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AGREEMENT AND PLAN
dated as of the 11th day of September, 1997
by and among
NATIONWIDE STAFFING, INC.
EPG SUB 1 ACQUISITION CORP.
EPG SUB 2 ACQUISITION CORP.
EPG SUB 3 ACQUISITION CORP.
EPG SUB 4 ACQUISITION CORP.
EPG SUB 5 ACQUISITION CORP.
EPG SUB 6 ACQUISITION CORP.
EPG SUB 7 ACQUISITION CORP.
EPG SUB 8 ACQUISITION CORP.
XXXXX PERSONNEL CONSULTANTS, INC.
XXXXX PERSONNEL CONSULTANTS, INC. #ONE
XXXXX PERSONNEL CONSULTANTS, INC. #TWO
EXCEPTIONAL RESOURCE SERVICES, INC.
EXCELSIOR PERSONNEL CONSULTANTS, INC.
EXCELLENT PERSONNEL CONSULTANTS, INC.
XXXXX PERSONNEL CONSULTANTS OF ABILENE, INC.
ELITE PERSONNEL CONSULTANTS, INC.
and
the STOCKHOLDER
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Page
INTRODUCTION AND RECITALS....................................................1
1. THE MERGER................................................................5
1.1 Delivery and Filing of Articles of Merger........................5
1.2 Effective Time of the Merger.....................................5
1.3 Certificate of Incorporation, By-laws and Board of Directors
of the Surviving Corporation....................................5
1.4 Certain Information With Respect to the Capital Stock of the
COMPANY, PARENT and ACQUISITION CORP.............................6
1.5 Effect of Merger.................................................6
2. CONVERSION OF STOCK.......................................................7
2.1 Manner of Conversion.............................................7
3. DELIVERY OF MERGER CONSIDERATION..........................................8
4. CLOSING...................................................................8
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND STOCKHOLDERS.......................................................9
5.1 Due Organization................................................10
5.2 Authorization...................................................10
5.3 Capital Stock of the COMPANY....................................10
5.4 Transactions in Capital Stock; Organization Accounting..........11
5.5 No Bonus Shares.................................................11
5.6 Subsidiaries....................................................11
5.7 Predecessor Status; Etc.........................................11
5.8 Spin-off by the COMPANY.........................................11
5.9 Financial Statements, Etc.......................................11
5.10 Liabilities and Obligations.....................................12
5.11 Accounts and Notes Receivable...................................13
5.12 Permits and Intangibles.........................................13
5.13 Environmental Matters...........................................14
5.14 Personal Property...............................................14
5.15 Significant Customers; Material Contracts and Commitments.......15
5.16 Real Property...................................................16
5.17 Insurance.......................................................17
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5.18 Compensation; Employment Agreements; Organized Labor Matters....17
5.19 Employee Plans..................................................18
5.20 Compliance with ERISA...........................................18
5.21 Conformity with Law; Litigation.................................19
5.22 Taxes...........................................................20
5.23 No Violations...................................................20
5.24 Government Contracts............................................21
5.25 Absence of Changes..............................................21
5.26 Deposit Accounts; Powers of Attorney............................23
5.27 Validity of Obligations.........................................23
5.28 Relations with Governments......................................23
5.29 Disclosure......................................................23
5.30 Prohibited Activities...........................................24
5.31 Authority; Ownership............................................25
5.32 Preemptive Rights...............................................25
5.33 No Intention to Dispose of Parent Stock.........................25
6. REPRESENTATIONS OF PARENT and ACQUISITION CORP...........................25
6.1 Due Organization................................................25
6.2 Authorization...................................................26
6.3 Capital Stock of PARENT and ACQUISITION CORP....................26
6.4 Transactions in Capital Stock, Organization Accounting..........26
6.5 Subsidiaries....................................................26
6.6 Financial Statements............................................26
6.7 Liabilities and Obligations.....................................27
6.8 Conformity with Law; Litigation.................................27
6.9 No Violations...................................................27
6.10 Validity of Obligations.........................................28
6.11 Parent Stock....................................................28
6.12 No Side Agreements..............................................28
6.13 Business; Real Property; Material Agreements....................28
6.14 Taxes...........................................................28
6.15 Absence of Changes. ...........................................29
6.16 Disclosure. ...................................................30
7. COVENANTS PRIOR TO CLOSING...............................................30
7.1 Access and Cooperation; Due Diligence...........................30
7.2 Conduct of Business Pending Closing.............................31
7.3 Prohibited Activities...........................................32
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7.4 No Shop.........................................................33
7.5 Notice to Bargaining Agents.....................................33
7.6 Agreements......................................................33
7.7 Notification of Certain Matters.................................34
7.8 Amendment of Schedules..........................................34
7.9 Cooperation in Preparation of Registration Statement............35
7.10 Final Financial Statements......................................35
7.11 Further Assurances..............................................36
7.12 Authorized Capital..............................................36
7.13 Compliance with Xxxx-Xxxxx......................................36
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
AND COMPANY...........................................................36
8.1 Representations and Warranties; Performance of Obligations......36
8.2 Satisfaction....................................................37
8.3 No Litigation...................................................37
8.4 Opinion of Counsel..............................................37
8.5 Registration Statement..........................................37
8.6 Consents and Approvals..........................................37
8.7 Good Standing Certificates......................................38
8.8 No Material Adverse Effect......................................38
8.9 Closing of IPO..................................................38
8.10 Secretary's Certificate.........................................38
8.11 Employment Agreements...........................................38
8.12 Tax Matters. ..................................................38
8.13 Parallel Transfer Restrictions..................................38
8.14 Other Mergers...................................................39
8.15 Listing.........................................................39
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND
ACQUISITION CORP......................................................39
9.1 Representations and Warranties; Performance of Obligations......39
9.2 No Litigation...................................................39
9.3 Secretary's Certificate.........................................39
9.4 No Material Adverse Effect......................................40
9.5 STOCKHOLDERS' Release...........................................40
9.6 Satisfaction....................................................40
9.7 Termination of Related Party Agreements.........................40
9.8 Opinion of Counsel..............................................40
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9.9 Consents and Approvals..........................................40
9.10 Good Standing Certificates......................................41
9.11 Registration Statement..........................................41
9.12 Employment Agreements...........................................41
9.13 Closing of IPO..................................................41
9.14 FIRPTA Certificate..............................................41
10.COVENANTS OF PARENT AND THE STOCKHOLDERS AFTER CLOSING...................41
10.1 Repayment of Certain Obligations................................41
10.2 Preservation of Tax Treatment...................................41
10.3 Preparation and Filing of Tax Returns...........................42
10.4 Directors.......................................................42
10.5 Preservation of Employee Benefit Plans..........................42
10.6 Dividends.......................................................43
11.INDEMNIFICATION..........................................................43
11.1 Indemnification by the STOCKHOLDERS.............................43
11.2 Indemnification by PARENT.......................................44
11.3 Third Person Claims.............................................44
11.4 Exclusive Remedy................................................46
11.5 Limitations on Indemnification..................................46
12.TERMINATION OF AGREEMENT.................................................46
12.1 Termination.....................................................47
12.2 Liabilities in Event of Termination.............................47
13.NONCOMPETITION...........................................................47
13.1 Prohibited Activities...........................................47
13.2 Damages.........................................................48
13.3 Reasonable Restraint............................................49
13.4 Severability; Reformation.......................................49
13.5 Independent Covenant............................................49
13.6 Materiality.....................................................49
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION..............................49
14.1 STOCKHOLDERS....................................................49
14.2 PARENT and ACQUISITION CORP.....................................50
14.3 Damages.........................................................51
14.4 Survival........................................................51
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15.TRANSFER RESTRICTIONS....................................................51
15.1 Transfer Restrictions...........................................51
16.FEDERAL SECURITIES ACT REPRESENTATIONS...................................51
16.1 Compliance with Law.............................................51
16.2 Economic Risk; Sophistication...................................52
17.REGISTRATION RIGHTS......................................................52
17.1 Piggyback Registration Rights...................................52
17.2 Registration Procedures.........................................53
17.3 Underwriting Agreement..........................................53
17.4 Availability of Rule 144........................................53
18.GENERAL..................................................................54
18.1 Cooperation.....................................................54
18.2 Successors and Assigns..........................................54
18.3 Entire Agreement................................................54
18.4 Counterparts....................................................54
18.5 Brokers and Agents..............................................54
18.6 Expenses........................................................54
18.7 Notices.........................................................55
18.8 Governing Law...................................................56
18.9 Survival of Representations and Warranties......................56
18.10 Exercise of Rights and Remedies.................................56
18.11 Time............................................................56
18.12 Reformation and Severability....................................56
18.13 Remedies Cumulative.............................................57
18.14 Captions........................................................57
18.15 Amendments and Waivers..........................................57
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ANNEXES
ANNEX I
FORM OF CERTIFICATE OF INCORPORATION AND BY-LAWS OF PARENT AND ACQUISITION CORP.
ANNEX II
CONSIDERATION TO BE PAID TO STOCKHOLDER
ANNEX III
STOCKHOLDER AND STOCK OWNERSHIP OF THE COMPANY
ANNEX IV
STOCKHOLDER AND STOCK OWNERSHIP OF PARENT
ANNEX V
FORM OF OPINION OF COUNSEL TO PARENT
ANNEX VI
FORM OF OPINION OF COUNSEL TO COMPANY
AND STOCKHOLDER
ANNEX VII
FORM OF EMPLOYMENT AGREEMENT
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SCHEDULES
COMPANY SCHEDULES: PARENT SCHEDULES:
SCHEDULE 5.1 SCHEDULE 6.4
SCHEDULE 5.3 SCHEDULE 6.6
SCHEDULE 5.4 SCHEDULE 6.7
SCHEDULE 5.5 SCHEDULE 6.8
SCHEDULE 5.5 SCHEDULE 6.9
SCHEDULE 5.6 SCHEDULE 6.13
SCHEDULE 5.7 SCHEDULE 6.14
SCHEDULE 5.8
SCHEDULE 5.9 JOINT SCHEDLES:
SCHEDULE 5.10
SCHEDULE 5.11 SCHEDULE 9.12
SCHEDULE 5.12
SCHEDULE 5.13
SCHEDULE 5.14
SCHEDULE 5.15
SCHEDULE 5.16
SCHEDULE 5.17
SCHEDULE 5.18
SCHEDULE 5.19
SCHEDULE 5.21
SCHEDULE 5.22
SCHEDULE 5.23
SCHEDULE 5.24
SCHEDULE 5.25
SCHEDULE 5.26
SCHEDULE 5.29
SCHEDULE 5.30
SCHEDULE 5.31
SCHEDULE 7.2
SCHEDULE 7.3
SCHEDULE 7.6/9.7
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AGREEMENT AND PLAN
THIS AGREEMENT AND PLAN (the "Agreement") is made as of the 11th day of
September, 1997, by and among NATIONWIDE STAFFING, INC., a Delaware
corporation ("PARENT"), EPG SUB 1 ACQUISITION CORP., EPG SUB 2 ACQUISITION
CORP., EPG SUB 3 ACQUISITION CORP., EPG SUB 4 ACQUISITION CORP., EPG SUB 5
ACQUISITION CORP., EPG SUB 6 ACQUISITION CORP., EPG SUB 7 ACQUISITION CORP., EPG
SUB 8 ACQUISITION CORP., each a Delaware corporation and a direct, wholly-owned
subsidiary of PARENT (each an "ACQUISITION CORP." and collectively, the
"ACQUISITION CORPS."), XXXXX PERSONNEL CONSULTANTS, INC., XXXXX PERSONNEL
CONSULTANTS, INC. # ONE, XXXXX PERSONNEL CONSULTANTS, INC. # TWO, EXCEPTIONAL
RESOURCE SERVICES, INC., EXCELSIOR PERSONNEL CONSULTANTS, INC., EXCELLENT
PERSONNEL CONSULTANTS, INC., XXXXX PERSONNEL CONSULTANTS OF ABILENE, INC., and
ELITE PERSONNEL CONSULTANTS, INC., all Texas corporations (individually, a
"Company" and collectively, the "COMPANIES"), and all of the COMPANIES' sole
stockholder specified on the attached Stockholder Signature Page (the
"STOCKHOLDER"), who agree as follows:
WHEREAS, the STOCKHOLDER is the sole stockholder of all of the
COMPANIES; and
WHEREAS, each ACQUISITION CORP. is a corporation duly organized and
existing under the laws of the State of Delaware and was organized by
PARENT on September , 1997 solely for the purpose of completing the
transactions set forth herein; and
WHEREAS, the respective Boards of Directors of each ACQUISITION
CORP. and each of the COMPANIES (which together are hereinafter
collectively referred to as "Constituent Corporations") deem it advisable
and in the best interests of each of the COMPANIES and each of the
ACQUISITION CORPS. and their respective stockholders that each ACQUISITION
CORP. merge with and into a COMPANY pursuant to this Agreement and the
applicable provisions of the laws of the State of Texas and the State of
Delaware; and
WHEREAS, PARENT is entering into other separate agreements
substantially similar to this Agreement (the "Other Agreements"), each of
which is entitled "Agreement and Plan," with each of the other Founding
Companies (as defined herein) and their
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respective stockholders in order to acquire additional temporary staffing,
"PEO" or staff leasing, permanent placement, and human resource consulting
service companies; and
WHEREAS, this Agreement, the Other Agreements and the IPO constitute
the "Consolidation Plan;" and
WHEREAS, the STOCKHOLDER and the Boards of Directors and the
stockholders of PARENT, each of the Other Founding Companies and each of
the subsidiaries of PARENT that are parties to the Other Agreements have
approved and adopted the Consolidation Plan as an integrated plan pursuant
to which the Company and each of the other Founding Companies will be
acquired by the PARENT in separate mergers or share exchanges that are
intended to qualify as tax-free transfers of property under Section 351 of
the Internal Revenue Code of 1986, as amended ("Code"); and
WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the Board of Directors of each
of the COMPANIES has approved this Agreement as part of the Consolidation
Plan in order for the PARENT to acquire the COMPANIES; and
WHEREAS, unless the context otherwise requires, capitalized terms
used in this Agreement or in any Schedule attached hereto and not
otherwise defined elsewhere herein shall have the following meanings:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means each COMPANY, any subsidiary of a COMPANY and any
member of a Relevant Group.
"Articles of Merger" shall mean the Articles or Certificate of Merger with
respect to a Merger in such form as may be required by applicable state laws in
order to implement a Merger in accordance with this Agreement.
"ACQUISITION CORP." or "ACQUISITION CORPS." have the meanings set forth in
the first paragraph of this Agreement.
"Acquisition Corp. Stock" means the common stock, par value $.01 per
share, of each ACQUISITION CORP.
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"Balance Sheet Date" means June 30, 1997.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"COMPANY" or "COMPANIES" have the meanings set forth in the first
paragraph of this Agreement, and, unless the context expressly requires
otherwise, shall include all subsidiaries of each COMPANY.
"Company Stock" means the common capital stock of each COMPANY.
"Constituent Corporations" has the meaning set forth in the third recital
of this Agreement.
"Corporation Statute" has the meaning set forth in Section 1.5.
"Effective Time of a Merger" shall mean the time as of which a Merger
becomes effective, which shall occur on the Funding and Consummation Date.
"Environmental Laws" has the meaning set forth in Section 5.13.
"Expiration Date" has the meaning set forth in Section 5(A).
"Founding Companies" means:
Alternative Solutions, Inc., a Massachusetts corporation
A.S.A.P. Services, Inc., an Arkansas corporation
Cardinal Services, Inc., an Oregon corporation
Employment Enterprises, Inc., a Virginia corporation
Xxxxx Personnel Group which consists of the following
Texas corporations:
Xxxxx Personnel Consultants, Inc., Xxxxx Personnel
Consultants, Inc. # One, Xxxxx Personnel Consultants,
Inc. # Two, Exceptional Resource Services, Inc.,
Excelsior Personnel Consultants, Inc., Excellent
Personnel Consultants, Inc., Xxxxx Personnel
Consultants of Abilene, Inc., and Elite Personnel
Consultants, Inc.
