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AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 19, 2004
AMONG
VENTURI PARTNERS, INC.
VTP, INC.
VENTURI TECHNOLOGY PARTNERS, LLC
COMSYS INFORMATION TECHNOLOGY SERVICES, INC.
COMSYS HOLDING, INC.
AND
THE STOCKHOLDERS OF
COMSYS HOLDING, INC. SIGNATORY HERETO
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TABLE OF CONTENTS
PAGE
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INTRODUCTION .................................................................................................... 1
ARTICLE 1 THE MERGER............................................................................................. 1
SECTION 1.1. The Merger................................................................................ 1
SECTION 1.2. Effects of the Merger..................................................................... 2
SECTION 1.3. Closing................................................................................... 2
SECTION 1.4. Consummation of the Merger................................................................ 2
SECTION 1.5. Organizational Documents; Directors and Officers.......................................... 2
ARTICLE 2 EFFECT OF THE MERGER ON THE EQUITY OF THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES............... 2
SECTION 2.1. Conversion of Merger Sub Capital Stock.................................................... 2
SECTION 2.2. Conversion of Holding Capital Stock....................................................... 3
SECTION 2.3. Exchange of Certificates.................................................................. 4
SECTION 2.4. Adjustments to the Exchange Ratios........................................................ 5
SECTION 2.5. Taking of Necessary Action; Further Action................................................ 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY, MERGER SUB AND PARTNERS................................. 7
SECTION 3.1. Organization.............................................................................. 7
SECTION 3.2. Capitalization............................................................................ 8
SECTION 3.3. Authorization; No Conflict................................................................ 9
SECTION 3.4. Subsidiaries.............................................................................. 11
SECTION 3.5. SEC Reports and Financial Statements...................................................... 11
SECTION 3.6. Absence of Material Adverse Changes, etc.................................................. 13
SECTION 3.7. Litigation................................................................................ 13
SECTION 3.8. Information Supplied...................................................................... 14
SECTION 3.9. Broker's or Finder's Fees................................................................. 14
SECTION 3.10. Employee Plans............................................................................ 14
SECTION 3.11. Board Recommendation; Company Action; Requisite Vote of the Company's Stockholders........ 17
SECTION 3.12. Taxes .................................................................................... 19
SECTION 3.13. Environmental Matters..................................................................... 22
SECTION 3.14. Compliance with Laws...................................................................... 22
SECTION 3.15. Employment Matters........................................................................ 23
SECTION 3.16. Foreign National Employees................................................................ 24
SECTION 3.17. Investment Company........................................................................ 24
SECTION 3.18. Property.................................................................................. 24
SECTION 3.19. Intellectual Property..................................................................... 25
SECTION 3.20. Insurance................................................................................. 25
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SECTION 3.21. Certain Contracts and Arrangements........................................................ 26
SECTION 3.22. Company Financing Arrangements............................................................ 27
SECTION 3.23. Company Rights Plan; Takeover Statutes.................................................... 27
SECTION 3.24. Activities of Merger Sub.................................................................. 28
SECTION 3.25. Agreement Regarding Staffing Disposition.................................................. 28
SECTION 3.26. Books and Financial Records............................................................... 28
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF HOLDING AND COMSYS................................................... 29
SECTION 4.1. Organization.............................................................................. 29
SECTION 4.2. Capitalization............................................................................ 29
SECTION 4.3. Authorization; No Conflict................................................................ 30
SECTION 4.4. Subsidiaries.............................................................................. 32
SECTION 4.5. Financial Statements...................................................................... 33
SECTION 4.6. Absence of Material Adverse Changes, etc.................................................. 34
SECTION 4.7. Litigation................................................................................ 34
SECTION 4.8. Information Supplied...................................................................... 34
SECTION 4.9. Broker's or Finder's Fees................................................................. 34
SECTION 4.10. Employee Plans............................................................................ 34
SECTION 4.11. Taxes..................................................................................... 37
SECTION 4.12. Environmental Matters..................................................................... 40
SECTION 4.13. Compliance with Laws...................................................................... 40
SECTION 4.14. Employment Matters........................................................................ 40
SECTION 4.15. Foreign National Employees................................................................ 42
SECTION 4.16. Investment Company........................................................................ 42
SECTION 4.17. Properties................................................................................ 42
SECTION 4.18. Intellectual Property..................................................................... 43
SECTION 4.19. Insurance................................................................................. 43
SECTION 4.20. Certain Contracts and Arrangements........................................................ 43
SECTION 4.21. Comsys Financing Arrangements............................................................. 44
SECTION 4.22. Books and Financial Records............................................................... 44
ARTICLE 4A REPRESENTATIONS AND WARRANTIES OF THE HOLDING STOCKHOLDERS............................................ 45
SECTION 4A1. Status; Power and Authority............................................................... 45
SECTION 4A2. Enforceability............................................................................ 45
SECTION 4A3. Access to Information..................................................................... 45
SECTION 4A4. Knowledgeable and Sophisticated Investor.................................................. 45
SECTION 4A5. Accredited Investor....................................................................... 45
SECTION 4A6. No Other Representations.................................................................. 46
SECTION 4A7. Investment Intent......................................................................... 46
SECTION 4A8. Transfer Restrictions..................................................................... 46
SECTION 4A9. No General Solicitation................................................................... 46
SECTION 4A10. No Brokers................................................................................ 46
SECTION 4A11. Legend.................................................................................... 46
SECTION 4A12. No Recommendation......................................................................... 47
SECTION 4A13. Other Activities.......................................................................... 47
SECTION 4A14. Reliance.................................................................................. 47
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ARTICLE 5 CONDUCT OF BUSINESS PENDING THE MERGER................................................................. 47
SECTION 5.1. Conduct of Business by the Company Pending the Merger..................................... 47
SECTION 5.2. Conduct of Business by Holding and Comsys Pending the Merger.............................. 51
ARTICLE 6 ADDITIONAL AGREEMENTS.................................................................................. 54
SECTION 6.1. Preparation of Proxy Statement............................................................ 54
SECTION 6.2. Blue Sky Laws............................................................................. 56
SECTION 6.3. Consents and Approvals.................................................................... 56
SECTION 6.4. Public Statements......................................................................... 57
SECTION 6.5. Registration Rights....................................................................... 58
SECTION 6.6. Further Assurances........................................................................ 58
SECTION 6.7. Tax Treatment............................................................................. 58
SECTION 6.8. Notification of Certain Matters........................................................... 59
SECTION 6.9. Access to Information; Confidentiality.................................................... 59
SECTION 6.10. No Solicitation........................................................................... 60
SECTION 6.11. Company Charter; Bylaws................................................................... 62
SECTION 6.12. Allocation of Financing Fees.............................................................. 62
SECTION 6.13. Staffing Disposition...................................................................... 63
SECTION 6.14. Indemnification and Insurance............................................................. 64
SECTION 6.15. Company Board of Directors; Officers...................................................... 66
SECTION 6.16. Wachovia Option Grant..................................................................... 67
SECTION 6.17. Section 16 Matters........................................................................ 67
SECTION 6.18. NASDAQ Listing............................................................................ 67
SECTION 6.19. Redemption of Holding Preferred Stock..................................................... 68
SECTION 6.20. Cancellation of Warrants.................................................................. 68
SECTION 6.21. Employee Benefit Matters.................................................................. 68
SECTION 6.22. Subscription Agreements................................................................... 68
ARTICLE 7 CONDITIONS............................................................................................. 69
SECTION 7.1. Conditions to Each Party's Obligation To Effect the Merger................................ 69
SECTION 7.2. Conditions to Obligations of Holding and Comsys........................................... 70
SECTION 7.3. Conditions to Obligation of the Company and Merger Sub.................................... 71
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER...................................................................... 72
SECTION 8.1. Termination............................................................................... 72
