EXHIBIT 2.22
ANNEX 1
WORK INTERNATIONAL CORPORATION
UNIFORM PROVISIONS
FOR THE
ACQUISITION
OF
FOUNDING COMPANIES
Words and terms used in these Uniform Provisions which are defined in
the Agreement and Plan of Reorganization among Work International Corporation,
[Newco], [Name of Acquisition Candidate] and its Stockholders (called therein
and herein "this Agreement") to which these Uniform Provisions are attached as
Annex I, are used herein as defined therein.
THE UNIFORM PROVISIONS
ARTICLE I
ADDITIONAL DEFINITIONS
Section 1.02. Additional Defined Terms. As used in this Agreement, the
following terms have the meanings assigned to them below:
"Acquisition Proposal" has the meaning specified in Section 6.04.
"Affiliate" means, as to any specified Person, any other Person who,
directly or indirectly through one or more intermediaries or otherwise,
controls, is controlled by or is under common control with the specified
Person. As used in this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management or policies of a Person (whether through ownership of
Capital Stock of the Person, by contract, or otherwise).
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in New York, New York or Houston, Texas are authorized
or obligated to close.
"Capital Lease" means a lease of (or other agreement conveying the
right to use) real or personal property that is required to be classified
and accounted for as a capital lease under GAAP as in effect on the date of
this Agreement.
"Capital Stock" means, with respect to: (a) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in the corporation; and (b) any
other Entity, any share, membership or other percentage interest, unit of
participation or other equivalent (however designated) of an equity
interest in the Entity.
"Cash Compensation" means, as applied to any employee, nonemployee
director or officer of, or any natural person who performs consulting or
other independent contractor services for, the Company or any Company
Subsidiary, the wages, salaries, bonuses (discretionary and formula), fees
and other cash compensation paid or payable by the Company and each Company
Subsidiary to that employee or other natural person.
"CERCLA" means the Comprehensive Environmental Response, Conservation,
and Liability Act of 1980.
"Certificate of Merger" means the articles or certificate of merger
respecting the Merger which contains the information required by the laws
of the Company's Organization State to effect the Merger.
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"Charter Documents" means, with respect to any Entity at any time, in
each case as amended, modified and supplemented at that time, the articles
or certificate of formation, incorporation or organization (or the
equivalent organizational documents) of the Entity, (b) the bylaws or
limited liability company agreement or regulations (or the equivalent
governing documents) of the Entity, and (c) each document setting forth the
designation, amount and relative rights, limitations and preferences of any
class or series of the Entity's Capital Stock or of any rights in respect
of the Entity's Capital Stock.
"Claim Notice" has the meaning specified in Section 9.04.
"Closing Memorandum" means the form of closing memorandum to be
prepared by WORK for the Closing, in which there shall be included the
forms of certificates of officers, the opinions of counsel and certain
other documents to be delivered at the Closing as provided in Article VII.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Commitment" has the meaning specified in Section 4.22.
"Company ERISA Benefit Plan" has the meaning specified in Section
4.26(d).
"Company ERISA Group" means any "group of organizations" within the
meaning of Section 414(b), (c), (m) or (o) of the Code, or any "controlled
group" as defined in Section 4001 (a)(14) of ERISA, of which the Company is
a member.
"Company ERISA Pension Plan" has the meaning specified in Section
4.26(d).
"Company Subsidiary" means at any time any Entity that is a Subsidiary
of the Company at that time.
"Confidential Information" means, with respect to any Person, all
trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from designs,
reports, investigations, research, testing, development, work-in-progress,
codes, marketing and sales programs, capital expenditure projects, cost
summaries, pricing formulae, contract analyses, financial information,
projections, confidential filings with any Governmental Authority and any
other confidential, nonpublic concepts, methods of doing business, ideas,
materials or information prepared or performed for, by or on behalf of that
Person.
"Current Date" means any day during the 20-day period ending on the
date of the Closing.
"Damage" to any specified Person means any cost, damage (including any
consequential, exemplary, punitive or treble damage) or expense (including
reasonable and necessary or appropriate fees and actual expenses of and
disbursements by attorneys,
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consultants, experts or other Representatives and Litigation costs) to, any
fine of or penalty on, or any liability (including loss of earnings or
profits) of, any other nature of that Person.
"Damage Claim" means, as asserted (a) against any specified Person,
any claim, demand or Litigation made or pending against that Person for
Damages to any other Person, or (b) by the specified Person, any claim or
demand of the specified Person against any other Person for Damages to the
specified Person.
"Derivative Securities" of a specified Entity means any Capital Stock
or debt security or other Indebtedness of the specified Entity or any other
Person which is convertible into or exchangeable for, or any option,
warrant or other right to acquire, (a) any unissued Capital Stock of the
specified Entity or (b) any Capital Stock of the specified Entity which has
been issued and is being held by the Entity directly or indirectly as
treasury Capital Stock.
"Election Period" has the meaning specified in Section 9.04(b).
"Employee Policies and Procedures" means at any time all employee
manuals and all material policies, procedures and work-related rules that
apply at that time to any employee, nonemployee director or officer of, or
any other natural person performing consulting or other independent
contractor services for, the Company or any Company Subsidiary.
"Employment Agreement" means at any time (a) any agreement to which
the Company or any Company Subsidiary is a party which then relates to the
direct or indirect employment or engagement, or arises from the past
employment or engagement, of any natural person by the Company or any
Company Subsidiary, whether as an employee, a nonemployee officer or
director, a consultant or other independent contractor, a sales
representative or a distributor of any kind, including any employee leasing
or service agreement and any noncompetition agreement, and (b) any
agreement between the Company or any Company Subsidiary and any Person
which arises from the sale of a business by that Person to the Company or
any Company Subsidiary and limits that Person's competition with the
Company or any Company Subsidiary.
"Entity" means any sole proprietorship, corporation, partnership of
any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual company,
joint stock company or joint venture.
"Environmental Laws" means any and all Governmental Requirements
relating to the environment or worker health or safety, including ambient
air, surface water, land surface or subsurface strata, or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes (including
Solid Wastes, Hazardous Wastes or Hazardous Substances) or noxious noise or
odor into the environment or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, recycling,
removal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including
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petroleum, petroleum distillates, asbestos or asbestos-containing material,
polychlorinated biphenyls, chlorofluorocarbons or
hydrochlorofluorocarbons).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means, with respect to any specified Person at any
time, any other Person, including an Affiliate of the specified Person,
that is, or at any time within six years of that time was, a member of any
ERISA Group of which the specified Person is or was a member at the same
time.
"ERISA Affiliate Pension Plan" has the meaning specified in Section
4.26(d).
"ERISA Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA and includes any ERISA Pension Benefit
Plan.
"ERISA Pension Benefit Plan" means any "employee pension benefit
plan," as defined in Section 3(2) of ERISA, including any plan that is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code (excluding any Multiemployer Plan).
"Exchange Act" means the Securities Exchange Act of 1934.
"Final Prospectus" means the prospectus included in the Registration
Statement at the time it becomes effective, except that if the prospectus
first furnished to the Underwriter after the Registration Statement becomes
effective for use in connection with the IPO differs from the prospectus
included in the Registration Statement at the time it becomes effective
(whether or not the prospectus so furnished to the Underwriter is required
to be filed with the SEC pursuant to Securities Act Rule 424(b)), the
prospectus so furnished will be the "Final Prospectus."
"Financial Statements" means the Initial Financial Statements and the
other financial statements of the Company and the Company Subsidiaries, if
any, delivered to WORK prior to the Effective Time pursuant to Section
6.08.
"GAAP" means generally accepted accounting principles and practices in
the United States as in effect from time to time which (i) have been
concurred with by KPMG Peat Marwick, LLP and (ii) have been or are applied
on a basis consistent (except for changes concurred with by KPMG Peat
Marwick, LLP) with the most recent audited Financial Statements delivered
to WORK prior to the Effective Time.
"General Release" means the general release of the Company and the
Company Subsidiaries to be executed at or before, and delivered to WORK and
the Company at, the Closing, effective as of the Effective Time, by each
Stockholder, which general release shall be in the form of the attached
Exhibit 1.02-B, with its blanks appropriately completed.
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"Governmental Approval" means at any time any authorization, consent,
approval, permit, franchise, certificate, license, implementing order or
exemption of, or registration or filing with, any Governmental Authority.
"Governmental Authority" means any national, state, county, municipal
or other government, domestic or foreign, or any agency, board, bureau,
commission, court, department or other instrumentality of any such
government.
"Governmental Requirement" means at any time (a) any law, statute,
code, ordinance, order, rule, regulation, judgment, decree, injunction,
order, writ, edict, award, authorization or other requirement of any
Governmental Authority in effect at that time or (b) any obligation
included in any certificate, certification, franchise, permit or license
issued by any Governmental Authority or resulting from binding arbitration,
including any requirement under common law, at that time.
"Guaranty" means, for any specified Person, without duplication, any
liability, contingent or otherwise, of that Person guaranteeing or
otherwise representing liability for any obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any liability of the specified Person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment of)
the other Person's obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment of that obligation, (b)
to purchase property, securities or services for the purpose of assuring
the owner of that obligation of its payment, or (c) to maintain working
capital, equity capital or other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay that
obligation; provided, however, that the term "Guaranty" excludes
endorsements for collection or deposit in the ordinary course of the
endorser's business.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"Immediate Family Member" of a Stockholder means at any time: (a) if
the Stockholder is a natural person, any child or grandchild (by blood or
legal adoption) or spouse of the Stockholder at that time, or any child of
the Stockholder's spouse; and (b) if the Stockholder is an Entity which has
as an ultimate beneficial owner one or more natural persons, or a natural
person and his spouse, any child or grandchild (by blood or legal adoption)
or spouse at that time (if not then an ultimate beneficial owner of the
Entity), or any child of the spouse, of the ultimate beneficial owner or
owners of the Entity.
"Indebtedness" of any Person means, without duplication, (a) any
liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds, letters
of credit, banker's acceptances and similar instruments), for the deferred
purchase price of property or services or arising under conditional sale or
other title retention agreements, other than trade payables arising in the
ordinary course of business, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) in respect of Capital
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Leases, or (iv) in respect of Interest Rate Protection Agreements, (b) any
liability secured by any Lien upon any property or assets of that Person
(or upon any revenues, income or profits of that Person therefrom), whether
or not that Person has assumed the liability or otherwise become liable for
its payment, or (c) any liability of others of the type described in the
preceding clause (a) or (b) in respect of which that Person has incurred,
assumed or acquired a liability by means of a Guaranty.
"Indemnified Party" has the meaning specified in Section 9.04(b).
"Indemnifying Party" has the meaning specified in Section 9.04(b).
"Indemnity Notice" has the meaning specified in Section 9.04(e).
"Information" means written information, including (a) data,
certificates, reports and statements (excluding Financial Statements) and
(b) summaries of unwritten agreements, arrangements, contracts, plans,
policies, programs or practices or of unwritten amendments or modifications
of, supplements to or waivers under any of the foregoing documents.
"Interest Rate Protection Agreement" means, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement
providing for the transfer or mitigation of interest rate risks of that
Person, either generally or under specific contingencies, between that
Person and any other Person.
"IPO" means the first time after January 1, 1998 a registration
statement filed under the Securities Act and respecting a primary offering
by WORK of shares of WORK Common Stock is declared effective under the
Securities Act and the shares registered by that registration statement are
issued and sold by WORK.
"IPO Closing Date" means the date on which WORK first receives payment
for the shares of WORK Common Stock it sells to the Underwriter in the IPO.
"IPO Price" means the price per share of WORK Common Stock which is
set forth as the "price to public" on the cover page of the Final
Prospectus.
"IPO Pricing Date" means the date, if any, on which WORK and the
Underwriter agree in the Underwriting Agreement to the price per share of
Common Stock at which the Underwriter, subject to the terms and conditions
of the Underwriting Agreement, will purchase newly issued shares of WORK
Common Stock from WORK on the IPO Closing Date.
"IRS" means the Internal Revenue Service.
"Lien" means, with respect to any property or asset of any Person (or
any revenues, income or profits of that Person therefrom), in each case
whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise, (a) any
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mortgage, lien, security interest, pledge, attachment, levy or other charge
or encumbrance of any kind thereupon or in respect thereof or (b) any other
arrangement under which the same is transferred, sequestered or otherwise
identified with the intention of subjecting the same to, or making the same
available for, the payment or performance of any liability in priority to
the payment of the ordinary, unsecured creditors of that Person, including
any "adverse claim" (as defined in Section 8-102 of each applicable Uniform
Commercial Code) in the case of any Capital Stock. For purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any asset that
Person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease or other title
retention agreement relating to that asset.
"Litigation" means any action, case, proceeding, claim, grievance,
suit or investigation or other proceeding conducted by or pending before
any Governmental Authority or any arbitration proceeding.
"Material" means, as applied to any specified Entity, material to the
business, operations, property or assets, liabilities, financial condition
or results of operations of the specified Entity and its Subsidiaries
considered as a whole.
"Material Adverse Effect" means, with respect to the consequences of
any fact or circumstance (including the occurrence or non-occurrence of any
event) to the Company and the Company Subsidiaries considered as a whole
(or after the Effective Time the Surviving Corporation and the Company
Subsidiaries considered as a whole), that such fact or circumstance has
caused, is causing or can reasonably be expected to cause, directly or
indirectly, singly or in the aggregate with other facts and circumstances,
any Damages in excess of the Threshold Amount.
"Material Agreement" of an Entity means any contract or agreement (a)
to which the Entity or any of its Subsidiaries is a party, or by which the
Entity or any of its Subsidiaries is bound or to which any property or
assets of the Entity or any of its Subsidiaries is subject and (b) which is
Material to the Entity.
"Material Staffing Contract"has the meaning specified in Section
4.22(a).
"Minimum Cash Amount" has the meaning specified in Section
7.02(a)(iii).
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of
ERISA.
"Newco Common Stock" means the common stock, par value $1 per share,
of Newco.
"Organization State" means, as applied to (a) any corporation, its
state or other jurisdiction of incorporation, (b) any limited liability
company or limited partnership, the
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state or other jurisdiction under whose laws it is organized and existing
in that legal form, and (c) any other Entity, the state or other
jurisdiction whose laws govern that Entity's internal affairs.
"Other Agreements" has the meaning specified in the Preliminary
Statements in this Agreement.
"Other Compensation Plan" means any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by the
Company or any Company Subsidiary, or to which the Company or any Company
Subsidiary contributes, on behalf of any of its employees, nonemployee
directors or officers or other natural persons performing consulting or
other independent contractor services for the Company or any Company
Subsidiary, including all such arrangements, plans, policies, practices or
programs providing for severance pay, deferred compensation, incentive,
bonus or performance awards or the actual or phantom ownership of any
Capital Stock or Derivative Securities of the Company or any Company
Subsidiary, but excluding all Company ERISA Pension Plans and Employment
Agreements.
"Other Financing Sources" has the meaning specified in Section
7.02(a)(iii).
"Other Transaction Documents" means the Other Agreements and the other
written agreements, documents, instruments and certificates at any time
executed pursuant to or in connection with the Other Agreements (other than
the Transaction Documents and the Underwriting Agreement), all as amended,
modified or supplemented from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Investments" means at the time of their purchase or other
acquisition by the Company or any Company Subsidiary (a) obligations issued
or guaranteed by the United States of America with a remaining maturity not
exceeding one year, (b) commercial paper with maturities of not more than
270 days and a published rating of not less than A-1 by S&P or P-1 by
Moody's, and (c) certificates of deposit and bankers' acceptances having
maturities of not more than one year of any commercial bank or trust
company if (A) the issuing bank or trust company has a combined capital and
surplus of at least $500 million and (B) its unsecured long-term debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A- by S&P or A3 by Moody's.