Global Technical Services, Inc., a Texas corporation
HP Services, Inc., a Texas corporation
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Technology Plus, Inc., a Kansas corporation
"Funding and Consummation Date" has the meaning set forth in Section 4.
"IPO" means the initial public offering of Parent Stock pursuant to the
Registration Statement.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Documents" has the meaning set forth in Section 5.23.
"Mergers" means a merger of the following ACQUISITION CORPS. with and into
the following related COMPANIES, as contemplated in this Agreement.
ACQUISITION CORPS. RELATED COMPANIES
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EPG Sub 1 Acquisition Corp. Xxxxx Personnel Consultants, Inc.
EPG Sub 2 Acquisition Corp. Xxxxx Personnel Consultants, Inc. # One
EPG Sub 3 Acquisition Corp. Xxxxx Personnel Consultants, Inc. # Two
EPG Sub 4 Acquisition Corp. Exceptional Resource Services, Inc.
EPG Sub 5 Acquisition Corp. Excelsior Personnel Consultants, Inc.
EPG Sub 6 Acquisition Corp. Excellent Personnel Consultants, Inc.
EPG Sub 7 Acquisition Corp. Xxxxx Personnel Consultants of
Abilene, Inc.
EPG Sub 8 Acquisition Corp. Elite Personnel Consultants, Inc.
"Other Agreements" has the meaning set forth in the fourth recital of this
Agreement.
"Other Founding Companies" means all of the Founding Companies other than
the COMPANIES.
"PARENT" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Charter Documents" has the meaning set forth in Section 6.1.
"Parent Stock" means the common stock, par value $.01 per share, of
PARENT.
"Pricing" means the date of determination by PARENT and the Underwriters
of the public offering price of the shares of Parent Stock in the IPO; the
parties to this Agreement contemplate that the Pricing shall take place on the
Closing Date.
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"Qualified Plans" has the meaning set forth in Section 5.20.
"Registration Statement" means that certain registration statement on Form
S-1 to be filed with the SEC covering the shares of Parent Stock to be issued in
the IPO.
"Relevant Group" means each COMPANY and any affiliated, combined,
consolidated, unitary or similar group of which a COMPANY is or was a member.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto, which shall reference the
relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"STOCKHOLDER" has the meaning set forth in the first paragraph of this
Agreement.
"Surviving Corporation" means each COMPANY as the surviving party in the
Merger.
"Tax" or "Taxes" means all federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, payroll, employment, excise, property, deed, stamp,
alternative or add on minimum, environmental or other taxes, assessments,
duties, fees, levies or other governmental charges of any nature whatever,
whether disputed or not, together with any interest, penalties, additions to tax
or additional amounts with respect thereto.
"Underwriters" means the prospective underwriters identified in the
Registration Statement.
1. THE MERGERS
1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. Each COMPANY and the
related ACQUISITION CORP. will cause the Articles of Merger to be signed,
verified and filed with the Secretary of State of the State of Delaware and the
appropriate authorities of the State of Texas and stamped receipt copies of each
such filing to be delivered to PARENT on or before the Funding and Consummation
Date.
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1.2 EFFECTIVE TIME OF THE MERGERS. At the Effective Time of the Merger, an
ACQUISITION CORP. shall be merged with and into a COMPANY, the separate
existence of the ACQUISITION CORP. shall cease, and a COMPANY shall be the
surviving party in the Merger and is sometimes hereinafter referred to as the
"Surviving Corporation" or "Surviving Corporations."
1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF THE
SURVIVING CORPORATIONS. At the Effective Time of each Merger:
(i) the Articles or Certificate of Incorporation of each COMPANY
then in effect shall be the Articles or Certificate of Incorporation of
each Surviving Corporation until changed as provided by law;
(ii) the By-laws of each ACQUISITION CORP. then in effect shall
become the By-laws of the Surviving Corporation, with such changes, if
any, as may be consistent with the laws of the State of Texas; and
subsequent to the Effective Time of the Merger, such By-laws shall be the
By-laws of such Surviving Corporation until they shall thereafter be duly
amended (and such By-Laws shall be amended, if necessary, to comply with
this Agreement and applicable state law);
(iii) the Board of Directors of each Surviving Corporation shall
consist of the persons who are on the Board of Directors of the related
COMPANY immediately prior to the Effective Time of the Merger, provided
that (x) Xxxxx X. Xxxxx shall be elected as an additional director of each
Surviving Corporation as of the Effective Time and (y) the number of
directors shall be reduced to take into account any directors who choose
to resign as of the Effective Time; the members of the Board of Directors
of each Surviving Corporation shall be entitled to hold office until the
next annual meeting of the SURVIVING CORP.'s stockholders, subject to the
provisions of the laws of the State of Texas and of the Articles or
Certificate of Incorporation and By-laws of the Surviving Corporation; and
(iv) the officers of each COMPANY immediately prior to the Effective
Time of the Merger shall continue as the officers of the related Surviving
Corporation in the same capacity or capacities, and effective upon the
Effective Time of the Merger Xxxxx X. Xxxxx shall be appointed as a Vice
President of the related Surviving Corporation and Xxxx X. Xxxxx shall be
appointed as an Assistant Secretary of the related Surviving Corporation,
each of such officers to serve, subject to the provisions of the Articles
or Certificate of Incorporation and By-laws of the related Surviving
Corporation, until their respective successors are duly elected and
qualified.
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1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE
COMPANIES, PARENT AND ACQUISITION CORPS. The respective designations and numbers
of outstanding shares of each class of outstanding capital stock of the COMPANY,
PARENT and ACQUISITION CORP. as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and outstanding
capital stock of each COMPANY is as set forth on Schedule 5.3 hereto;
(ii) immediately prior to the Funding and Consummation Date, the
authorized capital stock of PARENT will consist of 60,000,000 shares of
capital stock, of which 55,000,000 shares are common stock, the number of
issued and outstanding shares of which will be set forth in the
Registration Statement, and 5,000,000 shares of preferred stock, $.01 par
value, of which no shares will be issued and outstanding; and
(iii) as of the date of this Agreement, the authorized capital stock
of each ACQUISITION CORP. consists of 1,000 shares of common stock, par
value $.01 per share, of which one hundred (100) shares are issued and
outstanding and owned by PARENT.
1.5 EFFECT OF MERGERS. At the Effective Time of the Mergers, the effect of
each Merger shall be as provided in the applicable provisions of the corporation
law of the State of Texas (the "Corporation Statute") and the law of the State
of Delaware. Except as herein specifically set forth, the identity, existence,
purposes, powers, objects, franchises, privileges, rights and immunities of each
COMPANY shall continue unaffected and unimpaired by its Merger and the corporate
franchises, existence and rights of each ACQUISITION CORP. shall be merged with
and into the related COMPANY, and each COMPANY, as the Surviving Corporation,
shall be fully vested therewith. At the Effective Time of each Merger, the
separate existence of each ACQUISITION CORP. shall cease and, in accordance with
the terms of this Agreement, the Surviving Corporation shall possess all the
rights, privileges, immunities and franchises, of a public, as well as of a
private, nature, and all property, real, personal and mixed, and all debts due
on whatever account, including subscriptions to shares, and all taxes, including
those due and owing and those accrued, and all other choses in action, and all
and every other interest of or belonging to or due to each COMPANY and the
related ACQUISITION CORP. shall be taken and deemed to be transferred to, and
vested in, the Surviving Corporation without further act or deed; and all
property, rights and privileges, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of each COMPANY and the related ACQUISITION CORP.; and
the title to any real estate, or interest therein, whether by deed or otherwise,
under the laws of the state of incorporation vested in each COMPANY and the
related ACQUISITION CORP., shall not revert or be in any way impaired by reason
of the Merger. Except as otherwise provided herein, the Surviving Corporation
shall thenceforth be responsible and liable for all the liabilities and
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obligations of each COMPANY and the related ACQUISITION CORP. and any claim
existing, or action or proceeding pending, by or against each COMPANY or the
related ACQUISITION CORP. may be prosecuted as if the Merger had not taken
place, or the Surviving Corporation may be substituted in their place. Neither
the rights of creditors nor any liens upon the property of a COMPANY or an
ACQUISITION CORP. shall be impaired by a Merger, and all debts, liabilities and
duties of each COMPANY and the related ACQUISITION CORP. shall attach to the
Surviving Corporation, and may be enforced against the related Surviving
Corporation to the same extent as if said debts, liabilities and duties had been
incurred or contracted by the related Surviving Corporation.
2. CONVERSION OF STOCK
2.1 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding Company Stock and (ii) Acquisition Corp. Stock issued and
outstanding immediately prior to the Effective Time of the Mergers into shares
of (x) Parent Stock and (y) common stock of the Surviving Corporation,
respectively, shall be as follows:
As of the Effective Time of the Mergers:
(i) all of the shares of Company Stock of all of the COMPANIES
issued and outstanding immediately prior to the Effective Time of the
Mergers shall, by virtue of the Mergers and without any action on the part
of the holder thereof, automatically be deemed to represent (1) the right
to receive the number of shares of Parent Stock set forth on Annex II with
respect to such holder and (2) the right to receive the amount of cash set
forth on Annex II with respect to such holder;
(ii) all shares of Company Stock that are held by any COMPANY as
treasury stock shall be canceled and retired and no shares of Parent Stock
or other consideration shall be delivered or paid in exchange therefor;
and
(iii) each share of Acquisition Corp. Stock issued and outstanding
immediately prior to the Effective Time of the Mergers, shall, by virtue
of the Mergers and without any action on the part of PARENT, automatically
be converted into one (1) fully paid and non-assessable share of common
stock of the Surviving Corporation which shall constitute all of the
issued and outstanding shares of common stock of such Surviving
Corporation immediately after the Effective Time of the Mergers.
All Parent Stock received by the STOCKHOLDER pursuant to this Agreement
shall, except for restrictions on resale or transfer described in Sections 15
and 16 hereof, have the same rights as
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all the other shares of outstanding Parent Stock by reason of the provisions of
the Certificate of Incorporation of PARENT or as otherwise provided by the
Delaware General Corporation Law. All voting rights of such Parent Stock
received by the STOCKHOLDER shall be fully exercisable by the STOCKHOLDER and
the STOCKHOLDER shall not be deprived nor restricted in exercising those rights.
At the Effective Time of the Mergers, PARENT shall have no class of capital
stock issued and outstanding other than Parent Stock.
3. DELIVERY OF MERGER CONSIDERATION
3.1 At the Effective Time of the Mergers and on the Funding and
Consummation Date the STOCKHOLDER, who is the holder of all outstanding
certificates representing shares of Company Stock, shall, upon surrender of such
certificates, receive the number of shares of Parent Stock and the amount of
cash determined in accordance with Annex II, said cash to be payable by
certified check or wire transfer, at the option of the STOCKHOLDER.
3.2 The STOCKHOLDER shall deliver to PARENT at the Closing the
certificates representing Company Stock, duly endorsed in blank by the
STOCKHOLDER, or accompanied by blank stock powers, with signatures guaranteed by
a national or state chartered bank or other financial institution, and with all
necessary transfer tax and other revenue stamps, acquired at the STOCKHOLDER'S
expense, affixed and canceled. The STOCKHOLDER agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
4. CLOSING
At or prior to the Pricing, the parties shall take all actions necessary
to prepare to (i) effect the Mergers (including, if permitted by applicable
state law, the filing with the appropriate state authorities of the various
Articles of Merger which shall become effective at the Effective Time of the
Mergers) and (ii) effect the conversion and delivery of shares referred to in
Sections 2 and 3 hereof; provided, that such actions shall not include the
actual completion of the Mergers or the conversion and delivery of the shares
and certified check(s) or the initiation of wire transfers referred to in
Section 3 hereof, each of which actions shall only be taken upon the Funding and
Consummation Date. In the event that there is no Funding and Consummation Date
and this Agreement terminates, PARENT covenants and agrees to do all things
required by Delaware law and all things which counsel for the COMPANY advise
PARENT are required by applicable laws of the State of Texas in order to rescind
the mergers contemplated by the filing of the various Articles of Merger as
described in this Section. The taking of the actions described in clauses (i)
and (ii) above (the "Closing") shall take place on the closing date (the
"Closing Date") at the offices of Bracewell
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& Xxxxxxxxx, L.L.P., South Tower Pennzoil Place, 000 Xxxxxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000. On the Funding and Consummation Date, (x) the various
Articles of Merger shall be or shall have been filed with the appropriate state
authorities so that they shall be effective as early as practicable on the
Funding and Consummation Date and the Mergers shall thereby be effected, (y) all
transactions contemplated by this Agreement, including the conversion and
delivery of shares, the delivery of a certified check or checks or the
initiation of a wire transfer or transfers in an amount equal to the cash
portion of the consideration which the STOCKHOLDER shall be entitled to receive
pursuant to the Mergers and (z) the closing with respect to the IPO shall occur
and be deemed to be completed. The date on which the actions described in the
preceding clauses (x), (y) and (z) occurs shall be referred to as the "Funding
and Consummation Date." Except as otherwise provided in Section 12, during the
period from the Closing Date to the Funding and Consummation Date, this
Agreement may only be terminated by the parties if the underwriting agreement in
respect of the IPO is terminated pursuant to the terms of such agreement. This
Agreement shall in any event terminate if the Funding and Consummation Date has
not occurred within 15 business days of the Closing Date. Time is of the
essence.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND STOCKHOLDER
(A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STOCKHOLDER.
The COMPANIES and the STOCKHOLDER jointly and severally represent and
warrant that all of the following representations and warranties in this Section
5(A) are true at the date of this Agreement and, subject to Section 7.8 hereof,
shall be true on the Closing Date and on the Funding and Consummation Date, and
that such representations and warranties shall survive the Funding and
Consummation Date for a period of 12 months (the last day of such period being
the "Expiration Date"), except that (i) the warranties and representations set
forth in Section 5.22 hereof shall survive until such time as the limitations
period has run for all Tax periods ended on or prior to the Funding and
Consummation Date, which shall be deemed to be the Expiration Date for Section
5.22 and (ii) solely for purposes of determining whether a claim for
indemnification under Section 11.1(iii) hereof has been made on a timely basis,
and solely to the extent that in connection with the IPO, PARENT actually incurs
liability under the 1933 Act, the 1934 Act, or any other federal or state
securities laws, the representations and warranties set forth herein shall
survive until the expiration of any applicable limitations period, which shall
be deemed to be the Expiration Date for such purposes. For purposes of this
Section 5, each COMPANY includes any and all of its subsidiaries unless the
context expressly requires otherwise.
5.1 DUE ORGANIZATION. Each COMPANY is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and has the corporate
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power and authority to carry on its business as it is now being conducted. Each
COMPANY is duly qualified to do business and is in good standing in the
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, except (i) as set forth on
Schedule 5.1 or (ii) where the failure to be so authorized or qualified would
not have a material adverse effect on the business, operations, affairs,
prospects, properties, assets or condition (financial or otherwise), of all of
the COMPANIES and their subsidiaries taken as a whole (as used herein with
respect to all of the COMPANIES, or with respect to any other person, a
"Material Adverse Effect"). Schedule 5.1 sets forth each jurisdiction in which
each COMPANY is incorporated and contains a list of all jurisdictions in which
each COMPANY is authorized or qualified to do business. True, complete and
correct copies of the Certificate or Articles of Incorporation and By-laws, as
amended, of each COMPANY (the "Charter Documents") are all attached hereto as
Schedule 5.1. The stock records of each COMPANY, as heretofore made available to
PARENT, are correct and complete in all material respects. There are no minutes
in the possession of a COMPANY or the STOCKHOLDER which have not been made
available to PARENT, and all of such minutes are correct and complete in all
respects. The most recent minutes of each COMPANY, which are dated no earlier
than ten business days prior to the date hereof, affirm and ratify all prior
acts of such COMPANY, and of its officers and directors on behalf of such
COMPANY.
5.2 AUTHORIZATION. The representatives of each COMPANY executing this
Agreement have the authority to enter into and bind such COMPANY to the terms of
this Agreement. Each COMPANY has the corporate power and authority to enter into
this Agreement and a Merger. All requisite approval of the shareholders of each
COMPANY has been given and is confirmed by the signatures on the Stockholder
Signature Page.
