STOCK & NOTE PURCHASE AGREEMENT by and between KOOSHAREM CORPORATION as Purchaser, and DELSTAFF, LLC as Seller Dated as of January 28, 2009
Exhibit
99.3
STOCK
& NOTE PURCHASE AGREEMENT
by
and between
KOOSHAREM
CORPORATION
as
Purchaser,
and
DELSTAFF,
LLC
as
Seller
Dated
as of January 28, 2009
STOCK & NOTE PURCHASE
AGREEMENT
THIS
STOCK & NOTE PURCHASE AGREEMENT (“Agreement”), dated as of the 28th day of January, 2009, by and
between KOOSHAREM
CORPORATION, a California
corporation (“Purchaser”) and DELSTAFF, LLC, a Delaware limited
liability company (“Seller”). For purposes of this
Agreement, capitalized terms used and not defined herein shall have the
respective meanings ascribed to them in the Agreement and Plan of Merger, dated
as of the date hereof (the “Merger
Agreement”), by and among
Seller, Select Merger Sub Inc., a Delaware corporation and a wholly-owned
subsidiary of Purchaser (“Merger
Sub”), and Westaff, Inc., a
Delaware corporation (the “Company”).
W I T N E S S E T H:
WHEREAS,
Seller is the record owner of and “beneficially owns” (as such term is
defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) and is entitled to dispose of (or to direct the disposition of) and to
vote (or to direct the voting of) an aggregate of eight million two
hundred sixty two thousand six hundred ninety-six (8,262,696) shares of common
stock (the “Common
Stock”), par value $.01 per share, of the Company (such shares of Common
Stock, together with all other shares of capital stock of the Company acquired
by the Seller after the date hereof and during the term of this Agreement, being
collectively referred to herein as the “Shares”);
WHEREAS,
Seller is the owner of subordinated notes in the aggregate principal amount of
up to $3,000,000 along with accrued interest thereon and the indebtedness evidenced
thereby (the “Subordinated Notes”)
issued under the Subordinated Loan Agreement, dated as of August 25, 2008,
by and among the Company, WUSA, Westaff Support, Inc. and MediaWorld
International, as borrowers, and Seller, as subordinated lender (the “Subordinated Loan
Agreement”);
WHEREAS, concurrently with the
execution and delivery of this Agreement, Purchaser, Merger Sub and the Company
have entered into the Merger Agreement providing for the merger of Merger Sub
with and into the Company, with the Company continuing as the surviving
corporation in the Merger (the “Merger”), all upon
the terms and subject to the conditions set forth therein;
WHEREAS, as a condition to
entering into the Merger Agreement, Purchaser and Merger Sub have required that
Seller enter into this Agreement, and Seller desires to enter into this
Agreement to induce Purchaser and Merger Sub to enter into the Merger
Agreement;
WHEREAS,
Seller desires to sell to
Purchaser, and Purchaser desires to purchase from Seller, the Shares and the
Subordinated Notes and the indebtedness evidenced thereby;
and
WHEREAS, the Board of Directors of the
Company, and any special committee thereof formed in connection with the
transactions contemplated hereby, has taken all actions necessary and within its
authority such that no restrictive provision of any "fair price," "moratorium,"
"control share acquisition," "business combination," "Stockholder protection,"
"interested stockholder" or other similar anti-takeover statute or regulation,
including, without limitation, Section 203 of the General Corporation Law
of the State of Delaware, or any restrictive
provision of the Certificate of
Incorporation or By-Laws of the Company is, or at the Effective Time will be,
applicable to the Company, Purchaser, Merger Sub, the Common Stock, the Merger
or any other transaction contemplated by this Agreement or the Merger
Agreement.
NOW, THEREFORE, in consideration of the
foregoing and the mutual promises, representations, warranties, covenants and
agreements set forth herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
Section
1 Purchase and Sale of Shares
and Subordinated Notes;
Closing.
1.1 Purchase and Sale of
Shares. Upon
the terms and subject to the conditions of this Agreement, at the Closing,
Purchaser shall purchase, acquire and accept from Seller, and Seller shall sell,
convey, assign, transfer and deliver to Purchaser, all right, title and interest
in and to the Shares and Subordinated Notes as follows, free and clear of any
and all liens, security interests, pledges, claims, charges, restrictions,
covenants, conditions or encumbrances of any nature whatsoever (“Liens”).
1.2 Conveyance. Such
sale, conveyance, assignment, transfer and delivery shall be effected by
delivery to Purchaser or, at Purchaser’s request, to any other designee of
Purchaser, of (i) stock certificates representing the Shares, duly endorsed or
accompanied by stock powers duly executed in blank with appropriate transfer
stamps, if any, affixed, and any other documents that are necessary to transfer
title to the Shares to Purchaser (or any designee of Purchaser) and (ii) the
Subordinated Notes, along with duly executed instruments of assignment with
respect thereto necessary to transfer title to the Subordinated Notes to
Purchaser and the Subordinated Loan Agreement, free and clear of any and all
Liens.