SECTION 8.2. Effect of Termination..................................................................... 74
SECTION 8.3. Fees and Expenses......................................................................... 75
SECTION 8.4. Amendment................................................................................. 76
SECTION 8.5. Waiver.................................................................................... 76
ARTICLE 9 GENERAL PROVISIONS..................................................................................... 76
SECTION 9.1. Notices................................................................................... 76
SECTION 9.2. Non-Survival of Representations and Warranties............................................ 77
SECTION 9.3. Knowledge Qualifiers...................................................................... 78
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SECTION 9.4. Construction.............................................................................. 78
SECTION 9.5. Governing Law; Jurisdiction............................................................... 78
SECTION 9.6. Counterparts; Facsimile Transmission of Signatures........................................ 79
SECTION 9.7. Assignment; Binding Effect; Third Party Beneficiaries..................................... 79
SECTION 9.8. Severability.............................................................................. 80
SECTION 9.9. Entire Agreement.......................................................................... 80
SECTION 9.10. Specific Performance; Remedies............................................................ 80
SECTION 9.11. Incorporation of Exhibits and Disclosure Letters.......................................... 80
EXHIBITS SECTION
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Exhibit A Form of Amended and Restated Certificate of Incorporation of Holding .............................. 1.5
Exhibit B Form of Amended and Restated Bylaws of Holding..................................................... 1.5
Exhibit C Holding Stockholders' Escrowed Shares ............................................................. 2.4
Exhibit D Form of Escrow Agreement .......................................................................... 2.4
Exhibit E Form of Accredited Investor Questionnaire ......................................................... 4A.5
Exhibit F Form of Registration Rights Agreement.............................................................. 6.5(a)
Exhibit G Form of Amended and Restated Registration Rights Agreement......................................... 6.5(a)
Exhibit H Holding Tax Certificate............................................................................ 6.7
Exhibit I Company Tax Certificate............................................................................ 6.7
Exhibit J Joint Press Release................................................................................ 6.10(a)
Exhibit K Form of Amended and Restated Certificate of Incorporation of the Company........................... 6.11
Exhibit L Form of Amended and Restated Bylaws of the Company................................................. 6.11
Exhibit M Resigning Officers of the Company.................................................................. 6.15
Exhibit N New Officers of the Company........................................................................ 6.15
Exhibit O Voting Agreement................................................................................... 7.1(i)
Exhibit P Certain Employees.................................................................................. 7.2(d)
Exhibit Q Form of Separation and Release Agreement........................................................... 7.2(d)
Exhibit R Form of Severance and Retention Agreement.......................................................... 7.2(e)
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DEFINED TERMS
TERM LOCATION
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2003 10-K.................................................................. Section 3.1
401(K) Matter.............................................................. Section 3.25
Agreement.................................................................. Preamble
Amended and Restated Registration Rights Agreement......................... Section 6.5(a)
Amended Charter............................................................ Section 6.11
Buyer...................................................................... Section 3.25
Buyer Agreement............................................................ Section 3.25
Certificate of Merger...................................................... Section 1.4
Certificates............................................................... Section 2.3(a)
Class A-3 Exchange Ratio................................................... Section 2.2(b)
Class A-3 Merger Consideration............................................. Section 2.2(b)
Class B Exchange Ratio..................................................... Section 2.2(c)
Class B Merger Consideration............................................... Section 2.2(c)
Class C Exchange Ratio..................................................... Section 2.2(d)
Class C Merger Consideration............................................... Section 2.2(d)
Class D Exchange Ratio..................................................... Section 2.2(e)
Class D Merger Consideration............................................... Section 2.2(e)
Closing.................................................................... Section 1.3
Closing Date............................................................... Section 1.3
COBRA...................................................................... Section 3.10(e)
Code....................................................................... Introduction
Commitment Letter.......................................................... Section 4.21
Common Stock Exchange Ratio................................................ Section 2.2(a)
Common Stock Merger Consideration.......................................... Section 2.2(a)
Company.................................................................... Preamble
Company Board Approval..................................................... Section 3.11(a)
Company Bylaws............................................................. Section 3.1
Company Charter............................................................ Section 3.1
Company Common Stock....................................................... Section 2.2(a)
Company Contracts.......................................................... Section 3.21(a)
Company Disclosure Letter.................................................. Article 3 (Introductory Paragraph)
Company Employee........................................................... Section 3.15(a)
Company Employee Benefit Plan.............................................. Section 3.10(a)
Company Employee Pension Benefit Plan...................................... Section 3.10(a)
Company Employee Welfare Benefit Plan...................................... Section 3.10(a)
Company ERISA Affiliates................................................... Section 3.10(a)
Company Financial Advisor.................................................. Section 3.9
Company Financial Statements............................................... Section 3.5(b)
Company Foreign National Employees......................................... Section 3.16
Company Independent Contractors............................................ Section 3.15(a)
Company Insurance Policies................................................. Section 3.20
Company Intellectual Property.............................................. Section 3.19
Company Knowledgeable Officers............................................. Section 9.3
Company Material Adverse Effect............................................ Section 3.3(b)
Company Preferred Stock.................................................... Section 3.2(a)
Company Rights............................................................. Section 3.2(a)
Company Rights Plan........................................................ Section 3.2(a)
Company SEC Reports........................................................ Section 3.5(a)
Company Stockholder Vote................................................... Section 3.11(d)
Company Stockholders Meeting............................................... Section 6.1(d)
Company Subsidiaries....................................................... Section 3.1
Comsys..................................................................... Preamble
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TERM LOCATION
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Comsys Common Stock........................................................ Section 4.2(a)
Comsys Contracts........................................................... Section 4.20(a)
Comsys Disclosure Letter................................................... Article 4 (Introductory Paragraph)
Comsys Employee............................................................ Section 4.14(a)
Comsys Employee Benefit Plan............................................... Section 4.10(a)
Comsys Employee Pension Benefit Plan....................................... Section 4.10(a)
Comsys Employee Welfare Benefit Plan....................................... Section 4.10(a)
Comsys ERISA Affiliates.................................................... Section 4.10(a)
Comsys Foreign National Employees.......................................... Section 4.15
Comsys Independent Contractors............................................. Section 4.14(a)
Comsys Insurance Policies.................................................. Section 4.19
Comsys Intellectual Property............................................... Section 4.18
Comsys Knowledgeable Officers.............................................. Section 9.3
Confidentiality Agreement.................................................. Section 6.9(c)
Constituent Entities....................................................... Section 1.1
Credit Facility............................................................ Section 5.2(b)
DGCL....................................................................... Introduction
D&O Insurance.............................................................. Section 6.14(c)
Effective Date............................................................. Section 1.4
Effective Time............................................................. Section 1.4
Environmental Laws......................................................... Section 3.13
ERISA...................................................................... Section 3.10(o)
Escrow Agreement........................................................... Section 2.4(f)
Escrowed Shares............................................................ Section 2.4(f)
Exchange Act............................................................... Section 3.3(c)
Exchange Ratios............................................................ Section 2.2(e)
Expense Cap................................................................ Section 8.3
Expenses................................................................... Section 8.3
Financing.................................................................. Section 4.21
Form S-8................................................................... Section 6.5(b)
GAAP....................................................................... Section 3.5(b)
Group A Designees.......................................................... Section 6.15(a)
Group B Designees.......................................................... Section 6.15(a)
Holding.................................................................... Preamble
Holding Class A-1 Preferred Stock.......................................... Section 4.2(b)
Holding Class A-2 Preferred Stock.......................................... Section 4.2(b)
Holding Class A-3 Preferred Stock.......................................... Introduction
Holding Class B Preferred Stock............................................ Introduction
Holding Class C Preferred Stock............................................ Introduction