5.3 CAPITAL STOCK OF THE COMPANIES. The authorized capital stock of each
COMPANY is as set forth on Schedule 5.3. All of the issued and outstanding
shares of the capital stock of each COMPANY are owned by the STOCKHOLDER in the
amounts set forth in Annex III (or are owned by a Company in the case of any
subsidiary) and further, except as set forth on Schedule 5.3, are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the issued and
outstanding shares of the capital stock of each COMPANY have been duly
authorized and validly issued, are fully paid and nonassessable, are owned of
record and beneficially by the STOCKHOLDER, and such shares were offered,
issued, sold and delivered in compliance with all applicable state and Federal
laws concerning the issuance and distribution of securities. Further, none of
such shares were issued in violation of any preemptive rights of any past or
present stockholder.
5.4 TRANSACTIONS IN CAPITAL STOCK; ORGANIZATION ACCOUNTING. Except as set
forth on Schedule 5.4, no COMPANY has acquired any Company Stock. Except as set
forth on
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Schedule 5.4, (i) no option, warrant, call, conversion right or commitment of
any kind exists which obligates any COMPANY to issue any of its capital stock,
and (ii) no COMPANY has any obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any interests
therein or to pay any dividend or make any distribution in respect thereof.
Schedule 5.4 also includes complete and accurate copies of all stock option or
stock purchase plans, including a list of all outstanding options, warrants or
other rights to acquire shares of each COMPANY's capital stock.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of Company Stock was issued pursuant to awards, grants or bonuses.
5.6 SUBSIDIARIES. Except as set forth on Schedule 5.6, no COMPANY has any
subsidiaries. Except as set forth in Schedule 5.6, no COMPANY presently owns, of
record or beneficially, or control, directly or indirectly, any capital stock,
securities convertible into capital stock or any other equity interest in any
corporation, limited liability company, association or business entity nor is
any COMPANY, directly or indirectly, a participant in any joint venture,
partnership or other non-corporate entity.
5.7 PREDECESSOR STATUS; ETC. Set forth in Schedule 5.7 is a listing of all
names of all predecessor companies and names of each COMPANY, including the
names of any entities or businesses acquired by each COMPANY (by stock purchase,
asset purchase, merger or otherwise) or owned by each COMPANY or from whom each
COMPANY previously acquired material assets. Except as disclosed on Schedule
5.7, no COMPANY has been a subsidiary or division of another corporation or a
part of an acquisition which was later rescinded.
5.8 SPIN-OFF BY THE COMPANIES. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of any COMPANY or
any other person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
any COMPANY.
5.9 FINANCIAL STATEMENTS, ETC.
(a) FINANCIAL STATEMENTS. Attached hereto as Schedule 5.9 are copies of
the following financial statements of Xxxxx Personnel Consultants, Inc. and
Affiliates (which include all of the COMPANIES) (the "Company Financial
Statements"): the COMPANIES' combined audited and unaudited Balance Sheets as of
December 31, 1996 and June 30, 1997, and combined Statements of Income,
Shareholders' Equity and Cash Flows for all periods then ended. The date of June
30, 1997 is hereinafter referred to as the "Balance Sheet Date." Such Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis
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throughout the periods indicated (except as noted therein or on Schedule 5.9).
Except as set forth on Schedule 5.9, such combined Balance Sheets as of December
31, 1996 and June 30, 1997 present fairly the combined financial position of the
COMPANIES as of the dates indicated thereon, and such combined Statements of
Income, Shareholders' Equity and Cash Flows present fairly the results of
operations and cash flows for the periods indicated thereon.
(b) RESERVES FOR WORKERS' COMPENSATION AND HEALTH CARE. Except as set
forth on Schedule 5.9, the combined COMPANIES's reserves for workers'
compensation and health care costs reflected on the combined Balance Sheet as of
the Balance Sheet Date are adequate and appropriate and have been accrued in
accordance with generally accepted accounting principles. No COMPANY has
received any report (including, without limitation, a report from any actuary,
insurance company or accountant) which suggests that any of the reserves
reflected on any of the Balance Sheets may be inadequate.
5.10 LIABILITIES AND OBLIGATIONS. The COMPANIES have delivered to PARENT
an accurate list (which is set forth on Schedule 5.10) as of the Balance Sheet
Date of (i) all liabilities of the COMPANIES which are not reflected on the
balance sheet of the COMPANIES at the Balance Sheet Date or otherwise reflected
in the Company Financial Statements at the Balance Sheet Date, (ii) any material
liabilities of the COMPANIES (including all liabilities in excess of $10,000
which are not reflected in the balance sheet as of the Balance Sheet Date) and
(iii) all loan agreements, indemnity or guaranty agreements, bonds, mortgages,
liens, pledges or other security agreements. Except as set forth on Schedule
5.10, since the Balance Sheet Date the COMPANIES have not incurred any material
liabilities of any kind, character and description, whether accrued, absolute,
secured or unsecured, contingent or otherwise, other than nonmaterial
liabilities incurred in the ordinary course of business. Each COMPANY has also
delivered to PARENT on Schedule 5.10, in the case of those contingent
liabilities related to pending or, to such COMPANY's knowledge, threatened
litigation, or other liabilities which are not fixed or otherwise accrued or
reserved, a good faith and reasonable estimate of the maximum amount which may
be payable. For any such contingent liability or liability for which the amount
is not fixed or is contested, such COMPANY has provided to PARENT the following
information:
(i) a summary description of the liability together with the
following:
(a) copies of all relevant documentation relating thereto;
(b) amounts claimed and any other action or relief sought; and
(c) name of claimant and all other parties to the claim, suit or
proceeding; and
(ii) the name of the court or agency before which such claim, suit
or proceeding is pending; and
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(iii) the date such claim, suit or proceeding was instituted; and
(iv) either (x) a good faith and reasonable estimate of the maximum
amount, if any, which is likely to become payable with respect to the such
liability, or (y) a specific description of any related reserve that may
have been reflected in the Balance Sheet as of the Balance Sheet Date,
with respect to such liability. If no estimate is provided or no specific
reserve is reflected in the Balance Sheet as of the Balance Sheet Date,
the estimate shall for purposes of this Agreement be deemed to be zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. The COMPANIES have delivered to PARENT
an accurate list (which is set forth on Schedule 5.11) of the accounts and notes
receivable of the COMPANIES, as of August 31, 1997, including any such amounts
which are not reflected in the balance sheet as of the Balance Sheet Date, and
including receivables from and advances to employees and the STOCKHOLDER. The
COMPANY shall also provide PARENT (x) an accurate list of all receivables
obtained subsequent to August 31, 1997 and (y) an aging of all accounts and
notes receivable showing amounts due in 30 day aging categories, and such list
and such aging report (the "A/R Aging Reports") shall be current as of August
31, 1997. Except to the extent reflected on Schedule 5.11 or as disclosed by the
COMPANIES to PARENT in a writing accompanying the A/R Aging Reports, such
accounts, notes and other receivables are collectible in the amounts shown on
Schedule 5.11, and shall be collectible in the amounts shown on the A/R Aging
Reports, net of reserves reflected in the Balance Sheet as of the Balance Sheet
Date and as of the date of the A/R Aging Reports, respectively.
5.12 PERMITS AND INTANGIBLES. The COMPANIES and their employees (for the
benefit of a COMPANY) hold all licenses, registrations, franchises, permits and
other governmental authorizations the absence of any of which could have a
Material Adverse Effect on the COMPANIES. Each COMPANY and its employees (for
the benefit of a COMPANY) are licensed or registered as professional employer
organizations and/or as control persons thereof, as appropriate, in each
jurisdiction in which their activities require such licensing or registration,
except where failure to be so licensed or registered could not have a Material
Adverse Effect on the COMPANIES. The COMPANIES have delivered to PARENT an
accurate list and summary description (which is set forth on Schedule 5.12) of
all such licenses, registrations, franchises, permits and other governmental
authorizations, including permits, titles (including motor vehicle titles and
current registrations), fuel permits, licenses, registrations, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the COMPANIES or any of their employees (including
interests in software or other technology systems, programs and intellectual
property) (it being understood and agreed that a list of all environmental
permits and other environmental approvals is set forth on Schedule 5.13). To the
knowledge of the COMPANIES, the licenses, registrations, franchises, permits and
other
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governmental authorizations listed on Schedules 5.12 and 5.13 are valid, and no
COMPANY has received any notice that any governmental authority intends to
cancel, terminate or not renew any such license, franchise, permit or other
governmental authorization. The COMPANIES have conducted and are conducting
their business in compliance with the requirements, standards, criteria and
conditions set forth in the licenses, registrations, franchises, permits and
other governmental authorizations listed on Schedules 5.12 and 5.13 and are not
in violation of any of the foregoing except where such non-compliance or
violation would not have a Material Adverse Effect on the COMPANIES. Except as
specifically provided in Schedule 5.12, the transactions contemplated by this
Agreement will not result in a material default under or a material breach or
violation of, or materially adversely affect the rights and benefits afforded to
the COMPANIES by, any such licenses, registrations, franchises, permits or
government authorizations.
5.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.13, (i) the
COMPANIES have complied with and is in compliance with all Federal, state, local
and foreign statutes (civil and criminal), laws, ordinances, regulations, rules,
notices, permits, judgments, orders and decrees applicable to any of them or any
of their properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes and
Hazardous Substances (as such terms are defined in any applicable Environmental
Law) including petroleum and petroleum products; (ii) the COMPANIES have
obtained and adhered to all necessary permits and other approvals necessary to
treat, transport, store, dispose of and otherwise handle Hazardous Wastes and
Hazardous Substances, a list of all of which permits and approvals is set forth
on Schedule 5.13, and have reported to the appropriate authorities, to the
extent required by all Environmental Laws, all past and present sites owned and
operated by the COMPANIES where Hazardous Wastes or Hazardous Substances have
been treated, stored, disposed of or otherwise handled; (iii) there have been no
releases or threats of releases (as defined in Environmental Laws) at, from, in
or on any property owned or operated by the COMPANIES except as permitted by
Environmental Laws; (iv) the COMPANIES know of no on-site or off-site location
to which any COMPANY has transported or disposed of Hazardous Wastes and
Hazardous Substances or arranged for the transportation of Hazardous Wastes and
Hazardous Substances, which site is the subject of any Federal, state, local or
foreign enforcement action or any other investigation which could lead to any
claim against any COMPANY, PARENT or ACQUISITION CORP. for any clean-up cost,
remedial work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended; and (v) the
COMPANIES have no contingent liability in connection with any release of any
Hazardous Waste or Hazardous Substance into the environment.
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5.14 PERSONAL PROPERTY.
(a) The COMPANIES have delivered to PARENT an accurate list (which is set
forth on Schedule 5.14) of (x) all personal property included (or that will be
included) in "property and equipment, net" on the balance sheet of the
COMPANIES, (y) all other personal property owned by the COMPANIES with a value
in excess of $10,000 (i) as of the Balance Sheet Date or (ii) acquired since the
Balance Sheet Date and (z) all leases and agreements in respect of personal
property, including, in the case of the of (x), (y) and (z), (1) true, complete
and correct copies of all such leases and (2) an indication as to which assets
are currently owned, or were formerly owned, by STOCKHOLDER, relatives of
STOCKHOLDER, or affiliates of any COMPANY. Except as set forth on Schedule 5.14,
(i) all personal property used by any COMPANY in its business is either owned by
such COMPANY or leased by such COMPANY pursuant to a lease included on Schedule
5.14, (ii) all of the personal property listed on Schedule 5.14 is in good
working order and condition, ordinary wear and tear excepted and (iii) all
leases and agreements included on Schedule 5.14 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their terms.
(b) The COMPANIES owns license or possess the right to use all material
patents, patents pending, trademarks, servicemarks, trade names, service names,
slogans, registered copyrights, trade secrets, computer software and other
intellectual property rights they currently use, without any conflict or, to the
knowledge of any COMPANY, alleged conflict with the rights of others or in
violation of any license or other agreement with respect thereto. Each item of
intellectual property owned or used by the COMPANIES prior to the Closing will
be owned or available for use by the related Surviving Corporation on the same
terms and conditions immediately following the Closing. Except as described in
Schedule 5.14, the COMPANIES have taken all such actions as are reasonably
necessary to maintain and protect such of their intellectual property as is
material to the operations and results of the COMPANIES' business. Schedule 5.14
lists all of the material intellectual property rights used by the COMPANIES as
well as any material intellectual property rights owned by third parties and
used by the COMPANIES pursuant to licenses, sublicenses, agreements or
permissions; all of the foregoing licenses, sublicenses, agreements and
permissions are valid, binding and in full force and effect and no default has
occurred and no notice of default has been received with respect thereto.
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. The
COMPANIES has delivered to PARENT an accurate list (which is set forth on
Schedule 5.15) of all significant customers, or persons or entities that are
sources of a significant number of customers, it being understood and agreed
that a "significant customer," for purposes of this Section 5.15, means a
customer (or person or entity) representing 5% or more of the COMPANIES'
combined annual revenues as of the Balance Sheet Date. Except to the extent set
forth on Schedule 5.15, none of the
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COMPANIES' significant customers (or persons or entities that are sources of a
significant number of customers) have canceled or substantially reduced or, to
the knowledge of any COMPANY, are currently attempting or threatening to cancel
a contract or substantially reduce utilization of the services provided by a
COMPANY.
The COMPANIES have listed on Schedule 5.15 all material contracts,
commitments and similar agreements to which the COMPANIES are a party or by
which it or any of their properties are bound (including, but not limited to,
contracts with significant customers, joint venture or partnership agreements,
contracts with any labor organizations, strategic alliances and options to
purchase land), other than agreements listed on Schedule 5.10, 5.14 or 5.16, (a)
in existence as of the Balance Sheet Date and (b) entered into since the Balance
Sheet Date, and in the case has delivered true, complete and correct copies of
such agreements to PARENT. The COMPANIES have complied with all material
commitments and obligations pertaining to it, and are not in default under any
contracts or agreements listed on Schedule 5.15 and no notice of default under
any such contract or agreement has been received. The COMPANIES have also
indicated on Schedule 5.15 a summary description of all plans or projects
involving the opening of new operations, expansion of existing operations, the
acquisition of any personal property, business or assets requiring, in any
event, the payment of more than $50,000 by the COMPANIES.
5.16 REAL PROPERTY. Schedule 5.16 includes a list of all real property
owned or leased by the COMPANIES (i) as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date, and all other real property, if any, used
by the COMPANIES in the conduct of their business. The COMPANIES have good and
insurable title to the real property owned by it, including those reflected on
Schedule 5.14, subject to no mortgage, pledge, lien, conditional sales
agreement, encumbrance or charge, except for:
(i) liens reflected on Schedules 5.10 or 5.15 as securing specified
liabilities (with respect to which no material default exists);
(ii) liens for current taxes not yet payable and assessments not in
default;
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other exceptions to
title shown of record in the office of the County Clerks in which the
properties, assets and leasehold estates are located which do not
materially and adversely affect the current use of the property.
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Schedule 5.16 contains, without limitation, true, complete and correct copies of
all title reports and title insurance policies currently in possession of the
COMPANIES with respect to real property owned by the COMPANIES.
The COMPANIES have also delivered to the Parent an accurate list of real
property leased by the COMPANIES (which list is set forth on Schedule 5.16),
together with true, complete and correct copies of all leases and agreements in
respect of such real property leased by the COMPANIES (which copies are attached
to Schedule 5.16), and an indication as to which such properties, if any, are
currently owned, or were formerly owned, by STOCKHOLDER or business or personal
affiliates of the COMPANIES or STOCKHOLDER. Except as set forth on Schedule
5.16, all of such leases included on Schedule 5.16 are in full force and effect
and constitute valid and binding agreements of the parties (and their
successors) thereto in accordance with their terms.