1.3 Consideration. Upon
the terms and subject to the conditions of this Agreement, in consideration
of:
(i)
the sale of the Shares to Purchaser and the other agreements of Seller contained
herein, Purchaser shall deliver, or cause to be delivered, as full payment and
consideration for the sale of the Shares and in consideration of the other
agreements and covenants of Seller contained herein, at the Closing, to Seller
first lien term loan debt issued by Purchaser pursuant to the Purchaser Credit
Facility (as defined below) bearing a face amount of $40,000,000 (the “Share
Consideration”); and
(ii)
the sale of the Subordinated Notes to Purchaser, Purchaser shall deliver, or
cause to be delivered, as full payment and consideration for the sale of the
Subordinated Notes and in consideration of the other agreements and covenants of
Seller contained herein, at the Closing, to Seller first lien term loan debt
issued by Purchaser pursuant to the Purchaser Credit Facility (as defined below)
bearing a face amount equal to the actual principal amount of the Subordinated
Notes outstanding prior to Closing and not repaid, without regard to any accrued
interest, whether or not added to principal, with such maximum face amount not
to exceed $3,000,000 (the “Note Consideration”
and collectively with the Share Consideration, the “Consideration”).
1.4 Purchaser Credit
Facility. Pursuant
to Section 2.25 of that certain First Lien Credit and Guaranty Agreement,
dated as of July 12, 2007, among Purchaser, certain
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subsidiaries
of Purchaser as guarantors (the “Select Guarantors”),
the various lenders named therein, Bank of the West, as Administrative Agent,
Collateral Agent, Documentation Agent, Co-Lead Arranger and Co-Bookrunner, and
BNP Paribas Securities Corp., as Co-Lead Arranger and Co-Bookrunner (the “Purchaser Credit
Facility”), prior to the Closing Date, Purchaser shall issue additional
borrowings under the Term Loan Commitments (as defined in the Purchaser Credit
Facility) by an amount equal to the Consideration for Purchaser to purchase, in
a Permitted Acquisition (as defined in the Purchaser Credit Facility), the
Shares and the Subordinated Notes. Once all conditions to
consummation of the transactions contemplated in this Agreement, shall have been
satisfied or, to the extent permitted by applicable law, waived, Seller agrees
to execute and deliver to the Administrative Agent under the Purchaser Credit
Facility a Joinder Agreement in substantially the form attached as
Exhibit A hereto and all other documentation reasonably requested by
Purchaser and Administrative Agent in connection with Seller becoming a Lender
(as defined in the Purchaser Credit Facility) under the Purchaser Credit
Facility, and to join, no later than the Closing Date, the Purchaser Credit
Facility as a Lender (as defined in the Purchaser Credit Facility) and to make a
Term Loan to Purchaser in the amount of the Consideration. Seller’s
Term Loan to Purchaser pursuant to the Purchaser Credit Facility shall be used
to pay the Consideration, and Purchaser shall issue to Seller, pursuant to the
Purchaser Credit Facility, promissory note(s) evidencing Seller’s Term Loan to
Purchaser (the “Purchaser
Note(s)”). The Purchaser Note(s) shall be substantially in the
form of Exhibit B hereto
and shall be guaranteed by the Select Guarantors in accordance with the
Purchaser Credit Facility.
1.5 Time and Place of
Closing. Unless
otherwise mutually agreed upon in writing by Purchaser and Seller, the closing
of the transactions contemplated by this Agreement (the “Closing”) will be
held at such location as the parties shall mutually agree, at 10:00 a.m., local
time, on the date that all of the conditions precedent specified in Sections 6
and 7 (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to the fulfillment or waiver of those conditions) have
been satisfied or, to the extent permitted by applicable law, waived by the
party or parties permitted to do so (such date being referred to hereinafter as
the “Closing
Date”).
1.6 Closing Deliveries by
Seller. At
the Closing, Seller shall deliver or cause to be delivered to Purchaser or, at
Purchaser’s request, to any designee of Purchaser (unless delivered previously),
the following:
(a) stock
certificates representing the Shares referred to in, and delivered in accordance
with, Section 1.2;
(b) a
release in the form of Exhibit C
hereto, duly executed by Seller (the “Seller’s
Release”);
(c) a
duly executed Joinder Agreement in substantially the form attached as Exhibit A hereto
and all other documentation reasonably requested by Purchaser and Administrative
Agent in connection with Seller becoming a Lender;
(d) The
Subordinated Notes and the Subordinated Loan Agreement;
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(e) the
compliance certificate referred to in Section 6.4;
(f) duly
executed counterparts of the consents, waivers and approvals referred to in
Section 6.6;
(g) duly
executed affidavit from Seller attesting that Seller is not a “foreign person”
for purposes of Section 1445 of the Code;
(h) payoff
and/or termination letters from U.S Bank and the lenders party to the Financing
Agreement providing for the termination of the Financing Agreement and the
complete discharge and settlement of any amounts outstanding thereon or letters
of credit issued thereby; and
(i) all other
documents, certificates, instruments or writings required to be delivered by
Seller at or prior to the Closing pursuant to this Agreement or otherwise
required in connection with the consummation of the transactions contemplated by
this Agreement.