"Permitted Liens" means, as applied to the property or assets of any
Person (or any revenues, income or profits of that Person therefrom): (a)
Liens for Taxes if the same are not at the time due and delinquent; (b)
Liens of carriers, warehousemen, mechanics, laborers and materialmen for
sums not yet due; (c) Liens incurred in the ordinary course of that
Person's business in connection with worker's compensation, unemployment
insurance and other social security legislation (other than pursuant to
ERISA or Section 412(n) of the Code); (d) Liens incurred in the ordinary
course of that Person's business in connection with deposit accounts or to
secure the performance of bids, tenders, Staffing Contracts, trade
contracts,
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statutory obligations, surety and appeal bonds, performance and return-of-
money bonds and other obligations of like nature; (e) easements, rights-of-
way, reservations, restrictions and other similar encumbrances incurred in
the ordinary course of that Person's business or existing on property and
not materially interfering with the ordinary conduct of that Person's
business or the use of that property; (f) defects or irregularities in that
Person's title to its real properties which do not materially diminish the
value of the surface estate or interfere with the ordinary conduct of that
Person's business or the use of any of such properties; (g) any interest or
title of a lessor of assets being leased by any Person pursuant to any
Capital Lease disclosed in Section 4.19 of the Disclosure Statement or any
lease that, under GAAP, would be accounted for as an operating lease; and
(h) Liens securing purchase money Indebtedness disclosed in Section 4.18 or
4.19 of the Disclosure Statement so long as the Liens do not attach to any
property or assets other than the properties or assets purchased with the
proceeds of such Indebtedness.
"Person" means any natural person, Entity, estate, trust, union or
employee organization or Governmental Authority or, for the purpose of the
definition of "ERISA Affiliate," any trade or business.
"Plan" has the meaning specified in Section 4.27(a).
"Private Placement Memorandum" means the WORK Private Placement
Memorandum dated as of July 6, 1998, relating to the offer of WORK Common
Stock in connection with the Merger.
"Prohibited Transaction" means any transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.
"Property, Plant and Equipment" means at any time any property that
then would be included and classified as property, plant and equipment on a
consolidated balance sheet, prepared in accordance with GAAP, of the
Company and the Company Subsidiaries.
"Proprietary Rights" means (a) patents, applications for patents and
patent rights, (b) in each case, whether registered, unregistered or under
pending registration, trademark rights, trade names, trade name rights,
corporate names, business names, trade styles or dress, service marks and
logos and other trade designations and copyrights and (c), in the case of
the Company or any Company Subsidiary, all agreements relating to the
technology, know-how or processes used or marketed in any business of the
Company or any Company Subsidiary.
"Qualified Plans" has the meaning specified in Section 4.27(b).
"RCRA" means the Resource Conservation and Recovery Act of 1976.
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"Registration Rights Agreement" means the Registration Rights
Agreement to be executed and delivered at the Closing by WORK and the
Stockholders electing to be parties thereto, which shall be in the form of
Exhibit 1.02-A, with its blanks appropriately completed.
"Registration Statement" means the registration statement (including
(a) each preliminary prospectus included therein prior to the date on which
that registration statement is declared effective under the Securities Act
(including any prospectus filed with the SEC pursuant to Securities Act
Rule 424(b)), (b) the Final Prospectus and (c) any amendments thereof and
all supplements and exhibits thereto) filed by WORK with the SEC to
register shares of WORK Common Stock under the Securities Act for public
offering and sale in the IPO.
"Related Party Agreement" means any contract or other agreement,
written or oral, to which the Company or any Company Subsidiary is a party
or is bound or by which any property of the Company or any Company
Subsidiary is bound or may be subject and (a) to which any Stockholder or
any of that Stockholder's Related Persons or Affiliates also is a party,
(b) of which any Stockholder or any Stockholder's Related Persons or
Affiliates is a beneficiary, or (c) as to which any transaction
contemplated thereby properly would be characterized (without regard to the
amount involved) as a related party transaction for purposes of applying
the disclosure requirements of GAAP or the SEC applicable to the
Registration Statement.
"Related Person" of a Stockholder means: (a) if the Stockholder is a
natural person, (i) any Immediate Family Member of the Stockholder, (ii)
any Estate of the Stockholder or any Immediate Family Member of the
Stockholder, (iii) the trustee of any inter vivos or testamentary trust of
which all the beneficiaries are Immediate Family Members of the
Stockholder, and (iv) any Entity the entire equity interest in which is
owned by any one or more of the Stockholder and Immediate Family Members of
the Stockholder; and (b) if the Stockholder is an Entity, Estate or trust,
(i) any Person who owns an equity interest in the Stockholder on the date
hereof, (ii) any Person who would be a Related Person under clause (a) of
this definition of a natural person who is an ultimate beneficial owner of
the Stockholder, or (iii) any other Entity the entire equity interest in
which is owned by any one or more of the Stockholder and Immediate Family
Members of the Stockholder. As used in this definition, "Estate" means, as
to any natural person who has died or been adjudicated mentally incompetent
by a court of competent jurisdiction, (i) that person's estate or (ii) the
administrator, conservator, executor, guardian or representative of that
person's estate.
"Reportable Event" means, with respect to any Company ERISA Pension
Plan, (a) the occurrence of any of the events set forth in Section 4043(b)
or 4043(c) (other than a Reportable Event as to which the provision of 30
days' notice to the PBGC is waived under applicable regulations), 4062(e)
or 4063(a) of ERISA with respect to that plan, (b) any event requiring the
Company or any ERISA Affiliate to provide security to that plan under
Section 401 (a)(29) of the Code, or (c) any failure to make a payment
required by Section 412(m) of the Code with respect to that plan.
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"Representatives" means, with respect to any Person, the directors,
officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other
agents of that Person, or any other representatives of that Person or of
any of that Person's directors, officers, employees, Affiliates,
accountants (including independent certified public accountants), advisors,
attorneys, consultants or other agents.
"Restricted Payment" means, with respect to any Entity at any time,
any of the following effected by the Entity: (a) any declaration or payment
of any dividend or other distribution, direct or indirect, on account of
any Capital Stock of that Entity or any Affiliate of the Entity or (b) any
direct or indirect redemption, retirement, purchase or other acquisition
for value of, or any direct or indirect purchase, payment or sinking fund
or similar deposit for the redemption, retirement, purchase or other
acquisition for value of, or to obtain the surrender of, any then
outstanding Capital Stock of the Entity or any Affiliate of the Entity or
any then outstanding warrants, options or other rights to acquire or
subscribe for or purchase unissued or treasury Capital Stock of the Entity
or any of its Affiliates.
"Returns" means the returns, reports or statements (including any
information returns) any Governmental Requirement requires to be filed for
purposes of any Tax.
"S&P" means Standard and Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Solid Wastes, Hazardous Wastes or Hazardous Substances" have the
meanings ascribed to those terms in CERCLA, RCRA or any other Environmental
Law applicable to the business or operations of the Company or any Company
Subsidiary which imparts a broader meaning to any of those terms than does
CERCLA or RCRA.
"Staffing Contract" means any written or oral contract, subcontract or
other agreement under which the Company or a Company Subsidiary is or may
become obligated to provide to or for any Person temporary personnel
staffing, personnel placement, staff leasing, professional employer
organization, training and business solutions or other consulting services.
"Stockholder Indemnified Loss" has the meaning specified in Section
9.03.
"Stockholder Indemnified Party" means (a) each Stockholder and each of
that Stockholder's Affiliates (other than the Company or, following the
Effective Time, the Surviving Corporation or WORK or any of its
Subsidiaries, if the Stockholder is an Affiliate of WORK), agents and
counsel and (b) prior to the Effective Time, the Company and each of its
officers, directors, employees, agents and counsel who are not Stockholder
Indemnified Parties within the meaning of clause (a) of this definition.
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"Subsidiary" of any specified Person means at any time, any Entity a
majority of the Capital Stock of which is at that time owned or controlled,
directly or indirectly, by the specified Person.
"Supplemental Information" has the meaning specified in Section 6.06.
"Tax" or "Taxes" means all 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 or assessments of any nature imposed by any
Governmental Requirement, whether disputed or not, together with any
interest, penalties, additions to tax or additional amounts with respect
thereto.
"Taxing Authority" means any Governmental Authority having or
exercising jurisdiction with respect to any Tax.
"TBCA" means the Business Corporation Act of the State of Texas.
"Termination Event" means, with respect to any Company ERISA Pension
Plan, (a) any Reportable Event with respect to that plan which is likely to
result in the termination of that plan, (b) the termination of, or the
filing of a notice of intent to terminate, that plan or the treatment of
any amendment to that plan as a termination under Section 4041(c) of ERISA,
or (c) the institution of proceedings to terminate, or the appointment of a
trustee to administer, that plan under Section 4042 of ERISA.
"Third Party Claim" has the meaning specified in Section 9.04(b).
"Transaction Documents" means this Agreement, the Certificate of
Merger, the General Release, the Registration Rights Agreement, the
Transferors' Agreement, the New Employment Agreements and the other written
agreements, documents, instruments and certificates executed pursuant to or
in connection with this Agreement (other than the Other Transaction
Documents and the Underwriting Agreement), including those specified in
Article VII to be delivered at or before the Closing, all as amended,
modified or supplemented from time to time.
"Transferors' Agreement" means the Transferors' Agreement and Plan of
Transfer entered into as of the date of this Agreement, among WORK, the
Stockholders and the other Persons party thereto.
"Underwriter" means, collectively, (a) the investment banking firms
that prospectively may enter into the Underwriting Agreement and (b) from
and after the IPO Pricing Date, the investment banking firms parties to the
Underwriting Agreement.
"Underwriting Agreement" has the meaning specified in Section
7.02(a)(iii).
12
"Welfare Plan" means an "employee welfare benefit plan" as defined in
Section 3(1) of ERISA.
"Wholly Owned Subsidiary" means any corporation or other Entity all of
the outstanding Capital Stock of which, on a fully diluted basis, is owned
and controlled, directly or indirectly through another Wholly Owned
Subsidiary, by the Company.
"WORK Common Stock" means the common stock, par value $.001 per share,
of WORK.
"WORK Indemnified Loss" has the meaning specified in Section 9.02(a).
"WORK Indemnified Party" means WORK and its Affiliates and each of
their respective officers, directors, employees, agents and counsel;
provided, however, that no Person who indemnifies any WORK Indemnified
Parties under this Agreement in his capacity as a Stockholder will be a
WORK Indemnified Party for purposes of this Agreement, notwithstanding that
the Person is a WORK Indemnified Party for purposes of one or more of the
Other Agreements.
"WORK Preferred Stock" means the preferred stock, $.001 par value per
share, of WORK.
Section 1.03. Other Definitional Provisions.
(a) Except as otherwise specified herein, all references herein to any
Governmental Requirement defined or referred to herein, including the Code,
CERCLA, ERISA, the Exchange Act, RCRA and the Securities Act, shall be
deemed references to that Governmental Requirement or any successor
Governmental Requirement, as the same may have been amended or supplemented
from time to time, and any rules or regulations promulgated thereunder.
(b) When used in this Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a
whole and not to any specific provision of this Agreement, and the words
"Article," "Section," "Annex," "Schedule" and "Exhibit" refer to Articles
and Sections of, and Annexes, Schedules and Exhibits to, this Agreement,
unless otherwise specified.
(c) Whenever the context so requires, the singular number includes the
plural and vice versa, and a reference to one gender includes the other
gender and the neuter.
(d) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any
description preceding such word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
13
Section 1.04. Captions. Captions to Articles, Sections and subsections of
this Agreement and its Annexes, Schedules and Exhibits are included for
convenience of reference only, and shall not constitute a part of this Agreement
or any other Transaction Document for any other purpose, nor shall they in any
way affect the meaning or construction of any provision of this Agreement or any
other Transaction Document.
14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Section 3.01. Investment Representations. (a) The Stockholder will be
acquiring the shares of WORK Common Stock to be issued to him pursuant to
Section 2.04 solely for the Stockholder's account, for investment purposes only
and with no current intention or plan to distribute, sell or otherwise dispose
of any of those shares in connection with any distribution; (b) the Stockholder
is not a party to any agreement or other arrangement for the disposition of any
shares of WORK Common Stock other than this Agreement, the Transferors'
Agreement and the Registration Rights Agreement; (c) unless otherwise specified
on Schedule 3.01, the Stockholder is an "accredited investor" as defined in
Securities Act Rule 501 (a); (d) the Stockholder (i) is able to bear the
economic risk of an investment in the WORK Common Stock to be acquired by him
pursuant to this Agreement, (ii) can afford to sustain a total loss of that
investment, (iii) 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 WORK Common Stock, (iv) has had an adequate opportunity to ask
questions and receive answers from the officers of WORK concerning any and all
matters relating to the transactions contemplated by this Agreement, including
the background and experience of the current and proposed officers and directors
of WORK, the plans for the operations of the business of WORK, the business,
operations and financial condition of the Other Founding Companies and any plans
of WORK for additional acquisitions, and (v) has asked all questions of the
nature described in preceding clause (iv), and all those questions have been
answered to his satisfaction.
Section 3.02. Ownership and Status of Company Capital Stock. The
Stockholder is the record and beneficial owner (or, if the Stockholder is a
trust or the estate of a deceased natural person, the legal owner) of the number
of shares of Company Capital Stock set forth, by class, and by each series in
each class, opposite the Stockholder's name in Schedule 3.02, free and clear of
all Liens, except for the Liens accurately set forth in Schedule 3.02, all of
which will be released at or before the Effective Time.
Section 3.03. Power of the Stockholder; Approval of the Merger.
(a) The Stockholder has the full power, legal capacity and authority
to execute and deliver this Agreement and each other Transaction Document
to which the Stockholder is a party and to perform the Stockholder's
obligations in this Agreement and in all other Transaction Documents to
which the Stockholder is a party. This Agreement constitutes, and each
such other Transaction Document, when executed in the Stockholder's
individual capacity and delivered by the Stockholder, will constitute, the
legal, valid and binding obligation of the Stockholder, enforceable against
the Stockholder in accordance with its terms, except as their
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law). If the Stockholder is an Entity, the Stockholder
has, in accordance with all applicable Governmental Requirements and its
Charter Documents, obtained all approvals and taken all actions
15
necessary for the authorization, execution, delivery and performance by the
Stockholder of this Agreement and the other Transaction Documents to which
the Stockholder is a party. If the Stockholder is acting otherwise than in
his individual capacity (whether as an executor or a guardian or in any
other fiduciary or representative capacity), all actions on the part of the
Stockholder and all other Persons (including any court) necessary for the
authorization, execution, delivery and performance by the Stockholder of
this Agreement and the other Transaction Documents to which the Stockholder
is a party have been duly taken.
(b) The Stockholder, acting in each capacity in which he is entitled,
by reason of the Company's Charter Documents or the Governmental
Requirements of the Company's Organization State or for any other reason,
to vote to approve or disapprove the consummation of the Merger, has voted
all the shares of Company Capital Stock owned by him and entitled to a vote
or votes on that matter, in any one or more of the manners prescribed or
permitted by the Company's Charter Documents or the Governmental
Requirements of the Company's Organization State, whichever are
controlling, to approve this Agreement and the consummation of the Merger
and the other transactions contemplated by this Agreement.
Section 3.04. No Conflicts or Litigation. The execution, delivery and
performance in accordance with their respective terms by the Stockholder of this
Agreement and the other Transaction Documents to which the Stockholder is or
will be a party do not and will not (a) violate any Governmental Requirement,
(b) breach or constitute a default under any agreement or instrument to which
the Stockholder is a party or by which the Stockholder or any of the shares of
Company Capital Stock owned by the Stockholder is bound, (c) result in the
creation or imposition of, or afford any Person the right to obtain, any Lien
upon any of the shares of Company Capital Stock owned by the Stockholder (or
upon any revenues, income or profits of the Stockholder therefrom) or (d) if the
Stockholder is an Entity, violate the Stockholder's Charter Documents. No
Litigation is pending or, to the knowledge of the Stockholder, threatened to
which the Stockholder is or may become a party which (a) questions or involves
the validity or enforceability of any of the Stockholder's obligations under any
Transaction Document or (b) seeks (or reasonably may be expected to seek) (i) to
prevent or delay the consummation by the Stockholder of the transactions
contemplated by this Agreement to be consummated by the Stockholder or (ii)
Damages in connection with any consummation by the Stockholder of the
transactions contemplated by this Agreement.
Section 3.05. No Brokers. The Stockholder has not, directly or indirectly,
in connection with this Agreement or the transactions contemplated hereby (a)
employed any broker, finder or agent or (b) agreed to pay or incurred any
obligation to pay any broker's or finder's fee, any sales commission or any
similar form of compensation.