5.17 INSURANCE. The COMPANIES have delivered to PARENT, as set forth on
and attached to Schedule 5.17, (i) an accurate list as of the Balance Sheet Date
of all insurance policies carried by the COMPANIES, (ii) an accurate list of all
insurance loss runs or workers compensation claims received for the past three
(3) policy years, and (iii) true, complete and correct copies of all insurance
policies currently in effect. Such insurance policies evidence all of the
insurance that the COMPANIES are required to carry pursuant to all of their
contracts and other agreements and pursuant to all applicable laws. All of such
insurance policies are currently in full force and effect and shall remain in
full force and effect through the Funding and Consummation Date. Since January
1, 1993, no insurance carried by any COMPANY has been canceled by an insurer
and, to the knowledge of the COMPANIES, no COMPANY has been denied coverage. No
insurance carried by any COMPANY has ever been underwritten or reinsured with
any insurance company in which any COMPANY, the STOCKHOLDER or any affiliate of
any COMPANY or any STOCKHOLDER has any financial or ownership interest.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS. The
COMPANIES has delivered to PARENT an accurate list (which is set forth on
Schedule 5.18) showing all officers, directors and key employees of the
COMPANIES, listing all employment agreements with such officers, directors and
key employees and the rate of compensation (and the portions thereof
attributable to salary, bonus and other compensation, respectively) of each of
such persons as of (i) the Balance Sheet Date and (ii) the date hereof. The
COMPANIES have provided to PARENT true, complete and correct copies of any
employment agreements for persons listed on Schedule 5.18. Except as set forth
on Schedule 5.18, since June 30, 1997 there have been no increases in the
compensation payable or any special bonuses to any officer, director, key
employee or other employee, except ordinary salary increases implemented on a
basis consistent with past practices.
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Except as set forth on Schedule 5.18, (i) the COMPANIES are not
bound by or subject to (and none of its assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
COMPANIES are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of any COMPANY, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
any COMPANY's knowledge, threatened labor dispute involving any COMPANY and any
group of its employees nor has any COMPANY experienced any labor interruptions
over the past three years. Each COMPANY believes its relationship with employees
to be good.
5.19 EMPLOYEE PLANS. The STOCKHOLDER has delivered to PARENT an accurate
schedule (Schedule 5.19) showing all employee benefit and employee welfare plans
of the COMPANIES (including COMPANIES' subsidiaries), including all employment
agreements and other agreements or arrangements containing "golden parachute" or
other similar provisions, and deferred compensation agreements, together with
true, complete and correct copies of such plans, agreements and any trusts
related thereto, and classifications of employees covered thereby as of the
Balance Sheet Date. Except for the employee benefit plans, if any, described on
Schedule 5.19, no COMPANY (including any COMPANY subsidiary) sponsors, maintains
or contributes to any plan program, fund or arrangement that constitutes an
"employee pension benefit plan," nor has any COMPANY or any subsidiary any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning as is given that term in Section 3(2) of ERISA. No COMPANY nor
any subsidiary has sponsored, maintained or contributed to any employee pension
benefit plan other than the plans set forth on Schedule 5.19, nor is any COMPANY
or any subsidiary required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreement establishing the terms and
conditions or employment of any of COMPANY's or any subsidiary's employees.
No COMPANY nor any subsidiary is now, or can as a result of its past
activities become, liable to the Pension Benefit Guaranty Corporation ("PBGC")
or to any multiemployer employee pension benefit plan under the provisions of
Title IV of ERISA.
All employee benefit plans listed on Schedule 5.19 and the administration
thereof are in substantial compliance with their terms and all applicable
provisions of ERISA and the regulations issued thereunder, as well as with all
other applicable federal, state and local statutes, ordinances and regulations.
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All accrued contribution obligations of each COMPANY or any subsidiary
with respect to any plan listed on Schedule 5.19 have either been fulfilled in
their entirety or are fully reflected on the combined balance sheet of the
COMPANIES as of the Balance Sheet Date.
5.20 COMPLIANCE WITH ERISA. All such plans listed on Schedule 5.19 that
are intended to qualify (the "Qualified Plans") under Section 401(a) of the Code
are, and have been so qualified and have been determined by the Internal Revenue
Service to be so qualified, and copies of such determination letters are
included as part of Schedule 5.19. Except as disclosed on Schedule 5.20, all
reports and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof are included as part of Schedule 5.19. The
STOCKHOLDER, any such plan listed in Schedule 5.19, or any COMPANY (including
any COMPANY subsidiary) has not engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No such Plan
listed in Schedule 5.19 has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(1) of ERISA; and no
COMPANY (including any COMPANY subsidiary) has incurred any liability for excise
tax or penalty due to the Internal Revenue Service nor any liability to the
PBGC. In addition,
(i) there have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and approval by
the Internal Revenue Service;
(ii) no such plan listed in Schedule 5.19 subject to the provisions
of Title IV of ERISA has been terminated;
(iii) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any such plan listed in
Schedule 5.19;
(iv) no COMPANY (including any COMPANY subsidiary) has incurred
liability under Section 4062 of ERISA; and
(v) no circumstances exist pursuant to which any COMPANY (including
any COMPANY subsidiary) could have any direct or indirect liability
whatsoever (including, but not limited to, any liability to any
multiemployer plan or the PBGC under Title IV of ERISA or to the Internal
Revenue Service for any excise tax or penalty, or being subject to any
statutory lien to secure payment of any such liability) with respect to
any plan now or heretofore maintained or contributed to by any entity
other than any COMPANY that is, or
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at any time was, a member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes such COMPANY.
5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 5.21 or 5.13, neither the COMPANIES nor, to the knowledge of any
COMPANY, any client of any COMPANY is in violation of, or has violated, any law
or regulation or any order of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them which would have a Material Adverse Effect
on the COMPANIES; and except to the extent set forth on Schedule 5.10 or 5.13,
there are no material claims, actions, suits or proceedings, commenced or, to
the knowledge of any COMPANY, threatened, against or affecting any COMPANY, at
law or in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them and no notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received. No COMPANY has,
and, to the knowledge of each COMPANY, none of its clients has, conducted and is
conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable Federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations, including all such permits, licenses, orders and other
governmental approvals set forth on Schedules 5.12 and 5.13, and is not in
violation of any of the foregoing which might have a Material Adverse Effect on
the COMPANIES.
5.22 TAXES. Except as set forth on schedule 5.22, all of the COMPANIES
(including any COMPANY subsidiary) has timely filed all requisite federal, state
and other Tax returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date; and except as set forth on Schedule 5.22, to the
knowledge of any COMPANY, there are no examinations in progress or claims
against any of them for federal, state and other taxes (including penalties and
interest) for any period or periods prior to and including the Balance Sheet
Date and no notice of any claim for taxes, whether pending or threatened, has
been received. Except as set forth on Schedule 5.22, all Taxes, including
interest and penalties (whether or not shown on any Tax return) owed by any
COMPANY, any COMPANY's subsidiaries, any member of an affiliated or consolidated
group which includes or included any COMPANY or any COMPANY's subsidiaries, or
with respect to any payment made or deemed made by any COMPANY or any COMPANY's
subsidiaries, have been paid. The amounts shown as accruals for Taxes on the
Company Financial Statements are sufficient for the payment of all Taxes of the
kinds indicated (including penalties and interest) for all fiscal periods.
Copies of (i) any Tax examinations, (ii) extensions of statutory limitations and
(iii) the federal and local income Tax returns and franchise Tax returns of each
COMPANY (including any COMPANY subsidiaries) for their last three (3) fiscal
years, or such shorter period of time as any of them shall have existed, are
attached hereto as Schedule 5.22. Each COMPANY has a taxable year ended December
31 and has not made an election to retain a fiscal year other than December 31
under
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Section 444 of the Code. No COMPANY's methods of accounting have changed in the
past five years. No COMPANY is an investment company as defined in Section
351(e)(1) of the Code.
5.23 NO VIOLATIONS. No COMPANY is in violation of any Charter Document. No
COMPANY nor, to the knowledge of any COMPANY, any other party thereto is in
default under any lease, instrument, agreement, license, or permit set forth on
Schedule 5.12, 5.13, 5.14, 5.15 or 5.16, or any other material agreement to
which it is a party or by which its properties are bound (the "Material
Documents") in any manner that could result in a Material Adverse Effect; and,
except as set forth in Schedule 5.23, (a) the rights and benefits of the
COMPANIES under the Material Documents will not be materially adversely affected
by the transactions contemplated hereby and (b) the execution of this Agreement
and the performance of the obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any material violation or
breach or constitute a default under, any of the terms or provisions of the
Material Documents or the Charter Documents. Except as set forth on Schedule
5.23, none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and effect
and consummation of the transactions contemplated hereby will not give rise to
any right to termination, cancellation or acceleration or loss of any right or
benefit. Except as set forth on Schedule 5.23, none of the Material Documents
prohibits the use or publication by any COMPANY, the PARENT or ACQUISITION CORP.
of the name of any other party to such Material Document, and none of the
Material Documents prohibits or restricts any COMPANY from freely providing
services to any other customer or potential customer of any COMPANY, the PARENT,
ACQUISITION CORP. or any Other Founding Company.
5.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.24, no
COMPANY is now a party to any governmental contracts subject to price
redetermination or renegotiation.
5.25 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
on Schedule 5.25, there has not been:
(i) any material adverse change in the combined financial condition,
assets, liabilities (contingent or otherwise), income or business of the
COMPANIES; or
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the COMPANIES; or
(iii) any change in the authorized capital of the COMPANIES or their
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
or
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(iv) except as contemplated in Section 10.6, any declaration or
payment of any dividend or distribution in respect of the capital stock or
any direct or indirect redemption, purchase or other acquisition of any of
the capital stock of the COMPANIES; or
(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the COMPANIES to any of
their officers, directors, stockholders, employees, consultants or agents,
except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice; or
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the COMPANIES; or
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of any COMPANY to any person,
including, without limitation, the STOCKHOLDER or any affiliate thereof;
or
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to any COMPANY, including without limitation any
indebtedness or obligation of any STOCKHOLDER or any affiliate thereof; or
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of any COMPANY or requiring consent of any party to the transfer
and assignment of any such assets, property or rights; or
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of any COMPANY's business; or
(xi) any waiver of any material rights or claims of any COMPANY; or
(xii) any material breach, amendment or termination of any contract,
agreement, license, permit or other right to which any COMPANY is a party;
or
(xiii) any transaction by any COMPANY outside the ordinary course of
its businesses; or
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(xiv) any cancellation or termination of a material contract with a
customer or client prior to the scheduled termination date; or
(xv) any other distribution of property or assets by any COMPANY; or
(xvi) except as contemplated in Section 10.6, any incurrence,
drawing, borrowing or deferral of or under any debt or credit arrangement
so as to result in an aggregate amount of debt outstanding greater than as
set forth in the COMPANIES' combined Balance Sheet on the Balance Sheet
Date.
5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The COMPANIES have delivered to
the PARENT an accurate schedule (which is set forth on Schedule 5.26) as of the
date of this Agreement of:
(i) the name of the financial institution in which each COMPANY has
accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of the person authorized to draw thereon or have
access thereto.
Schedule 5.26 also sets forth the name of the person, corporation, firm or other
entity holding a general or special power of attorney from each COMPANY and a
description of the terms of such power.
5.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by the COMPANIES and the performance of the transactions contemplated herein
have been duly and validly authorized by the Board of Directors and the
STOCKHOLDER of the COMPANIES and this Agreement has been duly and validly
authorized by all necessary corporate action and is a legal, valid and binding
obligation of the COMPANIES and the STOCKHOLDER.
5.28 RELATIONS WITH GOVERNMENTS. The COMPANIES have not made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for government office.
5.29 DISCLOSURE. (a) This Agreement, including the schedules hereto,
together with the completed Directors and Officers Questionnaires attached
hereto as Schedule 5.29 and all other
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documents and information made available to PARENT and its representatives in
writing pursuant hereto or thereto, present fairly the business and operations
of the COMPANIES for the time periods with respect to which such information was
requested. The COMPANIES' rights under the documents delivered pursuant hereto
would not be materially adversely affected by, and no statement made herein
would be rendered untrue in any material respect by, any other document to which
any COMPANY is a party, or to which its properties are subject, or by any other
fact or circumstance regarding any COMPANY (which fact or circumstance was, or
should reasonably, after due inquiry, have been known to any COMPANY) that is
not disclosed pursuant hereto or thereto. If, prior to the 25th day after the
date of the final prospectus of PARENT utilized in connection with the IPO, the
COMPANIES or the STOCKHOLDER become aware of any fact or circumstance which
would change (or, if after the Funding and Consummation Date, would have
changed) a representation or warranty of the COMPANIES or STOCKHOLDER in this
Agreement or would affect any document delivered pursuant hereto in any material
respect, the COMPANIES and the STOCKHOLDER shall immediately give notice of such
fact or circumstance to PARENT. However, subject to the provisions of Section
7.8, such notification shall not relieve either the COMPANIES or the STOCKHOLDER
of their obligations under this Agreement, and, subject to the provisions of
Section 7.8, at the sole option of PARENT, the truth and accuracy of any and all
warranties and representations of the COMPANIES, or on behalf of the COMPANIES
and of STOCKHOLDER at the date of this Agreement and on the Closing Date and on
the Funding and Consummation Date, shall be a precondition to the consummation
of this transaction.
(b) PARENT shall use reasonable commercial efforts to file the
Registration Statement and to have it declared effective; however, the COMPANIES
and the STOCKHOLDER acknowledge and agree (i) that there exists no firm
commitment, binding agreement, or promise or other assurance of any kind,
whether express or implied, oral or written, that a Registration Statement will
become effective or that the IPO pursuant thereto will occur at a particular
price or within a particular range of prices or occur at all; (ii) that neither
PARENT or any of its officers, directors, agents or representatives nor any
Underwriter shall have any liability to the COMPANIES, the STOCKHOLDER or any
other person affiliated or associated with the COMPANIES for any failure of the
Registration Statement to become effective, the IPO to occur at a particular
price or within a particular range of prices or to occur at all; and (iii) that
the decision of STOCKHOLDER to enter into this Agreement, or to vote in favor of
or consent to the proposed Merger, has been or will be made independent of, and
without reliance upon, any statements, opinions or other communications, or due
diligence investigations which have been or will be made or performed by any
prospective Underwriter, relative to PARENT or the prospective IPO; provided,
however, that the COMPANIES and the STOCKHOLDER retain their right to insist
that the IPO Stock Price be no lower than the minimum price specified in Annex
II.
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5.30 PROHIBITED ACTIVITIES. Except as set forth on Schedule 5.30, the
COMPANIES have not, between the Balance Sheet Date and the date hereof, taken
any of the actions (Prohibited Activities) set forth in Section 7.3.
(B) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
The STOCKHOLDER represents and warrants that the representations and
warranties set forth below are true as of the date of this Agreement and,
subject to Section 7.8, shall be true on the Closing Date and on the Funding and
Consummation Date, and that the representations and warranties set forth in
Sections 5.31 and 5.32 shall survive until the first anniversary of the Funding
and Consummation Date, which shall be the Expiration Date for purposes of
Sections 5.31 and 5.32.
5.31 AUTHORITY; OWNERSHIP. The STOCKHOLDER has the full legal right, power
and authority to enter into this Agreement. The STOCKHOLDER owns beneficially
and of record all of the shares of the Company Stock identified on Annex III as
being owned by the STOCKHOLDER, and, except as set forth on Schedule 5.31, such
Company Stock is owned free and clear of all liens, encumbrances and claims of
every kind.
5.32 PREEMPTIVE RIGHTS. The STOCKHOLDER does not have, or hereby waives,
any preemptive or other right to acquire shares of Company Stock or Parent Stock
that the STOCKHOLDER has or may have had other than rights of the STOCKHOLDER to
acquire Parent Stock pursuant to (i) this Agreement or (ii) any written option
granted by PARENT.
5.33 NO INTENTION TO DISPOSE OF PARENT STOCK. The STOCKHOLDER is not under
any binding commitment or contract to sell, exchange or otherwise dispose of
shares of Parent Stock received as described in Section 3.1.
