under Section 15 of this
Agreement:
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THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT") AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE 1933 ACT AND APPLICABLE
SECURITIES LAW.
16.2 ECONOMIC RISK; SOPHISTICATION. Each STOCKHOLDER and NEWBURY
STOCKHOLDER is able to bear the economic risk of an investment in the Parent
Stock to be acquired pursuant to this Agreement and can afford to sustain a
total loss of such investment and has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and risks of
the proposed investment in the Parent Stock. Each STOCKHOLDER and NEWBURY
STOCKHOLDER has had an adequate opportunity to ask questions and receive answers
from the officers of PARENT concerning any and all matters relating to the
transactions described herein including, without limitation, the background and
experience of the current and proposed officers and directors of PARENT, the
plans for the operations of the business of PARENT, the business, operations and
financial conditions of the Founding Companies other than the COMPANY, and any
plans for additional acquisitions and the like. Each STOCKHOLDER and NEWBURY
STOCKHOLDER has asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to his satisfaction.
17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the Closing,
whenever PARENT proposes to register any Parent Stock for its own or others
account under the 1933 Act for a public offering, other than (i) any shelf
registration of shares to be used as consideration for acquisitions of
additional businesses by PARENT and (ii) registrations relating to employee
benefit plans, PARENT shall give the STOCKHOLDERS and NEWBURY STOCKHOLDERS
prompt written notice of its intent to do so. Upon the written request of any
STOCKHOLDER or NEWBURY STOCKHOLDER given within 30 days after receipt of such
notice, PARENT shall cause to be included in such registration all of the Parent
Stock issued to such STOCKHOLDER or NEWBURY STOCKHOLDER pursuant to this
Agreement (including any stock issued as (or issuable upon the conversion or
exchange of any convertible security, warrant, right or other security which is
issued by PARENT as) a dividend or other distribution with respect to, or in
exchange for, or in replacement of such Parent Stock) which the STOCKHOLDER or
NEWBURY STOCKHOLDER requests, provided that PARENT shall have the right to
reduce the number of shares included in such registration to the extent that
inclusion of such shares could, in the opinion of tax counsel to PARENT or its
independent auditors, jeopardize the status of the transactions contemplated
hereby and by the Registration Statement as qualifying under Section 351 of the
Code. In addition, if PARENT is advised in writing in good faith by any managing
underwriter of an underwritten offering of the securities being offered pursuant
to any registration statement under this Section 17.1 that the number of shares
to be sold by persons other than PARENT is greater than the
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number of such shares which can be offered without adversely affecting the
offering, PARENT may reduce pro rata the number of shares offered for the
accounts of such persons (based upon the number of shares held by such person)
to a number deemed satisfactory by such managing underwriter, provided, that,
for the such offering made by PARENT after the IPO, such reduction shall be made
first by reducing the number of shares to be sold by persons other than PARENT,
the STOCKHOLDERS, the NEWBURY STOCKHOLDERS and the STOCKHOLDERS of the Other
Founding Companies (collectively, the STOCKHOLDERS, the NEWBURY STOCKHOLDERS and
the STOCKHOLDERS of the Other Founding Companies being referred to herein as the
"Founding STOCKHOLDERS"), and thereafter, if a further reduction is required, by
reducing the number of shares to be sold by the Founding STOCKHOLDERS.
17.2 REGISTRATION PROCEDURES. All expenses incurred in connection with the
registrations under this Article 17 (including all registration, filing,
qualification, legal, printer and accounting fees, but excluding underwriting
commissions and discounts which shall be payable by the respective selling
parties), shall be borne by PARENT. In connection with registrations under
Section 17.1, PARENT shall (i) use its best efforts to prepare and file with the
SEC as soon as reasonably practicable, a registration statement with respect to
the Parent Stock and use its best efforts to cause such registration to promptly
become and remain effective for a period of at least 90 days (or such shorter
period during which holders shall have sold all Parent Stock which they
requested to be registered); (ii) use its best efforts to register and qualify
the Parent Stock covered by such registration statement under applicable state
securities laws as the holders shall reasonably request for the distribution for
the Parent Stock; and (iii) take such other actions as are reasonable and
necessary to comply with the requirements of the 1933 Act and the regulations
thereunder.
17.3 UNDERWRITING AGREEMENT. In connection with the registration pursuant
to Section 17.1 covering an underwritten registered offering, PARENT and each
participating holder agree to enter into a written agreement with the managing
underwriters in such form and containing such provisions as are customary in the
securities business for such an arrangement between such managing underwriters
and companies of PARENT's size and investment stature, including
indemnification.
17.4 AVAILABILITY OF RULE 144. PARENT shall not be obligated to register
shares of Parent Stock held by any STOCKHOLDER or NEWBURY STOCKHOLDER at any
time when the resale provisions of Rule 144(k) (or any similar or successor
provision) promulgated under the 1933 Act are available to such STOCKHOLDER or
NEWBURY STOCKHOLDER.
18. GENERAL
18.1 COOPERATION. The COMPANY, NEWBURY, STOCKHOLDERS, NEWBURY STOCKHOLDERS
and PARENT shall the deliver or cause to be delivered to the other on the
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Funding and Consummation Date, and at such other times and places as shall be
reasonably agreed to, such additional instruments as the other may reasonably
request for the purpose of carrying out this Agreement. The COMPANY and NEWBURY
will cooperate and use its reasonable efforts to have the present officers,
directors and employees of the COMPANY and NEWBURY cooperate with PARENT on and
after the Funding and Consummation Date in furnishing information, evidence,
testimony and other assistance in connection with any Tax return filing
obligations, actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the Funding and
Consummation Date.