Section 3.06. Preemptive and Other Rights; Waiver. Except for the right of
the Stockholder to receive shares of WORK Common Stock as a result of the Merger
or to acquire WORK Common Stock pursuant to any written option or warrant
granted by WORK to the Stockholder, the Stockholder either (a) does not have any
statutory or contractual preemptive or other right of any kind (including any
right of first offer or refusal) to acquire any shares of Company Capital Stock
16
or WORK Common Stock or (b) hereby irrevocably waives each such right of that
type the Stockholder has or may have.
Section 3.07. Control of Related Businesses. Except as accurately set
forth in Schedule 3.07, the Stockholder is not, alone or with one or more other
Persons, the controlling Affiliate of any Entity, business or trade (other than
the Company and the Company Subsidiaries, if the Stockholder is an Affiliate of
the Company) that (a) is engaged in any line of business which is the same as or
similar to any line of business in which the Company or any Company Subsidiary
is engaged or (b) is, or has within the three-year period ending on the date of
this Agreement, engaged in any transaction or been a party to any agreement with
the Company or any Company Subsidiary.
17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF
THE COMPANY AND THE STOCKHOLDERS
Section 4.01. Organization and Authority. Section 4.01 of the Disclosure
Statement sets forth the Organization State of the Company and the Company (a)
is a corporation duly organized, validly existing and in good standing under the
laws of that State, (b) has all requisite corporate power and authority under
those laws and its Charter Documents to own or lease and to operate its
properties and to carry on its business as now conducted, and (c) is duly
qualified and in good standing as a foreign corporation in all jurisdictions
(other than its Organization State) in which it owns or leases property or in
which the carrying on of its business as now conducted so requires, except where
the failure to be so qualified, singly or in the aggregate, would not have a
Material Adverse Effect;
Section 4.02. Qualification. Section 4.02 of the Disclosure Statement
accurately lists all the jurisdictions in which the Company and the Company
Subsidiaries are authorized or qualified to own or lease and to operate their
properties or to carry on their business as now conducted. Neither the Company
nor any Company Subsidiary owns, leases or operates properties or carries on its
business in any jurisdiction not listed in Section 4.02 of the Disclosure
Statement.
Section 4.03. Authorization; Enforceability; Absence of Conflicts;
Required Consents.
(a) The execution, delivery and performance by the Company of this
Agreement and each other Transaction Document to which it is or will be a
party, and the effectuation of the Merger and the other transactions
contemplated hereby and thereby, are within its corporate or other power
under its Charter Documents and all applicable Governmental Requirements of
its Organization State and have been duly authorized by all proceedings,
including actions permitted to be taken in lieu of proceedings, required
under its Charter Documents and all applicable Governmental Requirements of
the Organization State.
(b) This Agreement has been, and each of the other Transaction
Documents to which the Company is or will be a party, when executed and
delivered to WORK (or, in the case of the Certificate of Merger, the
applicable Governmental Authorities) will have been, duly executed and
delivered by the Company and is, or when so executed and delivered will be,
the legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as enforceability may be
(i) limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and (ii) subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance with their
respective terms by the Company of the Transaction Documents to which it is
a party do not and will not (i) violate, breach or constitute a default
under (A) the Charter Documents of the
18
Company or any of the Company Subsidiaries, (B) any Governmental
Requirement applicable to the Company or any of the Company Subsidiaries or
(C) except as set forth in Section 4.03 of the Disclosure Statement, any
Material Agreement of the Company, (ii) except as set forth in Section 4.03
of the Disclosure Statement, result in the acceleration or mandatory
prepayment of any Indebtedness, or any Guaranty not constituting
Indebtedness, of any of the Company and the Company Subsidiaries or afford
any holder of any of that Indebtedness, or any beneficiary of any of those
Guaranties, the right to require any of the Company and the Company
Subsidiaries to redeem, purchase or otherwise acquire, reacquire or repay
any of that Indebtedness, or to perform any of those Guaranties, (iii)
cause or result in the imposition of, or afford any Person the right to
obtain, any Lien upon any property or assets of any of the Company and the
Company Subsidiaries (or upon revenues, income or profits of any of the
Company and the Company Subsidiaries therefrom), (iv) except as set forth
in Section 4.03 of the Disclosure Statement, result in the revocation,
cancellation, suspension or material modification, in any single case or in
the aggregate, of any Governmental Approval possessed by any of the Company
and the Company Subsidiaries at the date hereof and necessary for the
ownership or lease or the operation of its properties or the carrying on of
its business as now conducted, including any necessary Governmental
Approval under each applicable Environmental Law, or (v) except as set
forth in Section 4.03 of the Disclosure Statement, entitle any Person other
than the Company or a Company Subsidiary to revoke, cancel, suspend or
materially modify any Company Commitment.
(d) Except for (i) the filing of the Certificates of Merger with the
applicable Governmental Authorities, (ii) filings of the Registration
Statement under the Securities Act and the SEC order declaring the
Registration Statement effective under the Securities Act, and (iii) as may
be required by the HSR Act or the applicable state securities or blue sky
laws, no Governmental Approvals are required to be obtained, and no reports
or notices to or filings with any Governmental Authority are required to be
made, by any of the Company and the Company Subsidiaries for the execution,
delivery or performance by the Company of the Transaction Documents to
which it is a party, the enforcement against the Company of its obligations
thereunder or the effectuation of the Merger and the other transactions
contemplated thereby.
Section 4.04. Charter Documents and Records; No Violation. The Company
has caused true, complete and correct copies of the Charter Documents, each as
in effect on the date hereof, and the minute books and similar corporate or
other Entity records of each of the Company and the Company Subsidiaries to be
delivered or otherwise made available to WORK. No breach or violation of any
Charter Document of any of the Company and the Company Subsidiaries has occurred
and is continuing.
Section 4.05. No Defaults. No act or omission by the Company or any of the
Company Subsidiaries has occurred, and to the knowledge of the Company, the
Company Subsidiaries and the Stockholders, no other condition or state of facts
exists, or, with the giving of notice or the lapse of time or both, would exist,
which (a) entitles any holder of any outstanding Indebtedness, or any Guaranty
not constituting Indebtedness, of any of the Company and the Company
Subsidiaries, or
19
a representative of the holder, to accelerate the maturity, or require a
mandatory prepayment of that Indebtedness or Guaranty, or affords the holder or
its representative, or any beneficiary of that Guaranty, the right to require
any of the Company and the Company Subsidiaries to redeem, purchase or otherwise
acquire, reacquire or repay any of that Indebtedness, or to perform that
Guaranty in whole or in part, (b) entitles any Person to obtain any Lien (other
than a Permitted Lien) upon any properties or assets of any of the Company and
the Company Subsidiaries (or upon revenues, income or profits of any of the
Company and the Company Subsidiaries therefrom), or (c) constitutes a violation
or breach of, or a default under, any Material Agreement of the Company by the
Company or any of the Company Subsidiaries.
Section 4.06. Company Subsidiaries. Section 4.06 of the Disclosure
Statement either (a) accurately sets forth the form of organization, legal name,
each assumed name and Organization State of each Company Subsidiary or (b)
correctly states no Entity is a Company Subsidiary. Except as accurately
disclosed in Section 4.06 of the Disclosure Statement, each Company Subsidiary
is a Wholly Owned Subsidiary. In the case of any Company Subsidiary that is not
a Wholly Owned Subsidiary, Section 4.06 of the Disclosure Statement accurately
sets forth, by each class and each series within each class, the number of
outstanding shares of Capital Stock of the Company Subsidiary, (a) the Company's
aggregate direct and indirect ownership of those shares and (b) the name and
address of record and percentage ownership of those shares by each holder of
record thereof other than the Company or a Company Subsidiary. No Lien exists on
any outstanding share of Capital Stock of any Company Subsidiary which is owned
directly or indirectly by the Company other than (a) the Liens, if any,
described in Section 4.06 of the Disclosure Statement, all of which will be
released at or before the Effective Time, and (b) Permitted Liens. Except as
accurately set forth in Section 4.06 of the Disclosure Statement, the Company
does not own, of record or beneficially, directly or indirectly through any
Person, and does not control, directly or indirectly through any Person or
otherwise, any Capital Stock or Derivative Securities of any Entity other than a
Company Subsidiary.
Section 4.07. Capital Stock of the Company and the Company Subsidiaries.
Schedule 4.07 sets forth the authorized Capital Stock of the Company and the
number of shares of Capital Stock of each class or series which are issued and
now outstanding, whether any shares of Capital Stock of the Company are held by
the Company as treasury shares, and whether any Derivative Securities of the
Company are outstanding. All the issued and outstanding shares of Capital Stock
of each of the Company and the Company Subsidiaries have been duly authorized
and validly issued in accordance with the applicable Governmental Requirements
of their issuer's Organization State and Charter Documents and are fully paid
and nonassessable. Neither the Company nor any Company Subsidiary has issued or
sold any shares of its outstanding Capital Stock in breach or violation of (a)
any applicable statutory or contractual preemptive rights, or any other rights
of any kind (including any rights of first offer or refusal), of any Person or
(b) the terms of any of its Derivative Securities which then were outstanding.
No Person has, otherwise than solely by reason of that Person's right, if any,
to vote shares of the Capital Stock of the Company or any Company Subsidiary it
holds (to the extent those shares afford their holder any voting rights) any
right to vote on any matter with the holders of Capital Stock of the Company or
any Company Subsidiary.
20
Section 4.08. Transactions in Capital Stock. Except as accurately set
forth in Section 4.08 of the Disclosure Statement: (a) the Company has no fixed
or contingent obligation to purchase, redeem or otherwise acquire or reacquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof, and (b) no transaction has been
effected, and no action has been taken, respecting the equity ownership of
either the Company or any Company Subsidiary, in either case in contemplation of
the transactions described in this Agreement.
Section 4.09. No Bonus Shares. Except as accurately set forth in Section
4.09 of the Disclosure Statement, no outstanding share of Capital Stock of the
Company was issued for less than its fair market value at the time of its
issuance or was issued in exchange for any consideration other than cash.
Section 4.10. Predecessor Status; etc. Section 4.10 of the Disclosure
Statement accurately lists all the legal and assumed names of all predecessor
companies for the past five years of the Company and each Company Subsidiary,
including the names of any Entities from which the Company previously acquired
material assets. Except as accurately disclosed in Section 4.10 of the
Disclosure Statement, the Company has not been a Subsidiary or division of
another corporation or a part of an acquisition that was later rescinded.
Section 4.11. Related Party Agreements. Except as accurately disclosed in
Schedule 4.11, each Related Party Agreement in effect on the date of this
Agreement will have been terminated as of the IPO Closing Date, and no Related
Party Agreement will then exist.
Section 4.12. Litigation. Except as accurately disclosed in Section 4.12
of the Disclosure Statement, no Litigation is pending or, to the knowledge of
the Company or any Stockholder, threatened to which the Company or any Company
Subsidiary is or may become a party.
Section 4.13. Financial Statements; Disclosure.
(a) Financial Statements. The Financial Statements (including in each
case the related schedules and notes) delivered to WORK by the Company
present fairly, in all material respects, the consolidated financial
position of the Company and the Company Subsidiaries at the respective
dates of the balance sheets included therein and the consolidated results
of their operations and their consolidated cash flows for the respective
periods set forth therein and have been prepared in accordance with GAAP.
As of the date of each balance sheet included in all previously delivered
Financial Statements, neither the Company nor any Company Subsidiary then
had any outstanding Indebtedness to any Person or any liabilities of any
kind (including contingent obligations, Tax assessments or forward or long-
term commitments), or any unrealized or anticipated loss, which in the
aggregate then were Material to the Company and required to be reflected in
those Financial Statements or in the notes related thereto in accordance
with GAAP which were not so reflected.
(b) Disclosure. To the knowledge of the Company and the Stockholders:
21
(i) all Information (other than financial budgets and
projections) that (A) is set forth in the Disclosure Statement, (B)
has been delivered to WORK by or on behalf of the Company pursuant to
an express requirement of this Agreement, or (C) has been furnished to
WORK by or on behalf of the Company for inclusion in the Registration
Statement under the captions "The Company," "Management's Discussion
and Analysis of Financial Condition and Results of Operations,"
"Business," "Management," and "Certain Transactions" in any prospectus
forming a part of the Registration Statement is, taken together, true
and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which the
statements were made; and
(ii) all financial budgets and projections that have been or are
hereafter from time to time prepared by the Company or any of its
Representatives and made available prior to the Effective Time to WORK
pursuant to or in connection with this Agreement, any other
Transaction Document or the transactions contemplated hereby or
thereby have been and will be prepared and furnished to WORK in good
faith and were and will be based on facts and assumptions that are
believed by the management of the Company to be reasonable in light of
the then current and reasonably foreseeable business conditions of the
Company and the Company Subsidiaries and represented and will
represent management's good faith estimate of the consolidated
projected financial performance of the Company and the Company
Subsidiaries based on the information available to the Responsible
Officer at the time so furnished (it being acknowledged by WORK that
the budgets and projections referred to in this clause (ii) are
derived from judgments made by the Company's management and are only
estimates of future results based on assumptions made at the time of
their preparation, and that there can be no assurance that the budgets
or projections will be obtained or maintained or that actual results
will not be different from those budgeted or projected).
Section 4.14. Compliance With Laws.
(a) Except as accurately disclosed in Section 4.14 of the Disclosure
Statement, (i) each of the Company and the Company Subsidiaries possesses
all necessary licenses, registrations and qualifications required for the
conduct of its business, and (ii) to the knowledge of the Company, the
Company and each of the Company Subsidiaries are in compliance in all
material respects with the terms and conditions of all Governmental
Approvals necessary for the ownership or lease and the operation of its
properties (including all the facilities and sites it owns or holds under
any lease) and the carrying on of its business as now conducted. The
Company has identified in Section 4.14 of the Disclosure Statement all the
Governmental Approvals it possesses. To the knowledge of the Company, all
the Governmental Approvals identified in Section 4.14 of the Disclosure
Statement are valid. Except as accurately disclosed in Section 4.14 of the
Disclosure Statement, neither the Company nor any Company Subsidiary has
received any notice from any Governmental
22
Authority of its intention to cancel, terminate or not renew any of those
Governmental Approvals.
(b) Except as accurately disclosed in Section 4.14 of the Disclosure
Statement, each of the Company and the Company Subsidiaries: (i) to the
knowledge of the Company, has been and continues to be in compliance with
all Governmental Requirements applicable to it or any of its presently or
previously owned or operated properties (including all the facilities and
sites now or previously owned or held by it under any lease), businesses or
operations, including all applicable Governmental Requirements under ERISA
and Environmental Laws; and (ii) (A) neither the Company nor any Company
Subsidiary has received any notice from any Governmental Authority which
asserts, or raises the possibility of assertion of, any noncompliance by
the Company or any Company Subsidiary with any Governmental Requirements
and (B) to the knowledge of the Company and the Stockholders, no condition
or state of facts exists which would provide a valid basis for any such
assertion.
Section 4.15. Certain Environmental Matters. Except as accurately
disclosed in Section 4.15 of the Disclosure Statement: (a) to the knowledge of
the Company, the Company and each Company Subsidiary have complied, and remain
in compliance, with the provisions of all Environmental Laws applicable to any
of them or any of their respective presently owned or operated facilities, sites
or other properties, businesses and operations and which relate to the reporting
by the Company and each Company Subsidiary of all sites presently owned or
operated by any of them where Solid Wastes, Hazardous Wastes or Hazardous
Substances have been treated, stored, disposed of or otherwise handled; (b) no
release (as defined in the applicable Environmental Laws) at, from, in or on any
site owned or operated by the Company or any Company Subsidiary has occurred
which, if all relevant facts were known to the relevant Governmental
Authorities, reasonably could be expected to require remediation to avoid deed
record notices, restrictions, liabilities or other consequences that would not
be applicable if the release had not occurred; (c) neither the Company nor any
Company Subsidiary has transported or arranged for the transportation of any
Solid Wastes, Hazardous Wastes or Hazardous Substances to, or disposed or
arranged for the disposition of any Solid Wastes, Hazardous Wastes or Hazardous
Substances at, any off-site location that could lead to any valid claim against
the Company, any Company Subsidiary, WORK or Newco, as a potentially responsible
party or otherwise, for any clean-up costs, remedial work, damage to natural
resources, personal injury or property damage, including any claim under CERCLA;
and (d) no storage tanks exist, or, to the knowledge of the Company, has
existed, on or under any of the properties owned or operated by the Company or
any Company Subsidiary from which any Solid Wastes, Hazardous Wastes or
Hazardous Substances have been released into the surrounding environment. The
Company has provided WORK with copies (or if not available, accurate written
summaries) of all environmental investigations, studies, audits, reviews and
other analyses conducted by or on behalf, or which otherwise are in the
possession, of the Company or any Company Subsidiary respecting any facility,
site or other property now or previously owned or operated by the Company or any
Company Subsidiary.