Holding Class D Preferred Stock............................................ Introduction
Holding Class E Preferred Stock............................................ Section 4.2(b)
Holding Common Stock....................................................... Introduction
Holding Financial Statements............................................... Section 4.5(a)
Holding Material Adverse Effect............................................ Section 4.3(d)
Holding Shares............................................................. Section 2.3(a)
Holding Stockholder Consent................................................ Section 4.3(c)
Holding Stockholders....................................................... Preamble
Holding Subsidiaries....................................................... Section 4.1
HSR Act.................................................................... Section 3.3(c)
Indemnified Party.......................................................... Section 6.14(a)
Indemnifying Parties....................................................... Section 6.14(b)
Inland..................................................................... Section 3.22
Investors.................................................................. Section 3.22
Letter Agreement........................................................... Section 3.22
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TERM LOCATION
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Letter Agreement Transactions.............................................. Section 3.11(a)
Lien....................................................................... Section 3.4(b)
Links...................................................................... Section 3.22
Maximum Amount............................................................. Section 6.14(c)
Merger..................................................................... Introduction
Merger Consideration....................................................... Section 2.2(e)
Merger Sub................................................................. Preamble
Merger Sub Common Stock.................................................... Section 2.1
Merger Sub Stockholder Consent............................................. Section 3.3(a)
MGOP....................................................................... Section 3.22
MGOPB...................................................................... Section 3.22
NASDAQ..................................................................... Section 2.3(c)
Net Cash Proceeds.......................................................... Section 3.25
NYSE....................................................................... Section 3.5(d)
Nonqualified Plan.......................................................... Section 6.21(b)
OTC Bulletin Board......................................................... Section 3.3(c)
Partners................................................................... Preamble
Person..................................................................... Section 3.9
PFI........................................................................ Section 3.3(a)
PFI Consent................................................................ Section 3.11(c)
Pre-Closing Period......................................................... Section 2.4(f)
Proxy Statement............................................................ Section 3.3(c)
Qualified Company Employee Benefit Plan.................................... Section 3.10(c)
Qualified Comsys Employee Benefit Plan..................................... Section 4.10(c)
Replacement Agreement...................................................... Section 3.25
Replacement Facility....................................................... Section 5.2(b)
Xxxxxxxx-Xxxxx Act......................................................... Section 3.5(d)
Securities Act............................................................. Section 3.5(a)
Series A Junior Participating Preferred Stock.............................. Section 3.2(a)
Series B Convertible Participating Preferred Stock......................... Section 3.2(a)
Staffing................................................................... Section 3.25
Staffing Disposition....................................................... Section 6.13(a)
Subscription Agreement..................................................... Section 3.22
Subsidiary................................................................. Section 3.4(a)
Superior Proposal.......................................................... Section 6.10(c)
Surviving Entity........................................................... Section 1.1
Surviving Entity Common Stock.............................................. Section 2.1
Takeover Proposal.......................................................... Section 6.10(c)
Tax or Taxes............................................................... Section 3.12(p)
Tax Liabilities............................................................ Section 2.4(f)
Tax Return................................................................. Section 3.12(p)
Termination Date........................................................... Section 8.1(b)
Termination Fee............................................................ Section 8.3
Unclaimed Property Taxes................................................... Section 2.4(f)
Unemployment Taxes......................................................... Section 2.4(f)
Voting Agreement........................................................... Section 7.1(i)
VPI 401(k) Plan............................................................ Section 6.21(b)
Wachovia................................................................... Section 6.16
Wachovia Director.......................................................... Section 6.15(a)
WARN Act................................................................... Section 3.15(e)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of July 19,
2004, is made by and among COMSYS Holding, Inc., a Delaware corporation
("HOLDING"), COMSYS Information Technology Services, Inc., a Delaware
corporation and wholly-owned subsidiary of Holding ("COMSYS"), Venturi Partners,
Inc., a Delaware corporation (the "COMPANY"), Venturi Technology Partners, LLC,
a North Carolina limited liability company and indirect, wholly-owned subsidiary
of the Company ("PARTNERS"), VTP, Inc., a Delaware corporation and wholly-owned
subsidiary of the Company ("MERGER SUB") and each of the stockholders of Holding
party hereto (the "HOLDING STOCKHOLDERS").
INTRODUCTION
The respective Boards of Directors of each of Holding, Comsys, the Company
and Merger Sub have unanimously (i) declared advisable and approved the merger
of Merger Sub with and into Holding (the "MERGER"), upon the terms and subject
to the conditions set forth in this Agreement and (ii) declared advisable,
approved and adopted this Agreement.
As a result of the Merger, and in accordance with the Delaware General
Corporation Law (the "DGCL"), each issued and outstanding share of (i) the
common stock of Holding, par value $.01 per share (the "HOLDING COMMON STOCK"),
(ii) Class A-3 preferred stock of Holding, par value $.01 per share (the
"HOLDING CLASS A-3 PREFERRED STOCK"), (iii) Class B preferred stock of Holding,
par value $.01 per share (the "HOLDING CLASS B PREFERRED STOCK"), (iv) Class C
preferred stock of Holding, par value $.01 per share (the "HOLDING CLASS C
PREFERRED STOCK") and (v) Class D preferred stock of Holding, par value $.01 per
share (the "HOLDING CLASS D PREFERRED STOCK"), will be converted into the right
to receive the applicable portion of the Merger Consideration (as defined in
Section 2.2(e)).
The parties to this Agreement intend that the Merger qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE"), for Federal income tax purposes, and that this
Agreement constitutes a plan of reorganization.
In consideration of the foregoing and of the mutual covenants contained in
this Agreement, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Holding, Comsys, the Company,
Partners, Merger Sub and the Holding Stockholders hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time, in accordance with
this Agreement and the DGCL, Merger Sub will be merged with and into Holding,
the separate existence of Merger Sub will cease, and Holding will continue as
the surviving entity. For purposes of this Agreement, (i) the entity surviving
the Merger after the Effective Time may be referred to as the "SURVIVING ENTITY"
and (ii) Holding and Merger Sub may together be referred to as the "CONSTITUENT
ENTITIES."
SECTION 1.2. Effects of the Merger. The Merger will have the effects
set forth in the DGCL.
SECTION 1.3. Closing. The closing of the Merger (the "CLOSING") will
take place at 10:00 a.m. (Houston time) on a date to be specified by the
parties, which will be no later than the second business day after satisfaction
or (to the extent permitted by applicable law) waiver of the conditions set
forth in Article 7 (other than any such conditions which by their nature cannot
be satisfied until the Closing Date, which shall be required to be so satisfied
or (to the extent permitted by applicable law) waived on the Closing Date), at
the offices of Akin Gump Xxxxxxx Xxxxx & Xxxx LLP, 0000 Xxxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxx 00000 unless another time, date or place is agreed to in
writing by the parties hereto (such date upon which the Closing occurs, the
"CLOSING DATE").
SECTION 1.4. Consummation of the Merger. On the Closing Date, the
parties hereto will cause the Merger to be consummated by filing with the
Secretary of State of the State of Delaware a certificate of merger or other
appropriate documents (in any such case, the "CERTIFICATE OF MERGER") in such
form as required by, and executed in accordance with, the relevant provisions of
the DGCL and will make all other filings or recordings required under the DGCL.
The Merger will become effective at such time as the Certificate of Merger is
duly filed with such Secretary of State, or at such later time as Holding and
the Company will agree and specify in the Certificate of Merger (the time and
date the Merger becomes effective being the "EFFECTIVE TIME" and "EFFECTIVE
DATE," respectively).
SECTION 1.5. Organizational Documents; Directors and Officers. The
certificate of incorporation of Holding, as in effect immediately prior to the
Effective Time, shall be amended in its entirety at the Effective Time to read
as set forth in Exhibit A hereto and, as so amended, shall be the certificate of
incorporation of the Surviving Entity until thereafter amended as provided
therein and under the DGCL. The bylaws of Holding, as in effect immediately
prior to the Effective Time, shall be amended in their entirety at the Effective
Time to read as set forth in Exhibit B hereto and, as so amended, shall be the
bylaws of the Surviving Entity until thereafter amended as provided therein and
under the DGCL. The directors of Holding immediately prior to the Effective Time
will be the initial directors of the Surviving Entity and will serve until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving Entity's
certificate of incorporation and bylaws and the DGCL. The officers of Holding
immediately prior to the Effective Time will be the initial officers of the
Surviving Entity and will serve until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Entity's certificate of incorporation and bylaws
and the DGCL.
ARTICLE 2
EFFECT OF THE MERGER ON THE EQUITY OF THE CONSTITUENT ENTITIES; EXCHANGE OF
CERTIFICATES
SECTION 2.1. Conversion of Merger Sub Capital Stock. At the
Effective Time, by virtue of the Merger and without any action on the part of
Holding, Comsys, Partners, the Company, Merger Sub or any Holding Stockholder,
each share of common stock, par value
2
$.01 per share, of Merger Sub ("MERGER SUB COMMON STOCK") outstanding
immediately prior to the Effective Time will be converted into one share of
common stock, par value $.01 per share, of the Surviving Entity ("SURVIVING
ENTITY COMMON STOCK"). Each certificate which immediately prior to the Effective
Time represents a number of outstanding shares of Merger Sub Common Stock will,
from and after the Effective Time, for all purposes represent the same number of
shares of Surviving Entity Common Stock.