18.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
PARENT, NEWBURY and the COMPANY, and the heirs and legal representatives of the
STOCKHOLDERS and the NEWBURY STOCKHOLDERS. Any attempt to assign this Agreement
in a manner inconsistent with this Agreement shall be void and of no force or
effect.
18.3 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits
and Annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the STOCKHOLDERS, the
NEWBURY STOCKHOLDERS, the COMPANY, NEWBURY and PARENT and supersede any prior
agreement and understanding relating to the subject matter of this Agreement.
Any disclosure made on any Schedule delivered pursuant hereto shall be deemed to
have been disclosed for purposes of any other Schedule required hereby, provided
that the COMPANY and NEWBURY shall make a good faith effort to cross reference
disclosure, as necessary or advisable, between related Schedules.
18.4 COUNTERPARTS. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
18.5 BROKERS AND AGENTS. Except as disclosed on Schedule 18.5, each party
represents and warrants that it employed no broker, agent or finder in
connection with this transaction and agrees to indemnify the other parties
hereto against all loss, cost, damages or expense arising out of claims for fees
or commission of any broker, agent or finder employed or alleged to have been
employed by such indemnifying party.
18.6 EXPENSES. Whether or not the transactions herein contemplated shall
be consummated, PARENT will pay the fees, expenses and disbursements of PARENT
and its agents, representatives, accountants and counsel incurred in connection
with the subject matter of this Agreement and any amendments thereto, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed by PARENT under this Agreement,
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including the fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
L.L.P., and any other person or entity retained by PARENT or by WJG, and the
costs of preparing the Registration Statement. The COMPANY and NEWBURY will pay
all of their respective fees, expenses and disbursements relating to this
Agreement and the Exchange, other than any fees, expenses and disbursements that
relate to the unique circumstances of a particular STOCKHOLDER or NEWBURY
STOCKHOLDER. Each STOCKHOLDER and NEWBURY STOCKHOLDER shall pay all sales, use,
transfer, real property transfer, recording, gains, stock transfer and other
similar taxes and fees ("Transfer Taxes") imposed in connection with the
Exchange, other than Transfer Taxes, if any, imposed by the State of Delaware.
Each STOCKHOLDER and NEWBURY STOCKHOLDER shall file all necessary documentation
and Returns with respect to such Transfer Taxes. In addition, each STOCKHOLDER
and NEWBURY STOCKHOLDER acknowledges that he or she, and not the COMPANY,
NEWBURY or PARENT will pay all Taxes due and payable by such STOCKHOLDER or
NEWBURY STOCKHOLDER upon receipt of the consideration payable to such
STOCKHOLDER or NEWBURY STOCKHOLDER pursuant to Section 1 hereof, and that he or
she will assume all Tax risks and liabilities of such STOCKHOLDER or NEWBURY
STOCKHOLDER in connection with the transactions contemplated hereby.
18.7 NOTICES. All notices of communication required or permitted hereunder
shall be in writing and may be given by depositing the same in United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person to
an officer or agent of such party.
(a) If to PARENT, addressed at:
Nationwide Staffing, Inc.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
with copies to:
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
South Tower Pennzoil Place
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) If to the STOCKHOLDERS or the NEWBURY STOCKHOLDERS,
addressed to them at their addresses set forth on the Stockholder
Signature Page or the Newbury Stockholder Signature Page, with
copies to:
-▇▇-
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(c) If to the COMPANY, addressed to it at:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(d) If to NEWBURY, addressed to it at:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.
18.8 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware, without regard or reference to any
conflict-of-law principles that would refer to the law of any other state or
jurisdiction.
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18.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the applicable Expiration
Date.
18.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
18.11 TIME. Time is of the essence with respect to this Agreement.
18.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
18.13 REMEDIES CUMULATIVE. Except as expressly specified herein to the
contrary, no right, remedy or election given by any term of this Agreement shall
be deemed exclusive but such shall be cumulative with all other rights, remedies
and elections available at law or in equity.
18.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement, and shall not
be used to construe or interpret any provision hereof.
18.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of PARENT, NEWBURY, the COMPANY, and the STOCKHOLDERS and
NEWBURY STOCKHOLDERS who collectively hold or who will hold at least 50% of the
Parent Stock issued or to be issued upon consummation of the Exchange. Any
amendment or waiver effected in accordance with this Section
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18.15 shall be binding upon the of the parties hereto, any other person
receiving Parent Stock in connection with the Exchange and the future holder of
such Parent Stock.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
"PARENT"
NATIONWIDE STAFFING, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
"COMPANY"
ALTERNATIVE SOLUTIONS, INC.
By:
Name:
Title:
"NEWBURY"
NEWBURY EMPLOYMENT, INC.
By:
Name:
Title:
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COMPANY STOCKHOLDER SIGNATURE PAGE
Address:
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Address:
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. 1997 TRUST Address:
FOR ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:______________________________
Print Name:
Title: Trustee
NEWBURY EMPLOYMENT, INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Address:
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
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NEWBURY STOCKHOLDER SIGNATURE PAGE
Address:
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address:
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address:
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Address:
Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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