Section 4.16. Liabilities and Obligations. Section 4.16 of the Disclosure
Statement accurately lists all present liabilities, of every kind, character and
description and whether accrued,
23
absolute, fixed, contingent or otherwise, of each of the Company and the Company
Subsidiaries which exceed or reasonably could be expected to exceed $10,000 and
which (a) had been incurred prior to the Current Balance Sheet Date, but are not
reflected on the Current Balance Sheet, or (b) were incurred after the Current
Balance Sheet otherwise than in the ordinary course of business, and consistent
with the past practice, of that Entity, in each case other than (i) obligations
and liabilities of the Company and the Company Subsidiaries in respect of the
Company Commitments, (ii) obligations and liabilities of the Company in respect
of each Company ERISA Benefit Plan, and (iii) obligations and liabilities of the
Company and the Company Subsidiaries set forth in the Disclosure Statement.
Section 4.16 of the Disclosure Statement also accurately lists and describes,
for each of the Company and the Company Subsidiaries: (a) each of its
outstanding secured and unsecured Guaranties not constituting its Indebtedness
and, for each of those Guaranties, whether any Stockholder or Related Person or
Affiliate of any Stockholder is a Person whose obligation is covered by that
Guaranty, and (b) for each of the items listed under clause (a) of this
sentence, (i) if that item is secured by any property or asset of the Company or
any Company Subsidiary, the nature of the security, and (ii) if that item is
covered in whole or in part by a Guaranty of any Stockholder or any Related
Person or Affiliate of any Stockholder, the name of the guarantor.
Section 4.17. Receivables. Except as accurately disclosed in Section 4.17
of the Disclosure Statement, all the accounts and notes or other advances
receivable of the Company and the Company Subsidiaries reflected on the Current
Balance Sheet were collected, or are, in the good faith belief of the Company's
management, collectible, in the respective amounts so reflected, net of the
reserves, if any, reflected in the Current Balance Sheet.
Section 4.18. Owned and Leased Real Properties.
(a) Section 4.18 of the Disclosure Statement accurately lists and
correctly describes in all material respects: (i) all real properties
owned by the Company or any of the Company Subsidiaries and, for each of
those properties, its address, the type and square footage of each
structure located thereon and the nature of its use in the business of the
Company and the Company Subsidiaries; (ii) all real properties of which any
of the Company and the Company Subsidiaries is the lessee and, for each of
those properties, its address, the type and square footage of each
structure located thereon which the Company or a Company Subsidiary is
leasing, the annual rental rate, the expiration date of its lease and the
use made of the leased property in the business of the Company and the
Company Subsidiaries; and (iii) in the case of each real property listed as
being owned, whether it was previously owned, and in the case of each real
property listed as being leased, whether it is presently owned, by any
Stockholder or any of his Related Persons or Affiliates (other than the
Company and the Company Subsidiaries, if the Stockholder is an Affiliate of
the Company).
(b) The Company has provided WORK with true, complete and correct
copies of all title reports and title insurance policies owned or in the
possession of any of the Company and the Company Subsidiaries and relating
to any of the real properties identified in Section 4.18 of the Disclosure
Statement as being owned. Except as accurately set forth in that Section
or those reports and policies, and except for Permitted Liens, the Company
24
or a Company Subsidiary owns in fee, and has good, valid and indefeasible
title to, free and clear of all Liens, each property listed in that Section
as being owned.
(c) The Company has provided WORK with true, correct and complete
copies of all leases under which the Company or a Company Subsidiary is
leasing each of the real properties listed in Section 4.18 of the
Disclosure Statement as being leased, and, except as accurately set forth
in Section 4.18 of the Disclosure Statement, (i) each of the listed leases
is, to the knowledge of the Company, valid and binding on the lessor party
thereto, and (ii) the lessee party thereto has not sublet any of the leased
space to any Person other than the Company or a Company Subsidiary.
(d) The fixed assets of each of the Company and the Company
Subsidiaries are affixed only to one or more of the real properties listed
in Section 4.18 of the Disclosure Statement and, except as accurately set
forth in that Section, are well-maintained and adequate for the purposes
for which they presently are being used or held for use, ordinary wear and
tear excepted.
(e) The Company has accurately disclosed in all material respects in
writing to WORK all plans or projects involving the opening of new
operations, the expansion of any existing operations or the acquisition of
any real property or existing business, with respect to which management of
the Company or any Company Subsidiary has made any expenditure in the two-
year period prior to the date of the Agreement in excess of $25,000, or
which if pursued by the Company or any Company Subsidiary would require
additional capital expenditures in excess of $25,000.
Section 4.19. Owned and Leased Personal Property.
(a) The Company has provided WORK with a list accurate and complete in
all material respects of all machinery, equipment and other personal
property included in the Property, Plant and Equipment owned and leased by
any of the Company and the Company Subsidiaries, which list states, in the
case of each of those properties listed as being owned, whether it was
previously owned, and in the case of each of those properties listed as
being leased, whether it is presently owned, by any Stockholder or any of
his Related Persons or Affiliates (other than the Company and the Company
Subsidiaries, if the Stockholder is an Affiliate of the Company).
(b) Except as accurately disclosed in Section 4.19 of the Disclosure
Statement and except for Permitted Liens, the Company or a Company
Subsidiary has good, valid and indefeasible title, free and clear of all
Liens, to each asset described in the list referred to in Section 4.19(a)
above as being owned by the Company or a Company Subsidiary.
(c) The Company has provided WORK with true, correct and complete
copies of all leases under which the Company or a Company Subsidiary is
leasing each of the properties listed in Section 4.19 of the Disclosure
Statement as being leased and all leases referred to in Section 4.21 and,
except as accurately disclosed in Section 4.19 of the
25
Disclosure Statement, (i) each of those leases is, to the knowledge of the
Company, valid and binding on the lessor party thereto, and (ii) the lessee
party thereto has not sublet any of the leased property to any Person other
than the Company or a Company Subsidiary.
(d) Except as accurately disclosed in Section 4.19 of the Disclosure
Statement, all items of machinery, equipment and other personal property
listed therein are in good working order and condition, ordinary wear and
tear excepted, and are adequate for the purposes for which they presently
are being used or held for use.
Section 4.20. Proprietary Rights. Except as accurately set forth in
Section 4.20 of the Disclosure Statement, each of the Company and the Company
Subsidiaries owns or has the legal right to use all Proprietary Rights that are
necessary to the conduct of its business as now conducted, in each case free of
any claims or infringements known to the Company or any Stockholder. Section
4.20 of the Disclosure Statement accurately (a) lists all such Proprietary
Rights, (b) indicates those owned by the Company or any Company Subsidiary and,
for those not listed as so owned, the agreement or other arrangement pursuant to
which they are possessed or used, (c) lists all consents of any Person which
will be required for the use of any of these Proprietary Rights by WORK or any
Subsidiary of WORK following the Effective Time and (d) lists all governmental
registrations of any of these Proprietary Rights which have lapsed or expired or
been canceled, abandoned, opposed or the subject of any reexamination request.
Section 4.21. Title to Other Properties. In each case, free and clear of
all Liens except for Permitted Liens and as accurately set forth in Section 4.21
of the Disclosure Statement, each of the Company and the Company Subsidiaries
has good and valid title to, or holds under a lease valid and binding on the
lessor party thereto, all its tangible personal properties and assets (other
than Property, Plant and Equipment) that individually is or in the aggregate are
Material to the Company.
Section 4.22. Commitments.
(a) In Section 4.22(a) of the Disclosure Statement, the Company has
completely and accurately listed each of the following (each a "Company
Commitment") to which the Company or any of the Company Subsidiaries is a
party or by which any of its properties is bound and which presently
remains executory in whole or in any part:
(i) each partnership, joint venture or cost-sharing agreement;
(ii) each guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iii) each instrument, agreement or other obligation evidencing
or relating to Indebtedness of any of the Company and the Company
Subsidiaries or to money lent or to be lent to another Person;
(iv) each contract to purchase or sell real property;
26
(v) each Staffing Contract for which either the contract price or
the cost of performance will or could reasonably be expected to exceed
$100,000 (each a "Material Staffing Contract");
(vi) each Related Party Agreement involving total payments within
any 12-month period in excess of $10,000 and which is not terminable
without penalty on no more than 30 days' prior notice;
(vii) each agreement (other than Staffing Contracts and routine
purchase orders or purchase order acknowledgments issued or received
in the ordinary course of business) for the acquisition or provision
of services, supplies, equipment, inventory, fixtures or other
property involving more than $10,000 in the aggregate;
(viii) each contract containing any noncompetition agreement,
covenant or undertaking; or
(ix) each other agreement or commitment not made in the ordinary
course of business that is Material to the Company.
True, correct and complete copies of all written Company Commitments, and
true, correct and complete written descriptions of all oral Company
Commitments, have been delivered or made available to WORK. Except as
accurately disclosed in Section 4.22(a) of the Disclosure Statement: (i)
there are no existing or asserted defaults, events of default or events,
occurrences, acts or omissions that, with the giving of notice or lapse of
time or both, would constitute defaults or events of default under any
Company Commitment which is Material to the Company by the Company or any
of the Company Subsidiaries or, to the knowledge of the Company, any other
party thereto; and (ii) no penalties have been incurred, nor are amendments
pending, with respect to any Company Commitment which is Material to the
Company. The Company Commitments are in full force and effect and are
valid and enforceable obligations of the Company or the Company
Subsidiaries parties thereto and, to the knowledge of the Company and the
Stockholders, the other parties thereto, in accordance with their
respective terms, and no defenses, off-sets or counterclaims have been
asserted or, to the knowledge of the Company and the Stockholders, may be
made by any party thereto (other than by the Company or a Company
Subsidiary), nor has the Company or a Company Subsidiary, as the case may
be, waived any rights thereunder, except as accurately described in Section
4.22(a) of the Disclosure Statement.
(b) Section 4.22(b) of the Disclosure Statement accurately describes
each Material Staffing Contract by identifying its parties, the nature of
the project or services being or to be provided under the contract by the
Company or a Company Subsidiary and the contract price. Except as
disclosed in Section 4.22(b) of the Disclosure Statement, no Staffing
Contract contains terms, conditions or requirements which:
(i) exceed the current performance capabilities of the Company or
the applicable Company Subsidiary; or
27
(ii) will or could reasonably be expected to result in a total
cost of performance which is in excess of the contract price.
(c) Except as accurately disclosed in Section 4.22(c) of the
Disclosure Statement or contemplated hereby or by any other Transaction
Document to which the Company or any Company Subsidiary or Stockholder is a
party: (i) neither the Company nor any Company Subsidiary or Stockholder
has received notice of any plan or intention of any other party to any
Company Commitment to exercise any right to cancel or terminate any Company
Commitment, and neither the Company nor any Company Subsidiary or
Stockholder knows of any condition or state of facts, including the
consummation of the Merger, which would justify the exercise of such a
right; and (ii) neither the Company nor any Company Subsidiary or
Stockholder currently contemplates, or has reason to believe any other
Person currently contemplates, any amendment or change to any Company
Commitment.
Section 4.23. Capital Expenditures. Section 4.23 of the Disclosure
Statement accurately sets forth the total amount of capital expenditures
currently budgeted to be incurred by the Company and the Company Subsidiaries
during the balance of the Company's current and next ensuing fiscal years.
Except as accurately set forth in Section 4.23 of the Disclosure Statement, to
the knowledge of the Company and the Stockholders, no condition or state of
facts exists which will cause the total capital expenditures of the Company and
the Company Subsidiaries which will be required to replace worn-out or obsolete
Property, Plant and Equipment in the Company's current and next ensuing fiscal
years to exceed the amount budgeted for capital expenditures by the Company and
the Company Subsidiaries for the current and next ensuing fiscal years in order
to maintain the types and levels of sales and services the Company and the
Company Subsidiaries presently make or provide.
Section 4.24. Inventories. Except as accurately set forth in Section 4.24
of the Disclosure Statement, neither the Company nor any Company Subsidiary
owned as of the Current Balance Sheet Date, or owns as of the date hereof, any
Material amount of inventories.
Section 4.25. Insurance. Except as accurately set forth in Section 4.25
of the Disclosure Statement: (a) the Company has provided WORK with: (i) a
list of all insurance policies carried by the Company and each of the Company
Subsidiaries; (ii) an accurate list of all insurance loss runs and worker's
compensation claims received for the most recently ended three policy years; and
(iii) true, complete and correct copies of all insurance policies carried by
each of the Company and the Company Subsidiaries which are in effect, all of
which have been issued by insurers of recognized responsibility and currently
are, and will remain without interruption through the IPO Closing Date, in full
force and effect; (b) no insurance carried by the Company or any Company
Subsidiary has been canceled by the insurer during the past five years, and
neither the Company nor any Company Subsidiary has ever been denied coverage;
(c) neither the Company, any Company Subsidiary nor any Stockholder has received
any notice or other communication from any issuer of any listed insurance policy
of any material increase in any deductibles, retained amounts or the premiums
payable thereunder, and, to the knowledge of the Company and the Stockholders,
no such increase in deductibles, retainages or premiums is threatened; and (d)
each policy of workers' compensation insurance carried by the Company and each
Company Subsidiaries carries a modifier of one or less.
28
Section 4.26. Employee Matters.
(a) Cash Compensation. The Company has provided WORK with an
accurate, complete written list of the names, titles and rates of annual
Cash Compensation, at the Current Balance Sheet Date and at the date hereof
(and the portions thereof attributable to salary or the equivalent, fixed
bonuses, discretionary bonuses and other Cash Compensation, respectively)
of all key employees (including all employees who are officers or
directors), nonemployee officers, nonemployee directors and key consultants
and independent contractors of each of the Company and the Company
Subsidiaries. Notwithstanding the foregoing, the terms "key employees" and
"key consultants and independent contractors" shall not include persons who
are not permanent employees, consultants or contractors who are assigned to
work at customer facilities.
(b) Employment Agreements. Section 4.26(b) of the Disclosure
Statement accurately lists all Employment Agreements with permanent
employees, consultants or independent contractors who are not regularly
assigned to work at customer facilities remaining executory in whole or in
part on the date hereof, complete and correct copies of all of which have
been provided to WORK by the Company. Neither the Company nor any Company
Subsidiary is a party to any oral Employment Agreement with any such
employee, consultant or independent contractor.
(c) Other Compensation Plans. Section 4.26(c) of the Disclosure
Statement accurately lists all Other Compensation Plans either remaining
executory at the date of this Agreement or to later become effective. The
Company has provided WORK with a true, correct and complete copy of each of
the listed Other Compensation Plans that is in writing and an accurate
description of each of the listed Other Compensation Plans that is not
written. Except as accurately set forth in Section 4.26(c) of the
Disclosure Statement, each of the Other Compensation Plans, including each
that is a Welfare Plan, may be unilaterally amended or terminated by the
Company or any Company Subsidiary without liability to any of them, except
as to benefits accrued thereunder prior to amendment or termination.