6. REPRESENTATIONS OF PARENT AND ACQUISITION CORP.
PARENT and each ACQUISITION CORP. jointly and severally represent
and warrant that all of the following representations and warranties in this
Section 6 are true at the date of this Agreement and, subject to Section 7.8
hereof, shall be true on the Closing Date and the Funding and Consummation Date,
and that such representations and warranties shall survive the Funding and
Consummation Date for a period of twelve months (the last day of such period
being the "Expiration Date"), except that (i) the warranties and representations
set forth in Section 6.14 hereof shall survive until such time as the
limitations period has run for all Tax periods ended on or prior to the Funding
and Consummation Date, which shall be deemed to be the Expiration Date for
Section 6.14 and (ii) solely for purposes of determining whether a claim for
indemnification under Section 11.2(iv) hereof has been made on a timely basis,
and solely to the extent that, in connection
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with the IPO, PARENT actually incurs liability under the 1933 Act, the 1934 Act,
or any other federal or state securities laws, the representations and
warranties set forth herein shall survive until the expiration of any applicable
limitations period, which shall be deemed to be the Expiration Date for such
purposes.
6.1 DUE ORGANIZATION. PARENT and each ACQUISITION CORP. are corporations
duly organized, validly existing and in good standing under the laws of the
State of Delaware and are duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on their business in the places and in the manner as now conducted except
where the failure to be so authorized or qualified would not have a Material
Adverse Effect. True, complete and correct copies of the Certificate of
Incorporation and By-laws, each as amended, of PARENT and each ACQUISITION CORP.
(the "Parent Charter Documents") are all attached hereto as Annex I.
6.2 AUTHORIZATION. The representatives of PARENT and each ACQUISITION
CORP. executing this Agreement have the authority to enter into and bind PARENT
and each ACQUISITION CORP. to the terms of this Agreement. PARENT and each
ACQUISITION CORP. have the corporate power and authority to enter into this
Agreement and the Merger.
6.3 CAPITAL STOCK OF PARENT AND ACQUISITION CORPS. The authorized capital
stock of PARENT and each ACQUISITION CORP. is as set forth in Sections 1.4(ii)
and (iii), respectively. All of the issued and outstanding shares of the capital
stock of each ACQUISITION CORP. are owned by PARENT and all of the issued and
outstanding shares of the capital stock of PARENT are owned as set forth on
Annex IV. All of the issued and outstanding shares of the capital stock of
PARENT and each ACQUISITION CORP. have been duly authorized and validly issued,
are fully paid and nonassessable. Further, none of such shares were issued in
violation of the preemptive rights of any past or present stockholder of PARENT
or any ACQUISITION CORP.
On the Funding and Consummation Date, PARENT shall have outstanding only
one class of common stock (Parent Common Stock) and the shares of Parent Common
Stock owned by the Founding Companies and the purchasers of stock in the IPO
will not possess less than 80% of the total voting power of Parent Common Stock
entitled to vote. For this purpose, the outstanding Parent Common Stock shall
include, without limitation, the shares to be held by the stockholders of all
Founding Companies and by purchasers in the IPO.
6.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except for the
Other Agreements and except as set forth on Schedule 6.4, (i) no option,
warrant, call, conversion right or commitment of any kind exists which obligates
PARENT or any ACQUISITION CORP. to issue any of their authorized but unissued
capital stock; and (ii) neither PARENT nor any ACQUISITION
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CORP. has any obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. Schedule 6.4 also
includes complete and accurate copies of all stock option or stock purchase
plans, including a list, accurate as of the date hereof, of all outstanding
options, warrants or other rights to acquire shares of the stock of PARENT.
6.5 SUBSIDIARIES. No ACQUISITION CORP. has any subsidiaries. PARENT has no
subsidiaries except for the ACQUISITION CORPS. and the other companies
identified as "ACQUISITION CORP." in the of the Other Agreements. Except as set
forth in the preceding sentence, neither PARENT nor any ACQUISITION CORP.
presently owns, of record or beneficially, or controls, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity, and neither PARENT
nor any ACQUISITION CORP., directly or indirectly, is a participant in any joint
venture, partnership or other non-corporate entity.
6.6 FINANCIAL STATEMENTS. Attached hereto as Schedule 6.6 are copies of
the following financial statements (the "Parent Financial Statements") of
PARENT, which reflect the results of its operations from inception in February,
1997: PARENT's audited Balance Sheet as of June 30, 1997 and Statements of
Income, Cash Flows and Retained Earnings for the period from inception through
June 30 , 1997. Such Parent Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as noted thereon or on Schedule
6.6). Except as set forth on Schedule 6.6, such Balance Sheet as of June 30,
1997 presents fairly the financial position of PARENT as of such date, and such
Statements of Income, Cash Flows and Retained Earnings present fairly the
results of operations and cash from for the period indicated.
6.7 LIABILITIES AND OBLIGATIONS. Except as set forth on Schedule 6.7,
PARENT and the ACQUISITION CORPS. have no material liabilities, contingent or
otherwise, except as set forth in or contemplated by this Agreement and the
Other Agreements and except for fees incurred in connection with the
transactions contemplated hereby and thereby.
6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 6.8, neither PARENT nor any ACQUISITION CORP. is in violation of any
law or regulation or any order of any court or Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over either of them which would have a
Material Adverse Effect; and except to the extent set forth in Schedule 6.8,
there are no material claims, actions, suits or proceedings, pending or, to the
knowledge of PARENT or any ACQUISITION CORP., threatened, against or affecting
PARENT or any ACQUISITION CORP., at law or in equity, or before or by any
federal, state, municipal or other governmental department,
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commission, board, bureau, agency or instrumentality having jurisdiction over
either of them and no notice of any claim, action, suit or proceeding, whether
pending or threatened, has been received. PARENT and each ACQUISITION CORP. have
conducted and are conducting their businesses in substantial compliance with the
requirements, standards, criteria and conditions set forth in applicable
federal, state and local statutes, ordinances, permits, licenses, orders,
approvals, variances, rules and regulations and are not in violation of any of
the foregoing which might have a Material Adverse Effect.
6.9 NO VIOLATIONS. Neither PARENT nor any ACQUISITION CORP. is in
violation of any Parent Charter Document. None of PARENT, any ACQUISITION CORP.,
or, to the knowledge of PARENT and any ACQUISITION CORP., any other party
thereto, is in default under any lease, instrument, agreement, license, or
permit to which PARENT or any ACQUISITION CORP. is a party, or by which PARENT
or any ACQUISITION CORP., or any of their properties, are bound (collectively,
the "Parent Documents"); and (a) the rights and benefits of PARENT and any
ACQUISITION CORP. under the Parent Documents will not be adversely affected by
the transactions contemplated hereby and (b) the execution of this Agreement and
the performance of the obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any material violation or
breach or constitute a default under, any of the terms or provisions of the
Parent Documents or the Parent Charter Documents. Except as set forth on
Schedule 6.9, none of the Parent Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and effect
and consummation of the transactions contemplated hereby will not give rise to
any right to termination, cancellation or acceleration or loss of any right or
benefit.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by PARENT and the ACQUISITION CORPS. and the performance of the transactions
contemplated herein have been duly and validly authorized by the Boards of
Directors of PARENT and the ACQUISITION CORPS. and this Agreement has been duly
and validly authorized by all necessary corporate action and is a legal, valid
and binding obligation of PARENT and the ACQUISITION CORPS.
6.11 PARENT STOCK. At the time of issuance thereof, the Parent Stock to be
delivered to the STOCKHOLDER pursuant to this Agreement will constitute valid
and legally issued shares of PARENT, fully paid and nonassessable, and with the
exception of restrictions upon resale set forth in Sections 15 and 16 hereof,
will be identical in all substantive respects (which do not include the form of
certificate upon which it is printed or the presence or absence of a CUSIP
number on any such certificate) to the Parent Stock issued and outstanding as of
the date hereof. The shares of Parent Stock to be issued to the STOCKHOLDER
pursuant to this Agreement will not be registered under the 1933 Act, except as
provided in Section 17 hereof.
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6.12 NO SIDE AGREEMENTS. Neither PARENT nor any ACQUISITION CORP. has
entered or will enter into any agreement with any of the Founding Companies or
any of the stockholders of the Founding Companies other than the Other
Agreements and the agreements contemplated by the Other Agreements, including
the employment agreements referred to therein.
6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. PARENT was organized in
February, 1997 and has conducted limited operations since that time. Neither
PARENT nor any ACQUISITION CORP. has conducted any material business since the
date of its inception, except in connection with this Agreement, the Other
Agreements and the IPO. Neither PARENT nor any ACQUISITION CORP. owns or has at
any time owned any real property or any material personal property or is a party
to any other agreement, except as listed on Schedule 6.13 and except that PARENT
is a party to the Other Agreements and the agreements contemplated thereby and
to such agreements as will be filed as Exhibits to the Registration Statement.
Except (i) as described in Schedule 6.13 and (ii) for the information in
the Annexes and Schedules, this Agreement and the Other Agreements are in
substantially the same form; and copies of the Other Agreements are available
for review by COMPANY and the STOCKHOLDER. In arriving at the consideration to
be paid to STOCKHOLDER specified in Annex II, PARENT utilized with the COMPANIES
substantially the same methodologies as PARENT utilized with each of the Other
Founding Companies.
6.14 TAXES.PARENT has timely filed all requisite federal, state and other
Tax returns or extension requests for all fiscal periods ended on or before the
Balance Sheet Date; and except as set forth on Schedule 6.14, there are no
examinations in progress or claims against PARENT for federal, state and other
Taxes (including penalties and interest) for any period or periods prior to and
including the Balance Sheet Date and no notice of any claim for taxes, whether
pending or threatened, has been received. All Tax, including interest and
penalties (whether or not shown on any tax return) owed by PARENT, any member of
an affiliated or consolidated group which includes or included PARENT, or with
respect to any payment made or deemed made by PARENT herein has been paid. The
amounts shown as accruals for taxes on Parent Financial Statements are
sufficient for the payment of all Taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that date.
PARENT is not an investment company as defined in Section 351(e)(1) of the Code.
PARENT will not make an election to treat the transaction as a
purchase of assets under Section 338 of the Code.
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6.15 ABSENCE OF CHANGES. Since June 30, 1997, except as set forth in the
drafts of the Registration Statement delivered to the STOCKHOLDER, and except as
contemplated by this Agreement and the Other Agreements, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of PARENT;
(ii) any damage destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
PARENT;
(iii) any change in the authorized capital of PARENT or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of PARENT;
(v) any work interruptions, labor grievances or claims filed, or any
event or condition of any character, materially adversely affecting the
business of PARENT;
(vi) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of PARENT to any person;
(vii) any cancellation or agreement to cancel, any indebtedness or
other obligation owing PARENT;
(viii)any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of PARENT or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(ix) any waiver of any material rights or claims of PARENT;
(x) any amendment or termination of any material contract agreement,
license, permit or other right to which PARENT is a party;
(xi) any transaction by PARENT outside the ordinary course of its
business; or
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(xii) any other distribution of property or assets by PARENT other
than in the ordinary course of business.
6.16 DISCLOSURE. The most recent draft of the Registration Statement
delivered to the COMPANIES and the STOCKHOLDER, together with this Agreement and
the information furnished to the COMPANIES and the STOCKHOLDER in connection
herewith, does not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing does not apply to statements contained in or omitted from any
of such documents made or omitted in reliance upon information furnished by the
COMPANIES or the STOCKHOLDER.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of this
Agreement and the Funding and Consummation Date, the COMPANIES will afford to
the officers and authorized representatives of PARENT access to all of the
COMPANIES' sites, properties, books and records and will furnish PARENT with
such additional financial and operating data and other information as to the
business and properties of the COMPANIES as PARENT may from time to time
reasonably request. The COMPANIES will cooperate with PARENT, its
representatives, auditors and counsel in the preparation of any documents or
other material which may be reasonably required in connection with any documents
or materials required by this Agreement. PARENT, ACQUISITION CORPS., the
STOCKHOLDER and the COMPANIES will treat all information obtained in connection
with the negotiation and performance of this Agreement as confidential in
accordance with the provisions of Section 14 hereof. In addition, PARENT will
cause each of the Other Founding Companies to enter into a provision similar to
this Section 7.1 requiring each Other Founding Company, its stockholders,
directors, officers, representatives, employees and agents to keep confidential
any information obtained by such Other Founding Company.
(b) Between the date of this Agreement and the Funding and Consummation
Date, PARENT will afford to the officers and authorized representatives of the
COMPANIES access to all of PARENT's and the ACQUISITION CORPS.' sites,
properties, books and records and will furnish the COMPANIES with such
additional financial and operating data and other information as to the business
and properties of PARENT and the ACQUISITION CORPS. as the COMPANIES may from
time to time reasonably request. PARENT and the ACQUISITION CORPS. will
cooperate with the COMPANIES, its representatives, auditors and counsel in the
preparation of any documents or other material which may be required in
connection with any documents or materials required by this Agreement. The
COMPANIES will cause all information obtained in connection
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with the negotiation and performance of this Agreement to be treated as
confidential in accordance with the provisions of Section 14 hereof.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Funding and Consummation Date, the COMPANIES will, except as
set forth on Schedule 7.2:
(i) carry on their businesses in substantially the same manner as
they have heretofore and not introduce any material new method of
management, operation or accounting; and
(ii) maintain their properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted; and
(iii) perform in all material respects all of their obligations
under agreements relating to or affecting its assets, properties or
rights; and
(iv) keep in full force and effect present insurance policies or
other comparable insurance coverage; and
(v) use its reasonable best efforts to maintain and preserve their
business organization intact, retain its present key employees and
maintain their relationships with suppliers, customers and others having
business relations with any COMPANY; and
(vi) maintain compliance with all material permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities; and
(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments, except as permitted in Section
10.6, or as disclosed on Schedule 5.10, or without the prior knowledge and
written consent of PARENT; and maintain all debt and lease obligations at
levels no greater than the levels in effect on the Balance Sheet Date; and
(viii) maintain or reduce present salaries and commission levels for
all officers, directors, employees and agents except for ordinary and
customary bonus and salary increases for employees in accordance with past
practices.
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7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3, and except
as expressly permitted by Section 10.6, between the date hereof and the Funding
and Consummation Date, the COMPANIES will not, without prior written consent of
PARENT:
(i) make any change in their Articles of Incorporation or By-laws;
or
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to their securities of any kind other than
in connection with the exercise of options or warrants listed in Schedule
5.4; or
(iii) declare or pay any dividend, or make any distribution in
respect of their stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of its stock;
or
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except if it is in
the normal course of business (consistent with past practice) or involves
an amount not in excess of $50,000; or
(v) create, assume or permit to exist any borrowing, debt, mortgage,
pledge or other lien or encumbrance upon any assets or properties whether
now owned or hereafter acquired, except (1) debt in an aggregate amount
not to exceed the amount of debt outstanding on the Balance Sheet Date,
(2) with respect to purchase money liens incurred in connection with the
acquisition of equipment with an aggregate cost not in excess of $50,000
necessary or desirable for the conduct of the businesses of the COMPANIES,
(3) (A) liens for taxes either not yet due or being contested in good
faith and by appropriate proceedings (and for which contested taxes
adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other like
liens arising in the ordinary course of business (the liens set forth in
clause (3) being referred to herein as "Statutory Liens"), or (4) liens
set forth on Schedule 5.10 and/or 5.15 hereto; or
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business; or
(vii) negotiate for the acquisition of any business or the start-up
of any new business; or
(viii) merge or consolidate or agree to merge or consolidate with or
into any other corporation; or
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(ix) waive any material rights or claims of any COMPANY, provided
that a COMPANY may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice,
provided, further, that such adjustments shall not be deemed to be
included in Schedule 5.11 unless specifically listed thereon; or
(x) commit a material breach or amend or terminate any material
agreement, permit, license or other right of any COMPANY; or
(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
7.4 NO SHOP. None of the STOCKHOLDER, any COMPANY, or any agent, officer,
director, trustee or any representative of any of the foregoing will, during the
period commencing on the date of this Agreement and ending with the earlier to
occur of the Funding and Consummation Date or the termination of this Agreement
in accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers from
any person for, or
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than PARENT or its
authorized agents relating to, any acquisition or purchase of all or a
material amount of the assets of, or any equity interest in, any COMPANY
or a merger, acquisition, consolidation, share exchange or business
combination of or with any COMPANY.
