Exhibit 99.10
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AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 2, 2003
BY AND AMONG
KFORCE INC.,
▇▇▇▇, ▇▇▇▇▇▇ & ASSOCIATES, INC.
AND
NOVATO ACQUISITION CORPORATION
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TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER ............................................................................... 1
Section 1.1. The Merger .................................................................... 1
Section 1.2. Effective Time ................................................................ 1
Section 1.3. Closing of the Merger ......................................................... 2
Section 1.4. Effects of the Merger ......................................................... 2
Section 1.5. Certificate of Incorporation and Bylaws ....................................... 2
Section 1.6. Directors ..................................................................... 2
Section 1.7. Officers ...................................................................... 2
Section 1.8. Conversion of Shares .......................................................... 2
Section 1.9. Exchange of Certificates ...................................................... 3
Section 1.10. Stock Options ................................................................. 5
Section 1.11. Withholding Rights ............................................................ 6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............................................ 6
Section 2.1. Organization and Qualification; Subsidiaries; Investments ..................... 6
Section 2.2. Capitalization of the Company and its Subsidiaries ............................ 7
Section 2.3. Authority Relative to this Agreement; Recommendation .......................... 8
Section 2.4. SEC Reports; Financial Statements; ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act Compliance .............. 9
Section 2.5. Information Supplied ..........................................................10
Section 2.6. Consents and Approvals; No Violations .........................................11
Section 2.7. No Default ....................................................................11
Section 2.8. No Undisclosed Liabilities; Absence of Changes ................................11
Section 2.9. Litigation ....................................................................13
Section 2.10. Compliance with Applicable Law ................................................13
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Section 2.11. Employee Benefits ...........................................................14
Section 2.12. Labor and Employment Matters ................................................18
Section 2.13. Environmental Laws and Regulations ..........................................19
Section 2.14. Taxes .......................................................................20
Section 2.15. Intellectual Property .......................................................22
Section 2.16. Insurance ...................................................................25
Section 2.17. Title to Properties; Absence of Liens and Encumbrances ......................25
Section 2.18. Certain Business Practices ..................................................26
Section 2.19. Office Balance Sheet Liabilities ............................................26
Section 2.20. Warranties ..................................................................26
Section 2.21. Material Contracts ..........................................................26
Section 2.22. Suppliers and Customers .....................................................28
Section 2.23. Affiliates ..................................................................28
Section 2.24. Opinion of Financial Advisor ................................................28
Section 2.25. Brokers .....................................................................28
Section 2.26. Takeover Statutes ...........................................................29
Section 2.27 Interested Party Transactions. ..............................................29
Section 2.28. Cash Flow ...................................................................29
Section 2.29. Representations Complete ....................................................29
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION .................................29
Section 3.1. Organization ................................................................30
Section 3.2. Capitalization of Parent and its Subsidiaries ...............................30
Section 3.3. Authority Relative to this Agreement ........................................31
Section 3.4. Parent Common Stock .........................................................32
Section 3.5. SEC Reports; Financial Statements ...........................................32
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Section 3.6. Information Supplied ....................................................................... 33
Section 3.7. Consents and Approvals; No Violations ...................................................... 33
Section 3.8. No Default ................................................................................. 34
Section 3.9. Litigation ................................................................................. 34
Section 3.10. Opinion of Financial Advisor ............................................................... 34
Section 3.11. Brokers .................................................................................... 34
Section 3.12. No Prior Activities ........................................................................ 34
Section 3.13. No Undisclosed Liabilities; Absence of Changes ............................................. 35
Section 3.14. Compliance with Applicable Law ............................................................. 35
Section 3.15. Suppliers and Customers .................................................................... 35
Section 3.16. Parent Employee Benefit Matters ............................................................ 35
Section 3.17. Parent Intellectual Property ............................................................... 36
Section 3.18. Representations Complete ................................................................... 36
ARTICLE 4 COVENANTS ........................................................................................... 37
Section 4.1. Conduct of Business ........................................................................ 37
Section 4.2. Preparation of S-4 and the Joint Proxy Statement/Prospectus; Stockholders Meetings ......... 41
Section 4.3. No Solicitation or Negotiation ............................................................. 43
Section 4.4. Nasdaq National Market ..................................................................... 46
Section 4.5. Access to Information ...................................................................... 46
Section 4.6. Certain Filings; Reasonable Efforts ........................................................ 47
Section 4.7. Public Announcements ....................................................................... 48
Section 4.8. Indemnification and Directors' and Officers' Insurance ..................................... 48
Section 4.9. Notification of Certain Matters; Additions to and Modification of Disclosure Schedules ..... 49
Section 4.10. Affiliates ................................................................................. 50
Section 4.11. Access to Company Employees ................................................................ 50
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Section 4.12. Company Compensation and Benefit Plans ............................................. 50
Section 4.13. Employee Benefits .................................................................. 50
Section 4.14. Takeover Statutes .................................................................. 51
Section 4.15. Section 16 Matters ................................................................. 51
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER ............................................................ 51
Section 5.1. Conditions to Each Party's Obligations to Effect the Merger ........................ 51
Section 5.2. Conditions to the Obligations of the Company ....................................... 52
Section 5.3. Conditions to the Obligations of Parent and Acquisition ............................ 53
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER ...................................................................... 55
Section 6.1. Termination ........................................................................ 55
Section 6.2. Effect of Termination .............................................................. 57
Section 6.3. Fees and Expenses .................................................................. 57
Section 6.4. Amendment .......................................................................... 58
Section 6.5. Extension; Waiver .................................................................. 58
ARTICLE 7 MISCELLANEOUS ....................................................................................... 59
Section 7.1. Nonsurvival of Representations and Warranties ...................................... 59
Section 7.2. Entire Agreement; Assignment ....................................................... 59
Section 7.3. Validity ........................................................................... 59
Section 7.4. Notices ............................................................................ 59
Section 7.5. Governing Law and Venue; Waiver of Jury Trial ...................................... 60
Section 7.6. Descriptive Headings ............................................................... 61
Section 7.7. Parties in Interest ................................................................ 61
Section 7.8. Certain Definitions ................................................................ 61
Section 7.9. Personal Liability ................................................................. 64
Section 7.10. Specific Performance ............................................................... 65
Section 7.11. Counterparts ....................................................................... 65
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Section 7.12. Closing Financial Statements ....................................................... 65
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TABLE OF EXHIBITS
Exhibit A .... Form of Company Voting Agreement
Exhibit B .... Form of Parent Voting Agreement
Exhibit C .... Form of Certificate of Merger
Exhibit D .... Form of Affiliate Agreement
Exhibit E .... Form of Lock-Up Agreement - ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇
Exhibit F .... Form of Lock-Up Agreement - ▇▇▇▇▇▇, Hazell and ▇▇▇▇▇▇
Exhibit G .... Employees and Officers of the Company and Parent with "knowledge"
Annex A ...... Stockholders of Company that executed Voting Agreements
Annex B ...... Shareholders of Parent that executed Voting Agreements
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TABLE OF DEFINED TERMS
Cross Reference
Term in Agreement Page
Acquisition ............................... Preamble .......................1
affiliate ................................. Section 7.8(a) ................61
Agreement ................................. Preamble .......................1
Applicable Law ............................ Section 7.8(b) ................61
business day .............................. Section 7.8(c) ................61
capital stock ............................. Section 7.8(d) ................61
Certificate of Merger ..................... Section 1.2 ....................1
Certificates .............................. Section 1.9(b) .................4
Change in the Company Recommendation ...... Section 4.2(b) ................43
Closing ................................... Section 1.3 ....................2
Closing Date .............................. Section 1.3 ....................2
Code ...................................... Preamble .......................1
Company ................................... Preamble .......................1
Company Affiliates ........................ Section 2.23 ..................28
Company Board ............................. Section 2.3(a) .................8
Company Disclosure Schedule ............... Article 2 ......................6
Company Employee Plan ..................... Section 2.11(a)(iii) ..........14
Company Fairness Opinion .................. Section 2.24 ..................28
Company Financial Advisor ................. Section 2.24 ..................28
Company Insider ........................... Section 4.15 ..................51
Company IP ................................ Section 7.8(e) ................61
Company Licensed IP ....................... Section 7.8(f) ................62
Company Owned IP .......................... Section 7.8(g) ................62
Company Participants ...................... Section 4.13(a) ...............50
Company Permits ........................... Section 2.10 ..................13
Company Plans ............................. Section 1.10(a) ............... 6
Company Preferred Stock ................... Section 2.2(a) ................ 7
Company Recommendation .................... Section 4.2(b) ................43
Company Registered IP ..................... Section 7.8(h) ................62
Company SEC Reports ....................... Section 2.4(a) .................9
Company Securities ........................ Section 2.2(a) .................8
Company Share Price ....................... Section 1.10(a) ................5
Company Stock Option or Options ........... Section 1.10(a) ................5
Company Stockholder Approval .............. Section 2.3(a) .................9
Company Stockholders Meeting .............. Section 2.3(a) .................9
Company Voting Agreements ................. Preamble .......................1
Contract .................................. Section 2.21(a) ...............27
DGCL ...................................... Section 1.1 ....................1
DOL ....................................... Section 2.11(b) ...............15
Effective Time ............................ Section 1.2 ....................2
Employee .................................. Section 2.11(a)(iv) ...........14
Employee Agreement ........................ Section 2.11(a)(v) ............14
Environmental Laws ........................ Section 2.13(a) ...............19
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ERISA ...................................... Section 2.11(a)(i) ........14
ERISA Affiliate ............................ Section 2.11(a)(ii) .......14
Exchange Act ............................... Section 2.2(b) .............8
Exchange Agent ............................. Section 1.9(a) .............3
Exchange Fund .............................. Section 1.9(a) .............3
Exchange Ratio ............................. Section 1.8(b) .............3
Fiduciary .................................. Section 2.11(a)(vi) .......15
Final Date ................................. Section 6.1(b)(ii) ........55
Financial Statements ....................... Section 2.4(a) .............9
Financing Agreement ........................ Section 4.1(a)(xxii) ......40
Fourth Quarter Revenues .................... Section 7.8(i) ............62
Governmental Entity ........................ Section 2.6 ...............11
GUST ....................................... Section 2.11(k) ...........18
Hazardous Material ......................... Section 2.13(a) ...........20
HSR Act .................................... Section 2.6 ...............11
include or including ....................... Section 7.8(l) ............62
include, without limitation ................ Section 7.8(l) ............62
including, without limitation .............. Section 7.8(l) ............62
Indemnified Liabilities .................... Section 4.8(a) ............49
Indemnified Persons ........................ Section 4.8(a) ............48
Insurance Policies ......................... Section 2.16 ..............25
Intellectual Property ...................... Section 7.8(j) ............62
IRS ........................................ Section 2.11(a)(vii) ......15
Joint Proxy Statement/Prospectus ........... Section 2.5 ...............10
knowledge or known ......................... Section 7.8(k) ............62
Lease Documents ............................ Section 2.17(a) ...........25
License-In Agreement ....................... Section 2.15(b) ...........23
Lien ....................................... Section 7.8(m) ............63
Market Trading Price ....................... Section 1.8(b) .............3
Material Adverse Effect on Parent .......... Section 7.8(o) ............64
Material Adverse Effect on the Company ..... Section 7.8(n) ............63
Material Contract .......................... Section 2.21(a) ...........27
Material Contracts ......................... Section 2.21(a) ...........27
Merger ..................................... Section 1.1 ................1
Merger Consideration ....................... Section 1.8(a) .............3
Multiemployer Plan ......................... Section 2.11(a)(viii) .....15
Multiple Employer Plan ..................... Section 2.11(a)(ix) .......15
Nondisclosure Agreement .................... Section 4.5(c) ............47
Notice of Superior Proposal ................ Section 4.3(b) ............44
Other Interests ............................ Section 2.1(c) .............7
Parent ..................................... Preamble ...................1
Parent Benefit Plans ....................... Section 3.16(a) ...........36
Parent Board ............................... Section 3.3(a) ............31
Parent Common Stock ........................ Section 1.8(a) .............3
Parent Disclosure Schedule ................. Article 3 .................30
Parent ESPP ................................ Section 4.13(b) ...........51
Parent Fairness Opinion .................... Section 3.10 ..............34
Parent Financial Advisor ................... Section 3.10 ..............34
Parent Permits ............................. Section 3.14 ..............35
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Parent Plans ........................... Section 3.2(a) ...................31
Parent Recommendation .................. Section 4.2(c) ...................43
Parent Rights .......................... Section 3.2(a) ...................31
Parent Rights Agreement ................ Section 3.2(a) ...................31
Parent SEC Reports ..................... Section 3.5(a) ...................32
Parent Securities ...................... Section 3.2(a) ...................31
Parent Shareholder Approval ............ Section 3.3(a) ...................31
Parent Shareholders Meeting ............ Section 3.3(a) ...................31
Parent Voting Agreements ............... Preamble ..........................1
Pension Plan ........................... Section 2.11(a)(x) ...............15
person ................................. Section 7.8(p) ...................64
Proceeding ............................. Section 7.8(q) ...................64
Qualifying Amendment ................... Section 7.8(r) ...................64
Registered Intellectual Property ....... Section 7.8(s) ...................64
S-4 .................................... Section 2.5 ......................10
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act ..................... Section 2.4(c) ...................10
SEC .................................... Section 2.4(a) ....................9
Securities Act ......................... Section 2.2(a) ....................8
Share .................................. Section 1.8(a) ....................3
Shares ................................. Section 1.8(a) ....................3
Shrinkwrap Software .................... Section 2.15(b) ..................23
Subsidiary ............................. Section 2.1(a) ....................6
Superior Proposal ...................... Section 4.3(c) ...................45
Surviving Corporation .................. Section 1.1 .......................1
Tax or Taxes ........................... Section 2.14(a)(i) ...............21
Tax Return ............................. Section 2.14(a)(ii) ..............21
Third Party ............................ Section 4.3(c) ...................45
Third Party Acquisition Proposal ....... Section 4.3(c) ...................45
Unaudited Financial Statements ......... Section 5.3(f) ...................54
Welfare Plan ........................... Section 2.11(a)(xi) ..............15
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as
of December 2, 2003, is by and among Kforce Inc., a Florida corporation
("Parent"), ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc., a Delaware corporation (the
"Company"), and Novato Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Parent ("Acquisition").
WHEREAS, the Boards of Directors of the Company, Parent and
Acquisition have each unanimously (i) determined that the Merger is advisable to
and fair and in the best interests of their respective corporations and
stockholders, and (ii) approved the Merger upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, for U.S. Federal income tax purposes it is intended
that the Merger qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the stockholders of the Company set forth on Annex A
hereto have executed and delivered to Parent irrevocable proxy and voting
agreements (the "Company Voting Agreements"), in the form of Exhibit A as an
inducement to Parent to enter into this Agreement; and
WHEREAS, the shareholders of Parent set forth on Annex B
hereto have executed and delivered to the Company irrevocable proxy and voting
agreements (the "Parent Voting Agreements"), in the form of Exhibit B as an
inducement to the Company to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE MERGER
Section 1.1. The Merger. At the Effective Time and upon the
terms and subject to the conditions of this Agreement and in accordance with the
Delaware General Corporation Law (the "DGCL"), Acquisition shall be merged with
and into the Company (the "Merger"). Following the Merger, the Company shall
continue as the surviving corporation (the "Surviving Corporation"), and the
separate corporate existence of Acquisition shall cease.
Section 1.2. Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, a Certificate of
Merger substantially in the form of Exhibit C (the "Certificate of Merger")
shall be duly executed and acknowledged by the Company and thereafter delivered
to the Secretary of State of the State of Delaware for filing pursuant to
Section 251 of the DGCL. The Merger shall become effective at such time as a
1
properly executed copy of the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware in accordance with Section 251 of
the DGCL or such later time as Parent and the Company may agree upon and as set
forth in the Certificate of Merger (the time the Merger becomes effective being
referred to herein as the "Effective Time").
Section 1.3. Closing of the Merger. The closing of the Merger
(the "Closing") will take place at a time and on a date (the "Closing Date") to
be specified by the parties, which shall be no later than the second business
day after satisfaction (or waiver) of the latest to occur of the conditions set
forth in Article 5 except for such conditions which may only be satisfied by
delivery of documents or certificates at the Closing, at the offices of Holland
& Knight LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, unless
another time, date or place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and Acquisition shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5. Certificate of Incorporation and Bylaws. The
Certificate of Incorporation of the Surviving Corporation shall be amended to
read the same as the Certificate of Incorporation of Acquisition in effect at
the Effective Time, and shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with Applicable Law; provided,
however, that at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended and restated in its
entirety to read as follows: "The name of this corporation is ▇▇▇▇, ▇▇▇▇▇▇ &
Associates, Inc." The bylaws of the Surviving Corporation shall be amended as
necessary to read the same as the bylaws of Acquisition in effect at the
Effective Time until amended in accordance with Applicable Law.
Section 1.6. Directors. The directors of Acquisition at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and bylaws of
the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
Section 1.7. Officers. The officers of Acquisition at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and bylaws of
the Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
Section 1.8. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par
value $0.001 per share, of the Company (each a "Share" and, collectively, the
"Shares") issued and outstanding immediately prior to the Effective Time (other
than (i) Shares held in the Company's treasury and (ii) Shares held by Parent or
Acquisition) shall, by virtue of the
2
Merger and without any action on the part of Acquisition, the Company or the
holder thereof, be converted into and shall become a number of fully paid and
nonassessable shares of common stock, par value $.01 per share, of Parent
("Parent Common Stock") equal to the Exchange Ratio (the "Merger
Consideration"). Notwithstanding the foregoing, if, between the date of this
Agreement and the Effective Time, the outstanding shares of Parent Common Stock
or the Shares shall have been changed into a different number of shares or a
different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, then the Exchange
Ratio shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares.
(b) The "Exchange Ratio" shall be calculated as follows: (i)
if the average of the closing prices per share of Parent Common Stock as
reported on the Nasdaq National Market for the 15 consecutive trading days
ending on and including the third trading day preceding the Closing Date (the
"Market Trading Price") is equal to or greater than $7.09 but less than $9.60,
the Exchange Ratio shall equal .60; (ii) if the Market Trading Price is equal to
or greater than $9.60, the Exchange Ratio shall be calculated by dividing $5.75
by the Market Trading Price, rounded to the third decimal place; or (iii) if the
Market Trading Price is less than $7.09, the Exchange Ratio shall be calculated
by dividing $4.25 by the Market Trading Price, rounded to the third decimal
place.
(c) At the Effective Time, each outstanding share of the
common stock, $0.01 par value per share, of Acquisition shall be converted into
one share of common stock, $0.01 per share, of the Surviving Corporation.
(d) At the Effective Time, each Share held in the treasury of
the Company and each Share held by Parent or Acquisition or any subsidiary of
Parent, Acquisition or the Company immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of
Acquisition, the Company or the holder thereof, be canceled, retired and cease
to exist, and no shares of Parent Common Stock shall be delivered with respect
thereto.
Section 1.9. Exchange of Certificates.
(a) Promptly following the Effective Time, as required by
subsections (b) and (c) below, Parent shall deliver to its transfer agent, or a
depository or trust institution of recognized standing selected by Parent and
reasonably satisfactory to the Company (the "Exchange Agent") for the benefit of
the holders of Shares for exchange in accordance with this Article 1: (i)
certificates representing the appropriate number of shares of Parent Common
Stock issuable pursuant to Section 1.8 and (ii) cash to be paid in lieu of
fractional shares of Parent Common Stock (such shares of Parent Common Stock and
such cash are hereinafter referred to as the "Exchange Fund"), in exchange for
outstanding Shares.
(b) Parent shall use commercially reasonable efforts to cause
the Exchange Agent, promptly after the Effective Time (and in no event later
than ten (10) business days following the Effective Time), to mail to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented outstanding Shares (the
3
"Certificates") and whose Shares were converted into the right to receive shares
of Parent Common Stock pursuant to Section 1.8: (i) a letter of transmittal
(which shall specify that delivery shall be effected and risk of loss and title
to the Certificates shall pass only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other customary
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock and, if applicable, a check representing the cash
consideration to which such holder may be entitled on account of a fractional
share of Parent Common Stock that such holder has the right to receive pursuant
to the provisions of this Article 1, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Shares that is
not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock may be issued to
a transferee if the Certificate representing such Shares is presented to the
Exchange Agent accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 1.9, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of Parent
Common Stock and cash in lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 1.9.
(c) No dividends or other distributions declared or made after
the Effective Time with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby, and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 1.9(f), until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of Applicable Law, following
surrender of any such Certificate there shall be paid to the record holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor without interest (i) the amount of any cash payable in lieu of
a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 1.9(f) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such number of whole shares of Parent Common Stock and (ii) at the appropriate
payment date the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
(d) If any Certificate for Shares shall have been lost, stolen
or destroyed, the Exchange Agent shall issue in exchange therefor upon the
making of an affidavit of that fact by the holder thereof such shares of Parent
Common Stock and cash in lieu of fractional shares, if any, as may be required
pursuant to this Agreement; provided, however, that Parent or the Exchange Agent
may, in its discretion, require the delivery of a bond or indemnity reasonably
satisfactory to Parent and the Exchange Agent.
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(e) All shares of Parent Common Stock issued upon the
surrender for exchange of Shares in accordance with the terms hereof (including
any cash paid pursuant to Section 1.9(c) or 1.9(f)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Shares and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article 1.
(f) No fractions of a share of Parent Common Stock shall be
issued in the Merger, but in lieu thereof each holder of Shares otherwise
entitled to a fraction of a share of Parent Common Stock shall upon surrender of
his or her Certificate or Certificates be entitled to receive an amount of cash
(without interest) determined by multiplying the average of the closing sale
prices for one share of Parent Common Stock as reported on the Nasdaq National
Market for the fifteen (15) consecutive trading days ending on and including the
third trading day preceding the Closing Date by the fractional share interest to
which such holder would otherwise be entitled (after aggregating all shares
owned by such holder). The parties acknowledge that payment of the cash
consideration in lieu of issuing fractional shares was not separately bargained
for consideration, but merely represents a mechanical rounding off for purposes
of simplifying the corporate and accounting complexities that would otherwise be
caused by the issuance of fractional shares.
(g) Any portion of the Exchange Fund that remains
undistributed to the stockholders of the Company upon the one year anniversary
of the Effective Time shall be delivered to Parent upon demand, and any
stockholders of the Company who have not theretofore complied with this Article
1 shall thereafter look only to Parent for payment of their claim for Parent
Common Stock and cash in lieu of fractional shares, as the case may be, and any
applicable dividends or distributions with respect to Parent Common Stock.
(h) Neither Parent nor the Company shall be liable to any
holder of Shares for shares of Parent Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar Applicable Law.
Section 1.10. Stock Options.
(a) Except as described in Section 1.10 of the Company
Disclosure Schedule, at the Effective Time, each option, warrant or other right
to purchase Shares (a "Company Stock Option" or collectively, "Company Stock
Options") issued pursuant to the Company's 1997 Stock Option Plan, IT
Professional Stock Option Plan, 2000 Stock Option Plan or other agreement or
arrangement, that is outstanding, unexercised and fully vested immediately prior
thereto (taking into account any acceleration in the vesting or exercisability
of a Company Stock Option by reason of this Agreement or the Merger or the
transactions or matters contemplated by this Agreement), and has an exercise
price less than (i) the Market Trading Price multiplied by (ii) the Exchange
Ratio (the "Company Share Price"), shall cease to represent a right to acquire
Shares and automatically shall be converted without any action on the part of
any holder of any Company Stock Option, at the Effective
5
Time, into the right to receive an aggregate amount of fully paid and
nonassessable shares of Parent Common Stock equal to (i) the difference between
(A) the Company Share Price minus (B) the option exercise price multiplied by
(ii) the number of option shares divided by (iii) the Market Trading Price. All
plans or agreements described above pursuant to which any Company Stock Option
has been issued or may be issued other than agreements to issue outstanding
warrants or rights are referred to collectively as the "Company Plans."
(b) At the Effective Time, each Company Stock Option that is outstanding
and unexercised immediately prior to the Effective Time, whether vested or
unvested, and has an exercise price greater than or equal to the Company Share
Price, shall be automatically terminated as of the Effective Time.
(c) At the Effective Time, each Company Stock Option that is outstanding,
unexercised and unvested and has an exercise price less than the Company Share
Price shall be automatically terminated as of the Effective Time.
Section 1.11. Withholding Rights. Notwithstanding anything herein to the
contrary, each of the Company, the Surviving Corporation and Parent shall be
entitled to deduct and withhold from the consideration otherwise payable to any
person pursuant to this Article 1 such amounts as it is required to deduct and
withhold with respect to the making of such payment under any provision of
federal, state, local or foreign tax law. To the extent that amounts are so
withheld by the Company, the Surviving Corporation or Parent, as the case may
be, such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of Shares in respect of which such deduction and
withholding was made by the Company, the Surviving Corporation or Parent, as the
case may be.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Acquisition, subject to such exceptions as are disclosed in the Disclosure
Schedule (the "Company Disclosure Schedule") delivered by the Company
simultaneously with the execution hereof (which Company Disclosure Schedule
shall provide an exception to or otherwise qualify the representations and
warranties of the Company contained in the section of this Agreement
corresponding by number to such disclosure and the other representations and
warranties herein to the extent such disclosure is readily apparent on its face
to be applicable to such representations and warranties specifically identify
the specific Section or subsection, as applicable, to which each such exception
relates), as follows:
Section 2.1. Organization and Qualification; Subsidiaries; Investments.