(d) ERISA Benefit Plans. Section 4.26(d) of the Disclosure Statement
accurately (i) lists each ERISA Pension Benefit Plan (A) the funding
requirements of which (under Section 301 of ERISA or Section 412 of the
Code) are, or at any time during the six-year period ending on the date of
this Agreement were, in whole or in part, the responsibility of the Company
or any Company Subsidiary, or respecting which the Company or any Company
Subsidiary is, or at any time during that period was, a "contributing
sponsor" or an "employer" as defined in Sections 4001(a)(13) and 3(5),
respectively, of ERISA (each plan described in this clause (A) being a
"Company ERISA Pension Plan"), (B) each other ERISA Pension Benefit Plan
respecting which a Company ERISA Affiliate is, or at any time during that
period was, such a "contributing sponsor" or "employer" (each plan
described in this clause (B) being an "ERISA Affiliate Pension Plan"), and
(C) each other ERISA Employee Benefit Plan that is being, or at any time
during that period was, sponsored, maintained or contributed to by the
Company or any Company Subsidiary (each plan described in this clause (C)
and each Company ERISA Pension Plan being a "Company
29
ERISA Benefit Plan"), (ii) states the termination date of each Company
ERISA Benefit Plan and ERISA Affiliate Pension Plan that has been
terminated, and (iii) identifies for each ERISA Affiliate Pension Plan the
relevant ERISA Affiliates. The Company has provided WORK with true,
complete and correct copies of (i) each Company ERISA Benefit Plan and
ERISA Affiliate Pension Plan, (ii) each trust agreement related thereto,
and (iii) all amendments to all such plans and trust agreements. Except
as accurately set forth in Section 4.26(d) of the Disclosure Statement, (i)
neither the Company nor any Company Subsidiary is, or at any time during
the six-year period ended on the date of this Agreement was, a member of
any ERISA Group that currently includes, or included when the Company or a
Company Subsidiary was a member, among its members any Person other than
the Company and the Company Subsidiaries, and (ii) no Person is an ERISA
Affiliate of the Company or any Company Subsidiary (other than the Company
or any Company Subsidiary in the case of any other Company Subsidiary or
any Company Subsidiary in the case of the Company, if the Company and the
Company Subsidiaries comprise an ERISA Group).
(e) Employee Policies and Procedures. Section 4.26(e) of the
Disclosure Statement accurately lists all Employee Policies and Procedures.
The Company has provided WORK with a copy of all written Employee Policies
and Procedures and a written description of all material unwritten Employee
Policies and Procedures the continuance or discontinuance of which could
reasonably be expected to have a Material Adverse Effect.
(f) Unwritten Amendments. Except as accurately described in Section
4.26(f) of the Disclosure Statement, no material unwritten amendments have
been made, whether by oral communication, pattern of conduct or otherwise,
with respect to any of the Employment Agreements, Other Compensation Plans
or Employee Policies and Procedures.
(g) Labor Compliance. To the knowledge of the Company, each of the
Company and the Company Subsidiaries has been and is in compliance with all
applicable Governmental Requirements respecting employment and employment
practices, terms and conditions of employment and wages and hours, and
neither the Company nor any Company Subsidiary is liable for any arrears of
wages or penalties for failure to comply with any of the foregoing.
Neither the Company nor any Company Subsidiary has engaged in any unfair
labor practice or discriminated on the basis of race, color, religion, sex,
national origin, age, disability or handicap in its employment conditions
or practices. Except as accurately set forth in Section 4.26(g) of the
Disclosure Statement, there are no (i) unfair labor practice charges or
complaints or racial, color, religious, sex, national origin, age,
disability or handicap discrimination charges or complaints pending or, to
the knowledge of the Company, threatened against the Company or any of the
Company Subsidiaries before any Governmental Authority (nor, to the
knowledge of the Company, does any valid basis therefor exist) or (ii)
existing or, to the knowledge of the Company, threatened labor strikes,
disputes, grievances, controversies or other labor troubles affecting the
Company or any of the Company Subsidiaries (nor, to the knowledge of the
Company, does any valid basis therefor exist).
30
(h) Unions. Except as accurately set forth in Section 4.26(h) of the
Disclosure Statement, (i) neither the Company nor any Company Subsidiary or
ERISA Affiliate has ever been a party to any agreement with any union,
labor organization or collective bargaining unit, (ii) no employees of any
of the Company and the Company Subsidiaries are represented by any union,
labor organization or collective bargaining unit, and (iii) to the
knowledge of the Company, none of the employees of the Company and the
Company Subsidiaries has threatened to organize or join a union, labor
organization or collective bargaining unit.
(i) No Aliens. All employees of each of the Company and the Company
Subsidiaries are citizens of, or are authorized in accordance with federal
immigration laws to be employed in, the United States.
(j) Change of Control Benefits. Except as accurately set forth in
Section 4.26(j) of the Disclosure Statement, neither the Company nor any of
the Company Subsidiaries is a party to any agreement, or has established
any policy, practice or program, requiring it to make a payment or provide
any other form of compensation or benefit or vesting rights to any person
performing services for the Company or any of the Company Subsidiaries
which would not be payable or provided in the absence of this Agreement or
the consummation of the transactions contemplated by this Agreement,
including any parachute payment under Section 280G of the Code.
(k) Retirees. Neither the Company nor any of the Company
Subsidiaries has any obligation or commitment to provide medical, dental or
life insurance benefits to or on behalf of any of its employees who may
retire or any of its former employees who have retired except (i) as may be
required pursuant to the continuation of coverage provisions of Section
4980B of the Code, the applicable parallel provisions of ERISA and any
applicable state law, (ii) continuation of benefits in the event of
disability, and (iii) conversion privileges provided under any insured
Company ERISA Employee Benefit Plans.
Section 4.27. Compliance With ERISA, etc.
(a) Compliance. Each of the Company ERISA Benefit Plans and Other
Compensation Plans (each, a "Plan") (i) is in substantial compliance with
all applicable provisions of ERISA, as well as with all other applicable
Governmental Requirements, and (ii) has been administered, operated and
managed in accordance with its governing documents.
(b) Qualification. All Plans that are intended to qualify under
Section 401(a) of the Code (the "Qualified Plans") are so qualified and
have been determined by the IRS to be so qualified (or application for
determination letters have been timely submitted to the IRS). The Company
has provided WORK with true, complete and correct copies of the current
plan determination letters, most recent actuarial valuation reports, if
any, most recent Form 5500, or, as applicable, Form 5500-C/R, filed with
respect to each Qualified Plan and most recent trustee or custodian report.
To the extent that any Qualified Plans have not been amended to comply with
applicable Governmental Requirements, the remedial amendment
31
period permitting retroactive amendment of these Qualified Plans has not
expired and will not expire within 120 days after the Effective Time. All
reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including
annual reports, summary annual reports, actuarial reports, PBGC-1 Forms,
audits or Returns) have been timely filed or distributed.
(c) No Prohibited Transactions, etc. None of the Stockholders, any
Plan or the Company or any Company Subsidiary has engaged in any Prohibited
Transaction. No Plan has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(a) of ERISA, and no
circumstances exist under which the Company or any Company Subsidiary could
have any direct or indirect liability whatsoever (including being subject
to any statutory Lien to secure payment of any such liability), to the PBGC
under Title IV of ERISA or to the IRS for any excise tax or penalty with
respect to any Plan maintained or contributed to by the Company or any of
its ERISA Affiliates. Further:
(i) there have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan without a
determination by the IRS that such action does not adversely affect
the tax-qualified status of that plan;
(ii) no Termination Event has occurred;
(iii) no Reportable Event has occurred with respect to any Plan
which was not properly reported;
(iv) the valuation of assets of each Qualified Plan, as of the
Effective Time, will equal or exceed the actuarial present value of
all "benefit liabilities" (within the meaning of Section 4001(a)(16)
of ERISA) under that plan in accordance with the assumptions contained
in the Regulations of the PBGC governing the funding of terminated
defined benefit plans;
(v) with respect to Plans qualifying as "group health plans"
under Section 4980B of the Code or Section 607(l) or 609 of ERISA and
related regulations (relating to the benefit continuation rights
imposed by "COBRA" or qualified medical child support orders), the
Company, each Company Subsidiary and the Stockholders have complied in
all material respects with all reporting, disclosure, notice, election
and other benefit continuation and coverage requirements imposed
thereunder as and when applicable to those plans, and neither the
Company nor any Company Subsidiary has incurred (or will incur) any
direct or indirect liability or is (or will be) subject to any loss,
assessment, excise tax penalty, loss of federal income tax deduction
or other sanction, arising on account of or in respect of any direct
or indirect failure by the Company, any Company Subsidiary or any
Stockholder, at any time prior to the Effective Time, to comply with
any such federal or state benefit continuation or coverage
requirement, which is capable of being assessed or asserted before or
after the Effective Time directly or indirectly against the Company,
any
32
Company Subsidiary, any Stockholder, the Surviving Corporation or WORK
with respect to any of those group health plans;
(vi) the Financial Statements as of the Current Balance Sheet
Date reflect the approximate total pension, medical and other benefit
liability for all Plans, and no material funding changes or
irregularities are reflected thereon which would cause those Financial
Statements to be not representative of prior periods; and
(vii) neither the Company nor any Company Subsidiary has
incurred liability under Section 4062 of ERISA.
(d) Multiemployer Plans. Except as accurately disclosed in Section
4.27(d) of the Disclosure Statement, neither the Company nor any Company
Subsidiary, and no ERISA Affiliate of any of them, is, or at any time
during the six-year period ended on the date of this Agreement was,
obligated to contribute to a Multiemployer Plan. Neither the Company nor
any Company Subsidiary, and no ERISA Affiliate of any of them, has made a
complete or partial withdrawal from a Multiemployer Plan so as to incur
withdrawal liability as defined in Section 4201 of ERISA.
(e) Claims and Litigation. Except as accurately disclosed in Section
4.27(e) of the Disclosure Statement, no Litigation or claims (other than
routine claims for benefits) are pending or, to the knowledge of the
Company, threatened against, or with respect to, any of the Plans or with
respect to any fiduciary, administrator or sponsor thereof (in their
capacities as such), or any party-in-interest thereof.
(f) Excise Taxes, Damages and Penalties. No act, omission or
transaction has occurred which would result in the imposition on the
Company or any Company Subsidiary of (i) breach of fiduciary duty liability
damages under Section 409 of ERISA, (ii) a civil penalty assessed pursuant
to Section 502 of ERISA or (iii) any excise tax under applicable provisions
of the Code with respect to any Plan.
(g) VEBA Welfare Trust. Any trust funding a Plan which is intended to
be exempt from federal income taxation pursuant to Section 501(c)(9) of the
Code, satisfies the requirements of that section and has received a
favorable determination letter from the IRS regarding the Plan's exempt
status and has not, since receipt of the most recent favorable
determination letter, been amended or operated in a way that would
adversely affect its exempt status.
Section 4.28. Taxes.
(a) Each of the following representations and warranties in this
Section 4.28 is qualified to the extent accurately disclosed in Section
4.28 of the Disclosure Statement.
(b) All Returns required to be filed with respect to any Tax for which
the Company or any of the Company Subsidiaries is liable have been duly and
timely filed with
33
the appropriate Taxing Authority, each Tax shown to be payable on each such
Return has been paid, each Tax payable by the Company or a Company
Subsidiary by assessment has been timely paid in the amount assessed, and
adequate reserves have been established on the consolidated books of the
Company and the Company Subsidiaries for all Taxes for which the Company or
any of the Company Subsidiaries is liable, but the payment of which is not
yet due. Neither the Company nor any Company Subsidiary is, or ever has
been, liable for any Tax payable by reason of the income or property of a
Person other than the Company or a Company Subsidiary. Each of the Company
and the Company Subsidiaries has timely filed true, correct and complete
declarations of estimated Tax in each jurisdiction in which any such
declaration is required to be filed by it. No Liens for Taxes exist upon
the assets of the Company or any Company Subsidiary except Liens for Taxes
which are not yet due. Neither the Company nor any Company Subsidiary is,
or ever has been, subject to Tax in any jurisdiction outside of the United
States. No Litigation with respect to any Tax for which the Company or any
Company Subsidiary is asserted to be liable is pending or, to the knowledge
of the Company or any Stockholder, threatened, and no basis which the
Company or any Stockholder believes to be valid exists on which any claim
for any such Tax can be asserted against the Company or any Company
Subsidiary. There are no requests for rulings or determinations in respect
of any Taxes pending between the Company, or any Company Subsidiary, and
any Taxing Authority. No extension of any period during which any Tax may
be assessed or collected and for which the Company or any Company
Subsidiary is or may be liable has been granted to any Taxing Authority.
Neither the Company nor any Company Subsidiary is or has been a party to
any tax allocation or sharing agreement. All amounts required to be
withheld by any of the Company and the Company Subsidiaries and paid to
governmental agencies for income, social security, unemployment insurance,
sales, excise, use and other Taxes have been collected or withheld and paid
to the proper Taxing Authority. The Company and each Company Subsidiary
have made all deposits required by law to be made with respect to
employees' withholding and other employment Taxes.
(c) Neither the Company nor any Stockholder is a "foreign person," as
that term is referred to in Section 1445(f)(3) of the Code.
(d) The Company has not filed a consent pursuant to Section 341 (f) of
the Code or any comparable provision of any other tax statute and has not
agreed to have Section 341 (f)(2) of the Code or any comparable provision
of any other Tax statute apply to any disposition of an asset. No asset of
the Company or of any Company Subsidiary is subject to any provision of
applicable law which eliminates or reduces the allowance for depreciation
or amortization in respect of that asset below the allowance generally
available to an asset of its type. No accounting method changes of the
Company or of any Company Subsidiary exist or are proposed or threatened
which could give rise to an adjustment under Section 481 of the Code.
(e) Schedule 4.28 discloses whether the Company has made, and there is
now in effect, an election with the IRS to be taxed as an S corporation
within the meaning of Section 1361 of the Code. If the Company has made an
election to be taxed as an S corporation, at all times since the effective
date of such election, the Company has qualified as an
34
S corporation within the meaning of Section 1361(a) of the Code. The
Company (i) owns no assets the disposition of which would cause the Company
to have a net recognized built-in gain within the meaning of Section 1374
of the Code, (ii) has had no item of income that has not been taken into
account by the Company and that would be treated as a recognized built-in
gain under Section 1374(d)(5) of the Code, and (iii) will not be liable for
any federal, state, city or local Taxes as a result of any transfer of the
Company's assets pursuant to the Merger.
Section 4.29. Government Contracts. Except as accurately set forth in
Section 4.29 of the Disclosure Statement, neither the Company nor any Company
Subsidiary is a party to any governmental contract subject to price
redetermination or renegotiation.
Section 4.30. Absence of Change. Since the Current Balance Sheet Date,
except as accurately set forth in Section 4.30 of the Disclosure Statement, none
of the following has occurred with respect to the Company or any Company
Subsidiary:
(a) any circumstance, condition, event or state of facts (either
singly or in the aggregate), other than conditions affecting the economy
generally, which has caused, is causing or could reasonably be expected to
cause a Material Adverse Effect on the Company;
(b) any change in its authorized Capital Stock or in any of its
outstanding Capital Stock or Derivative Securities;
(c) any Restricted Payment, except any declaration or payment of
dividends by any Company Subsidiary solely to the Company;
(d) any increase in, or any commitment or promise to increase, the
rates of Cash Compensation as of the date hereof, or the amounts or other
benefits paid or payable under any Company ERISA Pension Plan or Other
Compensation Plan, except for ordinary and customary bonuses and salary
increases for employees (other than the Stockholders or their Immediate
Family Members) at the times and in the amounts consistent with its past
practice;
(e) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, that will have a Material
Adverse Effect on the Surviving Corporation following the Effective Time;
(f) any distribution, sale or transfer of, or any Company Commitment
to distribute, sell or transfer, any of its assets or properties of any
kind which singly is or in the aggregate are Material to the Company, other
than distributions, sales or transfers in the ordinary course of its
business and consistent with its past practices to Persons other than to
the Stockholders and their Immediate Family Members and Affiliates;
(g) any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to it, including any Indebtedness,
obligation or other liability of any
35
Stockholder or any Related Person or Affiliate thereof, provided that the
Company or a Company Subsidiary may negotiate and adjust bills in the
course of good faith disputes with customers in a manner consistent with
past practice, if the adjustments are (i) included in the Supplemental
Information provided WORK pursuant to Section 6.07 or (ii) do not exceed
$10,000 in the aggregate;
(h) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, property
or rights or requiring consent of any Person to the transfer and assignment
of any such assets, property or rights;
(i) 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 its business or not consistent with its past practices;
(j) any waiver of any of its rights or claims that singly is, or in
the aggregate are, Material to the Company;
(k) any transaction by it outside the ordinary course of its business
or not consistent with its past practices and which involves in excess of
$10,000;
(1) any incurrence by it of any Indebtedness or any Guaranty not
constituting its Indebtedness, or any Company Commitment to incur any
Indebtedness or any such Guaranty;
(m) any investment in the Capital Stock, Derivative Securities or
Indebtedness of any Person, other than a Permitted Investment;
(n) except in accordance with the Company's consolidated capital
expenditure budget for the Company's current fiscal year, any capital
expenditure or series of related capital expenditures by the Company and
the Company Subsidiaries collectively in excess of $25,000, or commitments
by the Company and the Company Subsidiaries collectively to make capital
expenditures totaling in excess of $25,000; or
(o) any cancellation or termination of a Material Agreement of the
Company.