1.7 Deliveries by
Purchaser. At
the Closing, Purchaser shall deliver or cause to be delivered to Seller (unless
delivered previously) the following:
(a) Consideration
in the form of the Purchaser Note(s);
(b) the
compliance certificate referred to in Section 7.8; and
(c) all other
documents, certificates, instruments or writings required to be delivered by
Purchaser at or prior to the Closing pursuant to this Agreement or otherwise
required in connection with the consummation of the transactions contemplated by
this Agreement.
1.8 Adjustments. If,
at any time during the period between the date of this Agreement and the
Closing, a change in the outstanding shares of capital stock of the Company
shall occur by reason of any reclassification, recapitalization, stock split or
combination, reverse stock split, exchange, stock dividend or readjustment of
shares, the number of shares of Common Stock subject to this Agreement and the
consideration to be paid pursuant to this Agreement shall be adjusted
appropriately.
1.9 Designation of an Affiliate
to Purchase Shares and Subordinated Notes.
Purchaser shall have the right, upon delivery of written notice to Seller within
at least ten (10) Business Days prior to the Closing, to designate an
affiliate of Purchaser to acquire the Shares and the Subordinated Notes,
provided, however, that any such designation shall not relieve Purchaser of any
of its agreements, covenants and obligations under this Agreement.
Section
2 Representations and
Warranties of Seller. In
connection with the purchase and sale of the Shares and Subordinated Notes
referred to in Section 1 hereof and the execution and performance of this
Agreement, except as set forth on the Seller Disclosure
Schedule, Seller represents and warrants to Purchaser as
follows:
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2.1 Seller
is the record and beneficial owner of all right, title and interest in and to
all of the Shares and Subordinated Notes and has good and transferable title
thereto, free and clear of all Liens, obligations, charges, options, preemptive
rights, subscription rights, warrants, and calls of every kind.
2.2 Seller
has the full right, power, and authority to sell and deliver the Shares and
Subordinated Notes in accordance with this Agreement.
2.3 The
delivery of the Shares and Subordinated Notes delivered pursuant to
Section 1 hereof will transfer valid title thereto, free and clear of all
Liens, obligations, charges, options, preemptive rights, subscription rights,
warrants, and calls of every kind.
2.4 The
execution, delivery, and performance of this Agreement, the consummation of the
transactions contemplated hereby, and the compliance with or fulfillment of the
terms and provisions of this Agreement or of any other agreement or instrument
contemplated by this Agreement, do not and will not (i) contravene any law,
rule or regulation of any state or of the United States; (ii) contravene
any order, writ, award, judgment, decree or other determination that affects or
binds Seller, or any of its properties or, to the actual knowledge of Seller,
the Company or any of its properties; (iii) conflict with, result in a
breach of, constitute a default under, or give rise to a right of termination
under any contract, agreement, note, deed of trust, mortgage, trust, lease,
governmental or other license, permit or other authorization, or any other
instrument or restriction to which Seller, or to the actual knowledge of Seller,
the Company, is a party; or (iv) require Seller to obtain the approval,
consent or authorization of, or to make any declaration, filing (other than
filings required by the rules or regulations of the U.S. Securities and Exchange
Commission) or registration with, any third party or any foreign, federal,
state, county or local court, governmental authority or regulatory body that has
not been obtained in writing prior to the date of this Agreement.
2.5 Seller
is not subject to any order, writ, award, judgment, decree, or determination, is
not a party to or bound by any contract, agreement, note, deed of trust,
mortgage, trust, lease, governmental or other license, permit or other
authorization or other instrument or restriction that could conflict with,
impair, impose restrictions or otherwise prevent or delay the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated by this Agreement.
2.6 This
Agreement is the legal, valid and binding agreement of Seller and is enforceable
in accordance with its terms, subject to (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other laws or equitable
principles relating to or affecting the enforcement of creditors’ rights
generally, and (ii) the effect of general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether considered in a proceeding in equity or at
law).
2.7 Seller
has made an independent decision to sell the Shares and Subordinated Notes based
on the information available to it and that it has determined is adequate for
that purpose, Seller has had the opportunity to review all information which it
deems relevant to its decision to sell the Shares and the Subordinated Notes,
and Seller has not relied on any information (in any form, whether written or
oral) furnished by or on behalf of Purchaser or the Company, except for the
representations and warranties given by Purchaser under this Agreement, in
making that decision.
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2.8 Neither
Purchaser, nor the Company has given any investment advice or rendered any
opinion to Seller as to whether the sale of the Shares and Subordinated Notes is
prudent or suitable, and Seller is not relying on any representation or warranty
other than those made by Purchaser expressly in this Agreement.
2.9 Seller
is a sophisticated investor with respect to the Purchaser Notes and has adequate
information concerning the Purchaser Notes. Seller believes, by
reason of its business and financial experience, that it is capable of
evaluating the merits and risks of the transactions contemplated by this
Agreement and of protecting its own interest in connection with the transactions
contemplated by this Agreement. Seller has had the opportunity to
have legal counsel review and advise it with respect to the terms of this
Agreement.