SECTION 2.2. Conversion of Holding Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of Holding,
Comsys, Partners, the Company, Merger Sub or any Holding Stockholder:
(a) Each share of Holding Common Stock issued and outstanding
immediately prior to the Effective Time will be canceled and will be converted
automatically into the right to receive .0001 (the "COMMON STOCK EXCHANGE
RATIO") of a fully paid and nonassessable share of common stock, par value $.01
per share, of the Company (the "COMPANY COMMON STOCK") (the "COMMON STOCK MERGER
CONSIDERATION"), subject to adjustments contemplated by Section 2.2(f) and
Section 2.4. As of the Effective Time, all such shares of Holding Common Stock
will no longer be outstanding and will automatically be canceled and will cease
to exist, and each holder of a certificate representing any such shares of
Holding Common Stock will cease to have any rights with respect thereto, except
the right to receive the Common Stock Merger Consideration and any cash in lieu
of fractional shares of Company Common Stock to be issued or paid in
consideration therefore upon surrender of such certificate in accordance with
Section 2.3, without interest.
(b) Each share of Holding Class A-3 Preferred Stock issued and
outstanding immediately prior to the Effective Time will be canceled and will be
converted automatically into the right to receive 10.4397 (the "CLASS A-3
EXCHANGE RATIO") fully paid and nonassessable shares of Company Common Stock
(the "CLASS A-3 MERGER CONSIDERATION"), subject to the adjustments contemplated
by Section 2.2(f) and Section 2.4. As of the Effective Time, all such shares of
Holding Class A-3 Preferred Stock will no longer be outstanding and will
automatically be canceled and will cease to exist, and each holder of a
certificate representing any such shares of Holding Class A-3 Preferred Stock
will cease to have any rights with respect thereto, except the right to receive
the Class A-3 Merger Consideration and any cash in lieu of fractional shares of
Company Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.3, without interest.
(c) The conversion of Holding Class B Preferred Stock will be
based on its liquidation value. The aggregate liquidation value of Holding Class
B Preferred Stock immediately prior to the Effective Time is agreed to be
$53,726,164 notwithstanding anything to the contrary in Holding's certificate of
incorporation and each such dollar of liquidation value of Holding Class B
Preferred Stock will be canceled and will be converted automatically into the
right to receive .01165118 (the "CLASS B EXCHANGE RATIO") fully paid and
nonassessable shares of Company Common Stock (the "CLASS B MERGER
CONSIDERATION"), subject to the adjustments contemplated by Section 2.2(f) and
Section 2.4. As of the Effective Time, all shares of Holding Class B Preferred
Stock will no longer be outstanding and will automatically be canceled and will
cease to exist, and each holder of a certificate representing any such shares of
Holding Class B Preferred Stock will cease to have any rights with respect
thereto, except the right to receive
3
the Class B Merger Consideration and any cash in lieu of fractional shares of
Company Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.3, without interest.
(d) Each share of Holding Class C Preferred Stock issued and
outstanding immediately prior to the Effective Time will be canceled and will be
converted automatically into the right to receive 117.41923 (the "CLASS C
EXCHANGE RATIO") fully paid and nonassessable shares of Company Common Stock
(the "CLASS C MERGER CONSIDERATION"), subject to the adjustments contemplated by
Section 2.2(f) and Section 2.4. As of the Effective Time, all such shares of
Holding Class C Preferred Stock will no longer be outstanding and will
automatically be canceled and will cease to exist, and each holder of a
certificate representing any such shares of Holding Class C Preferred Stock will
cease to have any rights with respect thereto, except the right to receive the
Class C Merger Consideration and any cash in lieu of fractional shares of
Company Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.3, without interest.
(e) Each share of Holding Class D Preferred Stock issued and
outstanding immediately prior to the Effective Time will be canceled and will be
converted automatically into the right to receive 1,411.423 (the "CLASS D
EXCHANGE RATIO", and together with the Common Stock Exchange Ratio, the Class
A-3 Exchange Ratio, the Class B Exchange Ratio and the Class C Exchange Ratio,
the "EXCHANGE RATIOS") fully paid and nonassessable shares of Company Common
Stock (the "CLASS D MERGER CONSIDERATION," and together with the Common Stock
Merger Consideration, Class A-3 Merger Consideration, Class B Merger
Consideration and the Class C Merger Consideration, the "MERGER CONSIDERATION"),
subject to the adjustments contemplated by Section 2.2(f) and Section 2.4. As of
the Effective Time, all such shares of Holding Class D Preferred Stock will no
longer be outstanding and will automatically be canceled and will cease to
exist, and each holder of a certificate representing any such shares of Holding
Class D Preferred Stock will cease to have any rights with respect thereto,
except the right to receive the Class D Merger Consideration and any cash in
lieu of fractional shares of Company Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance with
Section 2.3, without interest.
(f) Notwithstanding anything in this Agreement to the contrary,
if, between the date of this Agreement and the Effective Time, the outstanding
shares of Company Common Stock, Holding Common Stock, Holding Class A-3
Preferred Stock, Holding Class B Preferred Stock, Holding Class C Preferred
Stock or Holding Class D Preferred Stock are changed into a different number of
shares or a different class by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or a stock dividend
thereon is declared with a record date within such period, the Exchange Ratios
will be appropriately adjusted to provide the Holding Stockholders the same
economic effect as contemplated by this Agreement prior to such event.
SECTION 2.3. Exchange of Certificates.
(a) Exchange Procedures. Immediately following the Effective Time,
(i) each of the Holding Stockholders will deliver to the Company for
cancellation and in exchange for the applicable portion of the Merger
Consideration, certificates (collectively, the "CERTIFICATES") that,
4
immediately prior to the Effective Time, represented all issued and outstanding
shares of Holding Common Stock, Holding Series A-3 Preferred Stock, Holding
Series B Preferred Stock, Holding Series C Preferred Stock or Holding Series D
Preferred Stock (collectively, the "HOLDING SHARES") owned by such Holding
Stockholder and (ii) the Company will deliver to each of the Holding
Stockholders one or more certificates representing the applicable portion of the
Merger Consideration and, if applicable, cash in lieu of any fractional share as
contemplated by Section 2.3(c). The Certificates shall be deemed at any time
after the Effective Time to represent only the right to receive upon surrender
in accordance with this Section 2.3 the applicable portion of the Merger
Consideration into which the Holding Shares have been converted pursuant to
Section 2.2 and, if applicable, cash in lieu of any fractional share as
contemplated by Section 2.3(c).
(b) No Further Ownership Rights in Holding Shares. The Merger
Consideration issued or paid upon the surrender for exchange of the Certificates
in accordance with the terms of this Article 2 will be deemed to have been
issued in full satisfaction of all rights pertaining to the Holding Shares
theretofore represented by the Certificates, and from and after the Effective
Time there will be no further registration of transfers on the stock transfer
books of Holding of the Holding Shares that were outstanding immediately prior
to the Effective Time.
(c) No Fractional Shares. No certificates or scrip representing
fractional shares of Company Common Stock will be issued upon the surrender for
exchange of Certificates, no dividend or distribution of the Company will relate
to such fractional share interest and such fractional share interest will not
entitle the owner thereof to vote or to any rights of a stockholder of the
Company. In lieu of such fractional share interest, the Company will pay to the
former holder of a Certificate after aggregating all Certificates held by such
holder an amount in cash equal to the product obtained by multiplying (x) the
fractional share interest to which such former holder (after taking into account
all Holding Shares held at the Effective Time by such holder) would otherwise be
entitled by (y) the average of the last reported sale prices for a share of
Company Common Stock on the NASDAQ National Market ("NASDAQ"), or such other
national exchange on which the Company Common Stock is listed and traded (in
each case as reported in The Wall Street Journal, or, if not so reported, any
other authoritative source) for the five most recent trading days on which
trades in the Company Common Stock were made prior to the Closing Date.
SECTION 2.4. Adjustments to the Exchange Ratios.
(a) Adjustments Based on Net Cash Proceeds. In the event the Net
Cash Proceeds (as defined in Section 3.25) received by the Company as
consideration for the Staffing Disposition (as defined in Section 6.13) exceed
$25 million, the aggregate Merger Consideration will be adjusted in accordance
with the following table so that, immediately after the Effective Time and
subject to Section 2.4(d), the Holding Stockholders will collectively own the
percentage of the outstanding Company Common Stock (on a fully diluted basis,
including the exercise or conversion of all warrants, options, preferred stock
or similar interests, as applicable) specified in the table (or proportionately
adjusted to the nearest whole share of Company Common Stock for incremental
amounts between those amounts shown in the table); provided, however, that in no
event will the aggregate Merger Consideration be adjusted pursuant to this
5
Section 2.4(a) so as to result in the Holding Stockholders collectively owning
less than 50.2% of the outstanding Company Common Stock (on a fully diluted
basis as described above) immediately after the Effective Time.