Section 4.31. Bank Relations; Powers of Attorney. Section 4.31 of the
Disclosure Statement accurately lists and identifies:
(a) the name of each financial institution in which the Company or any
Company Subsidiary has borrowing or investment arrangements, deposit or
checking accounts or safe deposit boxes;
(b) the types of those arrangements and accounts, including, as
applicable, names in which accounts or boxes are held, the account or box
numbers and the name of each Person authorized to draw thereon or have
access thereto; and
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(c) the name of each Person holding a general or special power of
attorney from the Company or any Company Subsidiary and a description of
the terms of each such power.
Section 4.32. Relations With Governments, etc. Neither the Company nor
any Company Subsidiary has made, offered or agreed to offer anything of value to
any governmental official, political party or candidate for government office
which would cause the Company or any Company Subsidiary to be in violation of
the Foreign Corrupt Practices Act of 1977 or any domestic or foreign anti-
bribery or other Governmental Requirement to a similar effect.
37
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WORK AND NEWCO
Section 5.01. Organization; Power. WORK is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas, and
Newco is a corporation duly organized, validly existing and in good standing
under the laws of its Organization State. Newco has been organized for the sole
purpose of participating in the Merger and has not, and will not, engage in any
activities other than those necessary to effectuate the Merger. Each of WORK
and Newco has all requisite corporate power and authority under the laws of its
Organization State and its Charter Documents to own or lease and to operate its
properties presently and following the Effective Time and to carry on its
business as now conducted and as proposed to be conducted following the
Effective Time. Neither WORK nor Newco has engaged in any operations since its
organization other than in connection with their formation and capitalization
and the transactions contemplated by this Agreement and the Other Agreements.
Section 5.02. Authorization; Enforceability; Absence of Conflicts;
Required Consents.
(a) The execution, delivery and performance by each of WORK and Newco
of this Agreement and each other Transaction Document to which it is or
will be a party, and the effectuation of the Merger and the other
transactions contemplated hereby and thereby, are within its corporate
power under its Charter Documents and the applicable Governmental
Requirements of its Organization State and have been duly authorized by all
proceedings, including actions permitted to be taken in lieu of
proceedings, required under its Charter Documents and the applicable
Governmental Requirements of its Organization State.
(b) This Agreement has been, and each of the other Transaction
Documents to which either of WORK or Newco is a party, when executed and
delivered to the other parties thereto (or, in the case of the Certificate
of Merger, the applicable Governmental Authorities), will have been, duly
executed and delivered by it and is, or when so executed and delivered will
be, its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as enforceability may be (i) limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
(ii) subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance with their
respective terms by each of WORK and Newco of the Transaction Documents to
which it is a party do not and will not (i) violate, breach or constitute a
default under (A) the Charter Documents of WORK or Newco, (B) any
Governmental Requirement applicable to WORK or Newco or (C) any Material
Agreement of WORK or Newco, (ii) result in the acceleration or mandatory
prepayment of any Indebtedness, or any Guaranty not constituting
Indebtedness, of WORK or Newco or afford any holder of any of that
Indebtedness, or any beneficiary of any of those Guaranties, the right to
require WORK or Newco to redeem, purchase or otherwise acquire, reacquire
or repay any of that Indebtedness, or to perform any of those
38
Guaranties, (iii) cause or result in the imposition of, or afford any
Person the right to obtain, any Lien upon any property or assets of WORK or
Newco (or upon any revenues, income or profits of either WORK or Newco
therefrom) or (iv) result in the revocation, cancellation, suspension or
material modification, in any single case or in the aggregate, of any
Governmental Approval possessed by WORK or Newco at the date of this
Agreement and necessary for the ownership or lease and the operation of its
properties or the carrying on of its business as now conducted, including
any necessary Governmental Approval under each applicable Environmental
Law.
(d) Except for (i) the filing of the Certificate of Merger with the
applicable Governmental Authorities, (ii) filings of the Registration
Statement under the Securities Act and a registration statement on Form 8-A
with respect to the registration of the WORK Common Stock under the
Exchange Act and the SEC order declaring those registration statements
effective under the Securities Act and the Exchange Act, respectively, and
(iii) as may be required by the HSR Act or applicable state securities or
blue sky laws, no Governmental Approvals are required to be obtained, and
no reports or notices to or filings with any Governmental Authority are
required to be made, by WORK or Newco for the execution, delivery or
performance by WORK or Newco of the Transaction Documents to which it is a
party, the enforcement against WORK or Newco, as the case may be, of its
obligations thereunder or the effectuation of the Merger and the other
transactions contemplated thereby.
Section 5.03. Charter Documents. WORK has delivered to the Company true,
complete and correct copies of the Charter Documents of each of WORK and Newco.
No breach or violation of any Charter Document of either WORK or Newco has
occurred and is continuing.
Section 5.04. Capital Stock of WORK and Newco.
(a) Immediately prior to the Effective Time, (i) the authorized
Capital Stock of WORK will be comprised of (A) 100,000,000 shares of WORK
Common Stock and (B) 10,000,000 shares of WORK Preferred Stock, (ii) before
giving effect to the Merger and the merger transactions contemplated by the
Other Agreements, (A) the number of shares of WORK Common Stock then issued
and outstanding, will be as set forth in the Registration Statement when it
becomes effective under the Securities Act, (B) 1,000 shares of Series A
WORK Preferred Stock and 2,500 shares of Series B WORK Preferred Stock will
then be issued or outstanding but will be converted into shares of WORK
Common Stock on the IPO Closing Date, and (C) WORK will have authorized and
reserved for issuance, pursuant to Other Compensation Plans or the exercise
of Derivative Securities the number of shares of WORK Common Stock set
forth in the Registration Statement when it becomes effective under the
Securities Act.
(b) The authorized Capital Stock of Newco is comprised of 1,000 shares
of Newco Common Stock, all of which shares are issued, outstanding and
owned, of record and beneficially, by WORK. No Derivative Securities of
Newco are outstanding.
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(c) All shares of WORK Common Stock and Newco Common Stock outstanding
immediately prior to the Effective Time, and all shares of WORK Common
Stock to be issued pursuant to Section 2.04, when issued, will have been
duly authorized and validly issued in accordance with the TBCA and their
issuer's Charter Documents, and will be fully paid and nonassessable. None
of the shares of WORK Common Stock to be issued pursuant to Section 2.04
will, when issued, have been issued in breach or violation of (i) any
applicable statutory or contractual preemptive rights, or any other rights
of any kind (including any rights of first offer or refusal), of any Person
or (ii) the terms of any of its Derivative Securities then outstanding.
Section 5.05. Subsidiaries. Immediately prior to the IPO Closing Date,
(a) WORK will have no Subsidiaries other than Newco and each Entity defined as
"Newco" in each of the Other Agreements, (b) Newco will have no Subsidiaries,
and (c) neither WORK nor Newco will own, of record or beneficially, directly or
indirectly through any Person or otherwise (except pursuant hereto or to the
Other Agreements), any Capital Stock or Derivative Securities of any Entity not
described in this Section 5.05 as a Subsidiary of WORK (in the case of WORK) or
any Entity (in the case of Newco).
Section 5.06. Liabilities. Except as disclosed in the Private Placement
Memorandum, neither WORK nor Newco has any material liabilities of any kind
other than those incurred in connection with this Agreement and the Other
Agreements and the transactions contemplated hereby and thereby, including the
IPO.
Section 5.07. Compliance With Laws; No Litigation. Each of WORK and Newco
is in compliance with all Governmental Requirements applicable to it, and no
Litigation is pending or, to the knowledge of WORK, threatened to which WORK or
Newco is or may become a party which questions or involves the validity or
enforceability of any obligation of WORK or Newco under any Transaction
Document, or which seeks (or reasonably may be expected to seek) (a) to prevent
or delay consummation by WORK or Newco of the transactions contemplated by this
Agreement to be consummated by WORK or Newco, as the case may be, or (b) Damages
from WORK or Newco in connection with any such consummation.
Section 5.08. No Brokers. WORK has not, directly or indirectly, in
connection with this Agreement or the transactions contemplated hereby, employed
any broker, finder or agent, or agreed to pay or incurred any obligation to pay
any broker's or finder's fee, any sales commission or any similar form of
compensation.
Section 5.09. Private Placement Memorandum. At the date hereof, the
Private Placement Memorandum (other than the historical financial statements,
including the notes thereto, of the Founding Companies (including the Company)
and the historical information contained therein respecting the Company and the
Stockholders, to which this Section 5.09 does not apply) does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
the light of the circumstances under which those statements are made.
40
Section 5.10. Registration and Other Rights. Except as set forth in the
Registration Rights Agreement or otherwise described in the Private Placement
Memorandum or the Registration Statement, at the Effective Time WORK will have
no (a) commitment to any Person to cause securities of WORK to be registered
under the Securities Act or the securities laws of any state, (b) outstanding
Derivative Securities, or (c) outstanding agreements or commitments of any
character committing WORK to issue or acquire shares of its Capital Stock or
Derivative Securities.
Section 5.11. No Side Agreements. Neither WORK nor Newco has entered 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 each of the Other Agreements, including the employee and other
agreements referred to therein.
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ARTICLE VI
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 6.01. Access and Cooperation; Due Diligence.
(a) From the date of this Agreement until the IPO Closing Date, the
Company, for the benefit of WORK and each Other Founding Company, will (i)
afford to the Representatives of WORK and each Other Founding Company
reasonable access to all the key employees, sites, properties, books and
records of each of the Company and the Company Subsidiaries, (ii) provide
WORK with such additional financial and operating data and other
information relating to the business and properties of each of the Company
and the Company Subsidiaries as WORK or any Other Founding Company may from
time to time reasonably request, and (iii) cooperate with WORK and each
Other Founding Company and their respective Representatives in the
preparation of any documents or other material which may be required in
connection with any Transaction Documents or any Other Transaction
Documents. Each Stockholder and the Company agree, for the benefit of WORK
and each Other Founding Company, that they will treat all Confidential
Information obtained by them in connection with the negotiation and
performance of this Agreement or the due diligence investigations conducted
with respect to each Other Founding Company as confidential in accordance
with the provisions of Section 11.01. In addition, WORK will cause each
Other Founding Company to enter into a provision identical to this Section
6.01(a) to require each Other Founding Company to keep confidential any
Confidential Information respecting any of the Company and the Company
Subsidiaries obtained by that Other Founding Company.
(b) Each of the Company and the Stockholders will use its best efforts
to secure, as soon as practicable after the execution of this Agreement,
all approvals or consents of third Persons as may be necessary to
consummate the transactions contemplated hereby.
(c) From the date hereof until the IPO Closing Date, WORK and Newco
will (i) afford to the Representatives of the Company and the Stockholders
access to all sites, properties, books and records of WORK and Newco, (ii)
provide the Company with such additional financial and operating data and
other information relating to the business and properties of WORK and Newco
as the Company or any Stockholder may from time to time reasonably request,
and (iii) cooperate with the Company and the Stockholders and their
respective Representatives in the preparation of any documents or other
material which may be required in connection with any Transaction
Documents.
(d) If this Agreement is terminated pursuant to Section 12.01, WORK
promptly will return, and will use reasonable commercial efforts to cause
all the Other Founding Companies to return, all written Confidential
Information of the Company it or they, as the case may be, then possess to
the Company.
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Section 6.02. Conduct of Business Pending Closing. From the date of this
Agreement until the Effective Time, the Company will, and will cause each
Company Subsidiary to, except as and only to the extent set forth in Schedule
6.02:
(a) carry on its businesses in substantially the same manner as it has
before, and not introduce any new method of management, operation or
accounting which is material to the Company;
(b) maintain its properties and facilities, including those held under
leases, in as good working order and condition as at present, ordinary wear
and tear excepted;
(c) perform all its obligations under agreements relating to or
affecting its assets, properties and other rights;
(d) keep in full force and effect, without interruption, all its
present insurance policies or other comparable insurance coverage;
(e) use reasonable commercial efforts to (i) maintain and preserve its
business organization intact, (ii) retain its present employees, and (iii)
maintain its relationships with suppliers, subcontractors, customers and
others having business relations with it;
(f) comply with all applicable Governmental Requirements; and
(g) except as required or expressly permitted by this Agreement,
maintain the instruments and agreements governing its outstanding
Indebtedness and leases on their present terms and not enter into new or
amended Indebtedness or lease instruments or agreements involving amounts
over $5,000 in any case or $25,000 in the aggregate, without the prior
written consent of WORK (which consent will not be unreasonably withheld).
Section 6.03. Prohibited Activities. From the date of this Agreement
until the Effective Time, without the prior written consent of WORK or unless as
required or expressly permitted by this Agreement or as set forth on Schedule
6.03, the Company will not, and will not permit any Company Subsidiary to:
(a) make any change in its Charter Documents;
(b) issue any of its Capital Stock or issue or otherwise create any of
its Derivative Securities;
(c) make any Restricted Payment (other than as provided in Schedule
6.03);
(d) make any investments (other than Permitted Investments) in the
Capital Stock, Derivative Securities or Indebtedness of any Person;
43
(e) enter into any contract or commitment (other than a Staffing
Contract) or incur or agree to incur any liability or make any capital
expenditures in a single transaction or a series of related transactions
involving an aggregate amount of more than $25,000 otherwise than in the
ordinary course of its business and consistent with its past practice;
(f) increase or commit or promise to increase the Cash Compensation
payable or to become payable to any officer, director, stockholder,
employee or agent, consultant or independent contractor of any of the
Company and the Company Subsidiaries or make any discretionary bonus or
management fee payment to any such Person, except bonuses or salary
increases to employees (other than the Stockholders or their Immediate
Family Members) at the times and in the amounts consistent with its past
practice;
(g) create or assume any Liens (other than Permitted Liens) upon any
of its assets or properties, whether now owned or hereafter acquired,
except for purchase money Liens incurred in connection with the acquisition
of equipment with an aggregate cost not in excess of $10,000 and necessary
or desirable for the conduct of the business of any of the Company and the
Company Subsidiaries;
(h) adopt, establish, amend or terminate any ERISA Employee Benefit
Plan, or any Other Compensation Plan or Employee Policies and Procedures,
or take any discretionary action, or omit to take any contractually
required action, if that action or omission could either (i) deplete the
assets of any ERISA Employee Benefit Plan or any Other Compensation Plan or
(ii) increase the liabilities or obligations under any such plan;
(i) sell, assign, lease or otherwise transfer or dispose of any of its
owned or leased Property, Plant or Equipment otherwise than in the ordinary
course of its business and consistent with its past practice;
(j) negotiate for the acquisition of any business or the start-up of
any new business;
(k) merge, consolidate or effect a share exchange with, or agree to
merge, consolidate or effect a share exchange with, any other Entity;
(1) waive any of its material rights or claims, provided that it may
negotiate and adjust bills in the course of good faith disputes with
customers in a manner consistent with past practice, but such adjustments
will not be deemed to be included in Section 4.17 of the Disclosure
Statement unless specifically listed in the Supplemental Information;
(m) commit a material breach of or amend materially or terminate any
Material Agreement of the Company or any of its Governmental Approvals; or
(n) enter into any other transaction (i) outside the ordinary course
of its business and consistent with its past practice or (ii) prohibited
hereby.
44
Section 6.04. No Shop: Release of Directors.