2.10 Seller
represents that it has adequate information concerning the business and
financial condition of the Company and its affiliates to make an informed
decision regarding the sale of the Shares and Subordinated Notes pursuant hereto
and has independently and without reliance upon Purchaser, except for the
representations and warranties given by Purchaser under this Agreement, made its
own analysis and decision to sell the Shares and Subordinated Notes pursuant
hereto. Seller acknowledges that the sale of the Shares and
Subordinated Notes is the result of independent arm’s-length negotiations
between Seller and Purchaser.
2.11 Seller
understands and acknowledges that Purchaser is entering into the Merger
Agreement in reliance upon Seller’s execution and delivery of this
Agreement.
Section
3 Representations and
Warranties of Purchaser. In
connection with the purchase and sale of the Shares referred to in
Section 1 hereof and the execution and performance of this Agreement,
except as set forth on the Purchaser Disclosure
Schedule attached hereto, Purchaser represents and warrants to Seller as
follows:
3.1 Purchaser
has the full right, capacity, power and authority to execute and deliver this
Agreement, to consummate the transactions contemplated by this Agreement, and to
comply with the terms, conditions and provisions of this Agreement.
3.2 The
execution, delivery, and performance of this Agreement, the consummation of the
transactions contemplated hereby and the compliance with or fulfillment of the
terms and provisions of this Agreement or of any other agreement or instrument
contemplated by this Agreement, do not and will not (i) contravene any law,
rule or regulation of any state or of the United States; (ii) contravene
any order, writ, award, judgment, decree or other determination that affects or
binds Purchaser or any of its properties; (iii) conflict with, result in a
breach of, constitute a default under, or give rise to a right of termination
under any contract, agreement, note, deed of trust, mortgage, trust, lease,
governmental or other license, permit or other authorization or any other
instrument or restriction to which Purchaser is a party or by which any of its
properties may be affected or bound; or (iv) require Purchaser to obtain
the approval, consent or authorization of, or to make any declaration, filing
(other than filings required by the rules or regulations of the U.S. Securities
and Exchange Commission) or
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registration
with, any third party or any foreign, federal, state, county or local court,
governmental authority or regulatory body that has not been obtained in writing
prior to the date of this Agreement.
3.3 Purchaser
is not subject to any order, writ, award, judgment, decree or determination nor
a party to nor bound by any deed of trust, mortgage, trust, lease, governmental
or other license, permit or other authorization, contract, agreement, note or
other instrument or restriction that could conflict with or prevent the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
3.4 This
Agreement is the legal, valid and binding agreement of Purchaser and is
enforceable in accordance with its terms, subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other laws or
equitable principles relating to or affecting the enforcement of creditors’
rights generally and, (ii) the effect of general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law).
3.5 Purchaser
has made an independent decision to issue the Purchaser Notes based on the
information available to it and that it has determined is adequate for that
purpose, Purchaser has had the opportunity to review all information which it
deems relevant to its decision to issue the Purchaser Notes, and Purchaser has
not relied on any information (in any form, whether written or oral) furnished
by or on behalf of Seller or the Company, except for the representations and
warranties given by Seller under this Agreement, in making that
decision.
3.6 Neither
Seller, nor the Company has given any investment advice or rendered any opinion
to Purchaser as to whether the sale of the Shares and the Subordinated Notes is
prudent or suitable, and Purchaser is not relying on any representation or
warranty other than those made by Seller expressly in this
Agreement.
3.7 Purchaser
is a sophisticated investor with respect to the Shares and Subordinated Notes
and has adequate information concerning the Shares and Subordinated
Notes. Purchaser believes, by reason of its business and financial
experience, that it is capable of evaluating the merits and risks of the sale
and of protecting its own interest in connection with the transactions
contemplated by this Agreement. Purchaser has had the opportunity to
have legal counsel review and advise it with respect to the terms of this
Agreement.
3.8 Purchaser
represents that it has adequate information concerning the business and
financial condition of the Company and its affiliates to make an informed
decision regarding the issuance of the Purchaser Notes in exchange for the
Shares and Subordinated Notes pursuant hereto and has independently and without
reliance upon Seller, except for the representations and warranties given by
Seller under this Agreement made its own analysis and decision with respect to
the issuance of the Purchaser Notes in exchange for the Shares and Subordinated
Notes pursuant hereto. Purchaser acknowledges that the issuance of
the Purchaser Notes in exchange for the Shares and the Subordinated Notes is the
result of independent arm’s-length negotiations between Seller and
Purchaser.
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3.9 Purchaser
has delivered to Seller a true, accurate and complete copy of the Purchaser
Credit Facility as well as all amendments, modifications, waivers, forbearances
and related documentation in connection therewith.
3.10 As
of the Effective Time, after giving effect to all of the transactions
contemplated by this Agreement and the Merger Agreement, including without
limitation the Financing, any alternative financing and the payment of the
aggregate Merger Consideration, any repayment or refinancing of debt
contemplated in this Agreement or the Commitment Letter, and payment of all
related fees and expenses, and assuming for these purposes that, as of the
Effective Time, the representations set forth in Article III of the Merger
Agreement shall be true and correct in all material respects, to the knowledge
of Parent, each of Parent and the Surviving Corporation are Solvent (as such
term is defined in the Merger Agreement).