Net Cash Proceeds In Excess of $25 Million Holding Stockholders Collective Ownership
($ millions) (%)
------------------------------------------ -----------------------------------------
0 55.5
5 54.5
10 53.5
15 52.6
20 51.8
25 51.0
30 or more 50.2
(b) Adjustments Based on Fully Diluted Company Common Stock
Outstanding. In the event that the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (on a fully diluted basis,
including shares issuable upon the exercise or conversion of all warrants,
options, preferred stock or similar interests, as applicable) plus the number of
shares issuable upon the exercise or conversion of all warrants issued in
connection with the preferred stock subscription agreement attached as an
exhibit to the Letter Agreement is more or less than 7,544,541, then the
aggregate Merger Consideration will be adjusted so that such Merger
Consideration at the Effective Time represents the same percentage interest in
the Company as it did on the date of this Agreement.
(c) Reserved.
(d) If the aggregate Merger Consideration is adjusted as set forth
in Sections 2.4(a) and (b) above, then (i) the respective number of shares of
Company Common Stock constituting each of the aggregate Common Stock Merger
Consideration, aggregate Class A-3 Merger Consideration, aggregate Class B
Merger Consideration, aggregate Class C Merger Consideration and aggregate Class
D Merger Consideration shall be adjusted to equal the number of shares of
Company Common Stock obtained by multiplying (x) the aggregate number of shares
constituting the aggregate Merger Consideration as adjusted above, by (y) a
fraction, the numerator of which is the number of shares of Company Common Stock
constituting the aggregate Merger Consideration to be received by the applicable
class of Holding capital stock prior to the adjustment, and the denominator of
which is the number of shares of Company Common Stock constituting the aggregate
Merger Consideration prior to such adjustment, and (ii) appropriate adjustments
shall be made to the Merger Consideration to be received in respect to each
share of the applicable class of Holding capital stock and the Exchange Ratio
for such class of Holding capital stock to reflect the adjustment to the number
of shares constituting the aggregate Merger Consideration to be received by the
applicable class of Holding capital stock.
(e) Excess Net Cash Proceeds. In the event Net Cash Proceeds
exceed $55 million, the Company will, notwithstanding anything to the contrary
contained herein, distribute such excess to its stockholders prior to Closing
without modifying any other calculation set forth in this Section 2.4.
6
(f) Adjustments Based on Tax Liabilities. At the Closing, the
Company will place in escrow 186,705 of the shares of Company Common Stock
constituting Merger Consideration (the "ESCROWED SHARES") in connection with
potential obligations with respect to: (a) the Taxes of Staffing or any of its
Subsidiaries due, or at any time determined to be due, and payable to the State
of California, or any subdivision or agency thereof, for unemployment taxes (the
"UNEMPLOYMENT TAXES") for any period beginning on or before and ending after the
Closing Date which is allocable to the portion of the period occurring on or
before the Closing Date (the "PRE-CLOSING PERIOD"); and (b) the Taxes of
Staffing or any of its Subsidiaries due, or at any time determined to be due,
and payable to the State of Delaware, or any subdivision or agency thereof, in
respect of escheated property for any Pre-Closing Period (the "UNCLAIMED
PROPERTY TAXES" and, together with the Unemployment Taxes, the "TAX
LIABILITIES"). The number of Escrowed Shares attributable to each Holding
Stockholder is set forth on Exhibit C attached hereto. The Company shall act as
escrow agent and hold the Escrowed Shares on terms and conditions customary for
such an escrow arrangement. The Escrowed Shares shall be held and released in
accordance with an escrow agreement in the form attached as Exhibit D (the
"ESCROW AGREEMENT"), which Escrow Agreement shall be entered into among the
Company, Holding and the Holding Stockholders, and shall provide for the release
of the Escrowed Shares to the Holding Stockholders as and when obligations for
the Tax Liabilities are paid by the Company or any of its Subsidiaries and
confirmed by the Company's audit committee.
SECTION 2.5. Taking of Necessary Action; Further Action. Each of
Holding, Partners, Comsys, the Company, Merger Sub and each Holding Stockholder
will use its commercially reasonable efforts to take all such actions as may be
necessary or appropriate in order to effectuate the Merger under the DGCL as
promptly as commercially practicable. If at any time after the Effective Time,
any further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Entity with full right, title and possession
to all assets, property, rights, privileges, powers and franchises of either of
the Constituent Entities, the officers and directors of the Surviving Entity are
fully authorized in the name of each Constituent Entity or otherwise to take,
and will take, all such lawful and necessary action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY, MERGER SUB AND PARTNERS
Except as set forth on the disclosure letter (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein) previously delivered by the Company to Holding
and Comsys (the "COMPANY DISCLOSURE LETTER"), the Company, Merger Sub and
Partners hereby jointly and severally represent and warrant to Holding, Comsys
and the Holding Stockholders as follows, provided, however, that no
representation or warranty or covenant in this Article 3 other than Section 3.10
and Section 3.25 shall be deemed to include Staffing:
SECTION 3.1. Organization. The Company and each of the Subsidiaries
of the Company (the "COMPANY SUBSIDIARIES") is a corporation, limited liability
company or partnership duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all requisite
power and authority to own, operate and lease its properties and to carry on its
business as now conducted. The Company and each of the Company Subsidiaries is
duly qualified and/or licensed, as may be required, and in good
7
standing in each of the jurisdictions in which the nature of the business
conducted by it or the character of the property owned, leased or used by it
makes such qualification and/or licensing necessary, except in such
jurisdictions where the failure to be so qualified and/or licensed, individually
or in the aggregate, would not be material to the Company and the Company
Subsidiaries or Partners, in each case considered as a single enterprise. The
copies of the Company's restated certificate of incorporation delivered to
Holding prior to the date hereof (the "COMPANY CHARTER") and amended and
restated bylaws (the "COMPANY BYLAWS") which are incorporated by reference as an
exhibit to the Company's Annual Report on Form 10-K for the year ended December
28, 2003 (the "2003 10-K") are complete and correct copies of such documents and
contain all amendments thereto as in effect on the date of this Agreement. The
copies of the certificate of incorporation and bylaws or similar organizational
documents of the Company Subsidiaries that were delivered to Holding and Comsys
prior to the date of this Agreement are complete and correct copies of such
documents and contain all amendments thereto as in effect on the date of this
Agreement.
SECTION 3.2. Capitalization.
(a) As of the date of this Agreement, the authorized capital stock
of the Company consists of (i) 95,000,000 shares of Company Common Stock,
6,089,938 of which are issued and outstanding, and (ii) 5,000,000 shares of
preferred stock, $.01 par value (the "COMPANY PREFERRED STOCK"), of which (A)
500,000 shares have been designated as "SERIES A JUNIOR PARTICIPATING PREFERRED
STOCK," no shares of which are issued and outstanding and (B) 1,047,290 shares
have been designated as "SERIES B CONVERTIBLE PARTICIPATING PREFERRED STOCK," no
shares of which are issued and outstanding. As of the date of this Agreement, no
shares of Company Common Stock were held in the treasury of the Company and
500,000 shares of Series A Junior Participating Preferred Stock were reserved
for issuance upon exercise of the rights (the "COMPANY RIGHTS") distributed to
the holders of Company Common Stock pursuant to the Amended and Restated Rights
Agreement dated as of April 14, 2003, by and between the Company and Wachovia
Bank, N.A., as amended on August 18, 2003 and the date hereof (the "COMPANY
RIGHTS PLAN"). The issued and outstanding shares of Company Common Stock have
been, and all shares which may be issued in connection with the Merger will be,
duly authorized and validly issued, fully paid and nonassessable, and free of
preemptive rights. The Company has not, subsequent to December 28, 2003,
declared or paid any dividend, or declared or made any distribution on, or
authorized the creation or issuance of, or issued, or authorized or effected any
split-up or any other recapitalization of, any of its capital stock, or directly
or indirectly redeemed, purchased or otherwise acquired any of its outstanding
capital stock, nor has the Company heretofore agreed to take any such action.
There are no outstanding contractual obligations of the Company of any kind to
redeem, purchase or otherwise acquire any outstanding shares of capital stock of
the Company. Other than the Company Common Stock, there are no outstanding
bonds, debentures, notes or other indebtedness or securities of the Company
having the right to vote on any matters on which stockholders of the Company may
vote. All of the outstanding capital stock of Merger Sub is owned by the
Company.