(a) Section 2.1(a) of the Company Disclosure Schedule sets
forth a true and complete list of each person in which the Company owns,
directly or indirectly, 5% or more of the voting interests or of which the
Company otherwise has the right to direct the management (each, a "Subsidiary")
together with the jurisdiction of incorporation or organization of each
Subsidiary and the percentage of each Subsidiary's outstanding capital
6
stock or other equity interests owned directly or indirectly by the Company. All
of the outstanding capital stock or other ownership interests of each Subsidiary
is owned by the Company, directly or indirectly, free and clear of any Lien or
any other limitation or restriction. Each of the Company and Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where any failure of any Subsidiary to
be so organized, existing and in good standing could be cured by a ministerial
filing or payment of a fee or tax. The Company has made available to Parent and
Acquisition accurate and complete copies of the Certificate of Incorporation and
bylaws or comparable other governing documents, each as in full force and effect
on the date hereof, of the Company and each of its Significant Subsidiaries (as
such term is defined in Rule 1-02 of Regulation S-X of the SEC). Other than as
specified in Section 2.1(a) of the Company Disclosure Schedule, the Company has
no operating Subsidiaries other than those incorporated in a state of the United
States.
(b) Each of the Company and its Subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(c) Section 2.1(c) of the Company Disclosure Schedule sets
forth a true and complete list, as of the date hereof, of each equity investment
(including obligations that are convertible into equity securities) made by the
Company or any Subsidiary in any person (including the percentage ownership as
of the most recent practicable date for which the Company or such Subsidiary has
capitalization information for such entity and any management rights granted to
the Company or any such Subsidiary) other than the Subsidiaries ("Other
Interests"). The Other Interests are owned directly or indirectly by the Company
free and clear of all Liens.
Section 2.2. Capitalization of the Company and its
Subsidiaries.
(a) The authorized capital stock of the Company consists of
(i) One Hundred Million (100,000,000) Shares, of which, as of November 6, 2003,
Twelve Million Five Hundred and Eighty Five Thousand Nine Hundred and Sixty
Three (12,585,963) Shares were issued and outstanding; and (ii) Ten Million
(10,000,000) shares of preferred stock, par value $0.001 per share ("Company
Preferred Stock"), none of which are outstanding as of the date hereof. All of
the outstanding Shares are and the Shares issuable upon exercise of the Company
Stock Options, when issued in accordance with the Company Plan, would be validly
issued and fully paid, nonassessable and not subject to any preemptive rights.
As of November 6, 2003, an aggregate of Five Million Six Hundred and Six
Thousand Eight Hundred and Seven (5,606,807) Shares were reserved for issuance
of which Four Million Two Hundred and Seventy Six Thousand and Twenty Four
(4,276,024) Shares were issuable upon or otherwise deliverable in connection
with the exercise of outstanding Company Stock Options issued pursuant to the
Company Plans. Between October 1, 2003 and the date hereof, no shares of the
Company's capital stock have been issued other than pursuant to the exercise
7
of Company Stock Options already in existence on such first date, and between
October 1, 2003 and the date hereof, no stock options have been granted. Except
as set forth above, as of the date hereof, there are outstanding (i) no shares
of capital stock or other voting securities of the Company, (ii) no securities
of the Company or any Subsidiary convertible into or exchangeable or exercisable
for, shares of capital stock or other voting securities of the Company or any
Subsidiary, (iii) no options, warrants or other rights to acquire from the
Company or any Subsidiary, and no obligations of the Company or any Subsidiary
to issue any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or other voting securities of the
Company or any Subsidiary, and (iv) no equity equivalent interests in the
ownership or earnings of the Company or any Subsidiary or other similar rights.
All of the outstanding Shares and Company Stock Options (collectively "Company
Securities") were issued in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws. As of the
date hereof, there are no outstanding rights or obligations of the Company or
any Subsidiary to repurchase, redeem or otherwise acquire any outstanding shares
of its capital stock or other ownership interests. Other than the Company Voting
Agreements, there are no stockholder agreements, voting trusts or other
arrangements or understandings to which the Company, the Company Board or any
Subsidiary is a party, and to the Company's knowledge, there are no other
agreements, voting trusts or other arrangements or understandings, relating to
the voting or registration of any shares of capital stock or other voting
securities of the Company or any Subsidiary. Other than treasury stock as
described in the Financial Statements, no Shares, Company Preferred Stock or
Company Stock Options are owned by the Company or any Subsidiary. The Company
has provided a true and complete list of all holders of outstanding Company
Stock Options, the exercise or vesting schedule, the exercise price per share,
and the term of each Company Stock Option, and whether such option is a
nonqualified stock option or incentive stock option, and any restrictions on the
Company's right to repurchase of the Shares underlying the options, in each case
as of the date hereof. None of the terms of the Company Stock Options provides
for accelerated vesting as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby. The
Company has not granted Company Stock Options to employees or consultants under
any Company Plan at an exercise price of less than the fair market value per
Share at the time of grant as determined in good faith by the Company Board. The
terms of the Company Plans allow the Company Plans to be terminated at the
Effective Time.
(b) The Shares constitute the only class of equity securities
of the Company or its Subsidiaries registered or required to be registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Section 2.3. Authority Relative to this Agreement;
Recommendation.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by the
Board of Directors of the Company (the "Company Board"). The Company Board has
directed that this Agreement be submitted to the Company's stockholders for
approval at the meeting of the Company's stockholders to be held in
8
connection with the Merger (the "Company Stockholders Meeting"), and except for
the approval of the Merger and the adoption of this Agreement by the affirmative
vote of the holders of a majority of the outstanding Shares (the "Company
Stockholder Approval"), no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Acquisition, constitutes the valid, legal
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to general principles of equity.
(b) Without limiting the generality of the foregoing, the
Company Board has unanimously (i) determined that the Merger is advisable and
fair to, and in the best interests of the Company and the Company's stockholders
and (ii) approved this Agreement, the Merger and the other transactions
contemplated hereby, (iii) resolved to recommend approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby by the
Company's stockholders, and (iv) has not withdrawn or modified such approval or
resolution to recommend (except as otherwise permitted in this Agreement).
Section 2.4. SEC Reports; Financial Statements; ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act Compliance.
(a) Except as described in Section 2.4 of the Company
Disclosure Schedule, the Company has filed all required forms, reports and
documents ("Company SEC Reports") with the Securities and Exchange Commission
(the "SEC") since December 31, 1998, each of which complied at the time of
filing in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, each law as in effect on the dates such
forms, reports and documents were filed. None of such Company SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, contained when filed any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein in light
of the circumstances under which they were made not misleading, except to the
extent superseded or amended by a Company SEC Report filed subsequently and
prior to the date hereof. The consolidated financial statements of the Company
included in the Company SEC Reports (the "Financial Statements") have been
prepared, in each case in all material respects, in conformity with United
States generally accepted accounting principles applied on a consistent basis
and maintained throughout the periods indicated (except as may be indicated in
the notes thereto and except that unaudited statements do not contain footnotes
in substance or form required to the extent permitted by Form 10-Q of the
Exchange Act), and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended.
(b) The Company has delivered, and hereafter will deliver to
Acquisition or Parent a complete and correct copy of any amendments or
modifications that are required to be filed with or submitted to the SEC but
have not yet been filed with or submitted to the
9
SEC to agreements, documents or other instruments that previously had been filed
with or submitted to the SEC by the Company pursuant to the Exchange Act.
(c) Each required form, report and document containing
financial statements that has been filed with or submitted to the SEC since July
31, 2002, was accompanied by the certifications required to be filed or
submitted by the Company's chief executive officer and chief financial officer
pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"), and at
the time of filing or submission of each such certification, such certification
was true and accurate and complied with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and
regulations promulgated thereunder.
(d) Since December 31, 1998, neither the Company nor any
Subsidiary nor any current director, officer, or to the Company's knowledge, any
former officer or director or current employee, auditor, accountant or
representative of the Company or any Subsidiary has received or otherwise had or
obtained knowledge of any complaint, allegation, assertion or claim, whether
written or oral, regarding a material deficiency in the accounting or auditing
practices, procedures, methodologies or methods of the Company or any Subsidiary
or their respective internal accounting controls. No attorney representing the
Company or any Subsidiary, whether or not employed by the Company or any
Subsidiary, has reported evidence of a material violation of securities laws,
breach of fiduciary duty or similar violation by the Company or any of its
officers, directors, employees or agents to the Company Board or any committee
thereof or to any director or officer of the Company.
(e) To the Company's knowledge, no employee of the Company or
any Subsidiary has provided or is providing information to any law enforcement
agency regarding the commission or possible commission of any crime or the
violation or possible violation of any Applicable Law. Neither the Company nor
any Subsidiary nor any officer, employee, contractor, subcontractor or agent of
the Company or any such Subsidiary has discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against an employee of
the Company or any Subsidiary in the terms and conditions of employment because
of any act of such employee described in 18 U.S.C. ss. 1514A(a).
Section 2.5. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of shares of Parent Common Stock in
the Merger (such Form S-4, and any amendments or supplements thereto, the "S-4")
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) the joint proxy
statement/prospectus relating to the matters to be submitted to the Company's
stockholders at the Company Stockholders Meeting and the matters to be submitted
to Parent's shareholders at the Parent Shareholders Meeting (such joint proxy
statement/prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") will, at the date mailed to stockholders of the
Company and Parent and at the times of the Company Stockholders Meeting and the
Parent Shareholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein
10
in light of the circumstances under which they are made not misleading. The
Joint Proxy Statement/Prospectus, insofar as it relates to the Company
Stockholders Meeting, will comply, as of its mailing date, as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation, warranty or covenant with respect to any information supplied or
required to be supplied by Parent or Acquisition which is contained in or
omitted from any of the foregoing documents or which is incorporated by
reference therein.
Section 2.6. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, the rules and regulations of the Nasdaq National
Market, and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), any filings under similar competition or merger notification
laws or regulations of foreign Governmental Entities, and the filing and
recordation of the Certificate of Merger as required by the DGCL, no material
filing with or notice to and no material permit, authorization, consent or
approval of any United States (federal, state or local) or foreign court or
tribunal, or administrative, governmental or regulatory body, agency or
authority (each a "Governmental Entity") is necessary for the execution and
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby. Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (i) conflict with or result in a
breach of any provision of the respective Certificate of Incorporation or bylaws
(or similar governing documents) of the Company or any Subsidiary, (ii) result
in a violation or breach of or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any Material Contract or (iii) violate any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any Subsidiary or any of their respective properties or assets.
Section 2.7. No Default. Neither the Company nor any Subsidiary is
in (i) breach, default or violation (and no event has occurred that with notice
or the lapse of time, or both, would constitute a breach, default or violation)
of any term, condition or provision of its Certificate of Incorporation or
bylaws (or similar governing documents), (ii) breach, default or violation (and
no event has occurred that with notice or the lapse of time, or both, would
constitute a breach, default or violation) of any material term, condition or
provision of (A) any material note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any Subsidiary is now a party or by which it or any of its properties or assets
may be bound or (B) any material order, writ, injunction, decree, law, statute,
rule or regulation applicable to the Company or any Subsidiary or any of its
properties or assets.
Section 2.8. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent disclosed in the Company SEC Reports filed on or
before the date hereof or as reflected on the consolidated balance sheet of the
Company for the quarter ended September 28, 2003), a true and correct copy of
which has been provided to Parent, other than liabilities or obligations to
suppliers, vendors, employees and landlords incurred in the ordinary and
11
usual course of such business consistent with past practices and none of which
shall exceed Two Hundred Fifty Thousand Dollars ($250,000) (either singularly or
a series of related liabilities), neither the Company nor any Subsidiary has any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by United States generally accepted accounting
principles to be reflected on a consolidated balance sheet of the Company
(including the notes thereto). Except for the negotiation and execution of this
Agreement, between September 28, 2003 and the date hereof, the Company and each
Subsidiary have conducted their respective businesses in all material respects
only in, and have not engaged in any material transaction other than according
to, the ordinary and usual course of such businesses consistent with past
practices, and there has not been any:
(a) Material Adverse Effect on the Company;
(b) damage, destruction or other casualty loss in excess of Two
Hundred Fifty Thousand Dollars ($250,000), individually or in the aggregate,
whether or not covered by insurance;
(c) declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of the Company or any Subsidiary,
repurchase, redemption or other acquisition by the Company or any Subsidiary of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary except for repurchases
from individuals following their termination of service required by the terms of
their pre-existing stock option or purchase agreements;
(d) amendment of any term of any outstanding security of the
Company or any Subsidiary;
(e) incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts in the aggregate not in excess of Two Hundred
Fifty Thousand Dollars ($250,000);
(f) creation or assumption by the Company or any Subsidiary of any
Lien on any asset or property excluding any Lien on the Company's assets
pursuant to the terms of the Company's revolving line of credit;
(g) loan, advance or capital contribution made by the Company or
any Subsidiary to, or investment in, any person other than (i) loans or advances
to employees in connection with business-related travel, in each case made in
the ordinary course of business consistent with past practices, and (ii) loans,
advances or capital contributions or investments by the Company to or in any
wholly-owned Subsidiary, by any wholly-owned Subsidiary in the Company or, by
any wholly-owned Subsidiary in any other wholly-owned Subsidiary;
(h) transaction or binding commitment made, or any Contract
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets or property) or
any relinquishment by the Company or any Subsidiary of any Contract or other
right, in either case, having a stated contract amount or otherwise potentially
involving Company or Subsidiary obligations or entitlements with a value of One
Hundred Fifty Thousand Dollars ($150,000) or more (other than Contracts with
12
customers and suppliers entered into in the ordinary course of business,
consistent with past practices);
(i) labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any Subsidiary, or any lockouts,
strikes, work stoppages or any threats thereof or any slowdowns or threats
thereof by or with respect to such employees;
(j) exclusive license, distribution, marketing or sales agreement
entered into or any agreement to enter into any exclusive license, distribution,
marketing or sales agreement;
(k) change by the Company in any of its accounting principles,
practices or methods;
(l) increase in the compensation payable or that could become
payable by the Company or any Subsidiary to (i) officers of the Company or any
Subsidiary, or (ii) any employee of the Company or any Subsidiary whose annual
cash compensation is equal to or greater than Seventy Five Thousand Dollars
($75,000), or (iii) any employee of the Company or any Subsidiary whose annual
cash compensation is less Seventy Five Thousand Dollars ($75,000), other than
any increases in the compensation payable or that could become payable to such
employees that do not exceed One Hundred Thousand Dollars ($100,000) in the
aggregate on an annual basis; or
(m) amendment or modification to the Financing Agreement, dated
June 13, 2003, entered into by the Company, Group-Ipex, Inc., Onstaff
Acquisition Corp. and the CIT Group/Business Credit, Inc.
Section 2.9. Litigation. Except as disclosed in the Company SEC
Reports filed on or before the date hereof, there are no suits, actions,
proceedings, investigations or claims pending or, to the Company's knowledge,
any credible threat thereof, against the Company, its Subsidiaries or any of
their respective properties or assets before any Governmental Entity. Except as
disclosed in the Company SEC Reports filed on or before the date hereof, neither
the Company nor any Subsidiary is subject to any outstanding order, writ,
injunction or decree of any Governmental Entity that reasonably could be
expected to result in any loss, expense, charge, assessment, levy, fine or other
liability being imposed upon or incurred by the Company or such Subsidiary
exceeding Two Hundred Fifty Thousand Dollars ($250,000) or that reasonably could
be expected to prevent the consummation of the transactions contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as disclosed
in the Company SEC Reports, each of the Company and Subsidiaries holds all
material permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (collectively, the "Company Permits"). Except as disclosed in the
Company SEC Reports filed on or before the date hereof, each of the Company and
Subsidiaries has materially complied, and is in material compliance with, the
terms of the Company Permits. Except as disclosed in the Company SEC Reports
filed on
13
or before the date hereof, the businesses of the Company and each Subsidiary
have been and are being conducted in material compliance with all Applicable
Laws. Except as disclosed in the Company SEC Reports filed on or before the date
hereof, no investigation or review by any Governmental Entity with respect to
the Company or any Subsidiary is pending or, to the Company's knowledge,
threatened.
Section 2.11. Employee Benefits.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(i) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended;
(ii) "ERISA Affiliate" means any other person or entity
under common control with the Company within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations thereunder;
(iii) "Company Employee Plan" refers to any material plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, stock option, stock purchase,
stock bonus, performance awards, membership interest or membership
interest-related awards, retirement, health, life, disability insurance,
dependent care, retirement, medical, fringe benefits or other employee benefits
or remuneration of any kind, funded or unfunded, written or unwritten, including
without limitation each "employee benefit plan," within the meaning of Section
3(3) of ERISA that is or has within the last three (3) years been maintained,
contributed to, or required to be contributed to, by the Company or any ERISA
Affiliate for the benefit of any Employee and pursuant to which the Company or
any ERISA Affiliate has or may have any material liability whether contingent or
otherwise;
(iv) "Employee" means any current or former employee,
director, or officer of the Company or any Subsidiary;
(v) "Employee Agreement" refers to each management,
employment (other than offer letters that do not alter "at will" employment
relationships and do not create any other binding obligation on the Company
other than setting initial compensation and rights to participate in standard
benefits), severance, or consulting agreement or contract as to which
obligations of the Company either currently or in the future are greater or
could reasonably be expected to be greater than Fifty Thousand Dollars
($50,000), or as to which such obligations under such agreement and all similar
agreements are greater or could reasonably be expected to be greater than One
Hundred Thousand Dollars ($100,000) in the aggregate, and each relocation,
repatriation, expatriation, visa, work permit or similar agreement or contract
between the Company or any Subsidiary and any Employee or consultant, as to
which obligations of the Company either currently or in the future are greater
or could reasonably be expected to be greater than Ten Thousand Dollars
($10,000), or as to which such obligations under such agreement and all similar
agreements are greater or
14
could reasonably be expected to be greater than One Hundred Thousand Dollars
($100,000) in the aggregate;
(vi) "Fiduciary" has the meaning set forth in Section
3(21) of ERISA.
(vii) "IRS" means the Internal Revenue Service;
(viii) "Multiemployer Plan" means any "Pension Plan"
(as defined below) which is a "multiemployer plan," as defined in Section 3(37)
of ERISA;
(ix) "Multiple Employer Plan" means any "Pension
Plan" (as defined below) which is a "multiple employer plan," as defined in
Section 4063 or 4064 of ERISA;
(x) "Pension Plan" refers to each Company Employee
Plan which is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA; and
(xi) "Welfare Plan" refers to each Company Employee
Plan which is a welfare plan as defined in ERISA Section 3(1).
(b) Company Employee Plans and Employee Agreements. Section
2.11(b) of the Company Disclosure Schedule contains an accurate and complete
list of (i) each Company Employee Plan; and (ii) each Employee Agreement
applicable to any employee of the Company or a Subsidiary. The Company has never
orally or in writing represented, promised or contracted to any Employee to
maintain or sponsor or contribute to any Company Employee Plan other than those
listed in Section 2.11(b) of the Company Disclosure Schedule. The Company has
also made available to Parent complete and correct copies of (i) the most recent
plan documents, related trust documents, adoption agreements, summary plan
descriptions, and all amendments thereto for each Company Employee Plan; (ii)
the most recent annual reports on Form 5500 filed with the IRS with respect to
each Company Employee Plan where such report is required; (iii) each group
annuity contract, insurance policy, service agreement, and other material
agreement or policy related to any Company Employee Plan; (iv) the most recent
annual nondiscrimination test reports for each Company Employee Plan; (v) the
most recent actuarial and audit reports for each Pension Plan; (vi) all IRS
determination letters and rulings received by the Company and, for the last
three years, copies of all correspondence to or from the IRS, Pension Benefit
Guaranty Corporation or the Department of Labor ("DOL") with respect to any
proceeding involving any Company Employee Plan; (vii) all material
communications to any Employee relating to any Company Employee Plan, or in each
case, relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any Liability to the Company; and (viii) the most
recent registration statement and prospectus prepared in connection with each
Company Employee Plan.
(c) Employee Plan Compliance. (i) Each Company Employee Plan
has been operated in accordance with its terms and complies in form and in
operation in all material respects with all Applicable Laws, including without
limitation ERISA and the Code;
15
(ii) no "prohibited transaction," within the meaning of Section 4975 of the Code
or Section 406 of ERISA, has occurred with respect to any Company Employee Plan
that could subject the Company, any Subsidiary or any employee of the Company to
any material liability; (iii) no Fiduciary has committed a breach of any
responsibility or obligation imposed upon Fiduciaries by Title I of ERISA with
respect to any Company Employee Plan that could subject the Company, any
Subsidiary or any Employee to any material liability; (iv) there are no
Proceedings pending or threatened or, to the Company's knowledge, reasonably
anticipated (other than routine claims for benefits) with respect to any Company
Employee Plan or with respect to the assets of any Company Employee Plan which
could reasonably be expected to result in a material liability to the Company or
any Company Employee Plan; (v) each Company Employee Plan can be amended,
terminated or otherwise discontinued in accordance with its terms, without
material Liability to the Company, Parent or any of their respective ERISA
Affiliates (other than as required by Applicable Law, or amounts for accrued
benefits and administration or contract expenses incurred in a termination
event); (vi) there are no inquiries, investigations, audits or Proceedings
pending or, to the Company's knowledge, threatened by the IRS or DOL with
respect to any Company Employee Plan or any related trust; (vii) neither the
Company nor any ERISA Affiliate is subject to any penalty or tax with respect to
any Company Employee Plan under Sections 4975 through 4980B of the Code; (viii)
each Pension Plan that is intended to be qualified under Section 401(a) of the
Code is and has received a favorable determination, notification, advisory
and/or opinion letter with respect to such status from the IRS or has time
remaining to apply under applicable Treasury Regulation or IRS pronouncement for
a determination, notification, advisory and/or opinion letter and to make any
necessary amendments, and, to the Company's knowledge, no event has occurred and
no condition or circumstance has existed or exists which may reasonably be
expected to result in the disqualification of such Pension Plan; (ix) there is
no violation of any reporting or disclosure requirements imposed by ERISA or the
Code with respect to any Company Employee Plan that could result in a material
Liability to the Company; (x) all contributions (including all employer
contributions and employee salary reduction contributions) required to be made
to any Company Employee Plan have been made to each such Company Employee Plan
by the time required by ERISA, the Code, and other Applicable Laws; (xi) neither
Company nor any ERISA Affiliate is, nor could any of them reasonably expect to
be, subject to (A) a security interest pursuant to Section 412(f) of the Code or
(B) a lien pursuant to Section 412(n) of the Code or Section 4068 or 302(f) of
ERISA; (xii) no event has occurred and there exists no condition or set of
circumstances which could reasonably be anticipated to result in any material
Liability to the Parent, the Company or its ERISA Affiliates with respect to any
Company Employee Plan except to provide benefits in accordance with the terms of
each such Company Employee Plan; and (xiii) with respect to each Company
Employee Plan, all payments due from the Company or an ERISA Affiliate to date
have been made and all amounts properly accrued to date as liabilities of the
Company which have not been paid have been properly recorded on the books of the
Company and are reflected in the Financial Statements.
(d) Pension Plans. At no time has the Company or its ERISA
Affiliates maintained, contributed to, or been required to contribute to a
Pension Plan subject to Code Section 412 or ERISA Section 302.
16
(e) Multiemployer and Multiple Employer Plans. At no time has
the Company or its ERISA Affiliates (which for this purpose includes any entity
that has been an ERISA Affiliate of the Company) within the last seven (7) years
contributed to or been required to contribute to any Multiemployer Plan or
Multiple Employer Plan.
(f) Post-Employment Obligations. No Company Employee Plan
provides, or has any Liability to provide, life insurance, medical or other
employee welfare benefits to any Employee upon his or her retirement or
termination of employment for any reason, except (i) as may be required by
statute, (ii) for benefits the full cost of which are borne by Employees of the
Company (or such Employees' beneficiaries or dependents), (iii) for death or
disability benefits under any Pension Plan, or (iv) for life insurance benefits
for any Employee who dies while in service with the Company.
(g) Welfare Plans. With respect to any Welfare Plans
maintained by the Company or its ERISA Affiliates, the Company and its ERISA
Affiliates have complied in all material respects with the provisions of
Sections 4980B, 9801 and 9802 of the Code.
(h) Plan Expenses and Amendment. Since the beginning of the
current plan year of any Company Employee Plan, no event has occurred and no
condition or circumstance has existed that could result in a material increase
in the benefits under such Company Employee Plan maintained by Company or any
Subsidiary from the level of benefits for the most recently completed plan year
of such Company Employee Plan. No insurance policy nor any other contract or
agreement affecting any Company Employee Plan requires or permits a retroactive
increase in premiums or payments due thereunder (other than any claims for
benefits under any self-funded Company Employee Plan). All amendments and
actions required to bring each of the Company Employee Plans into conformity
with all of the applicable provisions of ERISA and other Applicable Law have
been made or taken except to the extent that such amendments or actions are not
required by law to be made or taken until a date after the Closing Date and are
disclosed on Section 2.11(h) of the Company Disclosure Schedule or will be
provided to Parent within fourteen (14) days of the date hereof.
(i) Effect of Transaction.
(i) Except as described in Section 2.11(i) of the
Company Disclosure Schedule, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
may result in any material payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any officer or employee
of the Company.
(ii) No payment or benefit which will or may be made
by the Company or Parent or any of their respective affiliates with respect to
any Employee will be characterized as an "excess parachute payment," within the
meaning of Section 280G(b)(1) of the Code.
17
(j) Foreign Plans. Any Company Employee Plan which is subject
to any laws, regulations, or jurisdiction outside the United States is in
material compliance with the requirements of such laws.