(a) Each of the Company and the Stockholders agrees that, from the
date of this Agreement until the Effective Time, neither the Company nor
any Stockholder, nor any of their respective officers and directors shall,
and the Company and each Stockholder will direct and use their best efforts
to cause each of their respective Representatives not to, initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including any proposal or offer to
the Stockholders) with respect to a merger, acquisition, consolidation or
similar transaction involving, or any purchase of all or any significant
portion of the assets or any equity securities of, the Company (any such
proposal or offer being herein called an "Acquisition Proposal") or engage
in any activities, discussions or negotiations concerning, or provide any
Confidential Information respecting, the Company, any Other Founding
Company or WORK to, or have any discussions with, any Person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make
or implement an Acquisition Proposal. The Company and each Stockholder
will: (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons previously
conducted with respect to any of the foregoing, and each will take the
steps necessary to inform the Persons referred to in the first sentence of
this Section 6.04(a) of the obligations undertaken in this Section 6.04(a);
and (ii) notify WORK immediately if any such inquiries or proposals are
received by, any such information is requested from or any such discussions
or negotiations are sought to be initiated or continued with the Company or
any Stockholder.
(b) Each of the Company and the Stockholders hereby (i) waives every
right, if any, the Governmental Requirements of the Company's Organization
State afford the Company or Stockholders to require the Company's directors
(or their equivalents if the Company is not a corporation), in the exercise
of their fiduciary duties in their capacity as such, to engage in any of
the activities prohibited by this Section 6.04 and (ii) releases each such
person from any and all liability he might otherwise have to the Company or
any Stockholders but for this release.
Section 6.05. Notification of Certain Matters. The Stockholders and the
Company shall give prompt notice to WORK of (a) the existence or occurrence of
each condition or state of facts which becomes known to them and which will or
reasonably could be expected to cause any representation or warranty of the
Company or any Stockholder contained herein to be untrue or incorrect in any
material respect at or prior to the Closing or on the IPO Closing Date and (b)
any material failure of any Stockholder or the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by that
Person hereunder. WORK shall give prompt notice to the Company of (a) the
existence or occurrence of each condition or state of facts which will or
reasonably could be expected to cause any representation or warranty of WORK or
Newco contained herein to be untrue or inaccurate at or prior to the Closing or
on the IPO Closing Date and (b) any material failure of WORK or Newco 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
6.05 shall not be deemed to (a) modify the representations or warranties herein
of the party delivering that notice, or any other party, which modification may
be made only
45
pursuant to Section 6.06, (b) modify the conditions set forth in Article VII or
(c) limit or otherwise affect the remedies available hereunder to the party
receiving that notice.
Section 6.06. Supplemental Information. Each of the Company and the
Stockholders agrees that, with respect to its representations and warranties
contained in this Agreement, it will have the continuing obligation until the
Closing to provide WORK promptly with such additional supplemental Information
(collectively, the "Supplemental Information"), in the form of (a) amendments to
then existing Schedules or Sections of the Disclosure Statement or (b)
additional Schedules or Sections of the Disclosure Statement, as would be
necessary, in the light of the circumstances, conditions, events and states of
facts then known to the Company or any Stockholder, to make each of those
representations and warranties true and correct as of the Closing and on the IPO
Closing Date. For purposes only of determining whether the conditions to the
obligations of WORK and Newco which are specified in Sections 7.04(a)(i) and
7.04(b)(i) have been satisfied, and not for any purpose under Article IX, the
Schedules and the Disclosure Statement as of the Closing and on the IPO Closing
Date shall be deemed to be the Schedules and the Disclosure Statement as of the
date hereof as amended or supplemented by the Supplemental Information provided
to WORK prior to the Closing pursuant to this Section 6.06; provided, however,
that if the Supplemental Information so provided discloses the existence of
circumstances, conditions, events or states of facts which, in any combination
thereof, (a) have had a Material Adverse Effect on the Company which was not
reflected in the determination of the Merger Consideration or (b) in the
judgment of WORK (which shall be conclusive for purposes of this Section 6.06
and Article XII, but not for any purpose of Article IX), are having or will have
a Material Adverse Effect on the Company or the Surviving Corporation, as the
case may be, WORK will be entitled to terminate this Agreement pursuant to
Section 12.01(a)(iv) and to treat as WORK Indemnified Losses for all purposes of
Article IX (which treatment will not prejudice the right of any Stockholder
under Article IX to contest Damage Claims made by WORK in respect of those WORK
Indemnified Losses) all Damages to the Company or the Surviving Corporation
which are attributable to the circumstances, conditions, events and states of
facts first disclosed herein after the date hereof in the Supplemental
Information; and provided further, however, that if the circumstances,
conditions, events or states of facts disclosed in the Supplemental Information
and having or judged to have in the future such a Material Adverse Effect (A)
have not resulted from a breach by the Company or the Stockholders of any of
their covenants set forth in Article VI or elsewhere in this Agreement and (B)
do not indicate that any representation or warranty of the Stockholders and the
Company made in Articles III and IV shall have been untrue or inaccurate at the
date of this Agreement, then WORK shall only be entitled to terminate this
Agreement pursuant to Section 12.01(a)(iv), and shall not be entitled to treat
as WORK Indemnified Losses any such Damages to the Company or the Surviving
Corporation.
Section 6.07. Cooperation in Connection With the IPO. The Company and the
Stockholders will (a) provide WORK and the Underwriter with all the Information
concerning the Company or any of the Stockholders which is reasonably requested
by WORK or the Underwriter from time to time in connection with effecting the
IPO and (b) cooperate with WORK and the Underwriter and their respective
Representatives in the preparation and amendment of the Registration Statement
(including the Financial Statements) and in responding to the comments of the
SEC staff, if any, with respect thereto. WORK will provide to the Company and
the Stockholders copies of drafts of the Registration Statement prior to its
initial filing with the SEC. The Company and each
46
Stockholder agree promptly to (a) advise WORK if, at any time during the period
in which a prospectus relating to the IPO is required to be delivered under the
Securities Act, any information contained in the then current Registration
Statement prospectus concerning the Company, any Company Subsidiary or the
Stockholders becomes incorrect or incomplete in any material respect and (b)
provide WORK with the information needed to correct or complete that
information. WORK will provide the Company with copies of the Registration
Statement, including all pre-effective amendments thereto, promptly after the
filing thereof with the SEC under the Securities Act.
Section 6.08. Additional Financial Statements. The Company will furnish
to WORK:
(a) as soon as available and in any event within 30 days after the end
of each of the Company's fiscal quarters which ends prior to the IPO
Pricing Date, an unaudited consolidated balance sheet of the Company and
the Company Subsidiaries as of the end of that fiscal quarter and the
related consolidated statements of income or operations, cash flows and
stockholders' or other owners' equity for that fiscal quarter and for the
period of the Company's fiscal year ended with that quarter, in each case
(i) setting forth in comparative form the figures for the corresponding
portion of the Company's previous fiscal year and (ii) prepared in
accordance with GAAP applied on basis consistent throughout the periods
indicated (excepting footnotes) and consistent with the basis on which the
Initial Financial Statements including the Current Balance Sheet were
prepared; and
(b) if requested by WORK in connection with any amendment of the
Registration Statement and promptly following any such request, such
summary consolidated operating or other financial information of the
Company and the Company Subsidiaries as of the end of either the first or
second fiscal month in any of the Company's fiscal quarters as WORK may
request.
Section 6.09. Termination of Plans. If requested by WORK, if permitted by
all applicable Governmental Requirements to do so, the Company will, or will
cause the applicable Company Subsidiary to, terminate each Plan identified in
Section 4.26(c) or (d) of the Disclosure Statement as a "Plan To Be Terminated"
at, or if agreed by the Company, prior to, the Effective Time.
Section 6.10. Disposition of Unwanted Assets. At or prior to the Closing,
the Company will make all arrangements and take all such actions as are
necessary and satisfactory to WORK to dispose, prior to the Effective Time, of
those assets of it or of one or more of the Company Subsidiaries which are
listed in, and which shall be disposed of as provided in, Schedule 6.10.
Section 6.11. HSR Act Matters. If WORK shall determine that filings under
the HSR Act are necessary or appropriate in connection with the effectuation of
the Merger or the consummation of the acquisitions contemplated by the Other
Agreements, and advises the Company in writing of that determination, the
Company promptly will compile and file under the HSR Act such information
respecting it as the HSR Act requires of an Entity to be acquired, and the
expiration or termination of the applicable waiting period and any extension
thereof under the HSR Act shall be
47
deemed a condition precedent set forth in Section 7.02(b). Any filing fees
payable under the HSR Act shall be paid by WORK.
48
ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.02. Conditions to the Obligations of Each Party.
(a) The obligation of each Party to take the actions contemplated to
be taken by that Party at the Closing is subject to the satisfaction of
each of the following conditions on or before the date of the Closing:
(i) No Litigation. No Litigation shall be pending on the date of
the Closing to restrain, prohibit or otherwise interfere with, or to
obtain material damages or other relief from WORK or the Surviving
Corporation in connection with, the consummation of the Merger or the
IPO;
(ii) Governmental Approvals. All Governmental Approvals (other
than the acceptance for filing of the Certificate of Merger) required
to be obtained by any of the Company, WORK and Newco in connection
with the consummation of the Merger and the IPO shall have been
obtained; and
(iii) The Registration Statement. (A) The Registration
Statement, as amended to cover the offering, issuance and sale by WORK
of such number of shares of WORK Common Stock at the IPO Price (which
need not be set forth in the Registration Statement when it becomes
effective under the Securities Act) as shall yield aggregate cash
proceeds to WORK (net of the Underwriter's discount or commissions) in
at least the amount (the "Minimum Cash Amount") sufficient when added
to the funds, if any, available from other sources (the "Other
Financing Sources"), if any, and as set forth in the Registration
Statement when it becomes effective under the Securities Act to enable
WORK to pay or otherwise deliver on the IPO Closing Date (1) the total
cash portion of the Merger Consideration then to be delivered pursuant
to Section 2.04, (2) the total cash portion of the merger or other
acquisition consideration then to be delivered pursuant to the Other
Agreements as a result of the consummation of the mergers or other
acquisition transactions contemplated thereby, and (3) the total
amount of Indebtedness of the Founding Companies and WORK which the
Registration Statement discloses at the time it becomes effective
under the Securities Act will be repaid on the IPO Closing Date with
proceeds received by WORK from the IPO and the Other Financing
Sources, shall have been declared effective under the Securities Act
by the SEC; (B) no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC, and the SEC
shall not have initiated or threatened to initiate Litigation for that
purpose; (C) the Underwriter shall have agreed in writing (the
"Underwriting Agreement," which term includes the related pricing
agreement, if any) to purchase from WORK on a firm commitment basis
for resale to the public initially at the IPO Price, subject to the
conditions set forth in the Underwriting Agreement, such number of
shares of WORK Common Stock covered by the
49
Registration Statement as, when multiplied by the price per share of
WORK Common Stock to be paid by the Underwriter to WORK pursuant to
the Underwriting Agreement, shall equal at least the Minimum Cash
Amount; and (D) neither the Registration Statement nor the Final
Prospectus shall contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements contained therein not materially misleading in the light of
the circumstances under which those statements are made.
(b) The obligation of each party hereto with respect to the actions to
be taken on the IPO Closing Date is subject to the satisfaction on that
date of each of the following conditions:
(i) No Litigation. No Litigation shall be pending on the IPO
Closing Date to restrain, prohibit or otherwise interfere with, or to
obtain material damages or other relief from WORK or the Surviving
Corporation in connection with, the consummation of the Merger or the
IPO;
(ii) Governmental Approvals. All Governmental Approvals required
to be obtained by the Company, WORK and Newco in connection with the
consummation of the Merger and the IPO shall have been obtained;
(iii) Receipt of Certain Certificates. Each party to the
Transferors' Agreement or his Representative shall have received the
certificates that such party is entitled to receive on the IPO Closing
Date pursuant to Section 3.5 of the Transferors' Agreement;
(iv) Registration Statement and Final Prospectus. Neither the
Registration Statement, in its form at the Effective Time, nor the
Final Prospectus shall contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements contained therein not materially misleading in the light of
the circumstances under which those statements are made; and
(vi) Closing of the IPO. (A) WORK shall have issued and sold
shares of WORK Common Stock to the Underwriter in accordance with the
Underwriting Agreement for initial resale at the IPO Price and
received payment therefor in an amount at least equal to the amount by
which (1) the Minimum Cash Amount exceeds (2) the aggregate amount of
funds actually received on the IPO Closing Date, if any, from any one
or more of the Other Financing Sources and (B) the IPO Price shall
have been at least $9.
Section 7.03. Conditions to the Obligations of the Company and the
Stockholders.
(a) The obligations of the Company and each Stockholder with respect
to actions to be taken by them at or before the Closing are subject to the
satisfaction, or the written waiver by the Company on behalf of itself and
each Stockholder pursuant to Section 11.05,
50
on or before the date of the Closing of, in addition to the conditions
specified in Section 7.02 (a), all of the following conditions:
(i) Representations and Warranties. All of the representations
and warranties of WORK and Newco in Article V shall be true and correct in
all material respects as of the Closing as though made on that date;
(ii) Delivery of Documents. WORK shall have delivered to the
Company, with copies for each Stockholder:
(A) a WORK officer's certificate respecting the
representations and warranties of WORK and Newco in Article V and
compliance with the covenants of WORK and Newco in Article VI and in
the form thereof attached as an exhibit to the Closing Memorandum;
(B) corporate and tax opinions dated the IPO Closing Date
and addressed to the Company and the Stockholders from Counsel
for WORK and Newco substantially in the form thereof attached as
an exhibit to the Closing Memorandum, upon which the Underwriters
and their counsel will be authorized to rely;
(C) a certificate of the secretary or any assistant
secretary of WORK in the form thereof (without attachments
thereto) attached as an exhibit to the Closing Memorandum and
respecting, and to which there shall be attached, (1) the Charter
Documents of WORK and Newco (certified by the Secretary of State
of the State of Texas in the case of the certificates of
incorporation of WORK included therein); (2) the resolutions of
the boards of directors of WORK and Newco respecting the
Transaction Documents and the transactions contemplated thereby;
(3) a certificate respecting the incumbency and true signatures
of the WORK and Newco officers who execute the Transaction
Documents on behalf of WORK and Newco, respectively; (4) a
specimen certificate evidencing shares of WORK Common Stock; (5)
the prospectus included in the Registration Statement when it
became effective; and (6) a facsimile copy of the Underwriting
Agreement as executed and delivered by WORK and the Underwriter;
(D) the Registration Rights Agreement duly executed and
delivered by WORK; and
(E) a certificate, dated as of a Current Date, duly issued
by the Secretary of State of the State of Texas, showing WORK to
be in good standing and authorized to do business in that State.
(iii) Listing and Minimum Market Capitalization. Shares of the
WORK Common Stock shall have been admitted for listing on the New York Stock
51
Exchange and the product obtained by multiplying the IPO Price times the
number of shares of the WORK Common Stock to be outstanding on the IPO
Closing Date, after consummation of the IPO and the issuance of the shares
of WORK Common Stock to be issued pursuant to this Agreement and the Other
Agreements equals at least $100 million;
(iv) Management Personnel. On the IPO Closing Date, Xxxxxx Xxxxx
and X. Xxxxxxxx French shall be the Chairman of the Board and the President
and Chief Executive Officer, respectively, of WORK.
(b) The obligations of the Company and each Stockholder with respect
to the actions to be taken by them on the IPO Closing Date are subject to
the satisfaction, or the written waiver by the Company on behalf of itself
and each Stockholder pursuant to Section 11.05, on or before the IPO
Closing Date, of, in addition to the conditions specified in Section
7.02(b), all of the following conditions:
(i) Representations and Warranties. All of the representations
and warranties of WORK and Newco in Article V shall be true and
correct in all material respects as of the IPO Closing Date as though
made on that date.
(ii) Continued Effectiveness. Each of the New Employment
Agreements and the Transferors' Agreement then shall be in full force
and effect.
Section 7.04. Conditions to the Obligations of WORK and Newco.