7.5 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, each COMPANY
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements, and shall
provide PARENT on Schedule 7.5 with proof that any required notice has been
sent.
7.6 AGREEMENTS. Prior to the Closing Date, the STOCKHOLDER and the
COMPANIES shall terminate (i) any stockholders agreements, voting agreements,
voting trusts, options, warrants, (ii) any employment agreements between any
COMPANY and any employee listed on Schedule 9.12 hereto, and (iii) any existing
agreement between any COMPANY and the STOCKHOLDER other than those expressly
disclosed on Schedule 7.6/9.7 as not being terminated.
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7.7 NOTIFICATION OF CERTAIN MATTERS. The STOCKHOLDER and the COMPANIES
shall give prompt notice to PARENT of (i) the occurrence or non-occurrence of
any event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of any COMPANY or the STOCKHOLDER contained herein to
be untrue or inaccurate in any material respect at or prior to the Closing Date
or the Funding and Consummation Date and (ii) any material failure of the
STOCKHOLDER or any COMPANY to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by such person hereunder. PARENT and
the ACQUISITION CORPS. shall give prompt notice to the COMPANIES of (i) the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would be likely to cause any representation or warranty of PARENT or any
ACQUISITION CORP. contained herein to be untrue or inaccurate in any material
respect at or prior to the Closing Date or the Funding and Consummation Date and
(ii) any material failure of PARENT or any ACQUISITION CORP. to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder. The delivery of any notice pursuant to this Section 7.7 shall not
be deemed to (i) modify the representations or warranties hereunder of any
party, which modification may only be made pursuant to Section 7.8, (ii) modify
the conditions set forth in Sections 8 and 9, or (iii) limit or otherwise affect
the remedies available hereunder to any party receiving such notice.
7.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation, until 24 hours prior to the
anticipated effectiveness of the Registration Statement, to supplement or amend
promptly the Schedules hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules, provided however,
that supplements and amendments to Schedules 5.10, 5.11, 5.14 and 5.15 shall
only have to be delivered at the Closing Date, unless such Schedule is to be
amended to reflect an event occurring other than in the ordinary course of
business. Notwithstanding the foregoing sentence, no amendment or supplement to
a Schedule prepared by any COMPANY that constitutes or reflects an event or
occurrence that would have a Material Adverse Effect may be made unless PARENT
and a majority of the Founding Companies other than the COMPANIES consent to
such amendment or supplement; and provided further, that no amendment or
supplement to a Schedule prepared by PARENT or any ACQUISITION CORP. that
constitutes or reflects an event or occurrence that would have a Material
Adverse Effect may be made unless a majority of the Founding Companies consent
to such amendment or supplement. For all purposes of this Agreement, including
without limitation for purposes of determining whether the conditions set forth
in Sections 8.1 and 9.1 have been fulfilled, the Schedules hereto shall be
deemed to be the Schedules as amended or supplemented pursuant to this Section
7.8. In the event that one of the Other Founding Companies seeks to amend or
supplement a Schedule pursuant to Section 7.8 of one of the Other Agreements,
and such amendment or supplement constitutes or reflects an event or occurrence
that would have a Material Adverse
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Effect on such Other Founding Company, PARENT shall give the COMPANIES notice
promptly after it has knowledge thereof. If PARENT and a majority of the
Founding Companies consent to such amendment or supplement, which consent shall
have been deemed given by PARENT or any Founding Company if no response is
received within 24 hours following receipt of notice of such amendment or
supplement (or sooner if required by the circumstances under which such consent
is requested), but the COMPANIES do not give their consent, the COMPANIES may
terminate this Agreement pursuant to Section 12.1(iv). In the event that any
COMPANY seeks to amend or supplement a Schedule pursuant to this Section 7.8,
and PARENT and a majority of the Other Founding Companies do not consent to such
amendment or supplement, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 12.1(i). In the event that PARENT or any
ACQUISITION CORP. seeks to amend or supplement a Schedule pursuant to this
Section 7.8 and a majority of the Founding Companies do not consent to such
amendment or supplement, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 12.1(i). No party to this Agreement shall be
liable to any other party if this Agreement shall be terminated pursuant to the
provisions of this Section 7.8. No amendment of or supplement to a Schedule
shall be made later than 24 hours prior to the anticipated effectiveness of the
Registration Statement.
7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The COMPANIES
and STOCKHOLDER shall furnish or cause to be furnished to PARENT and the
Underwriters all of the information concerning the COMPANIES and the STOCKHOLDER
required for inclusion in, and will cooperate with PARENT and the Underwriters
in the preparation of, the Registration Statement and the prospectus included
therein (including audited and unaudited financial statements, prepared in
accordance with generally accepted accounting principles, in form suitable for
inclusion in the Registration Statement). The COMPANIES and the STOCKHOLDER
agree promptly to advise PARENT if at any time during the period in which a
prospectus relating to the offering is required to be delivered under the 1933
Act, any information contained in the prospectus concerning the COMPANIES or the
STOCKHOLDER becomes incorrect or incomplete in any material respect, and to
provide the information needed to correct such inaccuracy. Insofar as the
information relates solely to the COMPANIES or the STOCKHOLDER, the COMPANIES
represent and warrant as to such information with respect to themselves, and the
STOCKHOLDER represents and warrants, as to such information with respect to the
COMPANIES and herself, that the Registration Statement will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. PARENT will keep the
COMPANIES and the Other Founding Companies advised as to the status of the
Registration Statement, including receipt of SEC comments, PARENT'S response
thereto, and the anticipated date and time of its effectiveness.
7.10 FINAL FINANCIAL STATEMENTS. The COMPANIES shall provide prior to the
Funding and Consummation Date, and PARENT shall have had sufficient time to
review, the unaudited
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combined balance sheets of the COMPANIES as of the end of all fiscal quarters
following the Balance Sheet Date, and the unaudited combined statement of
income, cash flows and retained earnings of the COMPANIES for all fiscal
quarters ended after the Balance Sheet Date, disclosing no material adverse
change in the combined financial condition of the COMPANIES or the combined
results of their operations or cash flows from the financial statements as of
the Balance Sheet Date. Such financial statements must be prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as noted therein). Except as noted in
such financial statements, all of such financial statements will present fairly
the combined results of operations or cash flows of the COMPANIES for the
periods indicated therein.
7.11 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
7.12 AUTHORIZED CAPITAL. PARENT shall maintain its authorized capital
stock as set forth in the Registration Statement filed with the SEC except for
such changes in authorized capital stock as are made to respond to comments made
by the SEC or requirements of any exchange or automated trading system for which
application is made to register the Parent Stock.
7.13 COMPLIANCE WITH XXXX-XXXXX. All parties to this Agreement hereby
recognize that one or more filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "Xxxx-Xxxxx Act") may be required in
connection with the transactions contemplated herein. If it is determined by the
parties to this Agreement that filings under the Xxxx-Xxxxx Act are required,
then: (i) each of the parties hereto agrees to cooperate and use its best
efforts to comply with the Xxxx-Xxxxx Act, (ii) such compliance by the
STOCKHOLDER and the COMPANIES shall be deemed a condition precedent in addition
to the conditions precedent set forth in Section 9 of this Agreement, and such
compliance by PARENT and ACQUISITION CORPS. shall be deemed a condition
precedent in addition to the conditions precedent set forth in Section 8 of this
Agreement, and (iii) the parties agree to cooperate and use their best efforts
to cause all filings required under the Xxxx-Xxxxx Act to be made.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDER AND COMPANIES
The obligations of STOCKHOLDER and the COMPANIES with respect to actions
to be taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions. The obligations of
the STOCKHOLDER and the COMPANIES with respect to the actions to be taken on the
Funding and Consummation Date are subject to the
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satisfaction or waiver on or prior to the Funding and Consummation Date of the
conditions set forth in Sections 8.1, 8.8, 8.9 and 8.12. As of the Closing Date
or, with respect to the conditions set forth in Sections 8.l, 8.8 and 8.12, as
of the Funding and Consummation Date, all conditions not satisfied or objected
to shall be deemed to have been waived, except that no such waiver shall be
deemed to affect the survival of the representations and warranties of PARENT
and the ACQUISITION CORPS. contained in Section 6 hereof:
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of PARENT and ACQUISITION CORPS. contained in
Section 6 shall be true and correct in all material respects as of the Closing
Date and the Funding and Consummation Date as though such representations and
warranties had been made on and as of such dates; all of the terms, covenants
and conditions of this Agreement to be complied with and performed by PARENT and
ACQUISITION CORPS. on or before the Closing Date and the Funding and
Consummation Date shall have been duly complied with and performed in all
material respects; and certificates to the foregoing effect dated the Closing
Date and the Funding and Consummation Date, respectively, and signed by the
President or any Vice President of PARENT shall have been delivered to the
COMPANIES and the STOCKHOLDER.
8.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be satisfactory to the COMPANIES and their counsel. The
STOCKHOLDER and the COMPANIES shall not have determined that the Registration
Statement and the prospectus forming a part thereof, including any amendments
thereof or supplements thereto, contain any untrue statement of a material fact,
or omit to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that the
condition contained in this sentence shall be deemed satisfied if the COMPANIES
or STOCKHOLDER shall have failed to inform PARENT in writing prior to the
effectiveness of the Registration Statement of the existence of an untrue
statement of a material fact or the omission of such a statement of a material
fact.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO and no governmental agency or body shall have
taken any other action or made any request of the COMPANIES as a result of which
the management of the COMPANIES deems it inadvisable to proceed with the
transactions hereunder.
8.4 OPINION OF COUNSEL. The COMPANIES shall have received an opinion from
counsel for PARENT, dated the Funding and Consummation Date, in the form annexed
hereto as Annex V.
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8.5 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC and the Underwriters shall have agreed to acquire
on a firm commitment basis, subject to the conditions set forth in the
underwriting agreement, on terms such that the aggregate value of the cash and
the number of shares of Parent Stock to be received by the STOCKHOLDER is not
less than the Minimum Value set forth on Annex II.
8.6 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the transaction
contemplated herein shall have been obtained and made and no action or
proceeding shall have been instituted or threatened to restrain or prohibit the
Merger and no governmental agency or body shall have taken any other action or
made any request of COMPANIES as a result of which COMPANIES deems it
inadvisable to proceed with the transactions hereunder.
8.7 GOOD STANDING CERTIFICATES. PARENT and ACQUISITION CORPS. shall have
delivered to the COMPANIES a certificate, dated as of a date no later than ten
days prior to the Closing Date, duly issued by the Secretary of State Delaware
and Texas and in each state in which PARENT or ACQUISITION CORPS. are authorized
to do business, showing that PARENT and ACQUISITION CORPS. are in good standing
and authorized to do business.
8.8 NO MATERIAL ADVERSE EFFECT No event or circumstance shall have
occurred with respect to PARENT or ACQUISITION CORPS. which would constitute a
Material Adverse Effect.
8.9 CLOSING OF IPO. The closing of the sale of the Parent Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
8.10 SECRETARY'S CERTIFICATE. The COMPANIES shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of PARENT and of the ACQUISITION CORPS., certifying the truth and correctness of
attached copies of the PARENT's and ACQUISITION CORPS.' Certificate or Articles
of Incorporation (including amendments thereto), By-Laws (including amendments
thereto), and resolutions of the Boards of Directors and, if required, the
stockholders of PARENT and ACQUISITION CORPS. approving PARENT's and ACQUISITION
CORPS.' entering into this Agreement and the consummation of the transactions
contemplated hereby.
8.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 9.12
shall have been afforded the opportunity to enter into an employment agreement
substantially in the form of Annex VIII hereto.
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8.12 TAX MATTERS. The STOCKHOLDER shall have been advised a tax advisor
reasonably acceptable to the STOCKHOLDER that the Merger should qualify as a
tax-free transfer of property under Section 351 of the Code; provided that this
shall not constitute a condition precedent under this Section 8 or otherwise
unless the STOCKHOLDER has complied with every reasonable request designed or
intended to enable the Merger to so qualify.
8.13 PARALLEL TRANSFER RESTRICTIONS. WJG Capital, L.L.C. ("WJG") and the
PARENT's other stockholders and option and warrant holders shall have agreed in
writing to restrict the transfers of their shares of Parent Stock on
substantially the same terms as specified in Section 15.1; provided, that
nothing shall restrict WJG from distributing shares of Parent Stock to the
members of WJG so long as such members are subject to the referenced
restrictions on transfer.
8.14 OTHER MERGERS. PARENT's acquisitions of the Other Founding Companies
shall occur on the Funding and Consummation Date pursuant to the Other
Agreements.
8.15 LISTING. PARENT shall have caused the Parent Stock to be listed on
the New York Stock Exchange or traded or quoted on the NASDAQ National Market
System, subject to official notice of issuance.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND ACQUISITION CORP.
The obligations of PARENT and ACQUISITION CORPS. with respect to actions
to be taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions. The obligations of
PARENT and ACQUISITION CORPS. with respect to actions to be taken on the Funding
and Consummation Date are subject to the satisfaction or waiver on or prior to
the Funding and Consummation Date of the conditions set forth in Sections 9.1,
9.4 and 9.13. As of the Closing Date or, with respect to the conditions set
forth in Sections 9.1, 9.4 and 9.13, as of the Funding and Consummation Date,
all conditions not satisfied shall be deemed to have been waived, except that no
such waiver shall be deemed to affect the survival of the representations and
warranties of the COMPANIES and STOCKHOLDERS contained in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the STOCKHOLDER and the COMPANIES contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date and the Funding and Consummation Date with the same effect as
though such representations and warranties had been made on and as of such
dates; all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the STOCKHOLDER and the COMPANIES on or before the
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Closing Date or the Funding and Consummation Date, as the case may be, shall
have been duly performed or complied with in all material respects; and the
STOCKHOLDER shall have delivered to PARENT certificates dated the Closing Date
and the Funding and Consummation Date and signed by her to such effect.
9.2 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO and no governmental agency or body shall have
taken any other action or made any request of PARENT as a result of which the
management of PARENT deems it inadvisable to proceed with the transactions
hereunder.
9.3 SECRETARY'S CERTIFICATE. PARENT shall have received a certificate,
dated the Closing Date and signed by the secretary(ies) of the COMPANIES,
certifying the truth and correctness of attached copies of each such COMPANY's
Certificate or Articles of Incorporation (including amendments thereto), By-Laws
(including amendments thereto), and resolutions of the Board of Directors and
the STOCKHOLDER approving each such COMPANY's entering into this Agreement and
the consummation of the transactions contemplated hereby.
9.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the COMPANIES which would constitute a Material Adverse
Effect, and the COMPANIES shall not have suffered any material loss or damages
to any of its properties or assets, whether or not covered by insurance, which
change, loss or damage materially affects or impairs the ability of the
COMPANIES to conduct their business.
9.5 STOCKHOLDER'S RELEASE. The STOCKHOLDER shall have delivered to PARENT
and the COMPANIES an instrument dated the Closing Date releasing the COMPANIES
(including all subsidiaries) from (i) any and all claims of the STOCKHOLDER
against the COMPANY and PARENT and (ii) any and all obligations of the COMPANIES
and PARENT to the STOCKHOLDER, except for (x) items specifically identified on
Schedules 5.10, 5.15 or 7.6/9.7 as being claims of or obligations to the
STOCKHOLDER which are to survive Closing, (y) any obligations arising after the
Funding and Consummation Date to the STOCKHOLDER relating to his or her
employment by the COMPANY and (z) obligations arising under this Agreement or
the transactions contemplated hereby.
9.6 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been approved
by counsel to PARENT.
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9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as otherwise
specifically set forth on Schedule 7.6/9.7, all existing agreements between
COMPANIES (including all subsidiaries) and the STOCKHOLDER and their affiliates
shall have been canceled effective prior to or as of the Funding and
Consummation Date.
9.8 OPINION OF COUNSEL. PARENT shall have received an opinion from Counsel
to the COMPANIES and the STOCKHOLDER, dated the Closing Date, substantially in
the form annexed as Annex VI, and the Underwriters shall have received a copy of
the same opinion addressed to them.