3.11 Purchaser
hereby makes to Seller all of the representations and warranties that it made
under the Purchaser Credit Facility to the lenders party thereto, as if such
representations and warranties were set forth herein; provided that with
respect to the representations and warranties given by Purchaser to Seller with
respect to financial statements pursuant to Section 4.7 of the Purchaser Credit
Facility, such financial statements shall refer to Purchaser’s financial
statements included in Section 1 of the Confidential Letter delivered to Seller
on or before the date hereof.
3.12 As
of December 31, 2008, Purchaser is not in default under the Purchaser Credit
Facility.
Section
4 Covenants. Until the
termination of this Agreement in accordance with Section 11, Seller, in its
capacity as a stockholder of the Company, and Purchaser, respectively, agree as
follows:
4.1 At
the Company Stockholders’ Meeting or at any adjournment, postponement or
continuation thereof or in any other circumstance occurring prior to the Company
Stockholders’ Meeting upon which a stockholder vote or other stockholder
approval with respect to the Merger and the Merger Agreement is sought, Seller
shall vote (or cause to be voted) the Shares beneficially owned by it
(i) in favor of the approval of the Merger and the approval and adoption of
the Merger Agreement; and (ii) against any Company Alternative Proposal or
any action which could frustrate the consummation of the transactions
contemplated hereby or by the Merger Agreement. Any such vote shall
be cast in accordance with such procedures relating thereto so as to ensure that
it is duly counted for purposes of determining that a quorum is present and for
purposes of recording the results of such vote. Seller agrees not to
enter into any agreement or commitment with any Person the effect of which would
be inconsistent with or violative of the provisions and agreements contained in
this Section 4.1. During the term of this Agreement, and
notwithstanding anything to the contrary contained herein, in the event, and for
so long as, there exists a Company Change of Recommendation with respect to a
Company Superior Proposal, the provisions of this Section 4.1(i) shall only
apply to 6,100,000 Shares and Seller shall be entitled to vote the balance of
the Shares as it deems fit.
4.2 Seller
agrees not to, directly or indirectly, (i) sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of (collectively, a “Transfer”) or enter
into any
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agreement,
option or other arrangement with respect to, or consent to a Transfer of, or
reduce its risk in a Constructive Sale (as defined below) with respect to, any
or all of the Shares, other than in accordance with the Merger Agreement, or
(ii) grant any proxies (other than the Company proxy card in connection
with the Company Stockholders’ Meeting if and to the extent such proxy is
consistent with such Stockholder’s obligations under Section 4.1 hereof),
deposit any Shares into any voting trust or enter into any voting arrangement,
whether by proxy, voting agreement or otherwise, with respect to any of the
Shares, other than pursuant to this Agreement or in a manner consistent with
Seller’s obligations under Section 4.1 hereof. Seller further
agrees not to commit or agree to take any of the foregoing actions or take any
action that would reasonably be expected to have the effect of preventing,
impeding, interfering with or adversely affecting its ability to perform its
obligations under this Agreement. As used herein, the term
“Constructive Sale” shall mean a short sale with respect to any Shares, entering
into or acquiring an offsetting derivative contract with respect to any Shares,
entering into or acquiring a futures or forward contract to deliver any Shares
or entering into any other or other derivative transaction that has the effect
of materially changing the economic benefits and risks of
ownership.
4.3 Seller
shall not, nor shall Seller act in concert with any Person to make, or in any
manner participate in, directly or indirectly, a “solicitation” (as such term is
used in the rules of the Securities and Exchange Commission) of proxies or
powers of attorney or similar rights to vote shares of voting stock of the
Company.
4.4 Seller
shall take, or cause to be taken, all commercially reasonable actions and to do,
or cause to be done, all commercially reasonable things necessary, proper or
advisable in order to remain in compliance with the terms and conditions of and
continue in full force and effect the Subordinated Loan Agreement and any
extension or amendment thereof.
4.5 Seller
shall terminate its rights under the Governance Agreement, dated as of
April 30, 2007, by and among the Company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and W. ▇▇▇▇▇▇
▇▇▇▇▇▇, as amended by Amendment No. 1, dated as of June 2007, and Amendment
No. 2, dated as of January 2008, both amendments by and among the Company
and Seller (the “Governance
Agreement”).
4.6 Subject
to the terms of this Agreement, each party shall use commercially reasonable
efforts to take all actions and do all things necessary, proper or advisable in
order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the conditions set forth
in Sections 6 and 7), and the Merger Agreement (understanding that the
transactions contemplated thereby, including the Merger, will not be consummated
until after the Closing contemplated by Section 1.5 of this
Agreement).
4.7 Purchaser
and its Subsidiaries shall not take any actions which would reasonably be
expected to materially impact Purchaser’s ability to consummate the transactions
contemplated hereby or by the Merger Agreement.
4.8 Each
party shall give prompt written notice to all other parties to this Agreement
and the Merger Agreement, if such party reasonably believes that (i) any
condition to Closing set forth in Section 6 of this Agreement is unlikely to be
satisfied, or (ii) any condition to Closing set forth in Article VI of the
Merger Agreement is unlikely to be satisfied.