(k) GUST. For each Pension Plan maintained by the Company or
its ERISA Affiliates and intended to be a "qualified plan" under Section 401(a)
of the Code, the Company or ERISA Affiliate has either (i) received a favorable
determination letter from the IRS that takes into account any change required to
be made to such Pension Plan in order to comply with the requirements of Section
401(a) of the Code, as amended by the Requirement Protection Act of 1994,
enacted as part of the Uruguay Round Agreements Act, the Uniform Services
Employment and Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997, the Internal Revenue
Service Restructuring and Reform Act of 1998, and the Community Renewal Tax
Relief Act of 2000 (collectively referred to as "GUST"), (ii) timely filed an
application for determination with the IRS requesting a determination that such
Pension Plan meets the requirements of Section 401(a) of the Code, as amended by
GUST, and that an any trust established in connection with such Pension Plan is
exempt from federal income taxation of Section 501(a) of the Code, or (iii)
adopted a prototype plan that has received a favorable opinion letter from the
IRS that it meets the requirements of Section 401(a) of the Code, as amended by
GUST.
Section 2.12. Labor and Employment Matters.
(a) No collective bargaining agreement exists that is binding
on the Company or any Subsidiary. Neither the Company nor any Subsidiary has
received notice that any petition has been filed or proceeding instituted by an
employee or group of employees of the Company or any Subsidiary with the
National Labor Relations Board seeking recognition of a bargaining
representative, and no such petition or proceeding is pending or, to the
Company's knowledge, threatened.
(b) (i) There is no (A) labor strike, dispute or stoppage
pending or, to the Company's knowledge, threatened or (B) slowdown pending or
threatened against the Company or any Subsidiary; and
(ii) Neither the Company nor any Subsidiary has
received since January 1, 2001 any written demand letters, civil rights charges,
suits or drafts of suits, administrative or other claims made by any of its
employees or other persons (including those related to discrimination or
harassment), excluding matters that have been settled.
(c) All individuals who are performing consulting or other
services for the Company or any Subsidiary are or were correctly classified by
the Company as either "independent contractors" or "employees" as the case may
be, and, at the Closing Date, will qualify for such classification, except as
would not result in material harm to the Company.
(d) The Company has provided a complete and correct list of
the name of each officer, employee and independent contractor (to whom the
Company provides a Form 1099) of the Company and each Subsidiary, together with
such person's position or function, annual base salary or wages and any
incentives or bonus arrangement with respect to such
18
person. The Company has provided to Parent or its counsel all Form 1099s filed
with the IRS for the past three (3) years. As of the date hereof, the Company
has not received any information that would lead it to believe that any officer
of the Company will or may cease to be engaged by the Company or applicable
Subsidiary for any reason, including because of the consummation of the
transactions contemplated by this Agreement.
(e) The Company and each Subsidiary (and, to the Company's
knowledge, each of the Company's and each Subsidiary's material subcontractors)
is in compliance with all Applicable Laws governing or relating to employment,
employment practices, terms and conditions of employment and wages and hours, in
each case, with respect to employees.
(f) The Company and each Subsidiary have in all material
respects withheld and reported all amounts required by law or by agreement to be
withheld and reported with respect to wages, salaries and other payments to
employees.
(g) The Company is not liable for any payment in excess of
Twenty Five Thousand Dollars ($25,000) annually to any trust or other fund or to
any Governmental Entity, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees (other than
routine payments to be made in the normal course of business and consistent with
past practices).
(h) The Company has provided a complete and correct list of
all employees holding visas issued by the United States, listing each such
employee by name and type of visa. All other employees of the Company and each
Subsidiary working in the United States and subject to United States immigration
laws are citizens of the United States. Each employee of the Company and each
Subsidiary (whether employed within or outside of the United States) possesses
all applicable passports, visas or other applicable work authorizations with
respect to the location at which they are employed or with respect to which they
travel on behalf of the Company or any Subsidiary, and has complied with all
applicable immigration and similar laws, with such isolated exceptions which do
not materially effect the Company's compliance with applicable United States
immigration laws or to otherwise materially and adversely effect the Company's
business.
(i) The Company has furnished or made available to Parent a
list and description of all policies and guidelines of the Company and each
Subsidiary concerning employment practices, working conditions, hours and other
employment matters. The Company and each Subsidiary (and, to the Company's
knowledge, each of the Company's and its Subsidiaries' material subcontractors)
is in material compliance with all such policies and guidelines.
Section 2.13. Environmental Laws and Regulations.
(a) The term "Environmental Laws" means any applicable
federal, state, local or foreign law, statute, treaty, ordinance, rule,
regulation, permit, consent, approval, license, judgment, order, decree or
injunction relating to: (i) Releases (as defined in 42 U.S.C. sec. 9601(22)) or
threatened Releases of Hazardous Material into the environment, (ii) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or
19
shipment of Hazardous Material, (iii) the health or safety of employees in the
workplace, (iv) protecting or restoring natural resources or (v) the
environment. The term "Hazardous Material" means (i) "hazardous substances" (as
defined in 42 U.S.C. sec. 9601(14)), including "hazardous waste" as defined in
42 U.S.C. sec. 6903, (ii) petroleum, including crude oil and any fractions
thereof, (iii) natural gas, synthetic gas and any mixtures thereof, (iv)
asbestos and/or asbestos containing materials, (v) PCBs or materials containing
PCBs, (vi) any material regulated as a medical waste, (vii) lead containing
paint, and (viii) radioactive materials, but Hazardous Material does not include
office and janitorial supplies properly maintained.
(b) (i) There have been no Releases of Hazardous Material
by any person or entity in, on, under or affecting such properties or any
surrounding site which could reasonably be expected to subject the Company to
material liability; (ii) there is no presence of any Hazardous Material in, on,
under, or affecting such properties or any surrounding site which could
reasonably be expected to subject the Company to material liability; (iii) none
of the Company or any Subsidiary has disposed of any Hazardous Material in a
manner that has led, or reasonably could be expected to lead, to a Release which
could reasonably be expected to subject the Company to material liability; (iv)
since the inception, none of the Company or any Subsidiary has received any
written notice of, or entered into any order, settlement or decree, or become
legally responsible for through agreement, succession, assignment or other
means, relating to: (A) any violation of any Environmental Laws by the Company
or any Subsidiary or the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third party in
connection with any alleged violation of Environmental Laws by the Company or
any Subsidiary or (B) the response to or remediation of Hazardous Material at or
arising from any of the Company's or any Subsidiary's properties; (v) other than
non-compliance or violations that individually or in the aggregate could not
reasonably be expected to result in a fine, penalty or other liability in excess
of Fifty Thousand Dollars ($50,000), the Company and all Subsidiaries are in
material compliance with all Environmental Laws and there have been no material
violations of any Environmental Laws by the Company or any Subsidiary; (vi)
there is no fact that is reasonably likely to result in material liability to
the Company under any Environmental Law or which could reasonably be expected to
prevent the Company or any Subsidiary from complying with Environmental Laws;
and (vii) other than non-compliance or violations that individually or in the
aggregate could not reasonably be expected to result in a fine, penalty or other
liability in excess of Fifty Thousand Dollars ($50,000), each of the Company and
each Subsidiary has obtained and is in material compliance with all approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Entities, or from any other person,
that are required under any Environmental Law applicable to the owned or leased
properties of the Company or any Subsidiary.
Section 2.14. Taxes.
(a) Definitions. For purposes of this Agreement:
(i) the term "Tax" (including "Taxes") means (A) all
federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll,
20
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties and other taxes, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts with respect thereto, (B) any liability for payment of
amounts described in clause (A) whether as a result of transferee liability, of
being a member of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of law, and (C) any liability for the
payment of amounts described in clauses (A) or (B) as a result of any tax
sharing, tax indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other person; and
(ii) the term "Tax Return" means any return,
declaration, report, statement, information statement and other document filed
or required to be filed with respect to Taxes, including any claims for refunds
of Taxes and any amendments or supplements of any of the foregoing.
(b) (i) The Company and its Subsidiaries have duly and
timely filed all Tax Returns required to be filed; and (ii) all Tax Returns that
have been filed by the Company and its Subsidiaries are complete and accurate,
except to the extent any Taxes pertaining to the inaccuracy of clauses (i) and
(ii), in the aggregate, would not be material. None of the Tax Returns filed by
the Company or any of its Subsidiaries was required to contain (in order to
avoid the imposition of a penalty and determined without regard to disclosure
that may be made after the filing of the original Tax Return) a disclosure
statement under Section 6662 of the Code (or any predecessor provision or
comparable provision of state, local or foreign law). The Company and its
Subsidiaries have complied in all material respects with all Applicable Laws
relating to intercompany transactions and transfer pricing.
(c) Except with respect to Taxes that, in the aggregate, would
not be material, (i) the Company and its Subsidiaries have timely withheld and
paid all Taxes that were required to have been withheld or have become due or
payable, respectively, and have adequately provided in accordance with the
United States generally accepted accounting principles in the financial
statements included in the Company SEC Reports filed on or before the date
hereof for all Taxes (whether or not shown on any Tax Return) accrued through
the date of such Company SEC Reports; and (ii) all Taxes of the Company and its
Subsidiaries accrued following the end of the most recent period covered by the
Company SEC Reports have been incurred in the ordinary course of business of the
Company consistent with past practices and have been paid when due in the
ordinary course of business consistent with past practices.
(d) Except as set forth on Schedule 2.14(d) of the Company
Disclosure Schedule, no claim for assessment or collection of Taxes is presently
being asserted against the Company or its Subsidiaries, other than claims that,
in the aggregate, are not material, and neither the Company nor any of its
Subsidiaries is a party to any pending action, proceeding, audit or
investigation by any governmental taxing authority, nor does the Company have
knowledge of any such threatened action, proceeding, audit or investigation.
(e) Neither the Company nor any Subsidiary (nor any
predecessor thereof) (A) is a party to or bound by any closing agreement, offer
in compromise or any other
21
agreement with any Tax authority, (B) is a party to a plan or agreement that
could give rise to remuneration the deduction for which could be disallowed
under Section 162(m) of the Code, or (C) has ever been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code. There are no (1) adjustments under Section 481 of the Code or any similar
adjustments with respect to the Company or any Subsidiary (or their
predecessors) that will be effective for any period ending after the Closing,
(2) outstanding waivers or outstanding extensions of the statute of limitations
in effect with respect to Taxes for which the Company or any Subsidiary could be
held liable, or (3) grants of power of attorney to any person in effect with
respect to Taxes for which the Company or any Subsidiary would be liable.
(f) Neither the Company nor any of its affiliates has taken or
agreed to take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
(g) Neither the Company nor any Subsidiary is a party to or
bound by any obligation under any Tax sharing, Tax allocation, Tax indemnity or
similar agreement or arrangement.
(h) Neither the Company nor any Subsidiary has been a
"distributing corporation" or a "controlled corporation" in connection with a
distribution intended or purported to be governed by Section 355 of the Code.
(i) No Subsidiary of the Company that is not a United States
person, as defined in the Code, is or at any time has been a passive foreign
investment company within the meaning of Section 1297 of the Code, and neither
the Company nor any Subsidiary is a shareholder, directly or indirectly, in a
passive foreign investment company. No Subsidiary of the Company that is not a
United States person as defined in the Code (x) is, or at any time has been,
engaged in the conduct of a trade or business within the United States or
treated as or considered to be so engaged or (y) has, or at any time has had, an
investment in "United States property" within the meaning of Section 956(c) of
the Code. Neither the Company nor any Subsidiary is, or at any time has been,
impacted by (A) the dual consolidated loss provisions of the Section 1503(d) of
the Code, (B) the overall foreign loss provisions of Section 904(f) of the Code,
or (C) the recharacterization provisions of Section 952(c)(2) of the Code.
Section 2.15. Intellectual Property.
(a) Section 2.15(a) of the Company Disclosure Schedule
accurately identifies all Company Registered IP and all material unregistered
trademarks and other Intellectual Property currently used and owned by the
Company or any Subsidiary. No person has an ownership interest in any
Intellectual Property owned by the Company that would entitle them to exploit
the Intellectual Property without the Company's consent.
(b) "Shrinkwrap Software" means "off-the-shelf" computer
software applications, other than Company Owned IP, that are generally available
to all interested purchasers and licensees on standard terms and conditions. No
Company Licensed IP (A) is
22
provided to customers in connection with products or services of the Company; or
(B) is sublicensed to customers by the Company. Section 2.15(b) of the Company
Disclosure Schedule accurately identifies the license or other agreement or
understanding pursuant to which any Company Licensed IP that is material to the
Company's business and is not Shrinkwrap Software is being licensed to or used
by the Company or any Subsidiary (each, a "License-In Agreement"); and sets
forth a complete and accurate list of the amount of any remaining unused prepaid
royalty advanced by the Company or any Subsidiary and identifies those
License-In Agreements under which any royalty or license fee (excluding fees for
maintenance and support) will become payable by the Company or such Subsidiary,
as applicable, thereunder by reason of the passage of time or the use or
exploitation of the Intellectual Property licensed thereunder. The rights
licensed under each License-In Agreement shall be exercisable by the Surviving
Corporation on and after the Closing to the same extent as such rights would
have been exercisable by the Company or such Subsidiary, as applicable, if the
Closing had not occurred and at the same cost as the Company or such Subsidiary
would have incurred if the Closing had not occurred, and no party granting such
rights has given formal written notice to the Company or, to the Company's
knowledge, threatened that it intends to terminate such License-In Agreement
prior to the expiration thereof in accordance with its terms.
(c) The Company or one of its Subsidiaries has good and valid
title to all of the Company Owned IP, including without limitation all Company
Registered IP identified in Section 2.15(a) of the Company Disclosure Schedule,
free and clear of any Liens (subject to any non-exclusive licenses granted by
the Company or such Subsidiary in the ordinary course of business), and, to the
Company's knowledge, (i) the Company Registered IP is valid and (ii) the Company
has the right to enforce the Company Owned IP against third parties. Neither the
Company nor any Subsidiary is obligated to make any payment to any person in
connection with the manufacture, use, sale, importation, distribution, display,
modification or other exploitation of any Company Owned IP or, except as set
forth on Section 2.15(c) of the Company Disclosure Schedule, any other
Intellectual Property currently used by the Company other than Shrinkwrap
Software (excluding any fees for maintenance and support). The Company or any
Subsidiary, as applicable, is free to make, use, modify, copy, distribute, sell,
license, import, export and otherwise exploit all Company Owned IP on an
exclusive basis subject to any nonexclusive (x) end-user licenses granted to
customers or (y) nondisclosure or confidentiality agreements pursuant to which
any person has been granted access to Company Owned IP but not the right to
exploit such Company Owned IP. No current or former employee, officer, director,
stockholder, consultant or independent contractor has any valid right, claim or
interest in or with respect to any Company IP which would impair or which would
give rise to the impairment of the Company's use, distribution, license or other
exploitation of the Company IP.
(d) The Company and each Subsidiary have taken reasonable
measures and precautions necessary to protect, preserve and maintain the
confidentiality and secrecy of all trade secrets and other confidential
information material to the Company's business and otherwise to maintain and
protect the value of all Company Owned IP. Neither the Company nor any
Subsidiary has disclosed or delivered or permitted to be disclosed or delivered
to any person, and no person (other than employees or consultants of the Company
and its Subsidiaries which need such information in the course of their
employment) has access to or
23
has any rights with respect to, trade secrets and other confidential information
material to the Company's business, the source code or any portion or aspect of
the source code material to the Company's business, or any proprietary
information or algorithm contained in any source code of any software material
to the Company's business that comprises Company Owned IP, other than (i)
instances where such trade secrets, confidential information and source code has
been disclosed subject to an agreement with any person pursuant to which such
person is required to maintain the confidentiality thereof, or (ii) other
circumstances in which disclosure was made and the Company promptly acted to
mitigate and prevent any further disclosure. The Company has the right to bring
actions for infringement or unauthorized use of the Company Owned IP.
(e) (i) None of the Company Owned IP or any of the
Company's products or services or the Intellectual Property used by the Company
in its operations, in each case which is not Company Licensed IP or Shrinkwrap
Software, infringe, misappropriate, violate, dilute or constitute the
unauthorized use of any Intellectual Property of any third party and neither the
Company nor any Subsidiary has received any written notice or claim in the past
three (3) years asserting or suggesting that any such infringement,
misappropriation, violation, dilution or unauthorized use is or may be occurring
or has or may have occurred, that would be material to the business and
operations of the Company. No Proceeding in which the Company is a named party
and has been served or has received notice of, is pending or, to the Company's
knowledge, threatened, nor is there any pending claim or demand, which
challenges the ownership, legality, validity, enforceability, use, exploitation
or modification by the Company or any Subsidiary of such Company Owned IP or
other Intellectual Property licensed to the Company under any License-In
Agreement, and the Company has received no written notice of any of the
foregoing in the past (3) years. No Company Owned IP is subject to any
outstanding order, judgment, decree, or stipulation restricting the use thereof
by the Company or any Subsidiary or, in the case of any Intellectual Property
licensed to others, restricting the sale, transfer, assignment or licensing
thereof by the Company or such Subsidiary to any person.
(ii) To the Company's knowledge, the Company's
current use of any Company Licensed IP licensed under any License-In Agreement
does not infringe, misappropriate, violate, dilute or constitute the
unauthorized use of any Intellectual Property of any third party.
(iii) The Company has the right to grant the licenses
it grants in the course of its business.
(iv) To the Company's knowledge, the Company has the
right to use the Intellectual Property used by it in the conduct its business as
it is currently conducted.
(f) To the Company's knowledge, no person is infringing or
misappropriating any Company Owned IP or making any unlawful use of any products
of the Company. Neither the Company nor any Subsidiary has initiated and is
maintaining before a court or in an arbitration proceeding claims or causes of
action against other persons for infringement by such persons of Company Owned
IP (including claims for past infringement of Intellectual Property). The
transactions contemplated by this Agreement to be
24
consummated at the Closing will have no material adverse effect on the validity
or enforceability of the Company IP.
Section 2.16. Insurance. Each of the insurance policies
maintained by the Company and each Subsidiary (the "Insurance Policies") is in
full force and effect and is valid, outstanding and enforceable, and all
premiums due thereon have been paid in full, or if not yet due and payable,
reserved by the Company on its unaudited balance sheet as of September 28, 2003
in accordance with United States generally accepted accounting principles and is
listed on Schedule 2.16 of the Company Disclosure Schedule. True and complete
copies of all Insurance Policies have been delivered or made available to
Parent. None of the Insurance Policies will terminate or lapse (or be affected
in any other materially adverse manner) by reason of the execution and delivery
of, or consummation of any of the transactions contemplated by, this Agreement.
Each of the Company and each Subsidiary has complied in all material respects
with the provisions of each Insurance Policy under which it is the insured
party. No insurer under any Insurance Policy has canceled or generally
disclaimed liability under any such policy or indicated any intent to do so or
not to renew any such policy. All material claims of the Company or any
Subsidiary under the Insurance Policies have been filed in a timely fashion.
Section 2.17. Title to Properties; Absence of Liens and
Encumbrances.
(a) Section 2.17 of the Company Disclosure Schedule sets forth
a complete and accurate list of all real property currently owned, leased or
subleased by the Company or any Subsidiary, with the name of the lessor and the
date of the lease, sublease, assignment of the lease, any guaranty given or
leasing commissions payable by the Company or any Subsidiary in connection
therewith and each amendment to any of the foregoing (collectively, the "Lease
Documents"). True, correct and complete copies of all Lease Documents have been
delivered or made available to Parent or Parent's counsel. All such current
leases and subleases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or event which, with
notice or lapse of time, or both, would constitute a default) by the Company or
any Subsidiary or by the other party to such lease or sublease, or person in the
chain of title to such leased premises.
(b) Each of the Company and Subsidiaries has good and valid
title to, or, in the case of leased properties and assets, valid leasehold or
subleasehold interests in, all of its properties and assets, tangible and
intangible, real, personal and mixed, used or held for use in its business, free
and clear of any Liens, except for such imperfections of title, if any, that do
not materially impair the present value or use of the subject property. For
purposes of this Section 2.17 only, the terms "property" and "assets" do not
include Intellectual Property.
(c) Section 2.17(c) of the Company Disclosure Schedule sets
forth a true, complete and correct list of all real property owned or leased by
the Company or any of its Subsidiaries. Each of the Company and its Subsidiaries
is in compliance in all material respects with the terms of all leases for real
property to which it is a party. Neither the Company nor any of its Subsidiaries
is a party to any lease, assignment or similar
25
arrangement under which the Company or any Subsidiary is a lessor, assignor or
otherwise makes available for use by any third party any portion of the owned or
leased real property.
(d) The facilities, property and equipment owned, leased or
otherwise used by the Company or any of its Subsidiaries are in a good state of
maintenance and repair, free from material defects and in good operating
condition (subject to normal wear and tear) and suitable for the purposes for
which they are presently used.
(e) All tangible assets which are leased by the Company or any
of its Subsidiaries have been maintained with the manufacturers' standards and
specifications required by each such lease such that at each such termination of
the lease such assets can be returned to their owner without any further
material obligation on the part of the Company or any of its Subsidiaries with
respect thereto.
Section 2.18. Certain Business Practices. None of the Company,
any Subsidiary or any directors or officers, agents or employees of the Company
or any Subsidiary, has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity; (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iii)
made any payment in the nature of criminal bribery.
Section 2.19. Off Balance Sheet Liabilities. Except as
disclosed in the Company SEC Reports filed prior to the date hereof for
transactions, arrangements and other relationships otherwise specifically
identified in the Financial Statements, Section 2.19 of the Company Disclosure
Schedule sets forth a true, complete and correct list, as of the date hereof, of
all transactions, arrangements and other relationships between and/or among the
Company, any of its affiliates, and any special purpose or limited purpose
entity beneficially owned by or formed at the direction of the Company or any of
its affiliates.
Section 2.20. Warranties. Section 2.20 of the Company
Disclosure Schedule sets forth complete and accurate copies of the forms of
written warranties and guaranties by the Company or any Subsidiary utilized with
respect to its products or services. There have not been any material deviations
from such warranties and guaranties that would obligate the Company or any
Subsidiary to provide products or services in any form or manner not consistent
with the relevant specifications for such products or services, and none of the
Company, any Subsidiary or any of their respective salespeople, employees,
distributors and agents is authorized to undertake obligations to any customer
or to other third parties in excess of such warranties or guaranties.
Section 2.21. Material Contracts.
(a) Section 2.21(a) of the Company Disclosure Schedule sets
forth a complete and accurate list of all written or oral contracts, agreements,
notes, bonds, indentures, mortgages, guarantees, options, leases, licenses,
sales and purchase orders, warranties, commitments and other instruments of any
kind (each a "Contract"), to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary, is
26
otherwise bound, as follows (each a "Material Contract" and, collectively, the
"Material Contracts"):
(i) each "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company and
its Subsidiaries;
(ii) each Contract or related series of Contracts of
the Company or any Subsidiary other than with a customer pursuant to which the
Company or any Subsidiary received (or was entitled to receive) or paid (or was
purportedly obligated to pay) One Hundred Thousand Dollars ($100,000) or more in
the nine (9) month period ended September 28, 2003 (provided such Contract
remains in effect as of the date hereof);
(iii) each customer contract or series of related
contracts in effect on the date of this Agreement under which the Company or any
Subsidiary received in the nine (9) month period ended September 28, 2003 or is
entitled to receive thereafter (1) Five Hundred Thousand Dollars ($500,000) or
more for products or services and (2) a fixed amount to be paid in exchange for
the provision of services;
(iv) each Contract or series of related contracts
that requires payment by or to the Company after September 28, 2003 of One
Hundred Thousand Dollars ($100,000) or more (provided such Contract is not by
its terms cancelable by the Company or any Subsidiary on 60 days or less
notice);
(v) each Contract containing noncompetition
restrictions, including any covenant limiting the right of the Company or its
Subsidiaries to engage in any line of business or compete with any person in any
line of business, including any geographic limitations;
(vi) each Contract that either individually or in the
aggregate is material to any line of business of the Company or any Subsidiary
that requires any consent or other action by any person for, or will be subject
to default, termination, material repricing or other renegotiation, or
cancellation because of, the transactions contemplated hereby;
(vii) other than Shrinkwrap Software, each Contract
that either individually or in the aggregate, if terminated or expired, would
materially impair or prevent Company's ability to (A) develop, use, sell,
distribute or manufacture any products or services provided to customers in the
nine (9) months ending September 28, 2003 or in any future 12 month period; or
(B) enter a line of business currently contemplated by Company or any
Subsidiary;
(viii) each Contract or series of related Contracts
of the Company or any Subsidiary relating to, and evidences of, indebtedness for
borrowed money or the deferred purchase price of property (whether incurred,
assumed, guaranteed or secured by any asset) in excess of One Hundred Thousand
Dollars ($100,000);
(ix) each Contract relating to any legal entity in
the nature of a partnership, limited liability company, or joint venture, in
which the Company owns more than 25% of the voting rights, or a material
strategic alliance;
27
(x) each Contract that requires the Company or any
Subsidiary to grant "most favored customer" pricing to any other person;
(xi) each Contract which could prohibit the
consummation of the transactions contemplated by this Agreement; and
(xii) each Contract with any present director or
executive officer of the Company or any of its Subsidiaries or any stockholder
who owns or controls two percent (2%) or more of the Shares (other than Employee
Agreements).