9.9 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all consents
and approvals of third parties listed on Schedule 5.23 shall have been obtained;
and no action or proceeding shall have been instituted or threatened to restrain
or prohibit the Merger and no governmental agency or body shall have taken any
other action or made any request of PARENT as a result of which PARENT deems it
inadvisable to proceed with the transactions hereunder.
9.10 GOOD STANDING CERTIFICATES. The COMPANIES shall have delivered to
PARENT a certificate, dated as of a date no earlier than ten days prior to the
Closing Date, duly issued by the appropriate governmental authority in each
COMPANY's (and each subsidiary) state of incorporation and, unless waived by
PARENT, in the state in which each COMPANY (and each subsidiary) is authorized
to do business, showing each such COMPANY is in good standing and authorized to
do business and that all state franchise and/or income Tax returns and Taxes for
each COMPANY (and each subsidiary) for all periods prior to the Closing have
been filed and paid.
9.11 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC.
9.12 EMPLOYMENT AGREEMENTS. The appropriate COMPANY and each of the
persons listed on Schedule 9.12 shall have entered into an employment agreement
substantially in the form of Annex VII hereto.
9.13 CLOSING OF IPO. The closing of the sale of the Parent Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
9.14 FIRPTA CERTIFICATE. STOCKHOLDER shall have delivered to PARENT a
certificate to the effect that she is not a foreign person pursuant to Section
1.1445-2(b) of the Treasury regulations.
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10. COVENANTS OF PARENT AND THE STOCKHOLDER AFTER CLOSING
10.1 REPAYMENT OF CERTAIN OBLIGATIONS. On the Funding and Consummation
Date, PARENT shall pay off or cause to be paid off all of the COMPANIES' funded
indebtedness which either (i) has been disclosed pursuant to Schedule 5.10 of
this Agreement and is issued and outstanding consistent with this Agreement or
(ii) is incurred in accordance with Section 10.6. After the Funding and
Consummation Date, PARENT shall provide the COMPANY with the working capital
required for operations.
10.2 PRESERVATION OF TAX TREATMENT. Except as contemplated by this
Agreement or the Registration Statement, after the Funding and Consummation
Date, PARENT shall not and shall not permit any of its subsidiaries to undertake
any act that would jeopardize the tax status of the Consolidation Plan as
qualifying under Section 351 of the Code.
10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) The COMPANIES shall, if possible, file or cause to be filed all
separate Returns of any Acquired Party for all taxable periods that end on
or before the Funding and Consummation Date. Notwithstanding the
foregoing, the STOCKHOLDER shall file or cause to be filed all separate
federal income Tax Returns of any Acquired Party for all taxable periods
that end on or before the Funding and Consummation Date. The STOCKHOLDER
shall pay or cause to be paid all Tax liabilities (in excess of all
amounts already paid with respect thereto or properly accrued or reserved
with respect thereto on the Company Financial Statements) shown by such
Returns to be due.
(ii) PARENT shall file or cause to be filed all separate Returns of,
or that include, any Acquired Party for all taxable periods ending after
the Funding and Consummation Date.
(iii) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to the of the other parties hereto such cooperation
and information as any of them reasonably may request in filing any
Return, amended Return or claim for refund, determining a liability for
Taxes or a right to refund of Taxes or in conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall
include providing copies of all relevant portions of relevant Returns,
together with relevant accompanying schedules and relevant work papers,
relevant documents relating to rulings or other determinations by Taxing
Authorities and relevant records concerning the ownership and Tax basis of
property, which such party may possess. Each party shall make its
employees reasonably available on a mutually convenient basis at its cost
to provide explanation of any documents or information so provided.
Subject to the preceding sentence,
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the party required to file Returns pursuant to this Agreement shall bear
all costs of filing such Returns.
(iv) Each of the COMPANIES, ACQUISITION CORPS., PARENT and the
STOCKHOLDER shall comply with the Tax reporting requirements of the
Treasury Regulations promulgated under the Code, and treat the transaction
as a tax-free contribution under Section 351 of the Code.
10.4 DIRECTORS. The persons named in the Registration Statement shall be
appointed as directors and elected as officers of PARENT, as and to the extent
set forth in the Registration Statement, promptly following the Funding and
Consummation Date.
10.5 PRESERVATION OF EMPLOYEE BENEFIT PLANS. Following the Funding and
Consummation Date, PARENT shall not terminate any health insurance, life
insurance or 401(k) plan in effect at any COMPANY until such time as PARENT is
able to replace such plan with a plan that is applicable to PARENT and all of
its then existing subsidiaries, provided that PARENT shall have no obligation to
provide replacement plans that have the same terms and provisions as the
existing plans, provided, further, that any new health insurance plan shall
provide for coverage for preexisting conditions. On the Funding and Consummation
Date, the employees of each COMPANY will be the employees of the related
Surviving Corporation (provided that this provision is for purposes of
clarifying that the Merger, in and of itself, will not have any impact on the
employment status of any employee and provided, further, that this provision
shall not in any way limit the management rights of the related Surviving
Corporation or PARENT to assess workforce needs and make appropriate adjustments
as necessary or desirable within their discretion subject to applicable laws and
collective bargaining agreements).
10.6 DIVIDENDS. The COMPANIES may pay to the STOCKHOLDER as dividends the
amount of the COMPANIES' combined net income after accruals federal and state
income taxes for the period after the Balance Sheet Date to the Funding and
Consummation Date. The COMPANIES may borrow funds to the extent necessary to
make the payments contemplated by this Section 10.6 and to the extent necessary
to ensure that the COMPANIES have cash on hand to adequately fund operations on
the Funding and Consummation Date.
11. INDEMNIFICATION
The STOCKHOLDER, PARENT and ACQUISITION CORPS. each make the following
covenants that are applicable to them, respectively:
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11.1 INDEMNIFICATION BY THE STOCKHOLDER. The STOCKHOLDER covenants and
agrees that she will indemnify, defend, protect and hold harmless PARENT,
ACQUISITION CORPS., the COMPANIES and the Surviving Corporations at all times,
from and after the date of this Agreement until the applicable Expiration Date,
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by PARENT, ACQUISITION CORPS., the COMPANIES or the Surviving
Corporations as a result of or arising from (i) any breach of the
representations and warranties of the STOCKHOLDER or the COMPANIES set forth
herein or on the Schedules or certificates delivered in connection herewith,
(ii) any breach of any agreement on the part of the STOCKHOLDER or the COMPANIES
under this Agreement, or (iii) any liability under the 1933 Act, the 1934 Act or
other federal or state law or regulation, at common law or otherwise, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact relating to the COMPANIES or the STOCKHOLDER, and provided to
PARENT or its counsel by the COMPANIES or the STOCKHOLDER (but in the case of
the STOCKHOLDER, only if such statement was provided in writing) contained in
the Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to the
COMPANIES or the STOCKHOLDER required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that such indemnity
shall not inure to the benefit of PARENT, ACQUISITION CORPS., the COMPANIES or
the Surviving Corporations to the extent that such untrue statement (or alleged
untrue statement) was made in, or omission (or alleged omission) occurred in,
any preliminary prospectus and the STOCKHOLDER provided, in writing, corrected
information to PARENT's counsel and to PARENT for inclusion in the final
prospectus, and such information was not so included or properly delivered.
11.2 INDEMNIFICATION BY PARENT. PARENT covenants and agrees that it will
indemnify, defend, protect and hold harmless the STOCKHOLDER at all times from
and after the date of this Agreement until the Expiration Date, from and against
all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by the
STOCKHOLDER as a result of or arising from (i) any breach by PARENT or
ACQUISITION CORPS. of their representations and warranties set forth herein or
on the Schedules or certificates attached hereto, (ii) any breach of any
agreement on the part of PARENT or ACQUISITION CORPS. under this Agreement, or
(iii) any liabilities which the STOCKHOLDER may incur due to PARENT's or any
ACQUISITION CORP.'s failure to be responsible for the liabilities and
obligations of the COMPANIES as provided in Section 1 hereof (except to the
extent that PARENT or any ACQUISITION CORP. has claims against the STOCKHOLDER
by reason of such liabilities); (iv) any liability under the 1933 Act, the 1934
Act or other federal or state law or
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regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact relating to PARENT, any
ACQUISITION CORP. or any of the Other Founding Companies contained in any
preliminary prospectus, the Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a material fact
relating to PARENT or any ACQUISITION CORP. or any of the Other Founding
Companies required to be stated therein or necessary to make the statements
therein not misleading.
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any criminal proceeding
without the written consent of the Indemnified Party. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records or information reasonably
requested by the Indemnifying Party that are in the Indemnified Party's
possession or control. All Indemnified Parties shall use the same counsel, which
shall be the counsel selected by Indemnifying Party, provided that if counsel to
the Indemnifying Party shall have a conflict of interest that prevents counsel
for the Indemnifying Party from representing an Indemnified Party, then the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and Indemnifying Party will reimburse the
Indemnified Party for the reasonable expenses of its counsel. An Indemnified
Party shall also have the right, at its sole expense, to have counsel of its
choice participate in (but never to control) the defense of any such claim.
After the Indemnifying Party has notified the Indemnified Party of its intention
to undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except (i) as set forth in the preceding sentence and (ii) to the
extent such participation is requested by the Indemnifying Party, in which event
the Indemnified Party shall be reimbursed by the Indemnifying Party for
reasonable additional legal expenses and out-of-pocket expenses. If the
Indemnifying Party desires to accept a final and complete settlement of any such
Third Person claim and the Indemnified
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Party refuses to consent to such settlement, then the Indemnifying Party's
liability under this Section with respect to such Third Person claim shall be
limited to the amount so offered in settlement by said Third Person. Upon
agreement as to such settlement between said Third Person and the Indemnifying
Party, the Indemnifying Party shall, in exchange for a complete release from the
Indemnified Party, promptly pay to the Indemnified Party the amount agreed to in
such settlement and the Indemnified Party shall, from that moment on, bear full
responsibility for any additional costs of defense which it subsequently incurs
with respect to such claim and all additional costs of settlement or judgment.
If the Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, however, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
All settlements hereunder shall effect a complete release of the Indemnified
Party, unless the Indemnified Party otherwise agrees in writing. The parties
hereto will make appropriate adjustments for insurance proceeds in determining
the amount of any indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this Section 11
shall (except as prohibited by ERISA) be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party, provided that, nothing herein shall be
construed to limit the right of a party, in a proper case, to seek injunctive
relief for a breach of this Agreement.
11.5 LIMITATIONS ON INDEMNIFICATION. None of PARENT, ACQUISITION CORPS.,
the Surviving Corporations nor any other persons or entities indemnified
pursuant to Section 11.1 or 11.2 shall assert any claim for indemnification
hereunder against the STOCKHOLDER until such time as, and solely to the extent
that, the aggregate of all claims which all such persons may have against the
STOCKHOLDER shall exceed 1.0% of (i) the sum of the cash paid to the STOCKHOLDER
plus (ii) the value of the Parent Stock delivered to the STOCKHOLDER (calculated
as provided below) (the "Indemnification Threshold"). The STOCKHOLDER shall not
assert any claim for indemnification hereunder against PARENT or ACQUISITION
CORPS. until such time as, and solely to the extent that, the aggregate of all
claims which STOCKHOLDER may have against PARENT or ACQUISITION CORPS. shall
exceed the amount of the Indemnification Threshold.
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No person shall be entitled to indemnification under this Section 11 if
and to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.
Notwithstanding any other term of this Agreement the STOCKHOLDER shall not
be liable under this Section 11 for an amount which exceeds the amount of
proceeds received by the STOCKHOLDER in connection with the Merger. For purposes
of calculating the value of the Parent Stock received by the STOCKHOLDER, Parent
Stock shall be valued at its initial public offering price as set forth in the
Registration Statement. It is hereby understood and agreed that the STOCKHOLDER
may satisfy an indemnification obligation through payment of a combination of
stock and cash in proportion equal to the proportion of stock and cash received
by the STOCKHOLDER in connection with the Merger, valued as described
immediately above.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION.This Agreement may be terminated at any time prior to the
Funding and Consummation Date solely:
(i) by mutual consent of the boards of directors of PARENT and the
COMPANIES; or
(ii) by the COMPANIES (acting through their board of directors, if, by
September 30, 1997, the PARENT shall not have filed the Registration Statement
with the SEC reflecting an estimated minimum price for Parent Stock of at least
$10.50 per share; or
(iii) by the STOCKHOLDER or the COMPANIES (acting through their board of
directors), on the one hand, or by PARENT (acting through its board of
directors), on the other hand, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been consummated by
December 31, 1997, unless the failure of such transactions to be consummated is
due to the willful failure of the party seeking to terminate this Agreement to
perform any of its obligations under this Agreement to the extent required to be
performed by it prior to or on the Funding and Consummation Date; or
(iv) by the STOCKHOLDER or COMPANIES (acting through their boards of
directors), on the one hand, or by PARENT (acting through their board of
directors), on the other hand, if a material breach or default shall be made by
the other party in the observance or in the due and timely performance of any of
the covenants, agreements or conditions contained herein, and the curing of such
default shall not have been made on or before the Funding and Consummation Date;
or
(v) pursuant to Section 7.8 hereof; or
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(vi) pursuant to Section 4 hereof.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in Section
7.8 hereof, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement, including, but not limited
to, legal and audit costs and expenses.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. The STOCKHOLDER will not, for a period of five
(5) years following the Funding and Consummation Date, for any reason
whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner, joint
venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, in any
temporary staffing, "PEO" or leasing, permanent placement or human resource
consulting or outsourcing business in competition with PARENT or any of the
subsidiaries thereof, within 100 miles of where any COMPANY or any of their
subsidiaries conducted business prior to the effectiveness of the Merger (the
"Territory");
(ii) call upon any person who is, at that time, within the Territory, an
employee of PARENT (including the subsidiaries thereof) in a sales
representative or managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of PARENT (including the
subsidiaries thereof), provided that the STOCKHOLDER shall be permitted to call
upon and hire any member of his immediate family;
(iii) call upon any person or entity which is, at that time, or which has
been, within one (1) year prior to the Funding and Consummation Date, a client
or customer of PARENT (including the subsidiaries thereof), or any COMPANY or of
any of the Other Founding Companies within the Territory for the purpose of
soliciting or selling products or services in competition with PARENT within the
Territory;
(iv) call upon any prospective acquisition candidate, on the STOCKHOLDER'S
behalf or on behalf of any competitor in the temporary staffing, "PEO" or staff
leasing, permanent placement or human resource consulting or outsourcing
business, which candidate, to the actual knowledge of the STOCKHOLDER, was
called upon by PARENT (including the subsidiaries
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thereof) or for which, to the knowledge of the STOCKHOLDER, PARENT (or any
subsidiary thereof) made an acquisition analysis, for the purpose of acquiring
such entity; or
(v) disclose clients or customers, whether in existence or proposed, of
any COMPANY to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever except to the extent that such COMPANY has in the
past disclosed such information to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit the STOCKHOLDER from acquiring as an investment not more than one
percent (1%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or in the over-the-counter market.
13.2 DAMAGES. Because of the difficulty of measuring economic losses to
PARENT (including its subsidiaries) as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to PARENT (including its subsidiaries) for which it would have no other
adequate remedy, the STOCKHOLDER agrees that the foregoing covenant may be
enforced by PARENT (including its subsidiaries) in the event of breach by the
STOCKHOLDER, by injunctions and restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
STOCKHOLDER in light of the activities and business of PARENT (including the
subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of PARENT.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of the STOCKHOLDER
against PARENT (including the subsidiaries thereof), whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
PARENT (or any subsidiary) of such covenants. It is specifically agreed that the
period of five (5) years stated at the beginning of this Section 13, during
which the agreements and covenants of the STOCKHOLDER made in this Section 13
shall be effective, shall be computed by
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excluding from such computation any time during which the STOCKHOLDER is in
violation of any provision of this Section 13. The covenants contained in
Section 13 shall not be affected by any breach of any other provision hereof by
any party hereto and shall have no effect if the transactions contemplated by
this Agreement are not consummated.