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4.9 During
the period between the date of this Agreement and the Closing, Purchaser shall
deliver to Seller copies of Purchaser’s financial statements that are required
to be provided pursuant to the Purchaser Credit Facility at the times required
thereunder. These financial statements shall include income
statements and balance sheets and shall be in a form as prepared by Purchaser in
the usual and ordinary course of its business consistent with past
practice.
4.10 Purchaser
shall deliver a release in the form of Exhibit D hereto (the “DelStaff Release”),
duly executed by the parties thereto, promptly following the
Closing.
Section
5 Stockholder
Capacity. No
Person executing this Agreement, nor any officer, director, partner, employee,
agent or representative of such Person, who is or becomes during the term of
this Agreement a director or officer of the Company shall be deemed to make any
agreement or understanding in this Agreement in such Person’s capacity as a
director or officer. Seller is entering into this Agreement solely in
his or her capacity as the record or beneficial owner of, or the trustee of a
trust whose beneficiaries are the beneficial owners of the Shares and nothing
herein shall limit or affect any actions taken by Seller or any officer,
director, partner, employee, agent or representative of Seller, in his or her
capacity as a director or officer of the Company.
Section
6 Conditions of Purchaser’s
Obligation to Close. The
obligation of Purchaser to consummate the transactions contemplated hereby is
subject to the fulfillment to the reasonable satisfaction of Purchaser (any or
all of which may be waived, to the extent permitted by applicable law, in whole
or in part by Purchaser) at or prior to the Closing of each of the following
conditions:
6.1 Performance of Acts and
Covenants of Seller. Seller
shall have performed or complied in all material respects with all agreements,
obligations, covenants and conditions required by this Agreement to be performed
or complied with by Seller at or prior to the Closing.
6.2 Merger
Agreement. All
of the conditions to closing set forth in Article VI of the Merger
Agreement (other than Section 6.2(c) of the Merger Agreement with respect
to the consummation of the transactions contemplated hereby) shall have been
satisfied, or waived.
6.3 Representations and
Warranties of Seller. The
representations and warranties of Seller contained in this Agreement that are
qualified as to materiality shall be true, complete and correct in all respects,
and those that are not so qualified shall be true, complete and correct in all
material respects, as of the date hereof and at and as of the Closing Date with
the same force and effect as if made at and as of the Closing Date (unless such
representations and warranties by their terms speak as of a specific date, in
which case as of such date).
6.4 Compliance
Certificate. Seller
shall have delivered to Purchaser a certificate, duly executed by Seller and
dated as of the Closing Date, certifying the fulfillment of the conditions
specified in Sections 6.1 and 6.3.
6.5 No
Injunction. On
the Closing Date, there shall not be in effect any judgment, order, injunction
or decree issued by a court of competent jurisdiction restraining or prohibiting
consummation of the transactions contemplated by this Agreement or the Merger
Agreement.
- 10 -
6.6 Consents. Purchaser
and Seller shall have received, each in form and substance reasonably
satisfactory to Purchaser, all consents required in connection with the
transactions contemplated hereby.
6.7 Suits, Actions and
Proceedings. There
shall not exist any pending action, suit, investigation or proceeding brought by
any Governmental Entity that could reasonably be expected to enjoin, restrain or
prohibit (or that enjoins, restrains or prohibits) the Merger or the other
transactions contemplated hereby, or that has had or would reasonably be
expected to have a Material Adverse Effect on the Company.
6.8 No Claim Regarding Stock
Ownership or Sale Proceeds. There
must not have been made or threatened by any Person any written credible claim
asserting that such Person (a) is the holder or the beneficial owner of, or
has the right to acquire or to obtain beneficial ownership of, or any other
voting, equity, or ownership interest in, the Shares or (b) is entitled to
all or any portion of the Consideration.
6.9 Seller’s
Release.
Purchaser shall have received from Seller the Seller’s Release, duly executed by
Seller, in the form of Exhibit A.
6.10 Governance
Agreement. The
Governance Agreement shall have been terminated in all respects, copies of
evidence that such agreement has been terminated and are of no further force or
effect.
6.11 Purchaser Credit
Facility. The consummation of the transactions contemplated in
the Merger Agreement and this Agreement shall not cause Purchaser to be in
default of, or breach, its leverage covenants under the Purchaser Credit
Facility on a pro forma basis.
6.12 Other
Deliveries. Purchaser
shall have received from Seller all of the documents, certificates, instruments
or writings required to be delivered by Seller pursuant to
Section 1.6.
Section
7 Conditions of Seller’s
Obligation to Close. The
obligation of Seller to consummate the transactions contemplated hereby is
subject to the fulfillment to the reasonable satisfaction of Seller (any or all
of which may be waived, to the extent permitted by applicable law, in whole or
in part by Seller) at or prior to the Closing of each of the following
conditions:
7.1 Performance of Acts or
Covenants of Purchaser. Purchaser
shall have performed or complied in all material respects with all agreements,
obligations, covenants and conditions required by this Agreement to be performed
or complied with by it at or prior to the Closing.