(b) Section 3.2(b) of the Company Disclosure Letter lists all
outstanding options, warrants or other rights to subscribe for, purchase or
acquire from the Company or any Company Subsidiary any capital stock of the
Company or securities convertible into or exchangeable for capital stock of the
Company (and the exercise, conversion, purchase,
8
exchange or other similar price thereof) and all outstanding restricted stock
awards. There are no stock appreciation rights attached to the options, warrants
or rights listed in Section 3.2(b) of the Company Disclosure Letter. Except as
set forth above in this Section 3.2 and Section 3.2(b) of the Company Disclosure
Letter, no shares of capital stock or other voting securities of the Company are
issued, reserved for issuance or outstanding, and there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of the
Company Subsidiaries is a party or by which any of them is bound obligating the
Company or any of the Company Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
voting securities of the Company or of any of the Company Subsidiaries or
obligating the Company or any of the Company Subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. The Company's execution,
delivery and performance of this Agreement and the consummation by the Company
of the transactions contemplated hereby will not cause any adjustments to the
terms of any of the Company's outstanding warrants.
SECTION 3.3. Authorization; No Conflict.
(a) Each of the Company and Merger Sub has the requisite corporate
power and authority to enter into and deliver this Agreement and all other
agreements and documents contemplated hereby to which it is a party and to carry
out its obligations hereunder and thereunder. The execution and delivery of this
Agreement by the Company and Merger Sub, the performance by the Company and
Merger Sub of their respective obligations hereunder and the consummation by the
Company and Merger Sub of the transactions contemplated hereby (including the
Staffing Disposition) have been duly authorized by the respective Boards of
Directors of the Company and Merger Sub. Partners has the requisite limited
liability company power and authority to enter into and deliver this Agreement
and all other agreements and documents contemplated hereby to which it is a
party and to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement by Partners, the performance by Partners of its
obligations hereunder and the consummation by Partners of the transactions
contemplated hereby have been duly authorized by PFI Corp., a Delaware
corporation and wholly-owned subsidiary of the Company ("PFI"), as the sole
member of Partners. No other corporate proceedings on the part of the Company or
any of the Company Subsidiaries (including Merger Sub and Partners) are
necessary to authorize the execution and delivery of this Agreement, the
performance by the Company, Partners and Merger Sub of their respective
obligations hereunder and the consummation by the Company, Partners and Merger
Sub of the transactions contemplated hereby (including the Staffing
Disposition), except for the approval of this Agreement by the Company
Stockholder Vote (as defined in Section 3.11(d)) and by the holder or holders of
a majority of the common stock of Merger Sub (the "MERGER SUB STOCKHOLDER
CONSENT"). This Agreement has been duly executed and delivered by the Company,
Partners and Merger Sub and constitutes a valid and binding obligation of each
of the Company, Partners and Merger Sub, enforceable in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
9
(b) Neither the execution and delivery of this Agreement by the
Company, Partners or Merger Sub, nor the consummation by the Company, Partners
or Merger Sub of the transactions contemplated hereby (including the Staffing
Disposition) nor compliance by the Company, Partners or Merger Sub with any of
the provisions herein will (i) result in a violation or breach of or conflict
with the certificate of incorporation or bylaws of the Company or similar
organizational documents of any of the Company Subsidiaries, (ii) result in a
violation or breach of or conflict with any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination, cancellation of, or
give rise to a right of purchase under, or accelerate the performance required
by, or result in a right of termination or acceleration under, or result in the
creation of any Lien (as defined in Section 3.4(b)) upon any of the properties
or assets owned or operated by the Company or any Company Subsidiaries under, or
result in being declared void, voidable or without further binding effect, or
otherwise result in a detriment to the Company or any Company Subsidiary under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, contract, lease, agreement or other
instrument or obligation of any kind to which the Company or any of the Company
Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries or any of their respective properties or assets may be bound or
(iii) subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in paragraph
(c) below, violate any judgment, ruling, order, writ, injunction, decree,
statute, law (including the common law), rule or regulation applicable to the
Company or any of the Company Subsidiaries or any of their respective properties
or assets, other than any such event described in items (ii) or (iii) which,
individually or in the aggregate, has not had and would not reasonably be
expected to have or result in a Company Material Adverse Effect. A "COMPANY
MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the business,
operations, assets, liabilities, condition (financial or otherwise) or results
of operations of either (x) Partners and its Subsidiaries, considered as a
single enterprise or (y) the Company and the Company Subsidiaries, considered as
a single enterprise or (ii) the ability of any of the Company, Merger Sub and
Partners to perform their respective obligations under this Agreement or to
consummate the transactions contemplated by this Agreement; provided, however,
that any event, condition, change, occurrence, development or state of
circumstances which (A) adversely affects the securities markets in general or
the information technology staffing industry generally, including legal,
accounting or regulatory changes, (B) arises out of general economic or industry
conditions (and in each case does not disproportionately affect the Company and
the Company Subsidiaries or Partners, in each case considered as a single
enterprise) or (C) (other than with respect to a breach of either this Section
3.3 or Section 3.21 that is not timely cured if susceptible to cure) arise out
of, result from or relate to the transactions contemplated by this Agreement or
the announcement thereof, shall not be considered in determining whether a
Company Material Adverse Effect has occurred. For purposes hereof, changes in
the trading price of Company Common Stock as reported by the NASDAQ or a
delisting from NASDAQ will not alone constitute a Company Material Adverse
Effect.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental or regulatory
authority is necessary to be obtained or made by the Company or any Company
Subsidiary in connection with the Company's execution, delivery and performance
of this Agreement or the consummation by the Company or Merger Sub of the
transactions contemplated hereby, except for (i) compliance with the DGCL, with
respect to the filing of the Certificate of Merger, (ii) compliance with the
Xxxx-Xxxxx-Xxxxxx Antitrust
10
Improvement Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR ACT") and applicable foreign competition and/or antitrust
laws, if any, (iii) the filing with the SEC of (A) a proxy statement with
respect to the Merger and other matters to be submitted to the Company
stockholders for their consideration as provided in clauses (i) through (iii) of
the first sentence of Section 6.1(d) (such proxy statement, as amended or
supplemented from time to time, the "PROXY STATEMENT") and (B) such reports
under Section 13(a), 13(d), 15(d) or 16(a) and Rule 14f-1 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "EXCHANGE ACT"), as may be required in connection with this
Agreement and the transactions contemplated hereby, (iv) compliance with the
rules of the Over the Counter Bulletin Board (the "OTC BULLETIN BOARD"), NASDAQ
or other exchange on which Shares of the Company Common Stock are traded, as
applicable and (v) compliance with the "BLUE SKY" laws of various states.
SECTION 3.4. Subsidiaries.
(a) The Company Subsidiaries and their respective jurisdictions of
organization are identified in Section 3.4(a) of the Company Disclosure Letter.
As used in this Agreement, "SUBSIDIARY" means, with respect to any party, any
corporation or other organization whether incorporated or unincorporated, of
which (x) at least a majority of the securities or other interests having by
their terms voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly beneficially owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and one or
more of its Subsidiaries, or (y) such party or any Subsidiary of such party is a
general partner of a partnership or a manager of a limited liability company.
(b) All of the outstanding shares of capital stock or other equity
securities of, or other ownership interests in, each Company Subsidiary are duly
authorized, validly issued, fully paid and nonassessable, and such shares,
securities or interests are owned by the Company or by a Company Subsidiary free
and clear of any Liens or limitations on voting rights. There are no
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character relating to the issuance, transfer,
sales, delivery, voting or redemption (including any rights of conversion or
exchange under any outstanding security or other instrument) for any of the
capital stock or other equity interests of, or other ownership interests in, any
Company Subsidiaries. There are no agreements requiring the Company or any
Company Subsidiary to make contributions to the capital of, or lend or advance
funds to, any Company Subsidiary. As used in this Agreement, "LIEN" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.
SECTION 3.5. SEC Reports and Financial Statements.
(a) Since January 1, 2001, the Company has filed with the SEC all
forms, reports, schedules, registration statements, definitive proxy statements
and other documents (collectively, including all exhibits thereto, the "COMPANY
SEC REPORTS") required to be filed by the Company with the SEC. As of their
respective dates, and giving effect to any amendments or supplements thereto
filed prior to the date of this Agreement, the Company SEC Reports
11
complied in all material respects with the requirements of the Securities Act of
1933, as amended (the "SECURITIES ACT"), the Exchange Act and the respective
rules and regulations of the SEC promulgated thereunder applicable to such
Company SEC Reports, and none of the Company SEC Reports contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. None of the
Company Subsidiaries is required to file any forms, reports or other documents
with the SEC pursuant to Section 13 or 15 of the Exchange Act.