(b) (i) Each Material Contract is a legal, valid and binding
obligation of the Company or a Subsidiary and, to the Company's knowledge, each
other person who is a party thereto, enforceable against the Company or such
Subsidiary and to the Company's knowledge, each such other person in accordance
with its terms; (ii) neither the Company or any Subsidiary nor, to the Company's
knowledge, any other party thereto is in material default any Material Contract;
and (iii) neither the Company nor any Subsidiary is a party to any Material
Contract that, to the Company's knowledge, the Company or such Subsidiary does
not have the present ability to fully perform.
Section 2.22. Suppliers and Customers. The documents and
information supplied by the Company to Parent or any of its representatives with
respect to relationships and volumes of business done with the Company's or any
Subsidiary's significant suppliers and customers are accurate in all material
respects. During the last nine (9) months, neither the Company nor any
Subsidiary has received any written notices of termination or written or oral
threats of termination from any of the ten (10) largest suppliers or the
twenty-five (25) largest customers of the Company and its Subsidiaries, taken as
a whole, or to the Company's knowledge, any information that any such customer
or supplier intends to materially decrease the amount of business that it does
with the Company or any Subsidiary.
Section 2.23. Affiliates. Except for the directors and
executive officers of the Company, each of whom is listed in Section 2.23 of the
Company Disclosure Schedule, there are no persons who may be deemed to be
affiliates of the Company under Rule 145 of the Securities Act ("Company
Affiliates").
Section 2.24. Opinion of Financial Advisor. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ &
Co. Incorporated (the "Company Financial Advisor") has delivered to the Company
Board its opinion to the effect that as of the date such opinion was delivered,
the Merger Consideration is fair, from a financial point of view, to the holders
of Shares (the "Company Fairness Opinion"). The Company has been authorized by
the Company Financial Advisor to permit, subject to the prior review and consent
by the Company Financial Advisor (such consent not to be unreasonably withheld),
the inclusion of the Company Fairness Opinion (or a reference thereto) in the
Joint Proxy Statement/Prospectus. As of the date hereof, such opinion has not
been withdrawn, revoked or modified. A true and complete copy of the Company
Fairness Opinion will be delivered to Parent promptly after receipt of written
confirmation thereof.
Section 2.25. Brokers. No broker, finder or investment banker
(other than the Company Financial Advisor, a true and correct copy of whose
engagement agreement has
28
been provided to Parent) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
Section 2.26. Takeover Statutes. The Company Board has taken
all actions so that the restrictions contained in Section 203 of the DGCL
applicable to a "business combination" (as defined in such Section 203), and any
other similar Applicable Law, will not apply to Parent or Acquisition with
respect to the execution, delivery or performance of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby.
Section 2.27. Interested Party Transactions. Except as
disclosed in the Company SEC Reports, no director, officer or other affiliate of
the Company has or has had, directly or indirectly, (i) an economic interest in
any person that has furnished or sold, or furnishes or sells, services or
products that the Company or any Subsidiary furnishes or sells, or proposes to
furnish or sell; (ii) an economic interest in any person that purchases from or
sells or furnishes to, the Company or any Subsidiary, any goods or services;
(iii) a beneficial interest in any Contract included in Section 2.15 or 2.20 of
the Company Disclosure Schedule; or (iv) any contractual or other arrangement
with the Company or any Subsidiary; provided, however, that ownership of no more
than one percent (1%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "economic interest in any person" for
purposes of this Section 2.27.
Section 2.28. Cash Flow. The Company has adequate cash
(including borrowing capacity under its existing line of credit) to fund its
normal operations in the ordinary course of business through the Closing Date.
Section 2.29. Representations Complete. The representations
and warranties made by the Company in this Agreement, the statements made in any
Schedules or certificates furnished by the Company pursuant to this Agreement,
and the statements made by the Company in any documents mailed, delivered or
furnished to the shareholders of Parent or the Company in connection with
soliciting their proxy or consent to this Agreement and the Merger, do not
contain and will not contain, as of their respective dates and as of the
Effective Time, any untrue statement of a material fact, nor do they omit or
will they omit, as of their respective dates or as of the Effective Time, to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which they were made,
not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the
Company, subject to such exceptions as are disclosed in the Disclosure Schedule
(the "Parent Disclosure Schedule") delivered by Parent simultaneously with the
execution hereof (which Parent Disclosure Schedule shall provide an exception to
or otherwise qualify the representations and
29
warranties of Parent and Acquisition contained in the section of this Agreement
corresponding by number to such disclosure and the other representations and
warranties herein to the extent such disclosure is readily apparent on its face
to be applicable to such representations and warranties specifically identify
the specific Section or subsection, as applicable, to which each such exception
relates), as follows:
Section 3.1. Organization.
(a) Parent is a corporation duly organized, validly existing,
and with active status under the laws of the State of Florida and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. Acquisition is duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted. Parent has
made available to the Company complete and accurate copies of the Articles of
Incorporation and bylaws of Parent and the Certificate of Incorporation and
bylaws of Acquisition, in each case as in full force and effect on the date
hereof.
(b) Each of Parent and Acquisition is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
Section 3.2. Capitalization of Parent and its Subsidiaries.
(a) The authorized capital stock of the Parent consists of (i)
Two Hundred Fifty Million (250,000,000) shares of Parent Common Stock, of which,
as of October 31, 2003, Thirty Million Seven Hundred Fifty Thousand Six Hundred
Eighteen (30,750,618) shares of Parent Common Stock were issued and outstanding;
and (ii) Fifteen Million (15,000,000) shares of preferred stock, par value $.01
per share, none of which are outstanding. All of the outstanding shares of
Parent Common Stock have been validly issued and are fully paid, nonassessable
and free of preemptive rights. As of October 31, 2003, an aggregate of Eight
Million Eight Hundred and Eighty Seven Thousand Eight Hundred and Ten
(8,887,810) shares of Parent Common Stock were reserved for issuance of which
Six Million Five Hundred and Thirty Three Thousand One Hundred and Eighty Six
(6,533,186) shares of Parent Common Stock were issuable upon or otherwise
deliverable in connection with the exercise of outstanding options to purchase
Parent Common Stock issued pursuant to the following plans ("Parent Plans"):
Non-Employee Director Stock Option Plan and Stock Incentive Plan. Between
October 31, 2003 and the date hereof, no shares of the Parent's capital stock
have been issued other than pursuant to options already in existence on such
first date issued under Parent Plans, and between October 31, 2003 and the date
hereof, no stock options have been granted. Except as set forth above and for
the rights (the "Parent Rights") issued pursuant to Parent's Rights Agreement,
effective as of October 28, 1998, between Parent and State Street Bank and Trust
Company (the "Parent Rights Agreement"), as of the date hereof, there are
outstanding (i) no shares of capital stock or other voting securities of
30
Parent, (ii) no securities of Parent or any of its subsidiaries convertible into
or exchangeable or exercisable for shares of capital stock or other voting
securities of Parent, (iii) no options, warrants or other rights to acquire from
Parent or any of its subsidiaries, and, except as described in the Parent SEC
Reports, no obligations of Parent or any of its subsidiaries to issue, any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or other voting securities of Parent, and (iv)
no equity equivalent interests in the ownership or earnings of the Parent or
other similar rights (collectively "Parent Securities"). As of the date hereof,
there are no outstanding rights or obligations of the Parent or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Parent Securities.
Other than the Parent Voting Agreements, there are no shareholder agreements,
voting trusts or other arrangements or understandings to which Parent is a party
or by which it is bound relating to the voting or registration of any shares of
capital stock or other voting securities of Parent.
(b) The Parent Rights and Parent Common Stock constitute the only
classes of equity securities of Parent or its subsidiaries registered or
required to be registered under the Exchange Act.
Section 3.3. Authority Relative to this Agreement.
(a) Each of Parent and Acquisition has all necessary corporate
power and authority to execute and deliver this Agreement, to perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Acquisition and by Parent as the sole
shareholder of Acquisition. The Board of Directors of Parent (the "Parent
Board") has directed that the issuance of Parent Common Stock pursuant to this
Agreement be submitted to Parent's shareholders for approval at the meeting of
Parent's shareholders to be held in connection with the Merger (the "Parent
Shareholders Meeting") and, except for the approval of the issuance of Parent
Common Stock in the Merger by majority vote at a meeting of Parent's
shareholders at which a quorum is present (the "Parent Shareholder Approval"),
no other corporate proceedings on the part of Parent or Acquisition are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Parent and Acquisition and assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid, legal and
binding agreement of each of Parent and Acquisition enforceable against each of
Parent and Acquisition in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
(b) Without limiting the generality of the foregoing, the Parent
Board has unanimously (i) approved this Agreement, the Merger and the other
transactions contemplated hereby, (ii) resolved to recommend that Parent's
shareholders approve the issuance of Parent Common Stock in the Merger, and
(iii) has not withdrawn or modified such approval or resolution to recommend.
31
Section 3.4. Parent Common Stock. The shares of Parent Common
Stock to be issued upon exercise of Company Stock Options assumed by Parent
hereunder will, when issued and delivered in accordance with this Agreement, be
duly authorized, validly issued, fully paid and non-assessable and issued in
compliance with federal and state securities laws.
Section 3.5. SEC Reports; Financial Statements.
(a) Parent has filed all required forms, reports and documents
("Parent SEC Reports") with the SEC since December 31, 1998, each of which
complied at the time of filing in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each law as in effect
on the dates such forms, reports and documents were filed. None of such Parent
SEC Reports, including any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading,
except to the extent superseded or amended by a Parent SEC Report filed
subsequently and prior to the date hereof. The consolidated financial statements
of Parent included in the Parent SEC Reports fairly present in conformity with
United States generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto) the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended.
(b) Parent has heretofore made, and hereafter will make, available
to the Company a complete and correct copy of any amendments or modifications
that are required to be filed with or submitted to the SEC but have not yet been
filed with or submitted to the SEC to agreements, documents or other instruments
that previously had been filed with or submitted to the SEC by Parent pursuant
to the Exchange Act.
(c) Each required form, report and document containing financial
statements that has been filed with or submitted to the SEC since July 31, 2002,
was accompanied by the certifications required to be filed or submitted by
Parent's chief executive officer and chief financial officer pursuant to the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and at the time of filing or submission of each such
certification, such certification was true and accurate and complied with the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations promulgated thereunder.
(d) Since December 31, 1998, neither Parent nor any of its
subsidiaries nor, to Parent's knowledge, any director, officer, employee,
auditor, accountant or representative of Parent or any of its subsidiaries has
received or otherwise had or obtained knowledge of any complaint, allegation,
assertion or claim, whether written or oral, regarding a material deficiency in
the accounting or auditing practices, procedures, methodologies or methods of
Parent or any of its subsidiaries or their respective internal accounting
controls. No attorney representing Parent or any of its subsidiaries, whether or
not employed by Parent or any of its subsidiaries, has reported evidence of a
material violation of securities laws, breach of fiduciary duty or similar
violation by Parent or any of its officers, directors, employees or agents to
the Parent Board or any committee thereof or to any director or officer of
Parent.
32
(e) To the Parent's knowledge, no employee of Parent or any of its
subsidiaries has provided or is providing information to any law enforcement
agency regarding the commission or possible commission of any crime or the
violation or possible violation of any Applicable Law. Neither Parent nor any of
its subsidiaries nor any officer, employee, contractor, subcontractor or agent
of Parent or any such subsidiary has discharged, demoted, suspended, threatened,
harassed or in any other manner discriminated against an employee of Parent or
any of its subsidiaries in the terms and conditions of employment because of any
act of such employee described in 18 U.S.C. ss. 1514A(a).
Section 3.6. Information Supplied. None of the information
supplied or to be supplied by Parent or Acquisition for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Joint Proxy Statement/Prospectus will, at the date
mailed to stockholders of the Company and Parent and at the times of the Company
Stockholders Meeting and the Parent Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein in light of
the circumstances under which they are made not misleading. Each of the S-4 and
the Joint Proxy Statement/Prospectus will comply, as of its mailing date, as to
form in all material respects the provisions of the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, Parent makes no
representation, warranty or covenant with respect to any information supplied or
required to be supplied by the Company which is contained in or omitted from any
of the foregoing documents or which is incorporated by reference therein.
Section 3.7. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under and other applicable requirements of the Securities Act, the Exchange Act,
state securities or blue sky laws, the rules and regulations of the Nasdaq
National Market, the HSR Act, and any filings under similar competition or
merger notification laws or regulations of foreign Governmental Entities and the
filing and recordation of the Certificate of Merger as required by the DGCL, no
material filing with or notice to, and no material permit, authorization,
consent or approval of any Governmental Entity is necessary for the execution
and delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby. Neither the
execution, delivery and performance of this Agreement by Parent or Acquisition
nor the consummation by Parent or Acquisition of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
Articles of Incorporation or bylaws of Parent or the Certificate of
Incorporation or bylaws of Acquisition, (ii) result in a violation or breach of
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent or Acquisition or any of Parent's
other subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, or (iii) violate any material order, writ,
injunction, decree, law, statute, rule or regulation
33
applicable to Parent or Acquisition or any of Parent's other subsidiaries or any
of their respective properties or assets.
Section 3.8. No Default. Neither Parent nor any of its
subsidiaries is in (i) breach, default or violation (and no event has occurred
that with notice or the lapse of time, or both, would constitute a breach,
default or violation) of any term, condition or provision of its Articles of
Incorporation or bylaws (or similar governing documents), or (ii) material
breach, default or violation (and no event has occurred that with notice or the
lapse of time, or both, would constitute a breach, default or violation) of any
term, condition or provision of (a) any material note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent nor any of its subsidiaries is now a party or by which it or any
of its properties or assets may be bound, or (b) any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent nor
any of its subsidiaries or any of its properties or assets.
Section 3.9. Litigation. Except as disclosed in the Parent SEC
Reports filed on or before the date hereof or except as set forth on Section 3.9
of the Parent Disclosure Schedule, there is no suit, action, proceeding,
investigation or material claim pending or, to the Parent's knowledge, any
credible threat thereof, against Parent or any of its subsidiaries or any of
their respective properties or assets before any Governmental Entity. Except as
disclosed in the Parent SEC Reports filed on or before the date hereof, neither
Parent nor any of its subsidiaries is subject to any outstanding order, writ,
injunction or decree of any Governmental Entity that reasonably could be
expected to result in any loss, expense, charge, assessment, levy, fine or other
liability being imposed upon or incurred by the Parent or such subsidiary
exceeding Seven Hundred Fifty Thousand Dollars ($750,000) or that reasonably
could be expected to prevent the consummation of the transactions contemplated
hereby.
Section 3.10. Opinion of Financial Advisor. ▇▇▇▇▇▇ Brothers (the
"Parent Financial Advisor") has delivered to the Parent Board its opinion to the
effect that, as of the date such opinion was delivered, the Merger Consideration
is fair, from a financial point of view, to Parent (the "Parent Fairness
Opinion"). Parent has been authorized by the Parent Financial Advisor to permit,
subject to the prior review and approval of the Parent Financial Advisor (such
approval not to be unreasonably withheld), the inclusion of the Parent Fairness
Opinion (or a reference thereto) in the Joint Proxy Statement/Prospectus. Such
opinion has not been withdrawn, revoked or modified as of the date hereof. A
true and complete copy of the Parent Fairness Opinion will be delivered to the
Company promptly after receipt of written confirmation thereof.
Section 3.11. Brokers. No broker, finder or investment banker
(other than the Parent Financial Advisor) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or
Acquisition.
Section 3.12. No Prior Activities. Except for obligations incurred
in connection with its incorporation or organization or the negotiation,
execution and consummation of this Agreement and the transactions contemplated
hereby, Acquisition has
34
neither incurred any obligation or liability nor engaged in any business or
activity of any type or kind or entered into any agreement or arrangement with
any person.
Section 3.13. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent disclosed by Parent in the Parent SEC Reports filed
on or before the date hereof other than liabilities or obligations to suppliers,
vendors, employees and landlords incurred in the ordinary and usual course of
such business consistent with past practices, neither Parent nor any of its
subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by United States
generally accepted accounting principles to be reflected on a consolidated
balance sheet of Parent (including the notes thereto). Except for the
negotiation and execution of this Agreement, between October 1, 2003 and the
date hereof, the Parent and each of its subsidiaries have conducted their
respective businesses in all material respects only in, and have not engaged in
any material transaction other than according to, the ordinary and usual course
of such business consistent with past practices, and there has not been any
Material Adverse Effect on Parent.
Section 3.14. Compliance with Applicable Law. Except as disclosed
in the Parent SEC Reports filed on or before the date hereof, each of Parent and
its subsidiaries holds all material permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (collectively, the "Parent Permits").
Except as disclosed in the Parent SEC Reports filed on or before the date
hereof, Parent and its subsidiaries have materially complied, and are in
material compliance with, the terms of Parent Permits. Except as disclosed in
the Parent SEC Reports, the businesses of Parent and its subsidiaries have been
and are being conducted in material compliance with all material Applicable
Laws. Except as disclosed in the Parent SEC Reports filed on or before the date
hereof, no investigation or review by any Governmental Entity with respect to
Parent or any of its subsidiaries is pending or, to the Parent's knowledge,
threatened.
Section 3.15 Suppliers and Customers. The documents and
information supplied by Parent to the Company or any of its representatives with
respect to relationships and volumes of business done with Parent's or any of
its subsidiaries' significant suppliers and customers are accurate in all
material respects. During the last twelve (12) months, neither Parent nor any or
its subsidiaries has received any oral or written notices of termination or
written threats of termination from any of the ten (10) largest suppliers or the
twenty-five (25) largest customers of Parent and its subsidiaries, taken as a
whole, or to Parent's knowledge, any information that any such customer or
supplier intends to materially decrease the amount of business that it does with
the Parent or any of its subsidiaries.
Section 3.16 Parent Employee Benefit Matters.
(a) Section 3.16(a) of the Parent Disclosure Schedule lists, with
respect to employees in the United States of Parent and, to the Parent's
knowledge and its subsidiaries, all employee benefit plans (as defined in
Section 3(3) of ERISA) and all bonus, stock option, stock purchase, restricted
stock, long term incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, and all employment, change in control, and severance
agreements, to which
35
Parent or any of its subsidiaries is a party, with respect to which Parent or
any of its subsidiaries has any obligation or which are maintained, contributed
to or sponsored by Parent or any of its subsidiaries for the benefit of any
current or former employee, officer or director of Parent or any of its
subsidiaries (collectively, the "Parent Benefit Plans"), other than plans,
programs, arrangements or agreements that are not material. Copies or summaries
of each material Parent Benefit Plan have been made available to the Company.
Neither Parent nor any of its subsidiaries has any written commitment to create,
adopt or amend any material employee benefit plan, program, arrangement or
agreement, other than any immaterial modification or any modification or change
required by Applicable Law.
(b) Each Parent Benefit Plan is now in all respects in
compliance with its terms and with the requirements of all applicable laws and
regulations, including, without limitation, ERISA and the Code, except where any
non-compliance would not reasonably be likely, individually or in the aggregate,
to have a Material Adverse Effect on Parent. To the Parent's knowledge, no
action, claim or proceeding is pending or threatened with respect to any Parent
Benefit Plan, other than claims for benefits in the ordinary course and other
than such actions, claims or proceedings that could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.17 Parent Intellectual Property. Parent (or one of
its subsidiaries) owns all of the Intellectual Property, or has obtained the
right to use all of the Intellectual Property that is not owned by it, that is
used in any material respect in Parent's businesses as currently conducted. The
Intellectual Property owned by Parent (or one of its subsidiaries) and used in
any material respect in Parent's businesses as currently conducted, do not
infringe upon, violate or constitute the unauthorized use of any valid and
enforceable rights owned or controlled by any third party, including any
Intellectual Property of any third party. To Parent's knowledge, the
Intellectual Property it has licensed from third parties, and used in any
material respect in Parent's businesses as currently conducted, does not
infringe upon, violate or constitute the unauthorized use of any valid and
enforceable rights owned or controlled by any other third party.
Section 3.18 Representations Complete. The representations and
warranties made by Parent and Acquisition in this Agreement, the statements made
in any certificates furnished by Parent and Acquisition pursuant to this
Agreement, and the statements made by Parent and Acquisition in any documents
mailed, delivered or furnished to the stockholders of Parent and the Company in
connection with soliciting their proxy or consent to this Agreement and the
Merger, do not contain and will not contain, as of their respective dates and as
of the Effective Time, any untrue statement of a material fact, nor do they omit
or will they omit, as of their respective dates or as of the Effective Time, to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which they were made,
not misleading.
36
ARTICLE 4
COVENANTS
Section 4.1. Conduct of Business.
(a) Conduct of Business of the Company. Except (i) as
expressly contemplated by this Agreement, (ii) as disclosed in Section 4.1(a) of
the Company Disclosure Schedule, or (iii) to the extent that Parent shall
otherwise consent in writing (such consent or declination to consent not to be
unreasonably delayed), during the period from the date hereof to the earlier of
the Effective Time and the termination of this Agreement in accordance with its
terms, the Company shall, and shall cause each Subsidiary to, conduct its
operations in the ordinary course of business consistent with past practices
and, to the extent consistent therewith, and with no less diligence and effort
than would be applied in the absence of this Agreement, seek to preserve intact
its current business organizations, keep available the service of its current
officers and employees and preserve its relationships with customers, suppliers,
distributors, lessors, creditors, employees, contractors and others having
business dealings with it with the intention that its goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement and except as described in Section 4.1 of the Company Disclosure
Schedule, prior to the Effective Time, neither the Company nor any Subsidiary
shall, without the prior written consent (such consent or declination to consent
not to be unreasonably delayed) of Parent:
(i) amend its Certificate of Incorporation or bylaws
(or other similar governing instrument);
(ii) authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase or
otherwise), or alter or amend the terms of, any stock of any class or any other
debt or equity securities or equity equivalents (including any stock options or
stock appreciation rights);
(iii) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, make any other actual, constructive or deemed distribution in
respect of its capital stock or otherwise make any payments to stockholders in
their capacity as such, or redeem or otherwise acquire any of its securities or
any securities of any Subsidiary;
(iv) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization (other than the Merger);
(v) alter through merger, liquidation,
reorganization, restructuring or any other fashion the corporate structure of
any Subsidiary;
37
(vi) (A) incur, assume or forgive any long-term or
short-term debt or issue any debt securities except as permitted under the
existing line of credit with CIT/Business Credit in the ordinary course of
business consistent with past practices; (B) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except for obligations of any
Subsidiary incurred in the ordinary course of business consistent with past
practices; (C) make any loans, advances or capital contributions to or
investments in any other person (other than to a Subsidiary or customary loans
or advances to employees in each case in the ordinary course of business
consistent with past practices); (D) pledge or otherwise subject to any Lien
shares of capital stock of the Company or any Subsidiary or any of the Other
Interests; or (E) mortgage or pledge any of its properties or assets, tangible
or intangible, or create or suffer to exist any new Lien (or any increase or
expansion of the scope of any existing Lien) thereupon other than as a result of
modifications to synthetic lease agreements outstanding on the date hereof;
(vii) except as may be permitted by clause (viii)
below or as may be required by Applicable Law, (A) enter into, adopt, make,
amend in any manner or terminate any employment agreement or any bonus payments,
profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent, stock
purchase agreement other than (x) offer letters to new hires in the ordinary
course of business consistent with past practices provided that no such offer
letter shall provide (1) for the grant of options under the Company Plans that
will provide for acceleration, or (2) provide any severance rights, in either
case as a result of the transactions contemplated by this Agreement whether or
not in connection with any other event, including termination of employment, or
alter any "at will" employment relationship and (y) options under the Company
Plans to purchase Shares permitted by clause (ii), or (B) enter into, adopt
amend in any manner or terminate any pension, retirement, deferred compensation,
employment, health, life, or disability insurance, dependent care, severance or
other employee benefit plan agreement, trust, fund or other arrangement for the
benefit or welfare of any director, officer, employee or consultant in any
manner or (C) increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including the granting of stock
options, restricted stock, stock appreciation rights or performance units);
(viii) (A) pay or agree to pay any severance or
termination pay to any director, officer, employee or consultant, except
payments (1) made pursuant to written agreements outstanding on the date hereof
or the Company's written policy in existence on the date hereof, the terms of
which are in all material respects disclosed on Section 4.1(a)(viii) of the
Company Disclosure Schedule and copies of which have been provided to Parent,
(2) that are set forth in Section 4.1(a)(viii) of the Company Disclosure
Schedule with respect to the termination of employees or consultants or (3) as
required by Applicable Law;
(ix) exercise its discretion with respect to or
otherwise voluntarily accelerate the vesting of any Company Stock Option as a
result of the Merger, any other change of control of the Company (as defined in
the Company Plans) or otherwise;
38
(x) (A) except as permitted by clause (xiii)(E)
below, purchase, acquire, lease or license-in any material assets in any single
transaction or series of related transactions having a fair market value in
excess of One Hundred Thousand Dollars ($100,000) in the aggregate, or sell,
transfer or otherwise dispose of any assets other than sales in the ordinary
course of business consistent with past practice;
(xi) except as may be required as a result of a
change in law or in United States generally accepted accounting principles,
change any of the accounting principles, practices or methods used by it;
(xii) revalue any of its assets or properties,
including writing down the value of assets or writing-off notes or accounts
receivable, other than in the ordinary course of business consistent with past
practices or due to changes in the United States generally accepted accounting
principles requiring such revaluation that are adopted after the date hereof;
(xiii) (A) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other person or
division or business unit thereof or any equity interest therein; (B) enter into
any contract or agreement that would be material to the Company and its
Subsidiaries, taken as a whole, other than customer contracts in the ordinary
course of business consistent with past practices; (C) amend, modify or waive
any right under any Material Contract of the Company or any Subsidiary; (D)
modify its standard warranty terms or amend or modify any warranties in effect
as of the date hereof in any material manner that is adverse to the Company or
any Subsidiary; (E) authorize any additional or new capital expenditure or
expenditures that individually or in the aggregate are in excess of One Hundred
Thousand Dollars ($100,000); or (F) enter into any contract that contains
non-competition restrictions;
(xiv) make or rescind any express or deemed election
relating to Taxes or settle or compromise any Tax liability or enter into any
closing or other agreement with any Tax authority with respect to any material
tax liability; or file or cause to be filed any material amended Tax Return,
file or cause to be filed any claim for refund of Taxes previously paid, or
agree to an extension of a statute of limitations with respect to the assessment
or determination of Taxes;
(xv) fail to file any Tax Returns when due, fail to
cause such Tax Returns when filed to be true, correct and complete, prepare or
fail to file any Tax Return in a manner inconsistent with past practices in
preparing or filing similar Tax Returns in prior periods or, on any such Tax
Return of the Company, take any position, make any election, or adopt any method
that is inconsistent with positions taken, elections made or methods used in
preparing or filing similar Tax Returns in prior periods, in each case, except
to the extent required by Applicable Law, or fail to pay any Taxes when due;
(xvi) settle or compromise any pending or threatened
suit, action or claim that (A) relates to the transactions contemplated hereby
or (B) the settlement or compromise of which would require the payment by the
Company or any Subsidiary of
39
damages in excess of One Hundred Thousand Dollars ($100,000) or that would
otherwise be material to the Company or involves any equitable relief;
(xvii) enter into any licensing, distribution,
sponsorship, advertising, merchant program or other similar contracts,
agreements, or obligations which provide for payments by the Company or any
Subsidiary in an amount in excess of Fifty Thousand Dollars ($50,000) over the
noncancelable term of the agreement;
(xviii) fail to make in a timely manner any filings
with the SEC required under the Securities Act or the Exchange Act or the rules
and regulations promulgated thereunder;
(xix) subject to Sections 4.2 and 4.3 hereof, engage
in any action with the intent to directly or indirectly adversely impact any of
the transactions contemplated by this Agreement;
(xx) knowingly take any action that would result in a
failure to maintain trading of the Shares on the Nasdaq National Market;
(xxi) amend or terminate any insurance policy without
replacing such policy with a policy providing at least equal coverage, insuring
comparable risks and issued by an insurance company financially comparable to
the prior insurance company;
(xxii) amend or modify the Financing Agreement, dated
June 13, 2003, entered into by the Company, Group-Ipex, Inc., Onstaff
Acquisition Corp. and the CIT Group/Business Credit, Inc. (the "Financing
Agreement");
(xxiii) fail to pay when due, consistent with past
practices, its financial obligations in the ordinary course of business,
including payments to vendors, landlords and employees; or
(xxiv) take or agree in writing or otherwise to take
any of the actions described in Sections 4.1(i) through 4.1(xxiii) (and it shall
use all reasonable efforts not to take any action that would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect).