13.6 MATERIALITY. The COMPANY and the STOCKHOLDER hereby agree that this
covenant is a material and substantial part of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDER. The STOCKHOLDER recognizes and acknowledges that he
had in the past, currently has, and in the future may possibly have, access to
certain confidential information of the COMPANIES, the Other Founding Companies,
and/or PARENT, such as operational policies, pricing and cost policies, and
insurance costs that are valuable, special and unique assets of the COMPANIES',
the Other Founding Companies' and/or PARENT's businesses. The STOCKHOLDER agrees
that he will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of PARENT, (b) following the Closing,
such information may be disclosed by the STOCKHOLDER as is required in the
course of performing his duties for PARENT or the Surviving Corporation and (c)
to counsel and other advisers, provided that such advisers (other than counsel)
agree to the confidentiality provisions of this Section 14.1, unless (i) such
information becomes known to the public generally through no fault of the
STOCKHOLDER, (ii) disclosure is required by law or the order of any governmental
authority under color of law, provided, that prior to disclosing any information
pursuant to this clause (ii), the STOCKHOLDER shall give prior written notice
thereof to PARENT and provide PARENT with the opportunity to contest such
disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or threatened breach by the
STOCKHOLDER of the provisions of this Section, PARENT shall be entitled to an
injunction restraining the STOCKHOLDER from disclosing, in whole or in part,
such confidential information. Nothing herein shall be construed as prohibiting
PARENT from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
14.2 PARENT AND ACQUISITION CORPS. PARENT and ACQUISITION CORPS.
recognize and acknowledge that they had in the past and currently have access to
certain confidential information of the COMPANIES, such as operational policies,
pricing and cost policies, and insurance costs that are valuable, special and
unique assets of the COMPANIES' business. PARENT and ACQUISITION CORPS. agree
that, prior to the Closing, or if the Transactions contemplated by this
Agreement are not consummated, they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except
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(a) to authorized representatives of the COMPANIES, (b) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section 14.2, (c) to the Other Founding
Companies and their representatives pursuant to Section 7.1(a), unless (i) such
information becomes known to the public generally through no fault of PARENT or
any ACQUISITION CORP., (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), PARENT and ACQUISITION CORPS.
shall, if possible, give prior written notice thereof to the COMPANIES and the
STOCKHOLDER and provide the COMPANIES and the STOCKHOLDER with the opportunity
to contest such disclosure, or (iii) the disclosing party reasonably believes
that such disclosure is required in connection with the defense of a lawsuit
against the disclosing party, and (d) to the public to the extent necessary or
advisable in connection with the filing of the Registration Statement and the
IPO and the securities laws applicable thereto and to the operation of PARENT as
a publicly held entity after the IPO. In the event of a breach or threatened
breach by PARENT or any ACQUISITION CORP. of the provisions of this Section, the
COMPANIES and the STOCKHOLDER shall be entitled to an injunction restraining
PARENT and any ACQUISITION CORP. from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting the
COMPANIES and the STOCKHOLDER from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
14.3 DAMAGES. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article 14 shall
survive the Closing or the termination of this Agreement, for a period of five
(5) years from the Closing Date or the date of termination, as the case may be.
15. TRANSFER RESTRICTIONS
15.1 TRANSFER RESTRICTIONS. Except for transfers to immediate family
members who agree to be bound by the restrictions set forth in this Section 15.1
(or trusts for the benefit of the STOCKHOLDER or immediate family members, the
trustees of which so agree), for a period of one year from the Closing Date,
except pursuant to Section 17 hereof, the STOCKHOLDER shall not sell, assign,
exchange, transfer, encumber, pledge, distribute, appoint, or otherwise dispose
of any shares of Parent Stock received by the STOCKHOLDER in the Merger. The
certificates evidencing the Parent Stock delivered to the STOCKHOLDER pursuant
to Section 3 of this Agreement will
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bear a legend substantially in the form set forth below and containing such
other information as PARENT may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED
OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION PRIOR TO [FIRST ANNIVERSARY OF CLOSING DATE].
UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO
REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
AGENT) AFTER THE DATE SPECIFIED ABOVE.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
16.1 COMPLIANCE WITH LAW. The STOCKHOLDER acknowledges that the shares of
Parent Stock to be delivered to the STOCKHOLDER pursuant to this Agreement have
not been and will not be registered under the 1933 Act and therefore may not be
resold without compliance with the 1933 Act. The Parent Stock to be acquired by
the STOCKHOLDER pursuant to this Agreement is being acquired solely for their
own accounts, for investment purposes only, and with no present intention of
distributing, selling or otherwise disposing of it in connection with a
distribution. The STOCKHOLDER covenants, warrants and represents that none of
the shares of Parent Stock issued to the STOCKHOLDER will be offered, sold,
assigned, pledged, hypothecated, transferred or otherwise disposed of except
after full compliance with all of the applicable provisions of the 1933 Act and
the rules and regulations of the SEC. All the Parent Stock shall bear the
following legend in addition to the legend required under Section 15 of this
Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT") AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE 1933 ACT AND APPLICABLE
SECURITIES LAW.
16.2 ECONOMIC RISK; SOPHISTICATION. The STOCKHOLDER is able to bear the
economic risk of an investment in the Parent Stock to be acquired pursuant to
this Agreement and can afford to sustain a total loss of such investment and has
such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the proposed investment in the
Parent Stock. The STOCKHOLDER has had an adequate opportunity to ask questions
and receive answers from the officers of PARENT concerning any and all matters
relating to the
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transactions described herein including, without limitation, the background and
experience of the current and proposed officers and directors of PARENT, the
plans for the operations of the business of PARENT, the business, operations and
financial conditions of the Founding Companies other than the COMPANIES, and any
plans for additional acquisitions and the like. The STOCKHOLDER has asked any
and all questions in the nature described in the preceding sentence and all
questions have been answered to his satisfaction.
17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the Closing,
whenever PARENT proposes to register any Parent Stock for its own or others
account under the 1933 Act for a public offering, other than (i) any shelf
registration of shares to be used as consideration for acquisitions of
additional businesses by PARENT and (ii) registrations relating to employee
benefit plans, PARENT shall give the STOCKHOLDER prompt written notice of its
intent to do so. Upon the written request of the STOCKHOLDER given within 30
days after receipt of such notice, PARENT shall cause to be included in such
registration all of the Parent Stock issued to the STOCKHOLDER pursuant to this
Agreement (including any stock issued as (or issuable upon the conversion or
exchange of any convertible security, warrant, right or other security which is
issued by PARENT as) a dividend or other distribution with respect to, or in
exchange for, or in replacement of such Parent Stock) which the STOCKHOLDER
requests, provided that PARENT shall have the right to reduce the number of
shares included in such registration to the extent that inclusion of such shares
could, in the opinion of tax counsel to PARENT or its independent auditors,
jeopardize the status of the transactions contemplated hereby and by the
Registration Statement as qualifying under Section 351 of the Code. In addition,
if PARENT is advised in writing in good faith by any managing underwriter of an
underwritten offering of the securities being offered pursuant to any
registration statement under this Section 17.1 that the number of shares to be
sold by persons other than PARENT is greater than the number of such shares
which can be offered without adversely affecting the offering, PARENT may reduce
pro rata the number of shares offered for the accounts of such persons (based
upon the number of shares held by such person) to a number deemed satisfactory
by such managing underwriter, provided, that, for the such offering made by
PARENT after the IPO, such reduction shall be made first by reducing the number
of shares to be sold by persons other than PARENT, the STOCKHOLDER and the
stockholders of the Other Founding Companies (collectively, the STOCKHOLDER and
the stockholders of the Other Founding Companies being referred to herein as the
"Founding Stockholders"), and thereafter, if a further reduction is required, by
reducing the number of shares to be sold by the Founding Stockholders.
17.2 REGISTRATION PROCEDURES. All expenses incurred in connection with the
registrations under this Article 17 (including all registration, filing,
qualification, legal, printer and accounting
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fees, but excluding underwriting commissions and discounts which shall be
payable by the respective selling parties), shall be borne by PARENT. In
connection with registrations under Section 17.1, PARENT shall (i) use its best
efforts to prepare and file with the SEC as soon as reasonably practicable, a
registration statement with respect to the Parent Stock and use its best efforts
to cause such registration to promptly become and remain effective for a period
of at least 90 days (or such shorter period during which holders shall have sold
all Parent Stock which they requested to be registered); (ii) use its best
efforts to register and qualify the Parent Stock covered by such registration
statement under applicable state securities laws as the holders shall reasonably
request for the distribution for the Parent Stock; and (iii) take such other
actions as are reasonable and necessary to comply with the requirements of the
1933 Act and the regulations thereunder.
17.3 UNDERWRITING AGREEMENT. In connection with the registration pursuant
to Section 17.1 covering an underwritten registered offering, PARENT and each
participating holder agree to enter into a written agreement with the managing
underwriters in such form and containing such provisions as are customary in the
securities business for such an arrangement between such managing underwriters
and companies of PARENT's size and investment stature, including
indemnification.
17.4 AVAILABILITY OF RULE 144. PARENT shall not be obligated to register
shares of Parent Stock held by the STOCKHOLDER at any time when the resale
provisions of Rule 144(k) (or any similar or successor provision) promulgated
under the 1933 Act are available to the STOCKHOLDER.
18. GENERAL
18.1 COOPERATION. The COMPANIES, STOCKHOLDER, PARENT and ACQUISITION
CORPS. shall the deliver or cause to be delivered to the other on the Funding
and Consummation Date, and at such other times and places as shall be reasonably
agreed to, such additional instruments as the other may reasonably request for
the purpose of carrying out this Agreement. The COMPANIES will cooperate and use
its reasonable efforts to have the present officers, directors and employees of
the COMPANIES cooperate with PARENT on and after the Funding and Consummation
Date in furnishing information, evidence, testimony and other assistance in
connection with any Tax return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Funding and Consummation Date.
18.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
PARENT, ACQUISITION CORPS. and the COMPANIES,
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and the heirs and legal representatives of the STOCKHOLDER. Any attempt to
assign this Agreement in a manner inconsistent with this Agreement shall be void
and of no force or effect.
18.3 ENTIRE AGREEMENT. This Agreement (including the Schedules, Exhibits
and Annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the STOCKHOLDER, the
COMPANIES, ACQUISITION CORPS. and PARENT and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. Any disclosure
made on any Schedule delivered pursuant hereto shall be deemed to have been
disclosed for purposes of any other Schedule required hereby, provided that the
COMPANIES shall make a good faith effort to cross reference disclosure, as
necessary or advisable, between related Schedules.
18.4 COUNTERPARTS. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
18.5 BROKERS AND AGENTS. Except as disclosed on Schedule 18.5, each party
represents and warrants that it employed no broker, agent or finder in
connection with this transaction and agrees to indemnify the other parties
hereto against all loss, cost, damages or expense arising out of claims for fees
or commission of any broker, agent or finder employed or alleged to have been
employed by such indemnifying party.
18.6 EXPENSES. Whether or not the transactions herein contemplated shall
be consummated, PARENT will pay the fees, expenses and disbursements of PARENT
and its agents, representatives, accountants and counsel incurred in connection
with the subject matter of this Agreement and any amendments thereto, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed by PARENT under this Agreement, including the fees
and expenses of Xxxxxx Xxxxxxxx, LLP, Xxxxxxxxx & Xxxxxxxxx, L.L.P., and any
other person or entity retained by PARENT or by WJG, and the costs of preparing
the Registration Statement. The COMPANY will pay all of the fees, expenses and
disbursements relating to this Agreement and the Merger, other than any fees,
expenses and disbursements that relate to the unique circumstances of the
STOCKHOLDER. The STOCKHOLDER shall pay all sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
("Transfer Taxes") imposed in connection with the Merger, other than Transfer
Taxes, if any, imposed by the State of Delaware. The STOCKHOLDER shall file all
necessary documentation and Returns with respect to such Transfer Taxes. In
addition, the STOCKHOLDER acknowledges that she, and not the COMPANIES, PARENT
or the Surviving Corporations, will pay all Taxes due upon receipt of the
consideration payable pursuant to Section 2 hereof, and that he or she will
assume all Tax risks and liabilities of the STOCKHOLDER in connection with the
transactions contemplated hereby.
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18.7 NOTICES. All notices of communication required or permitted hereunder
shall be in writing and may be given by depositing the same in United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person to
an officer or agent of such party.
(a) If to PARENT or any ACQUISITION CORP., addressed to them at:
Nationwide Staffing, Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx, Chief Executive Officer
with copies to:
Xxxx X Xxxxxxxxxxxx
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
South Tower Pennzoil Place
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
(b) If to the STOCKHOLDER, addressed to the address set forth on
the Stockholder Signature Page, with copies to:
Xxxxx X. Xxxxxxx
Xxxxxxx & Associates, P.C.
0000 XX 0000
Xxxxx, Xxxxx 00000-0000
(c) If to any COMPANY, addressed to it at:
Xxxxx Personnel Services
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
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with copies to:
Xxxxx X. Xxxxxxx
Xxxxxxx & Associates, P.C.
0000 XX 0000
Xxxxx, Xxxxx 00000-0000
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.
18.8 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware, without regard or reference to any
conflict-of-law principles that would refer to the law of any other state or
jurisdiction.
18.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the applicable Expiration
Date.
18.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
18.11 TIME. Time is of the essence with respect to this Agreement.
18.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
18.13 REMEDIES CUMULATIVE. Except as expressly specified herein to the
contrary, no right, remedy or election given by any term of this Agreement shall
be deemed exclusive but such shall be cumulative with all other rights, remedies
and elections available at law or in equity.
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18.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement, and shall not
be used to construe or interpret any provision hereof.
18.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of PARENT, ACQUISITION CORPS., the COMPANIES and the STOCKHOLDER
who hold or who will hold at least 50% of the Parent Stock issued or to be
issued upon consummation of the Merger. Any amendment or waiver effected in
accordance with this Section 18.15 shall be binding upon the of the parties
hereto, any other person receiving Parent Stock in connection with the Merger
and the future holder of such Parent Stock.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
"PARENT"
NATIONWIDE STAFFING, INC.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
"ACQUISITION CORP."
EPG SUB 1 ACQUISITION CORP.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
"ACQUISITION CORP."
EPG SUB 2 ACQUISITION CORP.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
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"ACQUISITION CORP."
EPG SUB 3 ACQUISITION CORP.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
"ACQUISITION CORP."
EPG SUB 4 ACQUISITION CORP.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
"ACQUISITION CORP."
EPG SUB 5 ACQUISITION CORP.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
"ACQUISITION CORP."
EPG SUB 6 ACQUISITION CORP.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
"ACQUISITION CORP."
EPG SUB 7 ACQUISITION CORP.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
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"ACQUISITION CORP."
EPG SUB 8 ACQUISITION CORP.
By: _________________________
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
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"COMPANY" consists of the following
corporations:
XXXXX PERSONNEL CONSULTANTS, INC.
By: _________________________
Name:_________________________
Title:________________________
XXXXX PERSONNEL CONSULTANTS, INC. # ONE
By: _________________________
Name:_________________________
Title:________________________
XXXXX PERSONNEL CONSULTANTS, INC. # TWO
By: _________________________
Name:_________________________
Title:________________________
EXCEPTIONAL RESOURCE SERVICES, INC.
By: _________________________
Name:_________________________
Title:________________________
EXCELSIOR PERSONNEL CONSULTANTS, INC.
By: _________________________
Name:_________________________
Title:________________________
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EXCELLENT PERSONNEL CONSULTANTS, INC.
By: _________________________
Name:_________________________
Title:________________________
XXXXX PERSONNEL CONSULTANTS OF
ABILENE, INC.
By: _________________________
Name:_________________________
Title:________________________
ELITE PERSONNEL CONSULTANTS, INC.
By: _________________________
Name:_________________________
Title:________________________
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STOCKHOLDER SIGNATURE PAGE
(Xxxx Xxxxx is the sole stockholder of each corporation included
within the definition of "Companies")
_______________________ Address: 0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxxx Xxxxxx, Xxxxx 00000
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