7.2 Representations and
Warranties of Purchaser. The
representations and warranties of Purchaser contained in this Agreement that are
qualified by materiality shall be true, complete and correct in all respects,
and those that are not so qualified shall be true,
- 11 -
complete
and correct in all material respects, as of the date hereof and at and as of the
Closing Date with the same force and effect as if made at and as of the Closing
Date (unless such representations and warranties by their terms speak as of a
specific date, in which case as of such date).
7.3 Merger
Agreement. All
of the conditions to closing set forth in Article VI of the Merger
Agreement (other than Section 6.2(c) of the Merger Agreement with respect
to the consummation of the transactions contemplated hereby) shall have been
satisfied, or waived.
7.4 No
Injunction. On
the Closing Date, there shall not be in effect any judgment, order, injunction
or decree issued by a court of competent jurisdiction restraining or prohibiting
consummation of the transactions contemplated by this Agreement or the Merger
Agreement.
7.5 Suits, Actions and
Proceedings. There
shall not exist any pending action, suit, investigation or proceeding brought by
any Governmental Entity that could reasonably be expected to enjoin, restrain or
prohibit (or that enjoins, restrains or prohibits) the Merger or the other
transactions contemplated hereby, or that has had or would reasonably be
expected to have a Material Adverse Effect on Purchaser.
7.6 Consents. Purchaser
and Seller shall have received, each in form and substance reasonably
satisfactory to Seller, all consents required in connection with the
transactions contemplated hereby.
7.8 Compliance
Certificate. Purchaser
shall have delivered to Seller a certificate, duly executed by a senior officer
of Purchaser and dated as of the Closing Date, certifying the fulfillment of the
conditions specified in Sections 7.1 and 7.2.
7.9 Other
Deliveries. Seller
shall have received from Purchaser all of the documents, certificates,
instruments or writings required to be delivered by it pursuant to
Section 1.7.
Section
8 Appraisal
Rights. To
the extent permitted by applicable law, Seller hereby waives any rights of
appraisal or rights to dissent from the Merger that it may have under applicable
law.
Section
9 Indemnification. The
parties agree to indemnify one another as follows:
9.1 Seller agrees to indemnify, defend and
hold harmless Purchaser and its affiliates and controlling persons, and
its and their respective directors, officers, employees and agents
(collectively, the “Purchaser Indemnified
Group”), at any time after the Closing Date, from and against all
demands, claims, actions, causes of action, assessments, losses, damages,
deficiencies, liabilities (including strict liability), costs and expenses of
investigation, including, without limitation, interest, penalties and reasonable
attorney’s fees and expenses and consultants’ fees (collectively, “Damages”) asserted
against, resulting to, imposed upon, or incurred by any member of the Purchaser
Indemnified Group, directly or indirectly, by reason of or resulting from a
breach of any representation, warranty, covenant, or agreement of the Seller
contained in or made pursuant to this Agreement.
- 12 -
9.2 Purchaser agrees to indemnify, defend
and hold harmless Seller and its affiliates and controlling persons, and
its and their respective directors, officers, employees and agents
(collectively, the “Seller Indemnified
Group”), at any time after the Closing Date, from and against all Damages
asserted against, resulting to, imposed upon, or incurred by any member of the
Seller Indemnified Group, directly or indirectly, by reason of or resulting from
a breach of any representation, warranty, covenant, or agreement of Purchaser
contained in or made pursuant to this Agreement.
9.3 The
amount of Damages for which any party is responsible under this Agreement shall
be limited to $2,000,000 and, in the case of indemnification by Seller to
Purchaser, shall first be satisfied by offset against the Purchaser
Notes.
Section
10 Survival of Representations,
Warranties, Covenants and Agreements. All
representations, warranties, covenants, and agreements made in this Agreement
shall survive the execution of this Agreement, the closing of the transactions
contemplated hereby, and the delivery of the certificates or other evidence of
the Shares and Subordinated Notes sold hereunder for a period of eighteen (18)
months after the Closing; provided, however, that the
representations and warranties set forth in Section 3.10 shall terminate upon
the Closing Date.
Section
11 Termination.
This Agreement shall terminate upon the termination of the Merger Agreement in
accordance with its terms. No party hereto shall be relieved from any
liability for intentional breach of this Agreement by reason of any such
termination.
Section
12 Publication. Seller hereby
authorizes Purchaser and the Company to publish and disclose in the Proxy
Statement (including any and all documents and schedules filed with the
Securities and Exchange Commission relating thereto) its identity and ownership
of Shares and the nature of its commitments, arrangements and understandings
pursuant to this Agreement.
Section
13 Entire
Agreement. This
Agreement and the Merger Agreement sets forth the entire agreement between the
parties hereto with respect to the voting, purchase and sale of the Shares
contemplated herein and supersedes all prior written or oral agreements or
understandings between the parties hereto relating to the subject matter
hereof.
Section
14 Benefit. This
Agreement shall be binding upon and inure to the benefit of the respective legal
representatives, heirs, successors and assigns of the parties. This
Agreement may not be assigned by Purchaser or Seller.