(b) Conduct of Business of Parent. Except (i) as expressly
contemplated by this Agreement, (ii) as described in Section 4.1(b) of the
Parent Disclosure Schedule, or (iii) to the extent that Company shall otherwise
consent in writing (such consent or declination to consent not to be
unreasonably delayed), during the period from the date hereof to earlier of the
Effective Time and the termination of this Agreement in accordance with its
terms, prior to the Effective Time, Parent and its subsidiaries shall
collectively conduct their operations in the ordinary course of business
consistent with past practices, and without limiting the generality of the
foregoing neither Parent nor Acquisition will, without the prior written consent
(such consent or declination to consent not to be unreasonably delayed) of the
Company:
40
(i) amend its Articles of Incorporation or bylaws (or other
similar governing instrument) in a manner that would reasonably be likely to
adversely affect the Parent Common Stock;
(ii) pay or set a record date prior to the Effective Date
relating to any extraordinary dividend or extraordinary distribution;
(iii) knowingly take any action that would result in a
failure to maintain trading of Parent Common Stock on the Nasdaq National
Market;
(iv) fail to make in a timely manner any filings with the
SEC required under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder;
(v) engage in any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement; or
(vi) take or agree in writing or otherwise to take any of
the actions described in Sections 4.1(b)(i) through 4.1(b)(v) (and it shall use
all reasonable efforts not to take any action that would make any of the
representations or warranties of Parent contained in this Agreement untrue or
incorrect).
Section 4.2. Preparation of S-4 and the Joint Proxy
--------------------------------------
Statement/Prospectus; Stockholders Meetings.
-------------------------------------------
(a) As promptly as reasonably practicable following the date
hereof, Parent and the Company shall cooperate in preparing and each shall cause
to be filed with the SEC mutually acceptable proxy materials that shall
constitute the Joint Proxy Statement/Prospectus and Parent shall prepare and
file with the SEC the S-4. The Joint Proxy Statement/Prospectus will be included
as a prospectus in and will constitute a part of the S-4 as Parent's prospectus
and, subject to the provisions of Section 4.3(b), shall include the Company
Recommendation and the Parent Recommendation. Each of Parent and the Company
shall use commercially reasonable efforts to have the Joint Proxy
Statement/Prospectus declared effective under the Securities Act as promptly as
practicable after such filing and to keep the S-4 effective as long as is
necessary to consummate the Merger and the transactions contemplated hereby.
Each of Parent and the Company shall, as promptly as practicable after receipt
thereof, provide the other party with copies of any written comments and advise
each other of any oral comments with respect to the Joint Proxy
Statement/Prospectus or S-4 received from the SEC. Each party shall cooperate
and provide the other party with a reasonable opportunity to review and comment
on any amendment or supplement to the Joint Proxy Statement/Prospectus and the
S-4 prior to filing such with the SEC and will provide each other with a copy of
all such filings made with the SEC. Notwithstanding any other provision herein
to the contrary, no amendment or supplement (including by incorporation by
reference) to the Joint Proxy Statement/Prospectus or the S-4 shall be made
without the approval of both Parent and the Company, which approval shall not be
unreasonably withheld or delayed; provided that, with respect to documents filed
by a party hereto that are incorporated by reference in the S-4 or Joint Proxy
Statement/Prospectus, this right of approval shall apply only with respect to
41
information relating to the other party or its business, financial condition or
results of operations; and provided, further, that the Company, in connection
with a Change in the Company Recommendation, may amend or supplement the Joint
Proxy Statement/Prospectus or S-4 (including by incorporation by reference)
pursuant to a Qualifying Amendment to effect such a Change, and in such event,
this right of approval shall apply only with respect to information relating to
the other party or its business, financial condition or results of operations,
and shall be subject to the right of each party to have its Board of Directors'
deliberations and conclusions be accurately described. Parent will use
commercially reasonable efforts to cause the Joint Proxy Statement/Prospectus to
be mailed to Parent's shareholders, and the Company will use commercially
reasonable efforts to cause the Joint Proxy Statement/Prospectus to be mailed to
the Company's stockholders, in each case, as promptly as reasonably practicable
after the S-4 is declared effective under the Securities Act. Each party hereto
will advise the other party, promptly after it receives notice thereof, of the
time when the S-4 has become effective, the issuance of any stop order, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Joint Proxy Statement/Prospectus or the
S-4. If, at any time prior to the Effective Time, any information relating to
Parent or the Company, or any of their respective affiliates, officers or
directors, is discovered by Parent or the Company and such information should be
set forth in an amendment or supplement to any of the S-4 or the Joint Proxy
Statement/Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party hereto discovering such information shall
promptly notify the other parties hereto and, to the extent required by law,
rules or regulations, the Company and Parent shall cooperate to cause an
appropriate amendment or supplement describing such information to be promptly
filed with the SEC and disseminated to the stockholders of Parent and the
Company. Parent shall also take any commercially reasonable action (other than
qualifying to do business in any jurisdiction in which it is now not so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger and upon the
exercise of Company Stock Options, and the Company shall furnish all information
concerning the Company and the holders of Shares as may be reasonably requested
in connection with any such action.
(b) The Company shall duly take all lawful action to call, give
notice of, convene and hold the Company Stockholders Meeting as soon as
practicable on a date determined in accordance with the mutual agreement of
Parent and the Company for the purpose of obtaining the Company Stockholder
Approval and subject to Section 4.3, shall use commercially reasonable efforts
to solicit the Company Stockholder Approval. Notwithstanding anything to the
contrary contained in this Agreement, the Company may adjourn or postpone (i)
the Company Stockholders Meeting to the extent necessary to ensure that any
necessary supplement or amendment to the S-4 and/or the Joint Proxy
Statement/Prospectus is provided to the Company's stockholders in advance of a
vote on the Merger and this Agreement or (ii) the time for which the Company
Stockholders Meeting is originally scheduled (as set forth in the S-4 and the
Proxy Statement), if there are insufficient Shares represented, either in person
or by proxy, to constitute a quorum necessary to conduct the business of the
Company Stockholders Meeting. The Company Board shall recommend the approval of
the plan of merger contained in this Agreement by the stockholders of the
42
Company to the effect as set forth in Section 2.3(b) (the "Company
Recommendation"), and shall not (i) withdraw, modify or qualify in any manner
adverse to Parent such recommendation or (ii) take any action or make any
statement in connection with the Company Stockholders Meeting inconsistent with
such recommendation (collectively, a "Change in the Company Recommendation");
provided, however, that the Company Board may evaluate whether to make and may
make pursuant to Section 4.3 a Change in the Company Recommendation prior to the
Company Stockholders Meeting pursuant to Section 4.3 hereof and may make any
statement required by 14d-9 or 14e-2 of the Exchange Act.
(c) Parent shall duly take all lawful action to call, give notice
of, convene and hold the Parent Shareholders Meeting as soon as practicable on a
date determined in accordance with the mutual agreement of Parent and the
Company for the purpose of obtaining the Parent Shareholder Approval and, except
as set forth in this Section 4.2(c), shall use commercially reasonable efforts
to solicit the Parent Shareholder Approval. Notwithstanding anything to the
contrary contained in this Agreement, Parent may adjourn or postpone (i) the
Parent Shareholders Meeting to the extent necessary to ensure that any necessary
supplement or amendment to the S-4 and/or the Joint Proxy Statement/Prospectus
is provided to Parent's shareholders in advance of a vote on the Merger and this
Agreement or (ii) the time for which the Parent Shareholders Meeting is
originally scheduled (as set forth in the S-4 and the Proxy Statement), if there
are insufficient Shares represented, either in person or by proxy, to constitute
a quorum necessary to conduct the business of the Parent Shareholders Meeting.
The Parent Board shall recommend the approval of issuance of Parent Common Stock
in the Merger by the shareholders of Parent (the "Parent Recommendation"), and
shall not (i) withdraw, modify or qualify in any manner adverse to the Company
such recommendation or (ii) take any action or make any statement in connection
with the Parent Shareholders Meeting inconsistent with such recommendation;
provided, however, that the Parent Board may evaluate whether to make and may
make any statement required by 14d-9 or 14e-2 of the Exchange Act.
Section 4.3. No Solicitation or Negotiation.
------------------------------
(a) The Company, its Subsidiaries and other affiliates and their
respective officers, directors, representatives (including the Company Financial
Advisor or any other investment banker and any attorneys and accountants) shall,
and the Company shall use all reasonable efforts to cause its and its
Subsidiaries' and other affiliates' respective non-officer employees with
managerial responsibilities and agents to, immediately cease any discussions or
negotiations with any parties with respect to any Third Party Acquisition
Proposal. The Company also agrees promptly to request each person that has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring (whether by merger, acquisition of stock or assets or
otherwise) the Company or any Subsidiary, if any, to return (or if permitted by
the applicable confidentiality agreement, destroy) all confidential information
heretofore furnished to such person by or on behalf of the Company or any
Subsidiary and, if requested by Parent, to enforce such person's obligation to
do so. Neither the Company nor any Subsidiary or other affiliates shall, nor
shall the Company authorize or permit any of its or their respective officers,
directors or representatives to, and the Company shall use all reasonable
efforts to cause its and its Subsidiaries' and other affiliates' respective
non-officer employees with managerial responsibilities and agents not to,
directly or
43
indirectly, (i) encourage, solicit, initiate or knowingly facilitate the
submission of any proposal for a Third Party Acquisition Proposal, (ii)
participate in or initiate any discussions or negotiations regarding, or provide
any non-public information with respect to, the Company or any Subsidiary or
their respective businesses, assets or properties (other than Parent and
Acquisition or any designees of Parent and Acquisition) in connection with, or
take any other action to knowingly facilitate any Third Party Acquisition
Proposal or any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Third Party Acquisition Proposal or (iii)
enter into any agreement with respect to any Third Party Acquisition Proposal;
provided, however, that if the Company Board determines in good faith, after
consultation with legal counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under the DGCL,
the Company may, in response to an unsolicited bona fide written Third Party
Acquisition Proposal that the Company Board determines in good faith, based on
consultation with the Company Financial Advisor, constitutes or is reasonably
likely to result in a Superior Proposal which, if accepted, is reasonably
capable of being consummated and only for so long as the Board of Directors so
determines in good faith that its actions are reasonably likely to lead to a
Superior Proposal, (i) furnish only to any Third Party pursuant to a
confidentiality agreement in a form substantially similar to the Nondisclosure
Agreement (A) the information with respect to the Company of the same type and
scope that the Company provided to Parent prior to the date hereof and (B) any
such additional information that such Third Party requests, but only if the
Company is permitted, and does in fact, simultaneously furnish such additional
information to Parent, and (ii) participate in discussions and negotiations
regarding such Third Party Acquisition Proposal; provided, further, that nothing
herein shall prevent the Company Board from taking and disclosing to the
Company's stockholders a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender or exchange offer.
The Company shall promptly (and in any event within one (1) day after the
Company attains knowledge thereof) (x) notify Parent in the event the Company or
any Subsidiary or other affiliates or any of their respective officers,
directors, employees and agents receives any Third Party Acquisition Proposal,
including the terms and conditions thereof and the identity of the party
submitting such proposal, and any request for confidential information made in
connection with a Third Party Acquisition Proposal, (y) provide a copy of any
written agreements, proposals or other materials the Company receives from any
such person or group (or its representatives), and (z) promptly, and in any
event within one (1) day, advise Parent of any material modifications thereto.
(b) Except as set forth in this Section 4.3(b), the Company Board
shall not make a Change in the Company Recommendation or approve or recommend,
or cause or permit the Company to enter into any letter of intent, agreement or
obligation with respect to, any Third Party Acquisition Proposal.
Notwithstanding the foregoing, if the Company Board by a majority vote
determines in its good faith judgment prior to the Company Stockholders Meeting,
after consultation with outside legal counsel, that it is required to make a
Change in the Company Recommendation in order to comply with its fiduciary
duties, the Company Board may recommend a Superior Proposal, but only (i) after
providing written notice to Parent (a "Notice of Superior Proposal") advising
Parent that the Company Board has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and (ii) if Parent does not, within five
(5) days of Parent's receipt of the Notice of Superior Proposal, make an offer
that
44
the Company Board by a majority vote determines in its good faith judgment
(after consultation with the Company Financial Advisor or another financial
advisor of nationally recognized reputation) to be at least as favorable to the
Company's stockholders as such Superior Proposal, provided, however, that the
Company shall not be entitled to enter into an agreement with respect to a
Superior Proposal unless and until this Agreement is terminated pursuant to
Section 6.1 and the Company has paid the fees required by Section 6.3. Any
disclosure that the Company Board may be compelled to make with respect to the
receipt of a Third Party Acquisition Proposal or otherwise in order to comply
with its fiduciary duties or Rule 14d-9 or 14e-2 will not constitute a violation
of this Agreement, provided that such disclosure states that no action will be
taken by the Company Board in violation of this Section 4.3(b).
(c) For the purposes of this Agreement, "Third Party Acquisition
Proposal" means, other than in connection with the Merger or as otherwise
specifically contemplated by this Agreement, any proposal relating to (i) any
merger, consolidation, share exchange, business combination, recapitalization or
other similar transaction or series of related transactions involving the
Company or any Subsidiary; (ii) any sale, lease, exchange, transfer or other
disposition (including by way of merger, consolidation or exchange), in a single
transaction or a series of related transactions, of the assets of the Company or
any Subsidiary constituting fifteen percent (15%) or more of the consolidated
assets of the Company or accounting for fifteen percent (15%) or more of the
consolidated revenues of the Company; (iii) any tender offer, exchange offer or
similar transactions or series of related transactions made by any person
involving the Company's common stock constituting fifteen percent (15%) or more
of the Company's common stock; (iv) the acquisition by any person (other than
Parent or any of its affiliates) of beneficial ownership (as determined pursuant
to Rule 13d-3 of the Exchange Act) or the formation of any group (as defined in
Section 13(d) of the Exchange Act) to acquire beneficial ownership (as
determined pursuant to Rule 13d-3 of the Exchange Act) of more than fifteen
percent (15%) of the Company's common stock or the common stock of any
Subsidiary of the Company; (v) the adoption by the Company of a plan of
liquidation or the declaration or payment of an extraordinary dividend (whether
in cash or other property); (vi) the repurchase by the Company or any Subsidiary
of more than fifteen (15%) of the outstanding Shares; (vii) the acquisition by
the Company or any Subsidiary by merger, purchase of stock or assets, joint
venture or otherwise of a direct or indirect ownership interest or investment in
any person or business whose annual revenues or assets is equal to or greater
than 20% of the annual revenues or assets of the Company and the Subsidiaries,
taken as a whole, for and at the 12 month period ended September 30, 2003; or
(viii) any other substantially similar transaction or series of related
transactions that reasonably could be expected to result in the acquisition of a
controlling interest in the Company. For purposes of this Agreement, a "Third
Party" means a person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Acquisition or any
affiliate thereof. For purposes of this Agreement, a "Superior Proposal" means
any bona fide Third Party proposal (1) to acquire, directly or indirectly, for
consideration consisting solely of cash and/or publicly-traded securities
(including securities that will be publicly-traded immediately upon the
consummation of such Superior Proposal), one hundred percent 100% of the Shares
then outstanding, or all or substantially all of the assets of the Company; (2)
that contains terms and conditions that the Company Board by a majority vote
determines in good faith (after consultation with the Company Financial
45
Advisor or another financial advisor of nationally recognized reputation) to be
more favorable to the Company's stockholders than the Merger but in any event,
the consideration paid must be at least 5% greater than that offered by the
Parent; (3) that the Company Board by a majority vote determines in its good
faith judgment (after consultation with the Company Financial Advisor or another
financial advisor of nationally recognized reputation and its legal counsel) to
be reasonably capable of being completed (taking into account all legal,
financial, regulatory and other aspects of the proposal and the person making
the proposal); (4) that does not contain a "right of first refusal" or "right of
first offer" with respect to any counter-proposal that Parent might make; and
(5) that does not contain any "due diligence" condition and for which any
financing upon which it is conditioned is committed.
Section 4.4. Nasdaq National Market. Parent shall use commercially
----------------------
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger and the shares of Parent Common Stock to be reserved for issuance
upon exercise of Company Stock Options to be approved for listing on the Nasdaq
National Market, subject to official notice of issuance, prior to the Effective
Time.
Section 4.5. Access to Information.
---------------------
(a) Between the date hereof and the earlier of the Effective Time
or the termination of this Agreement in accordance with its terms, the Company
will, and will cause each Subsidiary to give Parent and its authorized
representatives (including Parent's external auditors) reasonable access to all
employees, plants, offices, warehouses and other facilities and to all books and
records and personnel files of current employees of the Company and any
Subsidiary as Parent may reasonably require, and will cause its officers and
each Subsidiary to furnish Parent with such financial and operating data and
other information with respect to the business and properties of the Company and
any Subsidiary as Parent may from time to time reasonably request. Between the
date hereof and the Effective Time, Parent shall make available to the Company,
as reasonably requested by the Company, a designated officer of Parent to answer
questions and make available such information and documents regarding Parent as
is reasonably requested by the Company taking into account the nature of the
transactions contemplated by this Agreement. Such access shall be subject to the
granting party's reasonable security measures and insurance requirements and
shall not include the right to perform "invasive" testing, but shall include the
right of Parent to do a financial statement (including balance sheet) review
prior to the Effective Time.
(b) Between the date hereof and the earlier of the termination of
this Agreement in accordance with its terms and the Effective Time, the parties
shall furnish to each other (i) within two (2) business days following
preparation thereof (and in any event within ten (10) business days after the
end of each fiscal month) an unaudited balance sheet as of the end of such month
and the related statements of earnings, stockholders' equity (deficit) and cash
flows for the month then ended, all of such financial statements to be prepared
in accordance with United States generally accepted accounting principles in
conformity with the practices consistently applied by the Company or Parent, as
the case may be, with respect to such financial statements and (ii) such other
revenue, expense, asset, liability, cash flow, borrowing base, and other similar
information as reasonably requested by Parent, and in
46
whatever frequency (but no more frequently than weekly) as Parent considers
appropriate in order to monitor and understand the operations and activities of
the Company.
(c) Each of the parties hereto will hold, and will cause its
consultants and advisers to hold, in confidence all documents and information
furnished to it by or on behalf of another party to this Agreement in connection
with the transactions contemplated by this Agreement pursuant to the terms of
that certain Confidentiality Agreement entered into between the Company and
Parent (the "Nondisclosure Agreement").
Section 4.6. Certain Filings; Reasonable Efforts.
-----------------------------------
(a) Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use commercially reasonable efforts to take or
cause to be taken all action and to do or cause to be done all things reasonably
necessary, proper or advisable under Applicable Law to consummate and make
effective the transactions contemplated by this Agreement, including using
commercially reasonable efforts to do the following: (i) cooperate in the
preparation and filing of the S-4 and the Joint Proxy Statement/Prospectus and
any amendments thereto, any filings that may be required under the HSR Act and
similar competition or merger notification laws or regulations of foreign
Governmental Entities; (ii) obtain consents of all third parties and
Governmental Entities (other than as provided in clause (i) above) necessary,
proper, advisable or reasonably requested by Parent or the Company, for the
consummation of the transactions contemplated by this Agreement (but subject to
the last sentence of Section 4.7(b) below); (iii) contest any legal proceeding
relating to the Merger; and (iv) execute any additional instruments necessary to
consummate the transactions contemplated hereby, including, without limitation,
such documentation necessary to ensure the continued enforceability of
restrictive covenants and confidentiality provisions applicable to the Company's
employees and independent contractors. Subject to the terms and conditions of
this Agreement, the Company, Parent and Acquisition agree to use all reasonable
efforts to cause the Effective Time to occur as soon as practicable after the
Company Stockholder Approval and the Parent Shareholder Approval is obtained.
The Company agrees to use, and to cause each Subsidiary to use, all reasonable
efforts to encourage their respective employees to accept any offers of
employment extended by Parent. If, at any time after the Effective Time, any
further action is necessary to carry out the purposes of this Agreement the
proper officers and directors of each party hereto shall take all such necessary
action.
(b) Parent and the Company will use commercially reasonable
efforts to consult and cooperate with one another, and consider in good faith
the views of one another, in connection with any analyses, appearances,
presentations, letters, white papers, memoranda, briefs, arguments, opinions or
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other foreign, federal,
or state antitrust, competition, or fair trade law. In this regard, but without
limitation, each party hereto shall use commercially reasonable efforts to
promptly inform the other of any material communication between such party and
the Federal Trade Commission, the Antitrust Division of the United States
Department of Justice, or any other federal, foreign or state antitrust or
competition Governmental Entity regarding the transactions contemplated herein.
Nothing in the Agreement, however, shall require or be construed to require any
party
47
hereto, in order to obtain the consent or successful termination of any review
of any such Governmental Entity regarding the transactions contemplated hereby,
to (i) sell or hold separate, or agree to sell or hold separate, before or after
the Effective Time, any assets, businesses or any interests in any assets of
businesses, of Parent, the Company or any of their respective affiliates (or to
consent to any sale, or agreement to sell, by Parent or the Company, of any
assets or businesses, or any interests in any assets or businesses), or any
change in or restriction on the operation by Parent or the Company of any assets
or businesses, or (ii) enter into any agreement or be bound by any obligation
that, in Parent's good faith judgment, may have an adverse effect on the
benefits to Parent of the transactions contemplated by this Agreement.
(c) Prior to the Closing, each party shall use reasonable best
efforts to refrain from taking any action or failing to take any action, which
action or failure to act would cause, or be reasonably likely to cause, the
Merger to fail to qualify as a reorganization within the meaning of section
368(a) of the Code. Following the Closing, Parent shall not cause or permit to
occur any action that would be reasonably likely to cause the Merger to fail to
qualify as a reorganization within the meaning of section 368(a) of the Code,
including but not limited to, any action that would cause a failure to meet the
continuity of business enterprise requirement of the Treasury Regulations
Section 1.368-1(d). The provisions of this Section 4.6(c) shall survive the
Closing.
Section 4.7. Public Announcements. Parent, Acquisition and the
--------------------
Company shall consult with each other and shall mutually agree upon any press
release or public announcement relating to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except (a) as may be
required by Applicable Law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or the Nasdaq National
Market, in which case the party proposing to issue such press release or make
such public announcement shall use all reasonable efforts to consult in good
faith with the other party before issuing any such press release or making any
such public announcement, or (b) following a Change in the Company's
Recommendation, after which no such consultation or agreement shall be required.
Notwithstanding the foregoing, the first public announcement of this Agreement
and the Merger shall be a joint press release agreed upon by Parent and the
Company.
Section 4.8. Indemnification and Directors' and Officers'
--------------------------------------------
Insurance.
