COMPANY AFFILIATE AGREEMENT
This Company Affiliate Agreement (this "Agreement") is dated as of
September 9, 1998, by and between First Consulting Group, Inc., a Delaware
corporation ("Parent"), Integrated Systems Consulting Group, Inc., a
Pennsylvania corporation ("Company"), and the undersigned affiliate
("Affiliate").
Recitals
Whereas, Affiliate is a stockholder of Company.
Whereas, Parent, Foxtrot Acquisition Sub, Inc., a Delaware corporation and
a wholly-owned subsidiary of Parent ("Merger Sub"), and Company have entered
into an Agreement and Plan of Merger and Reorganization dated as of September 9,
1998 (the "Merger Agreement"), providing for the merger of Merger Sub with and
into Company (the "Merger"). The Merger Agreement contemplates that, upon
consummation of the Merger, (i) the holders of the common stock of Company
("Company Common Stock") will receive shares of common stock of Parent ("Parent
Common Stock") in exchange for their shares of Company Common Stock and (ii)
Company will become a wholly-owned subsidiary of Parent. It is accordingly
contemplated that Affiliate will receive shares of Parent Common Stock in the
Merger.
Whereas, Affiliate understands that the Parent Common Stock being issued
in the Merger will be issued pursuant to a registration statement on Form S-4
and that Affiliate may be deemed to be an "affiliate" of Company, as the term
"affiliate" is used (i) for purposes of paragraphs (c) and (d) of Rule 145
("Rule 145") of the General Rules and Regulations of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act"), and (ii) in the SEC's Accounting Series Releases 130 and 135,
and, as such, Affiliate may only transfer, sell or dispose of such Parent Common
Stock in accordance with this Affiliate Agreement and Rule 145.
Whereas, it is a condition to be consummation of the Merger pursuant to the
Merger Agreement that the independent accounting firms that audit the annual
financial statements of Parent and Company will have delivered the written
concurrences with the conclusions of management of Parent and Company to the
effect that the Merger will be accounted for as a pooling of interests under
Accounting Principles Board Opinion No. 16.
Agreement
Now, Therefore, in order to induce Parent and Company to consummate the
transactions contemplated by the Merger Agreement, and for other valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
Affiliate), Affiliate hereby covenants and agrees as follows:
1. Representations and Warranties. Affiliate represents and warrants to
Parent as follows:
1.
(a) Affiliate is the holder and "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the number
of shares of Company Common Stock set forth under Affiliate's signature below
(the "Company Shares"), and Affiliate has good and valid title to Company
Shares, free and clear of any liens, pledges, security interests, adverse
claims, equities, options, proxies, charges, encumbrances or restrictions of any
nature.
(b) Affiliate has carefully read this Agreement, and has discussed
with Affiliate's own independent counsel to the extent Affiliate felt necessary
the limitations imposed on Affiliate's ability to sell, transfer or otherwise
dispose of the shares of Parent Common Stock that Affiliate is to receive in the
Merger (the "Parent Shares"). Affiliate fully understands the limitations this
Agreement places upon Affiliate's ability to sell, transfer or otherwise dispose
of the Parent Shares.
(c) Affiliate understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, Company, and their
respective affiliates, counsel and accounting firms for purposes of determining
Parent's eligibility to account for the Merger as a "pooling of interests,"
and that substantial losses and damages may be incurred by these persons if
Affiliate's representations, warranties or covenants are breached.
2. Prohibition Against Transfer. In addition to the restrictions set
forth elsewhere-herein, Affiliate agrees that Affiliate shall not effect any
sale, transfer or other disposition of the Parent Shares unless:
(a) such sale, transfer or other disposition is made in conformity
with the volume and other requirements of Rule 145 under the Securities Act, as
evidenced by a broker's letter and a representation letter executed by Affiliate
(reasonably satisfactory in form and content to Parent), each stating that such
requirements have been met;
(b) counsel reasonably satisfactory to Parent shall have advised
Parent in a written opinion letter (reasonably satisfactory in form and content
to the Parent), upon which Parent may rely, that such sale, transfer or other
disposition will be exempt from registration under the Securities Act;
(c) such sale, transfer or other disposition is effected pursuant to
an effective registration statement under the Securities Act; or
(d) an authorized representative of the SEC shall have rendered
written advice to Affiliate to the effect that the SEC would take no action, or
that the staff of the SEC would not recommend that the SEC take action, with
respect to such proposed sale, transfer or other disposition, and a copy of such
written advice and all other related communications with the SEC shall have
been delivered to Parent.