(a) The obligations of WORK and Newco with respect to actions to be
taken by them at or before the Closing are subject to the satisfaction, or
the written waiver by WORK and Newco pursuant to Section 11.05, on or
before the date of the Closing, of, in addition to the conditions specified
in Section 7.02 (a), all of the following conditions:
(i) Representations and Warranties. All the representations and
warranties of the Stockholders and the Company in Articles III and IV
shall be true and correct in all material respects as of the Closing
as though made at that time;
(ii) Delivery of Documents. The Stockholders and the Company
shall have delivered to WORK:
(A) a Company officer's certificate, signed by a Responsible
Officer, respecting the representations and warranties of the
Stockholders and the Company in Articles III and IV and
compliance with the covenants of the Stockholders and the Company
in Article VI and in the form thereof attached as an exhibit to
the Closing Memorandum;
52
(B) opinions dated the IPO Closing Date and addressed to
WORK from Counsel for the Company and the Stockholders
substantially in the form thereof attached as exhibits to the
Closing Memorandum;
(C) a certificate of the secretary or any assistant
secretary of the Company in the form thereof (without attachments
thereto) attached as an exhibit to the Closing Memorandum and
respecting, and to which is attached, (1) the Charter Documents
of the Company; (2) the resolutions of the board of directors of
the Company respecting the Transaction Documents and the
transactions contemplated thereby; and (3) a certificate
respecting the incumbency and true signatures of the Responsible
Officers who execute the Transaction Documents on behalf of the
Company;
(D) from each Stockholder, a General Release duly executed
and delivered by that Stockholder;
(E) from each Stockholder, an executed Form W-9 or Form W-8,
as the case may be, and in the event any Stockholder is not a
U.S. citizen or resident for U.S. tax purposes, from the Company,
a properly executed statement in form and substance reasonably
acceptable to WORK for purposes of satisfying WORK's obligation
under Treasury regulations Section 1.1445-2(c)(3) promulgated
under the Code;
(F) a copy of the articles or certificate of incorporation
of the Company, as amended to the date of Closing, certified by
the appropriate Governmental Authorities in the Organization
State; and
(G) for each of the Company and the Company Subsidiaries, a
certificate, dated as of a Current Date, duly issued by the
appropriate Governmental Authorities in its Organization State
and, unless waived by WORK, in each other jurisdiction listed for
it in Section 4.02 of the Disclosure Statement, showing it to be
in good standing and authorized to do business in its
Organization State and those other jurisdictions and that all
state franchise and/or income tax returns and taxes due by it in
its Organization State and those other jurisdictions for all
periods prior to the Closing have been filed and paid.
(b) The obligations of WORK and Newco with respect to the actions to
be taken on the IPO Closing Date are subject to the satisfaction, or the
written waiver by WORK and Newco pursuant to Section 11.05, on or before
the IPO Closing Date, of, in addition to the conditions specified in
Section 7.02(b), all of the following conditions:
(i) Representations and Warranties. All of the representations
and warranties of the Stockholders and the Company in Articles III and
IV shall be true
53
and correct in all material respects as of the IPO Closing Date as
though made on that date;
(ii) Continued Effectiveness. Each of the New Employment
Agreements and the Transferors' Agreement then shall be in full force
and effect.
54
ARTICLE VIII
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 8.01. Disclosure. If, subsequent to the IPO Pricing Date and
prior to the 25th day after the date of the Final Prospectus, any Stockholder
becomes aware of any fact or circumstance which would change (or, if after the
Effective Time, would have changed) a representation or warranty of the Company
or any Stockholder in this Agreement or would affect any document delivered
pursuant hereto in any material respect that Stockholder will promptly give
notice of that fact or circumstance to WORK.
Section 8.02. Preparation and Filing of Tax Returns. Each party hereto
will, and will cause its Affiliates to, provide to each 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. This cooperation and information shall include
providing copies of all relevant portions of the relevant Returns, together with
such accompanying schedules and work papers, documents relating to rulings or
other determinations by Taxing Authorities and records concerning the ownership
and Tax bases of property as are relevant which a party possesses. Each party
will make its employees, if any, reasonably available on a mutually convenient
basis at its cost to provide an explanation of any documents or information so
provided. Subject to the preceding sentence, each party required to file
Returns pursuant to this Agreement shall bear all costs attributable to the
preparation and filing of those Returns.
Section 8.03. Directors. WORK will cause such corporate proceedings as on
its part will be necessary to cause each of the persons, if any, who are named
in the Final Prospectus as persons who will become members of the board of
directors of WORK following the Effective Time to be appointed to the board when
the prospectus so provides.
Section 8.04. Removal of Guaranties. Within 120 days following the
Effective Time, WORK will cause the Stockholder Guaranties listed in Schedule
8.04 to be terminated. WORK hereby agrees to indemnify each Stockholder who is
a guarantor under any Stockholder Guaranty listed on Schedule 8.04 which is not
terminated on or before the IPO Closing Date against, and hold harmless each
such Stockholder from, any Damages incurred by such Stockholder as a result of
any default by the Company on or after the IPO Closing Date with respect to any
Indebtedness covered by such Stockholder Guaranty.
55
ARTICLE IX
INDEMNIFICATION
Section 9.01. Survival of Representations and Warranties. All the
provisions of this Agreement will survive the Closing and the Effective Time
notwithstanding any investigation at any time made by or on behalf of any party
hereto or the provision of any Supplemental Information pursuant to Section
6.06, provided that the representations and warranties set forth in Articles IV,
V and VI and in any certificate delivered in connection herewith with respect to
any of those representations and warranties will terminate and expire two years
after the IPO Closing Date, except as follows: (a) the representations and
warranties of the Stockholders which relate expressly or by necessary
implication to Taxes or ERISA will survive until the expiration of the
applicable statutes of limitations (including all periods of extension and
tolling); and (b) the representations and warranties of WORK and the Company
will terminate and expire at the Effective Time. After a representation and
warranty has terminated and expired, no indemnification will or may be sought on
the basis of that representation and warranty by any Person who would have been
entitled pursuant to this Article IX to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that, in the case of each representation and warranty that will terminate and
expire as provided in this Section 9.01, no claim presented in writing for
indemnification pursuant to this Article IX on the basis of that representation
and warranty prior to its termination and expiration will be affected in any way
by the termination and expiration.
Section 9.02. Indemnification of WORK Indemnified Parties.
(a) Subject to the applicable provisions of Sections 9.01 and 9.06,
the Stockholders covenant and agree that they, jointly and severally, will
indemnify each WORK Indemnified Party against, and hold each WORK
Indemnified Party harmless from and in respect of, all Damages that arise
from, are based on or relate or otherwise are attributable to (i) any
breach of the representations and warranties of the Stockholders or the
Company set forth herein (other than in Article III) or in certificates
delivered in connection herewith (other than in respect of certificates
relating only to the representations and warranties in Article III), (ii)
any nonfulfillment of any covenant or agreement on the part of the
Stockholders or the Company under this Agreement, (iii) any liability under
the Securities Act, the Exchange Act or other applicable Governmental
Requirement which arises out of or is based on (A) any untrue statement of
a material fact relating to the Company and the Company Subsidiaries, or
any of them, which is (1) provided to WORK or its counsel by the Company or
the Stockholders and (2) contained in any preliminary prospectus relating
to the IPO, the Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or (B) any
omission or alleged omission to state therein a material fact relating to
the Company and the Company Subsidiaries, or any of them, required to be
stated therein or necessary to make the statements therein not misleading,
and not provided to WORK or its counsel by the Company or the Stockholders
(each such Damage Claim and each Damage Claim described in Section 9.02(b)
being a "WORK Indemnified Loss").
56
(b) Each Stockholder, severally and not jointly with any other Person,
covenants and agrees that he will indemnify each WORK Indemnified Party
against, and hold each WORK Indemnified Party harmless from and in respect
of, all Damage Claims that arise from, are based on or relate or otherwise
are attributable to (i) any breach of the representations and warranties of
that Stockholder solely as to that Stockholder set forth in Article III or
in certificates delivered by that Stockholder and relating to those
representations and warranties, (ii) any nonfulfillment of any several, and
not joint and several, agreement on the part of that Stockholder under this
Agreement or (iii) any liability under the Securities Act, the Exchange Act
or other applicable Governmental Requirement which arises out of or is
based on (A) any untrue statement or alleged untrue statement of a material
fact relating solely to that Stockholder which is (1) provided to WORK or
its counsel by that Stockholder and (2) contained in any preliminary
prospectus relating to the IPO, the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or (B) any omission or alleged omission to state therein a
material fact relating solely to that Stockholder required to be stated
therein or necessary to make the statements therein not misleading, and not
provided to WORK or its counsel by that Stockholder.
(c) Notwithstanding anything to the contrary contained herein, the
amount of any Damages sustained by any Indemnified Party shall be
determined only after giving credit for the amount of the net monetary
benefit received by such Indemnified Party from any insurance carrier with
respect to any policy of insurance (not including any amounts the
Indemnified Party is required to pay with respect to deductibles or to
reimburse to such insurer), resulting from or attributable to, the event,
occurrence, state of facts, actions or other circumstance causing or giving
rise to such Damages.
Section 9.03. Indemnification of Stockholder Indemnified Parties. WORK
covenants and agrees that it will indemnify each Stockholder Indemnified Party
against, and hold each Stockholder Indemnified Party harmless from and in
respect of, all Damage Claims (that arise from, are based on or relate or
otherwise are attributable to (i) any breach by WORK or Newco of their
representations and warranties set forth herein or in their certificates
delivered to the Company or the Stockholders in connection herewith, (ii) any
nonfulfillment of any covenant or agreement on the part of WORK or Newco under
this Agreement (each such Damage Claim being a "Stockholder Indemnified Loss");
or (iii) any liability under the Securities Act, the Exchange Act or other
applicable Governmental Requirement which arises out of or is based on (A) any
untrue statement or alleged untrue statement of a material fact relating to
WORK, Newco or any of the Other Founding Companies contained in any preliminary
prospectus relating to the IPO, the Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or supplement thereto, or (B)
any omission or alleged omission to state therein a material fact relating to
WORK, Newco or any of the Other Founding Companies, or any of them, required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made.
57
Section 9.04. Conditions of Indemnification.
(a) All claims for indemnification under this Agreement shall be
asserted and resolved as provided in this Section 9.04.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party
claim or claims asserted against the Indemnified Party ("Third Party
Claim") that could give rise to a right of indemnification under this
Agreement and (ii) transmit to the Indemnifying Party a written notice
("Claim Notice") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to the claim (if
any), an estimate of the amount of damages attributable to the Third Party
Claim to the extent feasible (which estimate shall not be conclusive of the
final amount of the claim) and the basis for the Indemnified Party's
request for indemnification under this Agreement. Except as set forth in
Section 9.01, the failure to promptly deliver a Claim Notice shall not
relieve the Indemnifying Party of its obligations to the Indemnified Party
with respect to the related Third Party Claim except to the extent that the
resulting delay is materially prejudicial to the defense of the claim.
Within 15 days after receipt of any Claim Notice (the "Election Period"),
the Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified
Party under this Article IX with respect to the Third Party Claim and (ii)
if the Indemnifying Party does not dispute its potential liability to the
Indemnified Party with respect to the Third Party Claim, whether the
Indemnifying Party desires, at the sole cost and expense of the
Indemnifying Party, to defend the Indemnified Party against the Third Party
Claim.
(c) If the Indemnifying Party does not dispute its potential liability
to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of
the Third Party Claim, then the Indemnifying Party shall have the right to
defend, at its sole cost and expense, the Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently
by the Indemnifying Party to a final conclusion or settled at the
discretion of the Indemnifying Party in accordance with this Section
9.04(c) and the Indemnified Party will furnish the Indemnifying Party with
all information in its possession with respect to the Third Party Claim and
otherwise cooperate with the Indemnifying Party in the defense of the Third
Party Claim; provided, however, that the Indemnifying Party shall not enter
into any settlement with respect to any Third Party Claim that purports to
limit the activities of, or otherwise restrict in any way, any Indemnified
Party or any Affiliate of any Indemnified Party without the prior consent
of that Indemnified Party (which consent may be withheld in the sole
discretion of that Indemnified Party). The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying Party if found
liable hereunder, to file, during the Election Period, any motion, answer
or other pleadings that the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party.
The Indemnified Party may participate in, but not control, any defense or
settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this Section
58
9.04(c) and will bear its own costs and expenses with respect to its
participation; provided, however, that if the named parties to any such
action (including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party, and the Indemnified Party has been advised
in writing by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the Indemnifying Party, then the Indemnified Party may employ separate
counsel at the expense of the Indemnifying Party, and, on its written
notification of that employment, the Indemnifying Party shall not have the
right to assume or continue the defense of the action on behalf of the
Indemnified Party.
(d) If the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party under this
Article IX, (B) elects not to defend the Indemnified Party pursuant to
Section 9.04(c) or (C) fails to notify the Indemnified Party that the
Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 9.04(c) or (ii) elects to defend the Indemnified Party pursuant to
Section 9.04(c) but fails diligently and promptly to prosecute or settle
the Third Party Claim, then the Indemnified Party shall have the right to
defend, at the sole cost and expense of the Indemnifying Party (if the
Indemnified Party is entitled to indemnification hereunder), the Third
Party Claim by all appropriate proceedings, which proceedings shall be
promptly and vigorously prosecuted by the Indemnified Party to a final
conclusion or settled. The Indemnified Party shall have full control of
such defense and proceedings. Notwithstanding the foregoing, if the
Indemnifying Party has delivered a written notice to the Indemnified Party
to the effect that the Indemnifying Party disputes its potential liability
to the Indemnified Party under this Article IX and if such dispute is
resolved in favor of the Indemnifying Party, the Indemnifying Party shall
not be required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this Section 9.04 or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all
reasonable and appropriate costs and expenses of such litigation. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section
9.04(d), and the Indemnifying Party shall bear its own costs and expenses
with respect to such participation.
(e) If any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice
(the "Indemnity Notice") describing in reasonable detail the nature of the
claim, an estimate of the amount of Damages attributable to that claim to
the extent feasible (which estimate shall not be conclusive of the final
amount of the claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not
notify the Indemnified Party within 15 days from its receipt of the
Indemnity Notice that the Indemnifying Party disputes the claim, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed
a liability of the Indemnifying Party hereunder. If the Indemnifying
Party has timely disputed the claim, as provided above, the dispute shall
be resolved by proceedings in an appropriate court of competent
jurisdiction if the parties do not reach a settlement of such dispute
within 30 days after notice of the dispute is given.
59
(f) Payments of all amounts owing by an Indemnifying Party pursuant to
this Article IX relating to a Third Party Claim shall be made within 30
days after the latest of (i) the settlement of that Third Party Claim, (ii)
the expiration of the period for appeal of a final adjudication of that
Third Party Claim or (iii) the expiration of the period for appeal of a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement. Payments of all amounts owing by an
Indemnifying Party pursuant to Section 9.04(e) shall be made within 30 days
after the later of (i) the expiration of the 30-day Indemnity Notice period
or (ii) the expiration of the period for appeal of a final adjudication of
the Indemnifying Party's liability to the Indemnified Party under this
Agreement.
Section 9.05. Remedies Exclusive. Except as otherwise expressly provided
in this Agreement, the remedies provided in this Article IX are the exclusive
remedies available to one party against the other, either at law or in equity,
in respect of any matter indemnified against in this Article IX.
Section 9.06. Limitations on Indemnification.
(a) Notwithstanding the provisions of Section 9.02(a), neither the
Company nor any of the Stockholders shall be required to indemnify or hold
harmless any of the WORK Indemnified Parties on account of any WORK
Indemnified Loss under Section 9.02(a) unless the liability of the Company
and the Stockholders in respect of that WORK Indemnified Loss, when
aggregated with the liability of the Company and the Stockholders in
respect of all WORK Indemnified Losses under Section 9.02 (a), exceeds, and
only to the extent the aggregate amount of all those WORK Indemnified
Losses does exceed, the Threshold Amount. In no event shall (i) the
aggregate joint and several liability of the Company and the Stockholders
under this Agreement, including Section 9.02(a), exceed the Ceiling Amount
or (ii) the aggregate liability of each Stockholder under this Agreement,
including Sections 9.02(a) and 9.02(b), exceed that Stockholder's Pro Rata
Share of the Ceiling Amount.
(b) Notwithstanding the provisions of Section 9.03, WORK shall not be
required to indemnify or hold harmless any of the Stockholder Indemnified
Parties on account of any Stockholder Indemnified Loss unless the liability
of WORK in respect of that Stockholder Indemnified Loss, when aggregated
with the liability of WORK in respect of all Stockholder Indemnified
Losses, exceeds, and only to the extent the aggregate amount of all those
Stockholder Indemnified Losses does exceed, the Threshold Amount. In no
event shall WORK be liable under this Agreement, including Section 9.03,
for any amount in excess of the Ceiling Amount.
60