---------
(a) After the Effective Time, Parent shall cause the Surviving
Corporation to indemnify and hold harmless (and shall also advance expenses as
incurred to the fullest extent permitted under Applicable Law to), each person
who is now or has been prior to the date hereof or who becomes prior to the
Effective Time an officer or director of the Company or any Subsidiary (the
"Indemnified Persons") against (i) all losses, claims, damages, costs, expenses
(including counsel fees and expenses), settlement, payments or liabilities
arising out of or in connection with any claim, demand, action, suit, proceeding
or investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was an officer or director of the Company or
any Subsidiary, whether or not pertaining to any matter existing or occurring at
or prior to the Effective Time and whether or not asserted or claimed
48
prior to or at or after the Effective Time ("Indemnified Liabilities"); and (ii)
all Indemnified Liabilities based in whole or in part on or arising in whole or
in part out of or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the fullest extent required or permitted under
Applicable Law. Nothing contained herein shall make Parent, Acquisition, the
Company or the Surviving Corporation, an insurer, a co-insurer or an excess
insurer in respect of any insurance policies which may provide coverage for
Indemnified Liabilities, nor shall this Section 4.8 relieve the obligations of
any insurer in respect thereto. The parties hereto intend, to the extent not
prohibited by Applicable Law, that the indemnification provided for in this
Section 4.8 shall apply without limitation to negligent acts or omissions by an
Indemnified Person. Each Indemnified Person is intended to be a third party
beneficiary of this Section 4.8 and may specifically enforce its terms. This
Section 4.8 shall not limit or otherwise adversely affect any rights any
Indemnified Person may have under any agreement with the Company or under the
Company's Certificate of Incorporation or bylaws as presently in effect.
(b) From and after the Effective Time, Parent shall cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company pursuant to any indemnification agreements between the Company and
its directors and officers as of or prior to the date hereof (or indemnification
agreements in the Company's customary form for directors joining the Company
Board prior to the Effective Time) and any indemnification provisions under the
Company's certificate of incorporation or bylaws as in effect immediately prior
to the Effective Time.
(c) The Company shall be permitted to obtain a directors' and
officers' liability insurance policy covering those individuals who at the time
of the execution of this Agreement are covered by the Company's existing
directors' and officers' liability insurance policy, for a period of six years
following the Effective Time. The premium for such policy shall not exceed One
Million Dollars ($1,000,000).
(d) Parent will not, nor will Parent permit the Surviving
Corporation to merge or consolidate with any other Person or sell all or
substantially all of Parent's or such subsidiary's assets unless Parent or the
Surviving Corporation will ensure that the surviving or resulting entity assumes
the obligations imposed by this Section 4.8.
Section 4.9. Notification of Certain Matters; Additions to and
-------------------------------------------------
Modification of Disclosure Schedules. The Company shall give prompt notice to
------------------------------------
Parent and Acquisition, and Parent and Acquisition shall give prompt notice to
the Company (such notice by delivery of supplements to the Company Disclosure
Schedule or the Parent Disclosure Schedule, as applicable), of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which has caused or would be likely to cause any representation or warranty
contained in this Agreement by such first party to be untrue or inaccurate in
any material respect at or prior to the Effective Time, and (ii) any material
failure by the Company, Parent or Acquisition, as the case may be, to comply
with or satisfy in any material respect any covenant condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 4.9 shall not cure such breach
or non-compliance, be deemed to constitute an exception to the representations
and warranties
49
under Article 2 or Article 3, or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 4.10. Affiliates. The Company shall use commercially
----------
reasonable efforts to obtain from all Company Affiliates, and from any person
who may be deemed to have become a Company Affiliate after the date of this
Agreement and on or prior to the Effective Time, a letter agreement
substantially in the form of Exhibit D hereto as soon as practicable. Parent
---------
shall not be required to maintain the effectiveness of the S-4 for the purpose
of resale of shares of Parent Common Stock by stockholders of the Company who
may be affiliates of the Company or Parent pursuant to Rule 145 under the
Securities Act.
Section 4.11. Access to Company Employees. The Company agrees to
---------------------------
provide, and to cause each Subsidiary to provide, Parent with reasonable access
to its employees under procedures to be agreed upon by Parent and the Company
during normal working hours following the date of this Agreement, to among other
things, deliver offers of continued employment and to provide information to
such employees about Parent. All communications by Parent with Company employees
shall be conducted in a manner that does not disrupt or interfere with the
Company's efficient and orderly operation of its business.
Section 4.12. Company Compensation and Benefit Plans. The Company
--------------------------------------
agrees to take all actions necessary to terminate any or all Company Employee
Plans intended to constitute a Code Section 401(k) arrangement, and any other
employee stock purchase plan and deferred compensation plan, effective at or
immediately prior to the Closing Date, each as requested in writing by Parent no
later than five (5) business days prior to the Closing Date.
Section 4.13 Employee Benefits.
-----------------
(a) As soon as administratively practicable following the Closing
Date, Parent shall arrange for each participant in the Company Employee Plans
(the "Company Participants") who becomes a Parent employee (or an employee of
any Parent subsidiary or affiliate) after the Closing Date to be eligible to
participate in the Parent Benefit Plans and to receive thereunder benefits that
are generally equivalent in the aggregate to those received by Parent employees
with similar positions and responsibilities and qualifications (which shall be
determined by the Parent). To the extent Parent determines it necessary to
provide continuity of benefits for the Company Participants, Parent shall
continue one or more Company Employee Plans in lieu of providing benefits under
corresponding Parent Benefit Plans. Each Company Participant shall, to the
extent permitted by law, the plan governing the benefits and applicable tax
qualification requirements, and subject to any applicable break in service or
similar rule, receive credit for purposes of eligibility to participate in
Parent Benefit Plans, satisfaction of allocation requirements applicable to
matching contributions based upon salary deferral contributions on behalf of the
Company Participant to a Parent Benefit Plan that is a Code Section 401(k)
arrangement, and vesting under Parent Benefit Plans, for years of service with
the Company (and its Subsidiaries and predecessors) prior to the Closing Date.
Notwithstanding anything set forth above to the contrary, Parent shall arrange
for continuing coverage for Company Participants beginning on the Closing Date.
50
(b) Parent agrees that, from and after the Closing Date, the
Company employees who become employees of Parent or any of its subsidiaries may
participate in the employee stock purchase plan sponsored by Parent (the "Parent
ESPP"), subject to the terms and conditions of the Parent ESPP, and that service
with the Company shall be treated as service with Parent or its subsidiaries for
determining eligibility of the Company's employees under the Parent ESPP.
Section 4.14. Takeover Statutes. If any Takeover Statute or any
-----------------
similar statute, law, rule or regulation in any State of the United States
(including under the DGCL or any other law of the State of Delaware) is or may
become applicable to the Merger or any of the other transactions contemplated by
this Agreement, the Company and the Company Board shall promptly grant such
approvals and take such lawful actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement or by the Merger and otherwise take such lawful
actions to eliminate or minimize the effects of such statute, law, rule or
regulation, on such transactions.
Section 4.15. Section 16 Matters. Prior to the Effective Time, the
------------------
Company Board shall adopt a resolution consistent with the interpretative
guidance of the SEC so that the assumption of Company Options held by Company
Insiders pursuant to this Agreement and the receipt by Company Insiders of
Parent Common Stock in exchange for Shares pursuant to the Merger, shall be
exempt transactions for purposes of Section 16 of the Exchange Act. For purposes
of this Section 4.15, a "Company Insider" is any officer or director of the
Company who may become a covered person for purposes of Section 16 of the
Exchange Act of Parent, if any.
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.1. Conditions to Each Party's Obligations to Effect the
----------------------------------------------------
Merger. The respective obligations of each party hereto to effect the Merger are
------
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the Company shall have obtained the Company Stockholder
Approval, and Parent shall have obtained the Parent Shareholder Approval;
(b) no statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or enforced by any
United States federal or state court or United States federal or state
Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR Act
or any other material foreign, federal or state antitrust, competition or fair
trade law shall have terminated or expired;
(d) any governmental or regulatory notices, approvals or other
requirements necessary to consummate the transactions contemplated hereby and to
operate the Surviving Corporation after the Effective Time in all material
respects as it was operated
51
prior thereto (other than under the HSR Act or any other material foreign,
federal or state antitrust, competition or fair trade law) shall have been
given, obtained or complied with, as applicable except where the failure to be
given, obtained or complied with shall not have a Material Adverse Effect on the
Company or a Material Adverse Effect on the Parent;
(e) the S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a stop
order;
(f) no suspension in the trading of securities generally on Nasdaq
or the New York Stock Exchange shall have occurred;
(g) no general moratorium on commercial banking activities by
either federal or state authorities shall have been declared; and
(h) no material outbreak or escalation of hostilities, acts of
terrorism or other domestic or international calamity, crisis or change in
political, financial or economic conditions or other material event materially
affecting financial markets in the United States shall have occurred.
Section 5.2. Conditions to the Obligations of the Company. The
--------------------------------------------
obligation of the Company to effect the Merger is subject to the satisfaction at
or prior to the Effective Time of the following conditions:
(a) (i) each of the representations and warranties qualified by
"Material Adverse Effect on Parent" shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, and (ii) each of the representations and warranties of Parent and
Acquisition set forth in this Agreement and not qualified by "Material Adverse
Effect on Parent", disregarding all qualifications and exceptions contained
therein relating to materiality, shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent that such representations and warranties
speak as of another date, in which case such representations and warranties
shall be true and correct as of such other date), except where the failure of
such representations and warranties to be true and correct would not,
individually or in the aggregate, have a Material Adverse Effect on Parent, and
at the Closing, Parent and Acquisition shall have delivered to the Company a
certificate to that effect, executed by two (2) executive officers of Parent and
one executive officer of Acquisition;
(b) the covenants and obligations of Parent and Acquisition to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time, and, at the Closing, Parent and Acquisition shall have
delivered to the Company a certificate to that effect, executed by two (2)
executive officers of Parent and one executive officer of Acquisition;
(c) the shares of Parent Common Stock issuable to the Company's
stockholders pursuant to this Agreement and such other shares required to be
reserved for
52
issuance in connection with the Merger shall have been approved for quotation on
the Nasdaq National Market, upon official notice of issuance;
(d) the Company shall have received a written opinion of ▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to the Company, to the effect that (i) the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code, and (ii) each of Parent, Acquisition and the Company will be a party to
the reorganization within the meaning of Section 368(b) of the Code, and such
opinion shall not have been withdrawn; provided, however, that if ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, fails to deliver such opinion, then Holland & Knight LLP, counsel
to Parent, may deliver such opinion in satisfaction of this closing condition;
provided further, that any such opinion may rely on representations as such
counsel reasonably deems appropriate and on typical assumptions. Parent,
Acquisition, and the Company agree to provide to such counsel such
representations as such counsel reasonably requests in connection with rendering
such opinions;
(e) subject to each of the disclosures in the Parent Disclosure
Schedule, there shall have been no Material Adverse Effect on Parent.
Section 5.3. Conditions to the Obligations of Parent and
-------------------------------------------
Acquisition. The respective obligations of Parent and Acquisition to effect the
-----------
Merger are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) (i) each of the representations and warranties qualified as to
materiality or by "Material Adverse Effect on the Company" shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, and (ii) each of the representations and
warranties of the Company set forth in this Agreement and not so qualified by
materiality or by "Material Adverse Effect on the Company", shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the extent
that such representations and warranties speak as of another date, in which case
such representations and warranties shall be true and correct as of such other
date), and at the Closing, the Company shall have delivered to Parent and
Acquisition a certificate to that effect, executed by two (2) executive officers
of the Company;
(b) each of the covenants and obligations of the Company to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and, at the Closing, the Company shall have delivered to
Parent and Acquisition a certificate to that effect, executed by two (2)
executive officers of the Company;
(c) subject to each of the disclosures in the Company Disclosure
Schedule, there shall have been no Material Adverse Effect on the Company;
(d) Parent shall have received a written opinion of Holland &
Knight LLP, counsel to Parent, to the effect that (i) the Merger will constitute
a reorganization within the meaning of Section 368(a) of the Code, and (ii) each
of Parent, Acquisition and the Company will be a party to the reorganization
within the meaning of Section 368(b) of the Code, and
53
such opinion shall not have been withdrawn; provided, however, that if Holland &
Knight LLP fails to deliver such opinion, then ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
counsel to the Company, may deliver such opinion in satisfaction of this closing
condition; provided further, that any such opinion may rely on representations
as such counsel reasonably deems appropriate and on typical assumptions. Parent,
Acquisition, and the Company agree to provide to such counsel such
representations as such counsel reasonably requests in connection with rendering
such opinions;
(e) in connection with the compliance by Parent or Acquisition
with any Applicable Law (including the HSR Act or any other material foreign,
federal or state antitrust, competition or fair trade law), Parent shall not be
(i) required, or be construed to be required, to sell or divest any assets or
business or to restrict any business operations, or (ii) prohibited from owning,
and no limitation shall be imposed on Parent's ownership of, any portion of the
Company's business or assets;
(f) Parent shall have received unaudited financial statements of
the Company, in a form similar to the Company's prior Quarterly Reports on Form
10-Q, as of and for the year ended December 28, 2003, (the "Unaudited Financial
Statements");
(g) Parent shall have received certificates from the Chief
Executive Officer and the Chief Financial Officer of the Company, substantially
in the form of the certificates included in the Company's most recent SEC
filings under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, certifying certain matters related to the
Unaudited Financial Statements;
(h) Each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ shall have
entered into a Lock-Up Agreement in the form attached as Exhibit E, pursuant to
---------
which such individuals shall not, without the prior written consent of Parent,
offer to sell, contract to sell, or otherwise sell, dispose of, loan, pledge or
grant any rights with respect to shares of Parent Common Stock or any securities
convertible or exchangeable for any shares of Parent Common Stock for a period
of 90 days following the Closing Date. Following the expiration of such 90 day
lock-up period, each of Messrs. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ shall not, without the
prior written consent of Parent, offer to sell or otherwise dispose of more than
40,000 shares of Parent Common stock per day for a period of 90 days; and
(i) Each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇
shall have entered into a Lock-Up Agreement in the form attached as Exhibit F,
---------
pursuant to which such individuals shall not, without the prior written consent
of Parent, offer to sell or otherwise dispose of more than 40,000 shares of
Parent Common Stock per day during the 180 days following the Closing Date.
54
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
Section 6.1. Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time whether before
or after approval and adoption of this Agreement by the Company's stockholders
or Parent's shareholders:
(a) by mutual written consent of Parent, Acquisition and the
Company;
(b) by Parent and Acquisition or the Company if:
(i) any court of competent jurisdiction in the United States
or other United States federal or state Governmental Entity shall have issued a
final order, decree or ruling, or taken any other final action, restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action is or shall have become nonappealable; or
(ii) the Merger has not been consummated by April 30, 2004
which date shall be extended to June 30, 2004 if the Merger shall not have been
consummated as a result of a failure to satisfy the conditions set forth in
Section 5.1(c) (as appropriate, the "Final Date"); provided that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure to
fulfill any of its obligations under this Agreement shall have been a principal
reason that the Effective Time shall not have occurred on or before said date;
or
(iii) the Company shall have convened a Company Stockholders
Meeting to vote upon the Merger and shall have failed to obtain the requisite
vote of its stockholders at such meeting (including any adjournments thereof);
(iv) Parent shall have convened a Parent Shareholders Meeting
to vote upon the Merger and shall have failed to obtain the requisite vote of
its stockholders at such meeting (including any adjournments thereof); or
(c) by the Company if:
(i) there shall have been a breach of any representation or
warranty on the part of Parent or Acquisition set forth in this Agreement or if
any representation or warranty of Parent or Acquisition shall have become untrue
such that the conditions set forth in Section 5.2(a) would be incapable of being
satisfied by the Final Date; or
(ii) there shall have been a material breach by
Parent or Acquisition of any of their respective covenants or agreements
hereunder and Parent or Acquisition, as the case may be, has not cured such
breach within twenty (20) business days after written notice by the Company
thereof;
(d) by Parent and Acquisition if:
55
(i) there shall have been a breach of any representation or
warranty on the part of the Company set forth in this Agreement or if any
representation or warranty of the Company shall have become untrue, such that
the conditions set forth in Section 5.3(a) would be incapable of being satisfied
by the Final Date; provided, however, that Parent shall not be entitled to
terminate this Agreement pursuant to this Section 6.1(d)(i) as a result of the
Company's breach of Section 2.28 if such breach could have been cured by the
Company if Parent had consented to a commercially reasonable amendment or
modification to the Financing Agreement and such consent was unreasonably
withheld;
(ii) there shall have been a material breach by the Company
of one or more of its covenants or agreements hereunder and the Company has not
cured such breach within twenty (20) business days after written notice by
Parent or Acquisition thereof; provided, however, that Parent shall not be
entitled to terminate this Agreement pursuant to this Section 6.1(d)(ii) as a
result of the Company's breach of Section 4.1(a)(xxii) if such breach could have
been cured by the Company if Parent had consented to a commercially reasonable
amendment or modification to the Financing Agreement and such consent was
unreasonably withheld; or
(iii) the Fourth Quarter Revenues are less than Thirty Four
Million Dollars ($34,000,000);
(iv) Between the date hereof and the Closing Date, the
average of the closing sales prices of the
Parent Common Stock on the Nasdaq National Market shall have been less than
$6.00 per share for fifteen (15) consecutive trading days.
(e) by Parent and Acquisition, if the Company shall have:
(i) failed to make the Company Recommendation, failed to
reconfirm the Company Recommendation (including publicly if requested) within
three business days following the reasonable request of Parent to do so, or
effected a Change in the Company Recommendation, whether or not permitted by
the terms hereof; or
(ii) willfully and materially breached its obligations under
Section 4.3; or
(iii) failed to call the Company Stockholders Meeting or
failed to prepare and mail to its stockholders the Joint Proxy Statement/
Prospectus in accordance with Section 4.2(b);
provided that if the Company sends a notice of its intention to terminate this
Agreement pursuant to Section 6.1(c), the sending of such notice in and of
itself shall not be deemed to be a breach or default by the Company that would
permit Parent to terminate this Agreement pursuant to this Section 6.1(e).
(f) by the Company, if Parent or Acquisition shall have:
(i) failed to make the Parent Recommendation, failed to
reconfirm the Parent Recommendation within three business days following the
reasonable request of
56
the Company to do so, or effected a change in the Parent Recommendation,
whether or not permitted by the terms hereof;
(ii) willfully and materially breached its obligations under
Section 4.2(c);
(iii) failed to call the Parent Shareholders Meeting or failed
to prepare and mail to its shareholders the Joint Proxy Statement/Prospectus in
accordance with Section 4.2;
provided that if Parent or Acquisition sends a notice of its intention to
terminate this Agreement pursuant to Section 6.1(c), the sending of such notice
in and of itself shall not be deemed to be a breach or default by Parent or
Acquisition that would permit the Company to terminate this Agreement pursuant
to this Section 6.1(f).
Section 6.2. Effect of Termination. In the event of the
---------------------
termination and abandonment of this Agreement pursuant to Section 6.1, this
Agreement shall forthwith become void and have no effect without any liability
on the part of any party hereto, or any of its affiliates, directors, officers
or stockholders other than the provisions of this Section 6.2 and Sections
4.5(c) and 6.3 and all of Article 7 with the exception of Sections 7.8 and
Section 7.10 hereof. Nothing contained in this Section 6.2 shall relieve any
party from liability for any breach of this Agreement prior to such termination.
Section 6.3. Fees and Expenses.
-----------------
(a) If this Agreement is terminated:
(i) pursuant to Section 6.1(e), Parent and Acquisition would
suffer direct and substantial damages, which damages cannot be determined with
reasonable certainty. To compensate Parent and Acquisition for such damages, the
Company shall pay to Parent the amount of Two Million Dollars ($2,000,000) as
liquidated damages within one (1) business day of the termination of this
Agreement pursuant to Section 6.1(e). It is specifically agreed that the amount
to be paid pursuant to this Section 6.3(a) represents liquidated damages and not
a penalty.
(ii) pursuant to Section 6.1(e)(iii) and (I) at any time after
the date of this Agreement and before the Company Stockholders Meeting, a Third
Party Acquisition Proposal shall have been publicly announced or otherwise
communicated to the stockholders of the Company and such proposal shall not have
been publicly and unconditionally withdrawn at the time of the Company
Stockholders Meeting and (II) prior to December 31, 2004 the Company or any
Subsidiary enters into any definitive agreement with respect to any Third Party
Acquisition Proposal and consummates such Third Party Acquisition Proposal at
any time, then in addition to the amount payable pursuant to clause 6.3(a)(i)
above, the Company shall pay to Parent and Acquisition an additional amount
equal to the difference, if any, between three percent (3%) of the transaction
value paid to the Company's stockholders in the Third Party Acquisition Proposal
and $2,000,000.
57
(iii) Other than the payment of liquidated damages pursuant
to the preceding sub-sections (i) and (ii), in no event shall Parent be
entitled to compensation for any damages incurred by Parent as a result of the
termination of this Agreement by the Company.
(b) If this Agreement is terminated pursuant to Section 6.1(f),
the Company would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate the Company for such
damages, the Parent shall pay to the Company the amount of Two Million Dollars
($2,000,000) as liquidated damages (i) within one (1) business day of the
termination of this Agreement pursuant to Section 6.1(f). It is specifically
agreed that the amount to be paid pursuant to this Section 6.3(a) represents
liquidated damages and not a penalty. Other than the payment of liquidated
damages pursuant to the preceding sentence, in no event shall the Company be
entitled to compensation for any damages incurred by the Company as a result of
the termination of this Agreement by Parent, including, without limitation,
termination of this Agreement by Parent pursuant to Section 6.1(d)(iii) or
Section 6.1(d)(iv).
(c) Each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
(d) No fees and expenses pursuant to this Section 6.3 shall be
payable by the Company to Parent in the event the stockholders of the Company
fail to approve the transactions contemplated by this Agreement, provided that
the Company Recommendation has been made and no Change in Company Recommendation
has occurred, there has been no Third Party Acquisition Proposal announced, and
provided, further, that the individuals who have signed Company Voting
Agreements have complied with the terms thereof. No fees and expenses pursuant
to this Section 6.3 shall be payable by Parent to the Company in the event the
stockholders of Parent fail to approve the transactions contemplated by this
Agreement, provided that the Parent Recommendation has been made and no change
in the Parent Recommendation has occurred, and provided, further, that the
individuals who have signed Parent Voting Agreements have complied with the
terms thereof.
Section 6.4. Amendment. This Agreement may be amended by action
---------
taken by the Company, Parent and Acquisition at any time before or after
approval of the Merger by the stockholders of the Company or Parent but after
any such approval no amendment shall be made that requires the approval of such
stockholders under Applicable Law without such approval. This Agreement
(including, subject to Section 4.9, the Company Disclosure Schedule and the
Parent Disclosure Schedule) may be amended only by an instrument in writing
signed on behalf of the parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective
-----------------
Time, each party hereto may (i) extend the time for the performance of any of
the obligations or other acts of the other party, (ii) waive any inaccuracies in
the representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto, or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such
58
party. The failure of any party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE 7
MISCELLANEOUS
Section 7.1. Nonsurvival of Representations and Warranties. The
---------------------------------------------
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement
----------------------------
(including the Company Disclosure Schedule and the Parent Disclosure Schedule)
and the Nondisclosure Agreement (a) constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all other
prior and contemporaneous agreements and understandings both written and oral
between the parties with respect to the subject matter hereof and (b) shall not
be assigned by operation of law or otherwise; provided, however, that
Acquisition may assign any or all of its rights and obligations under this
Agreement to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Acquisition of its obligations hereunder if such
assignee does not perform such obligations.
Section 7.3. Validity. If any provision of this Agreement or the
--------
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices and other communications
-------
pursuant to this Agreement shall be in writing and shall be deemed given if
delivered personally, sent by facsimile, sent by nationally-recognized overnight
courier to the parties at the addresses set forth below or to such other address
as the party to whom notice is to be given may have furnished to the other
parties hereto in writing in accordance herewith. Any such notice or
communication shall be deemed to have been delivered and received (A) in the
case of personal delivery, on the date of such delivery, (B) in the case of
facsimile, on the date sent if confirmation of receipt is received and such
notice is also promptly mailed by registered or certified mail (return receipt
requested), and (C) in the case of a nationally-recognized overnight courier in
circumstances under which such courier guarantees next business day delivery, on
the next business day after the date when sent:
if to the Company: ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
59
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
if to the Parent: Kforce Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:: Holland & Knight LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law and Venue; Waiver of Jury Trial.
---------------------------------------------
(a) This Agreement shall be deemed to be made in and in all
respects shall be interpreted, construed and governed by and in accordance with
the law of the state of Delaware without regard to the conflict of law
principles thereof. The parties hereby irrevocably and unconditionally submit to
the exclusive jurisdiction of the courts of the Court of Chancery of Delaware
and the Federal courts of the United States of America located in the State of
Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Delaware State
or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 7.4 or in such other
manner as may be permitted by Applicable Law, shall be valid and sufficient
service thereof.
(b) The parties agree that irreparable damage would occur and that
the parties would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and
60
provisions of this Agreement in any Federal court located in the State of
Delaware or in Delaware state court, this being in addition to any other remedy
to which they are entitled at law or in equity.
(c) Each party acknowledges and agrees that any controversy which
may arise under this Agreement is likely to involve complicated and difficult
issues, and therefore each such party hereby irrevocably and unconditionally
waives any right such party may have to a trial by jury in respect of any
litigation directly or indirectly arising out of or relating to this Agreement
or the transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each such
party makes this waiver voluntarily, and (iv) each such party has been induced
to enter into this Agreement by, among other things, the waivers and
certifications in this Section 7.5.