(b) The consolidated balance sheets and the related consolidated
statements of operations, consolidated statements of stockholders' equity and
comprehensive income (loss) and consolidated statements of cash flows
(including, in each case, any related notes and schedules thereto)
(collectively, the "COMPANY FINANCIAL STATEMENTS") of the Company contained in
the Company SEC Reports have been prepared from the books and records of the
Company and the Company Subsidiaries, comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in conformity with United
States generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as otherwise noted therein)
and present fairly the consolidated financial position and the consolidated
results of operations and cash flows of the Company and the Company Subsidiaries
as of the dates or for the periods presented therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments in the
ordinary course of business). Except as reflected in the Company Financial
Statements, neither the Company nor any of the Company Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise), other than liabilities or obligations that (i) were not required
by GAAP to be disclosed or provided for in the Company Financial Statements or
(ii) were incurred since December 31, 2003, and which, in each case, (A) were
incurred in the ordinary course of business consistent with past practice and
(B) individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
(c) Since January 1, 2001, the Company has not received written
notice from the SEC or any other governmental entity that any of its accounting
policies or practices are or may be the subject of any review, inquiry,
investigation or challenge by the SEC or other governmental entity. Since
January 1, 2001, the Company's independent public accounting firm has not
informed the Company that it has any material questions, challenges or
disagreements regarding or pertaining to the Company's accounting policies or
practices. Since January 1, 2001, to the knowledge of the Company, no officer or
director of the Company has received, or is entitled to receive, any material
compensation from any entity that has engaged in or is engaging in any material
transaction with the Company or any Company Subsidiary. Set forth in Section
3.5(c) of the Company Disclosure Letter is a list of all off-balance sheet
special purpose entities and financing arrangements of the Company and the
Company Subsidiaries.
(d) With respect to each annual report on Form 10-K, each quarterly
report on Form 10-Q and each amendment of any such report included in the
Company SEC Reports filed since August 29, 2002, the chief executive officer and
chief financial officer of the Company have made all certifications required by
the Xxxxxxxx-Xxxxx Act of 2002 (the "XXXXXXXX-XXXXX
12
ACT") and any related rules and regulations promulgated by the SEC and the New
York Stock Exchange (the "NYSE"), the OTC Bulletin Board, NASDAQ or other
exchange on which the Company Common Stock has been or is traded from time to
time, as applicable, and the statements contained in any such certifications are
complete and correct in all material respects.
(e) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) or 15d-15(e) under the
Exchange Act); such disclosure controls and procedures are designed to ensure
that material information relating to the Company required to be disclosed in
the Company's Exchange Act Reports, including its consolidated Company
Subsidiaries, is made known to the Company's principal executive officer and its
principal financial officer by others within those entities, particularly during
the periods in which the periodic reports required under the Exchange Act are
being prepared; and, to the knowledge of the Company, such disclosure controls
and procedures are effective in timely alerting the Company's principal
executive officer and its principal financial officer to material information
required to be included in the Company's periodic reports required under the
Exchange Act.
(f) The Company is, or will timely be, in compliance in all material
respects with all current and proposed listing and corporate governance
requirements of the NYSE, the OTC Bulletin Board, NASDAQ or other exchange on
which the Company Common Stock has been or is traded from time to time, as
applicable, and is in compliance in all material respects, and will continue to
remain in compliance from the date hereof until immediately after the Effective
Time, with all rules, regulations and requirements of the Xxxxxxxx-Xxxxx Act and
the SEC.
SECTION 3.6. Absence of Material Adverse Changes, etc. Since March
28, 2004, the Company and the Company Subsidiaries have conducted their business
in the ordinary course of business consistent with past practice and there has
not been or occurred:
(a) any event, condition, change, occurrence, development or state
of circumstances which, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect;
(b) any material damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets owned or operated
by the Company and the Company Subsidiaries; or
(c) any event, condition, action or occurrence that, if taken during
the period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.1(b).
SECTION 3.7. Litigation. There are no suits, actions or legal,
administrative, arbitration or other proceedings or governmental investigations
pending or, to the knowledge of the Company, threatened, to which the Company or
any of the Company Subsidiaries is a party. There are no judgments, decrees,
injunctions, rules, awards or orders of any governmental or regulatory entity or
arbitrator outstanding against the Company or any of the Company Subsidiaries.
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SECTION 3.8. Information Supplied. The information provided by the
Company for inclusion in the Proxy Statement (including any information required
to be filed with the SEC and delivered to the Company stockholders pursuant to
Rule 14f-1 under the Exchange Act) and each amendment or supplement thereto, at
the time of filing thereof with the SEC and at the time of its dissemination to
the Company's stockholders will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act (and include any
information required to be included therein pursuant to Rule 14f-1 under the
Exchange Act). Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information about Holding or
Comsys or any of their respective affiliates supplied by or through Holding or
Comsys in writing specifically for inclusion in the Proxy Statement or any
amendment or supplement thereto.
SECTION 3.9. Broker's or Finder's Fees. Except for SunTrust Capital
Markets, Inc. (the "COMPANY FINANCIAL ADVISOR"), no agent, broker, Person or
firm acting on behalf of the Company or any Company Subsidiary or under the
Company's or any Company Subsidiary's authority is or will be entitled to any
advisory, commission or broker's or finder's fee or commission from any of the
parties hereto in connection with any of the transactions contemplated hereby.
The Company has furnished to Holding and Comsys a true and complete copy of the
Company's agreement with the Company Financial Advisor, pursuant to which the
Company Financial Advisor is entitled to a fee in connection with the
transactions contemplated hereby. The term "PERSON" means an individual,
corporation, partnership, joint venture, association, trust, unincorporated
organization, limited liability company or other entity.
SECTION 3.10. Employee Plans.
(a) There are no current Company Employee Benefit Plans established,
maintained, adopted, participated in, sponsored, contributed or required to be
contributed to, provided, promised to be provided, terminated by, or resulting
in any material liability to the Company or any entity with which the Company is
considered a single employer under Section 414(b), (c) or (m) of the Code
("COMPANY ERISA AFFILIATES"). As used in this Agreement, "COMPANY EMPLOYEE
BENEFIT PLAN" means any Company or Company Subsidiary plan, program, policy,
practice, agreement or other arrangement providing compensation or benefits in
any form to any current or former employee, independent contractor, officer or
director of the Company or any of the Company Subsidiaries or any beneficiary or
dependent thereof, whether written or unwritten, formal or informal, including
without limitation any "employee welfare benefit plan" within the meaning of
Section 3(1) of ERISA ("COMPANY EMPLOYEE WELFARE BENEFIT PLAN"), any "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA (whether or
not such plan is subject to ERISA) ("COMPANY EMPLOYEE PENSION BENEFIT PLAN") and
any other pension, profit-sharing, bonus, incentive compensation, deferred
compensation, vacation, sick pay, stock purchase, stock option, phantom equity,
severance, employment, consulting, unemployment, hospitalization or other
medical, life, or other insurance, long- or short-term disability, change of
control, fringe benefit, or any other plan, program or policy.
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(b) With respect to each Company Employee Benefit Plan, the Company
has made available to Holding and Comsys a true, correct and complete copy of:
(i) each writing constituting a part of such Company Employee Benefit Plan
(including, but not limited to, the plan document(s), adoption agreement,
prototype or volume submitter documents, trust agreement, annuity contract,
third party administrative contracts and insurance contracts) and all amendments
thereto; (ii) the two most recent Annual Reports (Form 5500 Series) including
all applicable schedules, if required; (iii) the current summary plan
description and any material modifications thereto, if required to be furnished
under ERISA, or any written summary provided to participants with respect to any
plan for which no summary plan description exists; (iv) the most recent
determination letter (or if applicable, advisory or opinion letter) from the
Internal Revenue Service, if any, or if an application for a determination
letter is pending, the application with all attachments; and (v) all notices
given within the last three years relating to such Company Employee Benefit
Plan, any fiduciary thereof, the Company, or any ERISA Affiliate by the Internal
Revenue Service, Department of Labor, Pension Benefit Guarantee Corporation, or
other governmental agency relating to such Company Employee Benefit Plan.