Section
15 Notices. All notices and
other communications given or made pursuant hereto shall be in writing and shall
be deemed to have been duly given or made (i) as of the date delivered or
sent by facsimile or email if delivered personally or on the date of
confirmation of receipt of transmission if sent by facsimile and (ii) on
the fifth business day after deposit in the U.S. mail, if mailed by registered
or certified mail (postage prepaid, return receipt requested), in each case to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice, except that notices of changes of address
shall be effective upon receipt):
- 13 -
| (a) | if to Purchaser, to: | |
|
Koosharem
Corporation
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: D.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇ (not official notice)
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(not official notice)
|
||
| and | ||
|
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇ (not official notice)
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(not official notice)
with a copy, which
shall not serve as a notice, to:
Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
|
||
| (b) | if to Seller, to: | |
| DelStaff, LLC
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ – ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇ (not official notice)
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
(not official notice)
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇ (not official notice)
|
||
| Laminar
Direct Capital, L.L.C.
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(not official notice)
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
(not official notice)
|
||
- 14
-
|
with a copy, which
shall not serve as a notice, to:
|
||
| H.I.G.
Capital, LLC
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
Telephone:
(▇▇▇)
▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
||
| ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
E.
▇▇▇▇ ▇▇▇▇▇
Telephone:
(▇▇▇)▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
|
||
| ▇▇▇▇▇
& ▇▇▇ ▇▇▇▇▇ PLLC
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇
▇. Chinundet
Telephone:
(▇▇▇)
▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
|
Section
16 Paragraph
Headings. The
headings of paragraphs contained in this Agreement are provided for convenience
only. They form no part of this Agreement and shall not affect its
construction or interpretation. All references to paragraphs in this
Agreement refer to the corresponding paragraphs of this Agreement.
Section
17 Amendment. Neither
this Agreement nor any terms or provisions hereof may be changed, waived,
discharged or terminated orally, or in any manner other than by an instrument in
writing signed by the party against whom the enforcement of the change, waiver,
discharge or termination is sought.
Section
18 Counterparts. This Agreement may
be executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which shall constitute one and the same
agreement.
Section
19 Further
Assurances. Each
of the parties hereto shall use all reasonable best efforts to do all things
necessary or advisable to make effective the transactions contemplated hereby
and shall cooperate and take such action as may be reasonably requested by the
other party in order to carry out fully the provisions and purposes of this
Agreement and the transactions contemplated hereby and to vest in Purchaser all
rights in respect of the Shares and the Subordinated Notes and vest in Seller
all rights with respect to the Purchaser Notes. From and after the
Closing Date, the parties hereto agree to execute or cause to be executed such
further
- 15 -
agreements,
documents or instruments as may be reasonably requested by one of the parties
hereto in order to effect the transactions contemplated hereunder or to exercise
any and all rights in respect of the Shares, Subordinated Notes or Purchaser
Notes.
Section
20 Specific
Performance. The
parties agree that this Agreement may be enforced in equity, and that specific
performance or other equitable relief would be an appropriate remedy in any such
action, in addition to any monetary or other damages which may be
proved. It is accordingly agreed that each party, in addition to any
other remedy to which it may be entitled in law or in equity, shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
compel specific performance of this Agreement, without the need for proof of
actual damages. Each party agrees to waive, and to cause its
affiliates to waive, any requirements for the securing or posting of any bond in
connection with such remedy. Each party also agrees to reimburse the
other party for all costs and expenses, including attorneys’ fees, incurred by
it in successfully enforcing its or its affiliates’ obligations
hereunder.
Section
21 Governing
Law; Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed entirely within
that State. Each party hereby agrees and consents to be subject to
the exclusive jurisdiction of the Court of Chancery of the State of Delaware in
and for New Castle County or, if the Court of Chancery lacks subject matter
jurisdiction, any court of the State of Delaware situated in New Castle County
or the United States District Court for the District of Delaware in any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby. Each party hereby irrevocably consents to the
service of any and all process in any such suit, action or proceeding by the
delivery of such process to such party at the address and in the manner provided
in Section 15. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of or in connection with this Agreement or the
transactions contemplated hereby in the Court of Chancery of the State of
Delaware in and for New Castle County or, if the Court of Chancery lacks subject
matter jurisdiction, any court of the State of Delaware situated in New Castle
County or the United States District Court for the District of Delaware and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum, and agrees not to raise
any other objection to venue in any such court.
Section
22 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the maximum extent possible.
Section
23 No Presumption Against the
Drafter. Each
of the parties to this Agreement participated in the drafting of this Agreement
and the interpretation of any ambiguity contained in the Agreement will not be
affected by the claim that a particular party drafted any provision
hereof.
[SIGNATURE PAGE
FOLLOWS]
- 16 -
IN WITNESS WHEREOF, the parties have
duly executed this Agreement effective as of the date and year first
above-written.
|
KOOSHAREM
CORPORATION
By: /s/ D.
Stephen Sorensen____________
Name: D. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Title: Chief
Executive Officer
|
|
|
DELSTAFF, LLC
By: /s/
▇▇▇▇▇▇▇ Phillips_
______________
Name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Title:
Manager
|
-
17 -