Section 7.6. Descriptive Headings. The descriptive headings
--------------------
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as expressly provided herein, nothing in this
Agreement is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement nor shall any such person be entitled to assert any claim hereunder.
In no event shall this Agreement constitute a third party beneficiary contract.
Section 7.8. Certain Definitions. For the purposes of this
-------------------
Agreement the term:
(a) "affiliate" means (except as otherwise provided in Sections
2.22 and 4.10) a person that, directly or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with the
first-mentioned person;
(b) "Applicable Law" means, with respect to any person, any
domestic or foreign, federal, state or local statute, law, ordinance, rule,
regulation, order, writ, injunction, judgment, decree or other requirement of
any Governmental Entity existing as of the date hereof or as of the Effective
Time applicable to such person or any of its respective properties, assets,
officers, directors, employees, consultants or agents;
(c) "business day" means any day other than a day on which the
Nasdaq National Market is closed;
(d) "capital stock" means common stock, preferred stock,
partnership interests, limited liability company interests or other ownership
interests entitling the holder thereof to vote with respect to matters involving
the issuer thereof;
(e) "Company IP" means any Company Licensed IP or Company Owned
IP;
61
(f) "Company Licensed IP" means any Intellectual Property that is
owned by any person other than the Company or any Subsidiary and that is
licensed to, used or distributed by the Company or any Subsidiary;
(g) "Company Owned IP" means any Intellectual Property owned (in
whole or in part) by the Company or any Subsidiary;
(h) "Company Registered IP" means any Registered Intellectual
Property owned (in whole or in part) by the Company or any Subsidiary;
(i) "Fourth Quarter Revenues" shall mean the consolidated revenues
of the Company for the quarter ended December 28, 2003 as calculated in
accordance with United States generally accepted accounting principles and
consistent with past practice.
(j) "Intellectual Property" means any patent or patent
applications, whether foreign, domestic or international (which terms shall be
deemed to include certificates of invention, utility models and other equivalent
rights, and applications for same), including without limitation all
divisionals, continuations, continuations-in-part, extensions (including
supplemental protection certificates), re-examinations, renewals and patents
issuing and/or reissued with respect to any and all of the foregoing, trademark
(whether registered or unregistered), trademark application, trade name,
fictitious business name, service ▇▇▇▇ (whether registered or unregistered),
service ▇▇▇▇ application, trade dress, logos, designs, company and other
business identifiers, and all goodwill of the business associated with the
foregoing, and all rights of renewal and extension thereof, domain name,
copyright (whether registered or unregistered), copyright application, mask
work, mask work application, trade secret, know-how, customer list, franchise,
system, computer software, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset;
(k) "knowledge" or "known" means, with respect to any matter in
question, the actual knowledge of such matter of (i) any member of the Board of
Directors; or (ii) any employee or officer with responsibility for such matter
in question; of the Company or any Subsidiary, or Parent or any of its
subsidiaries as the case may be as listed on Exhibit G. Each of such persons
---------
shall be deemed to have actual knowledge of a particular fact, circumstance,
event or other matter if (a) such fact, circumstance, event or other matter is
reflected in one or more documents (whether written or electronic) in, or that
have been in, such individual's possession, including personal files of such
individual; or (b) such fact, circumstance, event or other matter is reflected
in one or more documents (whether written or electronic) contained in books and
records of the Company (in the case of knowledge of the Company) or Parent (in
the case of knowledge of the Parent) that would reasonably be expected to be
reviewed by an individual who has the duties and responsibilities of such
individual in the customary performance of such duties and responsibilities;
(l) "include" or "including" means "include, without limitation"
or "including, without limitation," as the case may be, and the language
following "include" or "including" shall not be deemed to set forth an
exhaustive list;
62
(m) "Lien" means any mortgage, lien, pledge, hypothecation,
charge, security interest, encumbrance, equity, trust, equitable interest,
claim, preference, right of possession, lease, tenancy, license, encroachment,
covenant, infringement, interference, order, proxy, option, right of first
refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset; provided, however, that the term "Lien" shall not include (i) statutory
liens for Taxes, which are not yet due and payable or are being contested in
good faith by appropriate proceedings and disclosed in Section 2.14(d) of the
Company Disclosure Schedule, (ii) statutory or common law liens to secure
landlords, lessors or renters under leases or rental agreements confined to the
premises rented, (iii) deposits or pledges made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age pension or
other social security programs mandated under Applicable Law, (iv) statutory or
common law liens in favor of carriers, warehousemen, mechanics and materialmen
to secure claims for labor, materials or supplies and other like liens, and (v)
restrictions on transfer of securities imposed by applicable state and federal
securities laws;
(n) "Material Adverse Effect on the Company" means any
circumstance, change in, or effect on the Company and its Subsidiaries, taken as
a whole, that is, or is reasonably likely in the future to be, materially
adverse to the financial condition, earnings, results of operations, assets or
liabilities (including contingent liabilities), the business or operations
(financial or otherwise), or long-term prospects, of the Company or its
Subsidiaries, or on the ability of the Company to perform its obligations
hereunder, excluding any such circumstance, change or effect to the extent
resulting from or arising in connection with (i) any litigation brought or
threatened by stockholders of the Company (whether on behalf of the Company or
otherwise) in respect of the announcement of this Agreement or the consummation
of the Merger, or (ii) any disruption of customer, business partner, supplier or
employee relationships that resulted from the announcement of this Agreement or
the consummation of the Merger, to the extent so attributable; provided, that
any reduction in the market price or trading volume of the Company's publicly
traded common stock shall not be deemed to constitute a Material Adverse Effect
on the Company (it being understood that the foregoing shall not prevent Parent
from asserting that any underlying cause of such reduction independently
constitutes such a Material Adverse Effect on the Company); notwithstanding the
above, (x) any adverse circumstance or adverse change to the Company's and its
Subsidiaries' consolidated financial condition, earnings, results of operations,
assets or liabilities to the Company's and its Subsidiaries' consolidated
financial condition, earnings, results of operations, assets or liabilities in
the amount of Two Million Dollars ($2,000,000) individually or in the aggregate
or (y) any breach of the representations set forth in Section 2.28, shall be
considered to be a Material Adverse Effect on the Company; provided, however,
that if Parent shall have unreasonably withheld consent to any commercially
reasonable amendment or modification to the Financing Agreement that would cure
any breach by the Company of Section 2.28 of this Agreement or the covenant
contained in Section 4.1(a)(xxiii) of this Agreement, such breach shall not be
considered a Material Adverse Effect on the Company.
63
(o) "Material Adverse Effect on Parent" means any circumstance,
change in, or effect on Parent or its subsidiaries, that is, or is reasonably
likely in the future to be, materially adverse to the financial condition,
earnings, results of operations, assets or liabilities (including contingent
liabilities), the business or operations (financial or otherwise), or long-term
prospects, of Parent and its subsidiaries, taken as a whole, or on the ability
of the Parent to perform its obligations hereunder, excluding any such
circumstance, change or effect to the extent resulting from or arising in
connection with (i) any litigation brought or threatened by stockholder of the
Parent (whether on behalf of the Parent or otherwise) in respect of the
announcement of this Agreement or the consummation of the Merger, or (ii) any
disruption of customer, business partner, supplier or employee relationships
that resulted from the announcement of this Agreement or the consummation of the
Merger, to the extent so attributable; provided, that any reduction in the
market price or trading volume of Parent's publicly traded common stock shall
not be deemed to constitute a Material Adverse Effect on Parent (it being
understood that the foregoing shall not prevent the Company from asserting that
any underlying cause of such reduction independently constitutes such a Material
Adverse Effect on Parent); notwithstanding the above, any adverse circumstance
or change to Parent's and its subsidiaries' consolidated financial condition,
earnings, results of operations, assets or liabilities in the amount of Six
Million Dollars ($6,000,000) shall be considered to be a Material Adverse Effect
on Parent;
(p) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other legal entity including any Governmental Entity;
(q) "Proceeding" means any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
Governmental Entity or any arbitrator or arbitration panel;
(r) "Qualifying Amendment" means an amendment or supplement to the
Joint Proxy Statement/Prospectus or S-4 (including by incorporation by
reference) to the extent it contains (a) a Change in the Company Recommendation,
(b) a statement of the reasons of Company Board for making such Change in the
Company Recommendation, and (c) additional information reasonably related to the
foregoing; and
(s) "Registered Intellectual Property" means all United States,
international and foreign: (i) patents, including applications therefor; (ii)
registered trademarks, applications to register trademarks, including intent-to-
use applications, or other registrations or applications related to trademarks;
(iii) copyright registrations and applications to register copyrights; and (iv)
any other Intellectual Property that is the subject of an application,
certificate, filing, registration or other document issued by, filed with, or
recorded by, any state, government or other public legal authority at any time.
Section 7.9. Personal Liability. This Agreement shall not
-------------------
create or be deemed to create or permit any personal liability or
obligation on the part of any direct or indirect
64
stockholder of the Company or Parent or Acquisition or any officer, director,
employee, agent, representative or investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby acknowledge
--------------------
and agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties, for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder; provided, however, that if a party
hereto receives all payments and reimbursements of expenses to which it is
entitled pursuant to Section 6.3(a), (b) or (c) it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in
------------
one or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement.
Section 7.12. Closing Financial Statements. After the Closing
----------------------------
Date, the Company's Chief Financial Officer shall assist Parent in the
preparation of and shall certify (in a manner consistent with past practice) to
any financial statements, including audited financial statements, of the Company
for the periods ending (a) on December 28, 2003 and (b) on the Closing Date, as
may be reasonably requested by Parent.
(Remainder of page intentionally left blank)
65
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
KFORCE INC., a Florida corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: Chief Executive Officer
-------------------------
▇▇▇▇, ▇▇▇▇▇▇ & ASSOCIATES, INC., a
Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: Chief Executive Officer and Chairman
------------------------------------
of the Board
--------------------------------------------
NOVATO ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Chief Executive Officer, President,
-----------------------------------
Secretary and Treasurer
-------------------------------------------
{Signature Page to Agreement and Plan of Merger}
EXHIBIT A
FORM OF COMPANY
IRREVOCABLE PROXY
AND
VOTING AGREEMENT
THIS IRREVOCABLE PROXY AND VOTING AGREEMENT (this "Agreement"), dated
as of December 2, 2003, is entered into by and between Kforce Inc., a Florida
corporation ("Parent"), and Novato Acquisition Corporation, a Delaware
corporation and wholly-owned subsidiary of Parent ("Acquisition"), on the one
hand, and _________________ ("Stockholder") on the other hand, and, with respect
to Section 8(j) only, ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc., a Delaware corporation
(the "Company").
RECITALS
WHEREAS, concurrently herewith, Parent, Acquisition, and the Company
have entered into an Agreement and Plan of Merger, of even date herewith (as
such agreement may hereafter be amended from time to time in conformity with the
provisions thereof, the "Merger Agreement"), pursuant to which Acquisition will
merge with and into the Company and the Company shall be the surviving
corporation and become a wholly-owned subsidiary of Parent (the "Merger");
WHEREAS, Stockholder is the beneficial owner (as defined below) of
____________ (_________) shares of common stock, $0.001 par value per share, of
the Company (such shares, together with all other shares of capital stock or
other voting securities of the Company with respect to which the Stockholder has
beneficial ownership as of the date of this Agreement, and any shares of capital
stock or other voting securities of the Company, beneficial ownership of which
is directly or indirectly acquired after the date hereof, including, without
limitation, shares received pursuant to any stock splits, stock dividends or
distributions, shares acquired by purchase or upon the exercise, conversion or
exchange of any option, warrant or convertible security or otherwise, and shares
or any voting securities of the Company received pursuant to any change in the
capital stock of the Company by reason of any recapitalization, merger,
reorganization, consolidation, combination, exchange of shares or the like, are
referred to herein as the "Stockholder Shares"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Acquisition have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. For the purposes of this Agreement, terms not defined
-----------
herein but used herein and defined in the Merger Agreement shall have the
meanings set forth in the Merger Agreement, unless the context clearly indicates
otherwise.
2. Disclosure. Stockholder hereby agrees to permit the Company and
----------
Parent to publish and disclose in the S-4 Registration Statement and the Proxy
Statement (including all documents and schedules filed with the SEC), and any
press release or other disclosure document which Parent and the Company
reasonably determine to be necessary or desirable in connection with the Merger
and any transactions related thereto, Stockholder's identity and ownership of
the Stockholder Shares and the nature of Stockholder's commitments, arrangements
and understandings under this Agreement.
3. Voting Agreement. Stockholder hereby irrevocably agrees with Parent
----------------
and Acquisition that during the period commencing on the date hereof and
continuing until the first to occur of (a) the Effective Time or (b) the
termination of the Merger Agreement in accordance with its terms (the
"Termination Date"), at any meeting of the Company's stockholders, however
called, or in connection with any written consent of the Company's Stockholders,
Stockholder shall appear at each such meeting, in person or by proxy, or
otherwise cause all Stockholder Shares then outstanding to be counted as present
thereat for purposes of establishing a quorum, and Stockholder shall vote, or
cause to be voted (or in connection with any written consent of the Company's
stockholders, act, or cause to be acted, by written consent) with respect to all
Stockholder Shares that Stockholder is entitled to vote or as to which
Stockholder has the right to direct the voting, as of the relevant record date,
(i) in favor of approval of the Merger Agreement and the transactions
contemplated thereby; (ii) against any proposal that is intended to, or is
reasonably likely to result in any of the conditions of the Parent's or
Acquisition's obligations under the Merger Agreement not being fulfilled; (iii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty, or any other obligation or agreement,
of the Company under the Merger Agreement or Stockholder under this Agreement;
and (iv) against (A) any Third Party Acquisition Proposal (as defined in the
Merger Agreement), or (B) the election of a group of individuals to replace a
majority or more of the individuals presently on the Company Board; provided
that if one or more individuals presently on the Company Board withdraws his or
her nomination for reelection at any meeting of stockholders for the election of
directors, Stockholder may vote for a replacement director nominated by the
Company Board for such individual(s). The Stockholder agrees that the
obligations under this Agreement are unconditional and will remain in full force
and effect notwithstanding that the Company Board may have withdrawn or amended
its recommendation and approval of the Merger. Further, the Stockholder will not
enter into any agreement or understanding with any Person the effect of which
would be inconsistent with or violative of any provision contained in this
Section 3.
4. Irrevocable Proxy.
-----------------
(a) Stockholder hereby irrevocably constitutes and appoints Parent,
which shall act by and through ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (each, a "Proxy Holder"), or any of them, with full power of
substitution, its true and lawful proxy and attorney-in-fact to vote at any
meeting (and any adjournment or postponement thereof) of the Company's
stockholders called for purposes of considering whether to approve the Merger
Agreement and transactions contemplated thereby, any Third Party Acquisition
Proposal or any other transaction
Exhibit A - 2
described in Section 3 hereof, or to execute a written consent of stockholders
in lieu of any such meeting (if so permitted), all Stockholder Shares held by
Stockholder of record as of the relevant record date in favor of the approval
of the Merger Agreement and transactions contemplated thereby and against any
Third Party Acquisition Proposal or any other action described in Section
3(iv)(B) hereof.
(b) The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest sufficient in law to support an irrevocable proxy and shall
revoke all prior proxies granted by Stockholder which conflicts with the proxy
granted herein. Stockholder shall not grant any proxy to any person which
conflicts with the proxy granted herein, and any attempt to do so shall be void.
The power of attorney granted herein is a durable power of attorney and shall
survive the death or incapacity of Stockholder.
(c) If Stockholder fails for any reason to vote his, her or its
Stockholder Shares as required by Section 3 hereof, then the Proxy Holder shall
have the right to vote the Stockholder Shares at any meeting of the Company's
stockholders and in any action by written consent of the Company's stockholders
in accordance with this Section 4. The vote of a Proxy Holder shall control in
any conflict between a vote of such Stockholder Shares by a Proxy Holder and a
vote of such Stockholder Shares by Stockholder with respect to the matters set
forth in Section 4(a) hereof.
5. Director and Officer Matters Excluded. Parent and Acquisition
-------------------------------------
acknowledge and agree that no provision of this Agreement shall limit or
otherwise restrict Stockholder with respect to any act or omission that
Stockholder may undertake or authorize in Stockholder's capacity as a director
or officer of the Company, including, without limitation, any vote that
Stockholder may make as a director or officer of the Company with respect to any
matter presented to the Company Board.
6. Other Covenants, Representations and Warranties. Stockholder hereby
-----------------------------------------------
represents and warrants to, and covenants with, Parent and Acquisition as
follows:
(a) Title to Stockholder Shares. Stockholder is the beneficial
---------------------------
owner (as defined in Rule 13(d)(3) promulgated under the Exchange Act,
"beneficial owner") of all the Stockholder Shares. Except as set forth in Annex
1, attached hereto, Stockholder has sole voting power and the sole power of
disposition with respect to all of the Stockholder Shares outstanding on the
date hereof, and will have sole voting power and sole power of disposition with
respect to all of the Stockholder Shares acquired by such Stockholder after the
date hereof upon the exercise, conversion or exchange of any option, warrant or
convertible security owned or held by Stockholder as of the date hereof, with no
limitations, qualifications or restrictions on such rights. Stockholder is the
sole record holder (as reflected in the records maintained by the Company's
transfer agent) of the Stockholder Shares outstanding on the date hereof.
(b) Power; Binding Agreement. Stockholder has and will have the
------------------------
legal capacity, power and authority to enter into and perform all of
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by Stockholder will not violate any agreement or
court order to which Stockholder is a party or is subject, including, without
limitation, any voting agreement or voting trust. This Agreement has been duly
and
Exhibit A - 3
validly executed and delivered by Stockholder and constitutes a valid and
binding agreement of Stockholder, enforceable against Stockholder in accordance
with its terms.
(c) Restriction on Transfer, Proxies and Non-Interference; Stop
-----------------------------------------------------------
Transfer. Except as expressly contemplated by this Agreement, during the term of
--------
this Agreement, Stockholder shall not, directly or indirectly: (i) offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to, or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of the Stockholder
Shares or any interest therein; (ii) grant any proxies or powers of attorney
with respect to any Stockholder Shares which conflicts with Section 4(a) hereof
and the proxy granted herein or deposit any Stockholder Shares into a voting
trust or enter into a voting agreement with respect to any Stockholder Shares;
or (iii) take any action that would make any representation or warranty of
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling Stockholder from performing any of Stockholder's
obligations under this Agreement. Stockholder further agrees with and covenants
to Parent that Stockholder shall not request that the Company register the
transfer of any certificate or uncertificated interest representing any of the
Stockholder Shares, unless such transfer is made in compliance with this
Agreement. Stockholder agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent.
(d) No Consents. To his, her or its knowledge, the execution and
-----------
delivery of this Agreement by Stockholder does not, and the performance by
Stockholder of his, her or its obligations hereunder will not, require
Stockholder to obtain any consent, approval, authorization or permit of, or to
make any filing with or notification to, any Governmental Entity. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which Stockholder is a trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by Stockholder of
the transactions contemplated hereby. If Stockholder is married and
Stockholder's Shares constitute community property, this Agreement has been duly
authorized, executed and delivered by, and constitutes a valid and binding
agreement of, Stockholder's spouse, enforceable against such person in
accordance with its terms.
(e) Notification of Parent. Stockholder hereby agrees, while this
----------------------
Agreement is in effect, to notify Parent and Acquisition promptly of the number
of any additional shares of capital stock and the number and type of any other
voting securities of the Company acquired by such Stockholder, if any, after the
date hereof.
(f) Reliance by Parent and Acquisition. Stockholder understands
----------------------------------
and acknowledges that Parent and Acquisition are entering into the Merger
Agreement in reliance upon Stockholder's execution and delivery of this
Agreement.
(g) Sophistication. Stockholder acknowledges being an informed and
--------------
sophisticated investor and, together with Stockholder's advisors, has undertaken
such investigation as they have deemed necessary, including the review of the
Merger Agreement and this Agreement, to enable the Stockholder to make an
informed and intelligent decision with respect to the Merger Agreement and this
Agreement and the transactions contemplated thereby and hereby.
Exhibit A - 4
(h) Permitted Transfers. Notwithstanding Section 6(c), Stockholder shall
have the right to (A) transfer Stockholder Shares to (1) any Family Member; (2)
the trustee or trustees of a trust for the benefit of Stockholder and/or one or
more Family Members; (3) a partnership of which Stockholder and/or Family
Members owns a majority of the partnership interests; (4) a limited liability
company of which Stockholder and/or any Family Members owns a majority of the
membership interests; (5) the executor, administrator or personal representative
of the estate of Stockholder; "Family Member" means Stockholder's spouse,
father, mother, issue (if living with Stockholder), brother or sister.
Stockholder agrees that this Agreement and the obligations hereunder shall
attach to the Stockholder's Shares and shall be binding upon any Person to which
legal or beneficial ownership of such Shares shall pass, whether by operation of
law or otherwise, including without limitation, Stockholder's heirs, guardians,
administrators or successors. Notwithstanding anything to the contrary in this
Section 6(h), Stockholder acknowledges and agrees that any transfer permitted by
this Section 6(h) will not be effective until the transferee agrees in writing
to be bound by the terms of this Agreement. Notwithstanding any such transfer of
Shares, the transferor shall remain liable for the performance of all
obligations under this Agreement.
(i) No Encumbrances. Except as applicable in connection with the
transactions contemplated by Section 3 and 4 hereof and except as set forth in
Schedule 6(i) attached hereto, the Stockholder's Shares at all times during the
term hereof will be beneficially owned by Stockholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever.
(j) No Conflicts. None of the execution and delivery of this Agreement
by Stockholder, the consummation by Stockholder of the transactions contemplated
hereby or compliance by the Stockholder with any of the provisions hereof (A)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Stockholder is a party or by which
Stockholder or any of his or her properties or assets may be bound, or (B)
violate any order, writ injunction, decree, judgment, order, statute, rule or
regulation applicable to Stockholder or any of his or her properties or assets.
7. Termination. The voting agreement and irrevocable proxy granted pursuant
to Sections 3 and 4 hereof shall terminate immediately upon the earlier to occur
of (a) the Termination Date and (b) the Effective Time.
8. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(b) Assignment. This Agreement shall not be assigned by operation of law
or otherwise without the prior written consent of the other party, and any
attempted assignment in
Exhibit A - 5
violation hereof shall be void; provided, however, that Parent may, in its sole
discretion, assign its rights and obligations hereunder to any direct or
indirect wholly-owned subsidiary of Parent.
(c) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(d) Notices. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed given if delivered personally,
sent by facsimile, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the addresses set forth below or to such other address as the party
to whom notice is to be given may have furnished to the other parties hereto in
writing in accordance herewith. Any such notice or communication shall be deemed
to have been delivered and received (i) in the case of personal delivery, on the
date of such delivery, (ii) in the case of facsimile, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier in circumstances under which such
courier guarantees next business day delivery, on the next business day after
the date when sent, and (iv) in the case of mailing, on the third business day
following that on which the piece of mail containing such communication is
posted:
if to Parent or Acquisition: Kforce Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to: Holland & Knight LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
if to Stockholder, to: such address for Stockholder as set forth
on the signature page hereto
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(e) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
Exhibit A - 6
(f) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(g) Governing Law; Venue; Specific Performance; Waiver of Jury Trial.
This Agreement shall be deemed to be made in and in all respects shall be
interpreted, construed and governed by and in accordance with the laws of the
State of Delaware without regard to the conflict of law principles thereof. The
parties hereby irrevocably submit to the jurisdiction of the courts of the State
of Delaware and the Federal courts of the United States of America located in
the State of Delaware solely in respect of the interpretation and enforcement of
the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware state or federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
8(d) hereof or in such other manner as may be permitted by applicable law, shall
be valid and sufficient service thereof.
All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any such rights, powers or remedies by
any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the State of Delaware and the Federal courts
of the United States of America located in the State of Delaware, this being in
addition to any other remedy to which they are entitled at law or in equity.
Each party acknowledges and agrees that any controversy which may arise
under this Agreement is likely to involve complicated and difficult issues, and
therefore each such party hereby irrevocably and unconditionally waives any
right such party may have to a trial by jury in respect of any litigation
directly or indirectly arising out of or relating to this Agreement or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of
Exhibit A - 7
litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each such
party makes this waiver voluntarily, and (iv) each such party has been induced
to enter into this Agreement by, among other things, the waivers and
certifications in this Section 8(g).
(h) Counterparts. This Agreement may be executed by facsimile and in one
or more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.
(i) Further Assurances. At the request of any party to another party or
parties to this Agreement, such other party or parties shall execute and deliver
such instruments or documents to evidence or further effectuate (but not to
enlarge) the respective rights and obligations of the parties and to evidence
and effectuate any termination of this Agreement.
(j) Company Stop Transfer Agreement. The Company hereby acknowledges the
restrictions on transfer of the Stockholder Shares contained in Section 6(c)
hereof. The Company agrees not to register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any
Stockholder Shares, unless such transfer is made pursuant to and in compliance
with this Agreement. The Company further agrees to instruct its transfer agent
(the "Transfer Agent") not to transfer any certificate or uncertificated
interest representing any Stockholder Shares, until (i) the Transfer Agent has
received Parent's consent to such a transfer, or (ii) this Agreement has been
terminated pursuant to Section 7 hereof.
(k) No Third Party Beneficiaries. This Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(l) Description Headings. The description headings used herein are for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
(Remainder of page intentionally left blank)
Exhibit A - 8
IN WITNESS WHEREOF, Parent, Acquisition and Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
KFORCE INC.