3. Stop Transfer Instructions; Legend. Affiliate acknowledges and agrees
that (a) stop transfer instructions will be given to Parent's transfer agent
with respect to the Parent Shares, and (b) each certificate representing any of
such shares of Parent Common Stock or any substitutions thereof shall bear a
legend (together with any other legend or legends required by applicable state
securities laws or otherwise), stating in substance:
2.
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH RULE AND IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED AS OF
SEPTEMBER 9, 1998, BETWEEN THE REGISTERED HOLDER FIRST
CONSULTING GROUP, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICES OF FIRST CONSULTING GROUP, INC.
4. Covenants Related to Pooling of Interests. In accordance with SEC
Staff Accounting Bulletin No. 65 ("SAB65"), during the period contemplated by
SAB 65, until the earlier of (i) Parent's public announcement of financial
results covering at least 30 days of combined operations of Parent and Company
or (ii) the Merger Agreement is terminated in accordance with its terms,
Affiliate will not sell, exchange, transfer, pledge, distribute, or otherwise
dispose of or grant any option, establish any "short" or put-equivalent
position with respect to or enter into any similar transaction (through
derivatives or otherwise) intended or having the effect, directly or indirectly,
to reduce its risk relative to: (i) any shares of Company Common Stock, except
pursuant to and upon the consummation of the Merger, or (ii) any shares of
Parent Common Stock received by Affiliate in the Merger or any shares of Parent
Common Stock received by Affiliate upon exercise of options assumed by Parent in
connection with the Merger. Parent may, at its discretion, cause a restrictive
legend covering the restrictions referred to in this Section 4 to be placed on
Parent Common Stock certificates issued to Affiliate in the Merger and place a
stock transfer notice consistent with the restrictions referred to in this
Section 4 with its transfer agent with respect to such certificates, provided
such restrictive legend shall be removed and/or notice shall be countermanded
promptly upon expiration of the necessity therefor at the request of Affiliate.
5. Permitted Transfers. Notwithstanding anything to the contrary
contained in this Agreement, Affiliate (i) may transfer Affiliate's pro rata
portion (of the total number of shares available under the "de minimis"
exception referred to in this clause (i) to all affiliates of Parent and
Company) of the "de minimis" number of shares of Company Common Stock and Parent
Common Stock available for sale in accordance with SEC Staff Accounting Bulletin
No. 76 (the "De Minimis Pool") contingent upon confirmation and approval by
legal counsel for Company and independent auditors to Company and Parent that
such transfer qualifies as within Affiliate's pro rata portion of the De Minimis
Pool and does not otherwise adversely affect the Parent's ability to account for
the Merger as a "pooling of interests" (ii) may (with the written consent of
Parent, not to be unreasonably withheld): (A) transfer shares of Company Common
Stock or Parent Common Stock to Company in payment of the exercise price of
options to purchase Company Common Stock; (B) transfer shares of Parent Common
Stock in payment of the exercise price of options to purchase Parent Common
Stock; (C) transfer shares of Company Common Stock or Parent Common Stock to any
organization qualified under Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, so long as such organization has traditionally been supported
by contributions from the general public (as opposed to being supported largely
by a specific donor); and (D) transfer shares of Company Common Stock or shares
of Parent
3.
Common Stock to a trust established for the benefit of Affiliate and/or for the
benefit of one or more members of Affiliate's family, or make a bona fide gift
of shares of Common Stock of Company or shares of Parent Common Stock to one or
more members of Affiliate's family, provided that in the case of a transfer or
gift pursuant to this clause (C) or (D), a transferee of such shares agrees to
be bound by the limitations set forth in this Agreement.
6. Specific Performance. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise breached.
Affiliate agrees that, in the event of any breach or threatened breach by
Affiliate of any covenant or obligation contained in this Agreement, each of
Parent and Company shall be entitled (in addition to any other remedy that may
be available to it, including monetary damages) to seek and obtain (a) a decree
or order of specific performance to enforce the observance and performance of
such covenant or obligation, and (b) an injunction restraining such breach or
threatened breach.
7. Independence of Obligations. The covenants and obligations of
Affiliate set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Affiliate, on the one
hand, and Company or Parent, on the other. The existence of any claim or cause
of action by Affiliate against Company or Parent shall not constitute a defense
to the enforcement of any of such covenants or obligations against Affiliate.
8. Notices. Any notice or other communication required or permitted to
be delivered under this Agreement shall be in writing and shall be deemed
properly delivered, given and received when delivered (by hand, by registered
mail, by courier or express delivery service or by facsimile confirmation) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other party):
if to Parent: First Consulting Group, Inc.
000 X. Xxxxx Xxxxxxxxx- 0xx Xxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
if to Company: Integrated Systems Consulting Group, Inc.