By:--------------------------------------
Name:
Title:
NOVATO ACQUISITION CORPORATION
By:--------------------------------------
Name:
Title:
STOCKHOLDER:
_________________________________________
Name:____________________________________
Title:___________________________________
Address:_________________________________
_________________________________________
SPOUSE OF STOCKHOLDER (IF APPLICABLE):
_________________________________________
Name:____________________________________
Address:_________________________________
_________________________________________
ACKNOWLEDGED AND AGREED TO
(with respect to Section 8(j)):
▇▇▇▇, ▇▇▇▇▇▇ & ASSOCIATES, INC.
By: ______________________________
Name:
Title:
Exhibit A - 9
EXHIBIT B
FORM OF PARENT
IRREVOCABLE PROXY
AND
VOTING AGREEMENT
THIS IRREVOCABLE PROXY AND VOTING AGREEMENT (this "Agreement"), dated as of
December 2, 2003, is entered into by and between ▇▇▇▇, ▇▇▇▇▇▇ & Associates,
Inc., a Delaware corporation (the "Company"), on the one hand, and
_________________ ("Shareholder") on the other hand, and, with respect to
Section 8(j) only, Kforce Inc., a Florida corporation (the "Parent").
RECITALS
WHEREAS, concurrently herewith, Parent, Novato Acquisition Corporation, a
Delaware corporation and wholly owned subsidiary of the Parent ("Acquisition"),
and the Company have entered into an Agreement and Plan of Merger, of even date
herewith (as such agreement may hereafter be amended from time to time in
conformity with the provisions thereof, the "Merger Agreement"), pursuant to
which Acquisition will merge with and into the Company and the Company shall be
the surviving corporation and become a wholly-owned subsidiary of Parent (the
"Merger");
WHEREAS, Shareholder is the beneficial owner (as defined below) of
____________ (_________) shares of common stock, $0.01 par value per share, of
Parent (such shares, together with all other shares of capital stock or other
voting securities of Parent with respect to which the Shareholder has beneficial
ownership as of the date of this Agreement, and any shares of capital stock or
other voting securities of Parent, beneficial ownership of which is directly or
indirectly acquired after the date hereof, including, without limitation, shares
received pursuant to any stock splits, stock dividends or distributions, shares
acquired by purchase or upon the exercise, conversion or exchange of any option,
warrant or convertible security or otherwise, and shares or any voting
securities of Parent received pursuant to any change in the capital stock of
Parent by reason of any recapitalization, merger, reorganization, consolidation,
combination, exchange of shares or the like, are referred to herein as the
"Shareholder Shares"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, the Company has requested that Shareholder agree, and Shareholder has
agreed, to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. For the purposes of this Agreement, terms not defined
herein but used herein and defined in the Merger Agreement shall have the
meanings set forth in the Merger Agreement, unless the context clearly indicates
otherwise.
2. Disclosure. Shareholder hereby agrees to permit the Company and Parent
to publish and disclose in the S-4 Registration Statement and the Proxy
Statement (including all documents and schedules filed with the SEC), and any
press release or other disclosure document which Parent and the Company
reasonably determine to be necessary or desirable in connection with the Merger
and any transactions related thereto, Shareholder's identity and ownership of
the Shareholder Shares and the nature of Shareholder's commitments, arrangements
and understandings under this Agreement.
3. Voting Agreement. Shareholder hereby irrevocably agrees with the Company
that during the period commencing on the date hereof and continuing until the
first to occur of (a) the Effective Time or (b) the termination of the Merger
Agreement in accordance with its terms (the "Termination Date"), at any meeting
of Parent's shareholders, however called, or in connection with any written
consent of the Parent's shareholders, Shareholder shall appear at each such
meeting, in person or by proxy, or otherwise cause all Shareholder Shares then
outstanding to be counted as present thereat for purposes of establishing a
quorum, and Shareholder shall vote, or cause to be voted (or in connection with
any written consent of the Parent's shareholders, act, or cause to be acted, by
written consent) with respect to all Shareholder Shares that Shareholder is
entitled to vote or as to which Shareholder has the right to direct the voting,
as of the relevant record date, (i) in favor of approval of the Merger Agreement
and the transactions contemplated thereby; (ii) against any proposal that is
intended to, or is reasonably likely to result in any of the conditions of the
Company's obligations under the Merger Agreement not being fulfilled; (iii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty, or any other obligation or agreement,
of the Parent or Acquisition under the Merger Agreement or Shareholder under
this Agreement; and (iv) against the election of a group of individuals to
replace a majority or more of the individuals presently on the Parent Board;
provided that if one or more individuals presently on the Parent Board withdraws
his or her nomination for reelection at any meeting of shareholders for the
election of directors, Shareholder may vote for a replacement director nominated
by the Parent Board for such individual(s). The Shareholder agrees that the
obligations under this Agreement are unconditional and will remain in full force
and effect notwithstanding that the Parent Board may have withdrawn or amended
its recommendation and approval of the Merger. Further, the Shareholder will not
enter into any agreement or understanding with any Person the effect of which
would be inconsistent with or violative of any provision contained in this
Section 3.
4. Irrevocable Proxy.
(a) Shareholder hereby irrevocably constitutes and appoints the Company,
which shall act by and through ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ (each,
a "Proxy Holder"), or either of them, with full power of substitution, its true
and lawful proxy and attorney-in-fact to vote at any meeting (and any
adjournment or postponement thereof) of the Parent's shareholders called for
purposes of considering whether to approve the Merger Agreement and transactions
contemplated thereby or any other transaction described in Section 3 hereof, or
to
Exhibit B - 2
execute a written consent of shareholders in lieu of any such meeting (if so
permitted), all Shareholder Shares held by Shareholder of record as of the
relevant record date in favor of the approval of the Merger Agreement and
transactions contemplated thereby and against the election of a group of
individuals to replace the majority or more of the individuals presently on the
Parent Board as more fully described in Section 3(iv) hereof.
(b) The proxy and power of attorney granted herein shall be irrevocable
during the term of this Agreement, shall be deemed to be coupled with an
interest sufficient in law to support an irrevocable proxy and shall revoke all
prior proxies granted by Shareholder which conflicts with the proxy granted
herein. Shareholder shall not grant any proxy to any person which conflicts with
the proxy granted herein, and any attempt to do so shall be void. The power of
attorney granted herein is a durable power of attorney and shall survive the
death or incapacity of Shareholder.
(c) If Shareholder fails for any reason to vote his, her or its
Shareholder Shares as required by Section 3 hereof, then the Proxy Holder shall
have the right to vote the Shareholder Shares at any meeting of Parent's
shareholders and in any action by written consent of the Company's shareholders
in accordance with this Section 4. The vote of a Proxy Holder shall control in
any conflict between a vote of such Shareholder Shares by a Proxy Holder and a
vote of such Shareholder Shares by Shareholder with respect to the matters set
forth in Section 4(a) hereof.
5. Director and Officer Matters Excluded. The Company acknowledges and
agrees that no provision of this Agreement shall limit or otherwise restrict
Shareholder with respect to any act or omission that Shareholder may undertake
or authorize in Shareholder's capacity as a director or officer of Parent or
Acquisition, including, without limitation, any vote that Shareholder may make
as a director or officer of Parent or Acquisition with respect to any matter
presented to the Parent Board or the Board of Directors of Acquisition.
6. Other Covenants, Representations and Warranties. Shareholder hereby
represents and warrants to, and covenants with, the Company as follows:
(a) Title to Shareholder Shares. Shareholder is the beneficial owner (as
defined in Rule 13(d)(3) promulgated under the Exchange Act, "beneficial owner")
of all the Shareholder Shares. Except as set forth in Annex 1, attached hereto,
Shareholder has sole voting power and the sole power of disposition with respect
to all of the Shareholder Shares outstanding on the date hereof, and will have
sole voting power and sole power of disposition with respect to all of the
Shareholder Shares acquired by such Shareholder after the date hereof upon the
exercise, conversion or exchange of any option, warrant or convertible security
owned or held by Shareholder as of the date hereof, with no limitations,
qualifications or restrictions on such rights. Shareholder is the sole record
holder (as reflected in the records maintained by Parent's transfer agent) of
the Shareholder Shares outstanding on the date hereof.
(b) Power; Binding Agreement. Shareholder has and will have the legal
capacity, power and authority to enter into and perform all of Shareholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by Shareholder will not violate any agreement or court order to
which Shareholder is a party or is subject, including, without limitation, any
voting agreement or voting trust. This Agreement has been duly and
Exhibit B - 3
validly executed and delivered by Shareholder and constitutes a valid and
binding agreement of Shareholder, enforceable against Shareholder in accordance
with its terms.
(c) Restriction on Transfer, Proxies and Non-Interference; Stop
Transfer. Except as expressly contemplated by this Agreement, during the term of
this Agreement, Shareholder shall not, directly or indirectly: (i) offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to, or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of the Shareholder
Shares or any interest therein; (ii) grant any proxies or powers of attorney
with respect to any Shareholder Shares which conflicts with Section 4(a) hereof
and the proxy granted herein or deposit any Shareholder Shares into a voting
trust or enter into a voting agreement with respect to any Shareholder Shares;
or (iii) take any action that would make any representation or warranty of
Shareholder contained herein untrue or incorrect or have the effect of
preventing or disabling Shareholder from performing any of Shareholder's
obligations under this Agreement. Shareholder further agrees with and covenants
to the Company that Shareholder shall not request that Parent register the
transfer of any certificate or uncertificated interest representing any of the
Shareholder Shares, unless such transfer is made in compliance with this
Agreement. Shareholder agrees that, in order to ensure compliance with the
restrictions referred to herein, Parent may issue appropriate "stop transfer"
instructions to its transfer agent.
(d) No Consents. To his, her or its knowledge, the execution and
delivery of this Agreement by Shareholder does not, and the performance by
Shareholder of his, her or its obligations hereunder will not, require
Shareholder to obtain any consent, approval, authorization or permit of, or to
make any filing with or notification to, any Governmental Entity. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which Shareholder is a trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by Shareholder of
the transactions contemplated hereby. If Shareholder is married and
Shareholder's Shares constitute community property, this Agreement has been duly
authorized, executed and delivered by, and constitutes a valid and binding
agreement of, Shareholder's spouse, enforceable against such person in
accordance with its terms.
(e) Notification of the Company. Shareholder hereby agrees, while this
Agreement is in effect, to notify the Company promptly of the number of any
additional shares of capital stock and the number and type of any other voting
securities of Parent acquired by such Shareholder, if any, after the date
hereof.
(f) Reliance by the Company. Shareholder understands and acknowledges
that the Company is entering into the Merger Agreement in reliance upon
Shareholder's execution and delivery of this Agreement.
(g) Sophistication. Shareholder acknowledges being an informed and
sophisticated investor and, together with Shareholder's advisors, has undertaken
such investigation as they have deemed necessary, including the review of the
Merger Agreement and this Agreement, to enable the Shareholder to make an
informed and intelligent decision with respect to the Merger Agreement and this
Agreement and the transactions contemplated thereby and hereby.
Exhibit B - 4
(h) Permitted Transfers. Notwithstanding Section 6(c), Shareholder
shall have the right to (A) transfer Shareholder Shares to (1) any Family
Member; (2) the trustee or trustees of a trust for the benefit of Shareholder
and/or one or more Family Members; (3) a partnership of which Shareholder and/or
Family Members owns a majority of the partnership interests; (4) a limited
liability company of which Shareholder and/or any Family Members owns a majority
of the membership interests; (5) the executor, administrator or personal
representative of the estate of Shareholder; "Family Member" means Shareholder's
spouse, father, mother, issue (if living with Shareholder), brother or sister.
Shareholder agrees that this Agreement and the obligations hereunder shall
attach to the Shareholder's Shares and shall be binding upon any Person to which
legal or beneficial ownership of such Shares shall pass, whether by operation of
law or otherwise, including without limitation, Shareholder's heirs, guardians,
administrators or successors. Notwithstanding anything to the contrary in this
Section 6(h), Shareholder acknowledges and agrees that any transfer permitted by
this Section 6(h) will not be effective until the transferee agrees in writing
to be bound by the terms of this Agreement. Notwithstanding any such transfer of
Shares, the transferor shall remain liable for the performance of all
obligations under this Agreement.
(i) No Encumbrances. Except as applicable in connection with the
transactions contemplated by Section 3 and 4 hereof, the Shareholder's Shares at
all times during the term hereof will be beneficially owned by Shareholder, free
and clear of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances whatsoever.
(j) No Conflicts. None of the execution and delivery of this Agreement
by Shareholder, the consummation by Shareholder of the transactions contemplated
hereby or compliance by the Shareholder with any of the provisions hereof (A)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Shareholder is a party or by which
Shareholder or any of his or her properties or assets may be bound, or (B)
violate any order, writ injunction, decree, judgment, order, statute, rule or
regulation applicable to Shareholder or any of his or her properties or assets.
7. Termination. The voting agreement and irrevocable proxy granted
pursuant to Sections 3 and 4 hereof shall terminate immediately upon the earlier
to occur of (a) the Termination Date and (b) the Effective Time.
8. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(b) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, and any
attempted assignment in
Exhibit B - 5
violation hereof shall be void; provided, however, that Parent may, in its sole
discretion, assign its rights and obligations hereunder to any direct or
indirect wholly-owned subsidiary of Parent.
(c) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(d) Notices. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed given if delivered personally,
sent by facsimile, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the addresses set forth below or to such other address as the party
to whom notice is to be given may have furnished to the other parties hereto in
writing in accordance herewith. Any such notice or communication shall be deemed
to have been delivered and received (i) in the case of personal delivery, on the
date of such delivery, (ii) in the case of facsimile, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier in circumstances under which such
courier guarantees next business day delivery, on the next business day after
the date when sent, and (iv) in the case of mailing, on the third business day
following that on which the piece of mail containing such communication is
posted:
if to the Company: ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
if to Shareholder, to: such address for Shareholder as set forth on
the signature page hereto
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(e) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
Exhibit B - 6
(f) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(g) Governing Law; Venue; Specific Performance; Waiver of Jury Trial.
This Agreement shall be deemed to be made in and in all respects shall be
interpreted, construed and governed by and in accordance with the laws of the
State of Delaware without regard to the conflict of law principles thereof. The
parties hereby irrevocably submit to the jurisdiction of the courts of the State
of Delaware and the Federal courts of the United States of America located in
the State of Delaware solely in respect of the interpretation and enforcement of
the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware state or federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
8(d) hereof or in such other manner as may be permitted by applicable law, shall
be valid and sufficient service thereof.
All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any such rights, powers or remedies by
any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the State of Delaware and the Federal courts
of the United States of America located in the State of Delaware, this being in
addition to any other remedy to which they are entitled at law or in equity.
Each party acknowledges and agrees that any controversy which may
arise under this Agreement is likely to involve complicated and difficult
issues, and therefore each such party hereby irrevocably and unconditionally
waives any right such party may have to a trial by jury in respect of any
litigation directly or indirectly arising out of or relating to this Agreement
or the transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has
Exhibit B - 7
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each such
party makes this waiver voluntarily, and (iv) each such party has been induced
to enter into this Agreement by, among other things, the waivers and
certifications in this Section 8(g).
(h) Counterparts. This Agreement may be executed by facsimile and in
one or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement.
(i) Further Assurances. At the request of any party to another party
or parties to this Agreement, such other party or parties shall execute and
deliver such instruments or documents to evidence or further effectuate (but not
to enlarge) the respective rights and obligations of the parties and to evidence
and effectuate any termination of this Agreement.
(j) Parent Stop Transfer Agreement. Parent hereby acknowledges the
restrictions on transfer of the Shareholder Shares contained in Section 6(c)
hereof. Parent agrees not to register the transfer (book-entry or otherwise) of
any certificate or uncertificated interest representing any Shareholder Shares,
unless such transfer is made pursuant to and in compliance with this Agreement.
Parent further agrees to instruct its transfer agent (the "Transfer Agent") not
to transfer any certificate or uncertificated interest representing any
Shareholder Shares, until (i) the Transfer Agent has received the Company's
consent to such a transfer, or (ii) this Agreement has been terminated pursuant
to Section 7 hereof.
(k) No Third Party Beneficiaries. This Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(l) Description Headings. The description headings used herein are
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(Remainder of page intentionally left blank)
Exhibit B - 8
IN WITNESS WHEREOF, the Company and Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
▇▇▇▇, ▇▇▇▇▇▇ & ASSOCIATES, INC.
By:_________________________________________
Name:
Title:
SHAREHOLDER:
____________________________________________
Name:_______________________________________
Title:______________________________________
Address:____________________________________
____________________________________________
SPOUSE OF SHAREHOLDER (IF APPLICABLE):
____________________________________________
Name:_______________________________________
Address:____________________________________
____________________________________________
ACKNOWLEDGED AND AGREED TO
(with respect to Section 8(j)):
KFORCE INC.
By:
------------------------------
Name:
Title:
Exhibit B - 9
ANNEX 1
Exhibit B - Annex 1
EXHIBIT C
CERTIFICATE OF MERGER
OF
NOVATO ACQUISITION CORPORATION
(A DELAWARE CORPORATION)
WITH AND INTO
▇▇▇▇, ▇▇▇▇▇▇ & ASSOCIATES, INC.
(A DELAWARE CORPORATION)
UNDER SECTION 251 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned corporation, ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc., hereby
certifies that:
FIRST: The names and state of incorporation of the constituent corporations
are: Novato Acquisition Corporation, a Delaware corporation (the "Disappearing
Corporation"), and ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc., a Delaware corporation (the
"Surviving Corporation").
SECOND: An agreement of merger has been approved, adopted, certified,
executed and acknowledged by the Disappearing Corporation and by the Surviving
Corporation in accordance with the provisions of Section 251 of the General
Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is ▇▇▇▇, ▇▇▇▇▇▇ & Associates,
Inc.
FOURTH: Upon the effectiveness of the merger, the certificate of
incorporation of the Disappearing Corporation, as attached to this Certificate
of Merger as Exhibit A, shall be the certificate of incorporation of the
Surviving Corporation, until duly amended as provided therein or by applicable
law, except that the first provision of the certificate of incorporation of the
Disappearing Corporation shall be amended to read: "The name of the corporation
(hereinafter called this "Corporation") is "▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc."
FIFTH: The executed agreement of merger is on file at the principal place
of business of the Surviving Corporation at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SIXTH: A copy of the agreement of merger will be furnished by the Surviving
Corporation on request and without cost, to any stockholder of the Disappearing
Corporation or the Surviving Corporation.
IN WITNESS WHEREOF, the undersigned has executed and subscribed to this
Certificate of Merger on behalf of ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc. as its
authorized officer and affirms, under penalty of perjury, that this Certificate
of Merger is the act and deed of such corporation and that the facts stated in
this Certificate of Merger are true.
DATED: February ____, 2004
▇▇▇▇, ▇▇▇▇▇▇ & ASSOCIATES, INC.,
a Delaware corporation
By: __________________________
Name: ________________________
Title: ________________________
Exhibit C - 2
EXHIBIT D
FORM OF AFFILIATE AGREEMENT
[Name]
[Address]
____________________, 2004
Kforce Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
I have been advised that, as of the date of this letter, I may be deemed to
be an "affiliate" of ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc., a Delaware corporation
(the "Company"), as the term "affiliate" is defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), although nothing contained
in this letter should be construed as an admission of such fact or as a waiver
of any rights I may have to object to any claim that I am an affiliate. I have
been further advised that, pursuant to the terms of the Agreement and Plan of
Merger dated as of December 2, 2003 (the "Merger Agreement") by and among Kforce
Inc., a Florida corporation (the "Parent"), Novato Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of the Parent ("Merger Sub"),
and the Company, Merger Sub will be merged with and into the Company (the
"Merger") and that, as a result of the Merger, I am entitled to receive shares
of Parent Common Stock (as defined in the Merger Agreement) in exchange for the
shares of common stock of the Company owned by me.
I hereby represent, warrant and covenant to the Parent that in the event I
receive any Parent Common Stock as a result of the Merger:
a. I shall not make any sale, transfer or other disposition of Parent
Common Stock in violation of the Act or the Rules and Regulations.
b. I have carefully read this letter and discussed its requirements
and other applicable limitations upon my ability to sell, transfer or
otherwise dispose of Parent Common Stock to the extent I believed necessary
with my counsel or counsel for the Company.
c. I have been advised that the issuance of Parent Common Stock to me
pursuant to the Merger will be registered with the Commission under the Act
on a Registration Statement on Form S-4. However, I have also been advised
that, since at the time the Merger will be submitted for a vote of the
stockholders of the Company, I may be deemed to have been an affiliate of
the Company, I may not sell, transfer or otherwise dispose of Parent Common
Stock issued to me in the Merger unless (i) such sale, transfer or other
disposition has been registered under the Act, (ii) such sale, transfer or
other disposition is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act, or
(iii) in the opinion of counsel reasonably acceptable to Parent, such sale,
transfer or other disposition is otherwise exempt from registration under
the Act.
d. I understand that the Parent is under no obligation to register the
sale, transfer or other disposition of Parent Common Stock by me or on my
behalf under the Act.
e. I also understand that stop transfer instructions will be given to
Parent's transfer agent with respect to shares of Parent Common Stock
issued to me and that there will be placed on the certificates for such
shares of Parent Common Stock issued to me, or any substitutions therefor,
a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
SOLD OR OTHERWISE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED DECEMBER ___, 2003 BETWEEN THE REGISTERED HOLDER
HEREOF AND KFORCE INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF KFORCE INC."
f. I also understand that unless the transfer by me of my Parent
Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, the Parent reserves the right
to put the following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
g. I agree that if I breach the representations, warranties or
covenants contained in this letter, the Parent shall be entitled to the
remedy of specific performance of this Agreement and to temporary and
permanent injunctive relief to enforce the provisions of this Agreement,
without the posting of any bond. This provision with respect to injunctive
relief shall not, however, diminish the right of the Parent to any other
remedy to which it may be entitled, at law or in equity, in addition to
injunctive relief.
It is understood and agreed that the legends set forth in paragraphs (e)
and (f) above shall be removed by delivery of substitute certificates without
such legend if the undersigned shall have delivered to the Parent a copy of a
letter from the staff of the Commission, or, if reasonably requested, an opinion
of counsel in form and substance reasonably satisfactory to Parent, to the
effect that such legend is not required for purposes of the Act.
Very truly yours,
_____________________________
Name: [_______________]
Accepted this ______ day of _____________, 2004
by KFORCE INC.
By: ___________________________________________
Name:__________________________________________
Title:_________________________________________
Exhibit D - 2
EXHIBIT E
KFORCE INC.
LOCK-UP AGREEMENT
December __, 2003
Kforce Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Pursuant to that certain Agreement and Plan of Merger dated as of the
date hereof ("Merger Agreement"), by and among ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc.
("▇▇▇▇ ▇▇▇▇▇▇"), Kforce Inc. (the "Company") and Novato Acquisition Corporation,
shares of the Company's common stock, par value $.01 per share (subject to
adjustment for stock splits, combinations and similar events, the "Shares")
shall be exchanged for common stock of ▇▇▇▇ ▇▇▇▇▇▇. In connection with the
performance of the Company's obligations under such Merger Agreement, it is a
condition precedent to its performance that the undersigned execute and deliver
this letter.
In consideration of the foregoing and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
undersigned hereby agrees and represents to you that for a 90-day period
commencing on the Closing Date (as such term is defined in the Merger
Agreement), the undersigned will not, without prior written consent of the
Company, sell or otherwise dispose of any Shares. Following the expiration of
such 90-day period, the undersigned shall not, without prior written consent of
the Company, sell or otherwise dispose of more than 40,000 Shares per trading
day for an additional period of 90 days.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-up Agreement. All authority
herein conferred or agreed to be conferred shall survive the death or incapacity
of the undersigned and any obligations of the undersigned shall be binding upon
the heirs, personal representatives, successors and permitted assigns of the
undersigned.
Executed as of the date first above written.
Very truly yours,
By:_________________________
EXHIBIT F
KFORCE INC.
LOCK-UP AGREEMENT
December __, 2003
Kforce Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Pursuant to that certain Agreement and Plan of Merger dated as of the date
hereof ("Merger Agreement"), by and among ▇▇▇▇, ▇▇▇▇▇▇ & Associates, Inc. ("▇▇▇▇
▇▇▇▇▇▇"), Kforce Inc. (the "Company") and Novato Acquisition Corporation, shares
of the Company's common stock, par value $.01 per share (subject to adjustment
for stock splits, combinations and similar events, the "Shares") shall be
exchanged for common stock of ▇▇▇▇ ▇▇▇▇▇▇. In connection with the performance of
the Company's obligations under such Merger Agreement, it is a condition
precedent to its performance that the undersigned execute and deliver this
letter.
In consideration of the foregoing and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
undersigned hereby agrees and represents to you that for a 180-day period
commencing on the Closing Date (as such term is defined in the Merger
Agreement), the undersigned will not, without prior written consent of the
Company, sell or otherwise dispose of more than 40,000 Shares per trading day
during such 180-day period.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-up Agreement. All authority
herein conferred or agreed to be conferred shall survive the death or incapacity
of the undersigned and any obligations of the undersigned shall be binding upon
the heirs, personal representatives, successors and permitted assigns of the
undersigned.
Executed as of the date first above written.
Very truly yours,
By:___________________________________
EXHIBIT G
Employees and officers of the Company and Parent with "knowledge"
Employees and Officers of the Company
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Employees and Officers of the Company
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ANNEX A
Stockholders of the Company that executed Voting Agreements
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ANNEX B
Shareholders of Parent that executed Voting Agreements
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