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
4.
with a copy to: Saul, Ewing, Xxxxxx & Xxxx LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
if to Affiliate:
at the address or facsimile phone number set forth below Affiliate's
signature on the signature page hereof.
with a copy to: Saul, Ewing, Xxxxxx & Xxxx LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
9. Severability. If any provision of this Agreement or any part of any
such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of
this Agreement is separable from every other provision of this Agreement, and
each part of each provision of this Agreement is separable from every other part
of such provision.
10. Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of California (without
giving effect to principles of conflicts of laws).
11. Waiver. No Failure on the part of Parent or Company to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of Parent or Company in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single partial exercise of any such power, right, privilege or
remedy shall prelude any other or further exercise thereof or of any other
power, right, privilege or remedy. Neither Parent or Company shall be deemed to
have waived any claim arising out of this Agreement, or any power, right,
privilege or remedy under this Agreement, unless the waiver of such claim,
power, right, privilege or remedy is expressly set forth in a written instrument
duly executed and delivered on behalf of the party deemed to be charged; and any
such waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
5.
12. Captions. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
13. Further Assurances. Affiliate shall execute and/or cause to be
delivered to Parent or Company such instruments and other documents and shall
take such other actions as Parent or Company may reasonably request to
effectuate the intent and purposes of this Agreement.
14. Entire Agreement. This Agreement, the Merger Agreement and any Voting
Agreement or Noncompetition Agreement between Affiliate and Parent or
Irrevocable Proxy executed by Affiliate in favor of Parent constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto.
15. Non-Exclusivity. The rights and remedies of Parent and Company
hereunder are not exclusive of or limited by any other rights or remedies which
Parent may have, whether at law, in equity, by contract or otherwise, all of
which shall be cumulative (and not alternative). Nothing in this Agreement shall
limit any of Affiliate's obligations, or the rights or remedies of Parent or
Company, under any Voting Agreement (including any Irrevocable Proxy contained
therein) or Noncompetition Agreement between Parent and Affiliate; and nothing
in any such Voting Agreement (including any Irrevocable Proxy) or Noncompetition
Agreement shall limit any of Affiliate's obligations, or any of the rights or
remedies of Parent, under this Agreement.
16. Amendments. This Agreement may not be amended, modified, altered, or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Parent, Company and Affiliate.
17. Binding Nature. This Agreement will be binding upon Affiliate and
Affiliate's representatives, executors, administrators, estate, heirs,
successors and assigns, and shall inure to the benefit of Company, Parent and
their respective successors and assigns.
18. Attorneys' Fees and Expenses. If any legal action or other legal
proceeding relating to the enforcement of any provision of this Agreement is
brought against Affiliate, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
19. Assignment. This Agreement and all obligations of Affiliate hereunder
are personal to Affiliate and may not be transferred or delegated by Affiliate
at any time. Company or Parent may freely assign any or all of its rights under
this Affiliate Agreement, in whole or in part, to any other person or entity
without obtaining the consent or approval of Affiliate.
20. Survival. Each of the representatives, warranties, covenants and
obligations contained in this Agreement shall survive the consummation of the
Merger.
6
The undersigned have executed this Agreement as of the date first set forth
above.
First Consulting Group, Inc.
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Printed Name: Xxxxx X. Xxxx
---------------------------
Title: President
----------------------------------
Integrated Systems Consulting
Group, Inc.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
Affiliate:
By:_____________________________________
Printed Name:___________________________
Address: _______________________________
________________________________________
________________________________________
Facsimile:______________________________
Integrated Systems Consulting Group,
Inc. Stock Beneficially owned by
Affiliate:
_________________________________ shares
of Common Stock
_________________________________ shares
of Common Stock issuable upon exercise
of outstanding options
AFFILIATE AGREEMENT SIGNATURE PAGE
The undersigned have executed this Agreement as of the date first set forth
above.
First Consulting Group, Inc.
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
Integrated Systems Consulting
Group, Inc.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Printed Name: Xxxxx Xxxxxx
---------------------------
Title: President
----------------------------------
Affiliate:
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Printed Name: Xxxxx Xxxxxx
---------------------------
Address: 000 Xxxxx Xxxx Xx
----------------------------------------
________________________________________
Xxxxxxxxx XX 00000
----------------------------------------
Facsimile: 000-000-0000
------------------------------
Integrated Systems Consulting Group,
Inc. Stock Beneficially owned by
Affiliate:
2,917,879 shares
---------------------------------
of Common Stock
-0- shares
---------------------------------
of Common Stock issuable upon exercise
of outstanding options
AFFILIATE AGREEMENT SIGNATURE PAGE