(c) Each Company Employee Benefit Plan that is intended to be
"QUALIFIED" within the meaning of Section 401(a), 401(f) or 403(a) of the Code
and, to the extent applicable, Section 401(k) of the Code ("QUALIFIED COMPANY
EMPLOYEE BENEFIT PLAN"), has received a favorable determination letter from the
Internal Revenue Service that has not been revoked (or is within the remedial
amendment period for obtaining such letter), and no event has occurred and no
condition exists that could reasonably be expected to adversely affect the
qualified status of any such Company Employee Benefit Plan. For the avoidance of
doubt, the term "favorable determination letter" as used in this Section 3.10(c)
does not include an opinion letter or advisory letter issued with respect to a
master and prototype or volume submitter plan. Any favorable determination
letters referenced in this Section 3.10(c) cover "GUST" as defined in footnote 2
of IRS Notice 2003-49. Each Qualified Company Employee Benefit Plan has timely
made "GOOD FAITH" amendments to comply with the Economic Growth and Tax
Reconciliation Relief Act of 2001 as required by IRS Notice 2001-42.
(d) The Company has (i) filed or caused to be filed all material
returns and reports on the Company Employee Benefit Plans that it and/or any
fiduciary of any such plan is required to file and (ii) paid or made adequate
provision for all fees, interest, penalties, assessments or deficiencies that
have become due pursuant to those returns or reports or pursuant to any
assessment or adjustment that has been made relating to those returns or
reports.
(e) The funding, if any, under each Company Employee Welfare Benefit
Plan does not exceed and has not exceeded the limitations under Sections 419A(b)
and 419A(c) of the Code. The Company is not subject to taxation on the income of
any Company Employee Welfare Benefit Plan's welfare benefit fund (as such term
is defined in Section 419(e) of the Code) under Section 419A(g) of the Code. All
Company Employee Welfare Benefit Plans required to comply with the health care
continuation coverage ("COBRA") provisions of ERISA and the Code (and similar
state law) have complied with such requirements in all material respects.
(f) Each Company Employee Benefit Plan has been operated and
administered in all material respects in accordance with its provisions.
15
(g) The Company and the Company Subsidiaries have complied, and are
now in compliance, in all material respects, with all provisions of ERISA, the
Code and all laws and regulations applicable to the Company Employee Benefit
Plans.
(h) Neither the Company nor any ERISA Affiliate has ever
established, maintained, contributed to, or had an obligation to contribute to,
any Company Employee Benefit Plan that is a "MULTIEMPLOYER PLAN," as that term
is defined in Section 3(37) of ERISA, or is subject to Title IV of ERISA.
Neither the Company nor any Company ERISA Affiliate has any liability under
Title IV of ERISA (including a liability to pay premiums to the Pension Benefit
Guaranty Corporation), and no such liability has been or is expected to be
incurred by the Company or any of the Company Subsidiaries.
(i) Neither the Company nor any Company Subsidiary is obligated to
provide life, health or medical benefits or insurance coverage to any
individual, or to the family members of any individual, for any period extending
beyond the termination of the individual's employment, except to the extent
required by the COBRA provisions in ERISA and the Code or any similar provisions
of state law.
(j) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (including the Staffing
Disposition) will not, either alone or in connection with termination of
employment, (i) entitle any current or former employee, independent contractor,
director, or officer of the Company or the Company Subsidiaries to severance
pay, any change in control payment, or any other material payment (including
unemployment compensation, bonus or otherwise), except as expressly provided in
this Agreement, (ii) accelerate the time of payment or vesting, change the form
or method of payment, or increase the amount of compensation due, any such
employee, independent contractor, director, or officer, (iii) materially
increase any benefits otherwise payable under any Company Employee Benefit Plan,
agreement or otherwise, or (iv) entitle any such employee, independent
contractor, director or officer to any gross-up or similar material payment in
respect of the excise tax described in Section 4999 of the Code. Neither the
Company nor any Company Subsidiary has taken any action that would result in its
incurring any obligation for any payments or benefits described in clauses (i),
(ii), (iii) or (iv) of this Section 3.10(j) (without regard to whether the
transactions contemplated by this Agreement are consummated) except to the
extent required in a written contract or agreement in existence as of the date
of this Agreement.
(k) There are no suits, actions, proceedings, investigations, claims
or orders pending or, to the knowledge of the Company, threatened against the
Company, any Company Subsidiary or any Company Employee Benefit Plan related to
any Company Employee Benefit Plan (other than claims for benefits or appeals of
denied claims in the ordinary course of business). No Employee Benefit Plan is
subject to any ongoing audit, investigation, or other administrative proceeding
of any governmental entity, and no Plan is the subject of any pending
application for administrative relief under any voluntary compliance program or
closing agreement program of the Internal Revenue Service or the Department of
Labor.
(l) The Company has the right to amend or terminate each Company
Employee Benefit Plan at any time without incurring any liability other than
with respect to benefits that have already accrued under a Company Employee
Pension Benefit Plan.
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(m) Without limiting the generality of any other representation
contained herein, there exists no Lien against the Company, any Company
Subsidiary, any ERISA Affiliate, or any of their assets arising under sections
302(f) or 4068(A) of ERISA or section 412(n) of the Code.
(n) Neither the Company nor any Company ERISA Affiliate has a formal
plan, commitment, or proposal, whether legally binding or not, nor has any of
them made a commitment to employees, officers, directors, consultants or
independent contractors to create any additional Company Employee Benefit Plan
or modify, change or terminate any existing Company Employee Benefit Plan, and
no such plan, commitment or proposal is under serious consideration. No events
have occurred or are expected to occur with respect to any Company Employee
Benefit Plan that would cause a material change in the cost of providing the
benefits under such plan or would cause a material change in the cost of
providing for other liabilities of such plan other than an economic downturn, an
increase in the cost of healthcare, or similar event beyond the control of the
Company and Company Subsidiaries.
(o) As used in this Agreement, "ERISA" means the Employee Retirement
Income Securities Act of 1974, as amended, and the rules and regulations
promulgated thereunder.
SECTION 3.11. Board Recommendation; Company Action; Requisite Vote
of the Company's Stockholders.
(a) The Board of Directors of the Company has, by resolutions duly
adopted by the requisite vote of the directors present at a meeting of such
board duly called and held on July 17, 2004 and not subsequently rescinded or
modified in any way, unanimously (i) determined that this Agreement, the Merger,
in accordance with the terms of this Agreement, and the other transactions
contemplated hereby (including the proposed amendment and restatement of the
Company Charter and the Company Bylaws, approval of the transactions
contemplated by the Letter Agreement (as defined in Section 3.22) (the "LETTER
AGREEMENT TRANSACTIONS") and the Staffing Disposition (as defined in Section
6.13(a))) are advisable and in the best interests of the Company and its
stockholders, (ii) approved and adopted this Agreement and approved the Merger
and the other transactions contemplated hereby, including the Letter Agreement
Transactions, the Staffing Disposition and the amendment and restatement of the
Company Charter and Company Bylaws, (iii) directed that this Agreement, the
amended and restated Company Charter and the Staffing Disposition be submitted
for consideration by the stockholders of the Company and (iv) recommended that
the stockholders of the Company approve this Agreement, the amendment and
restatement of the Company Charter and the Staffing Disposition (collectively,
the "COMPANY BOARD APPROVAL"). Notwithstanding the foregoing, any change in or
modification or revocation of the recommendation to the Company's stockholders
of this Agreement, the amendment and restatement of the Company Charter or the
Staffing Disposition by the Board of Directors of the Company in accordance with
either Section 6.1(d) or Section 6.10(a) shall not constitute a breach of the
representation in clause (iv). The Board of Directors of the Company has
received from the Company Financial Advisor a written opinion, a true and
correct copy of which has been provided to Holding and Comsys by the Company, to
the effect that, as of the date of the opinion, from a financial point of view,
the consideration to be received by the shareholders of the Company pursuant to
the Merger
17
transaction is fair to the Company's stockholders. The Company has been
authorized by the Company Financial Advisor to include such opinion in its
entirety in the Proxy Statement so long as such inclusion is in form and
substance reasonably satisfactory to the Company Financial Advisor and its
counsel.
(b) The Board of Directors of Merger Sub has, by written consent of
all of the directors, which consent has not been subsequently rescinded or
modified in any way, unanimously (i) determined that this Agreement, the Merger,
in accordance with the terms of this Agreement, and the other transactions
contemplated hereby are advisable and in the best interests of Merger Sub, (ii)
approved and adopted this Agreement and approved the Merger and the other
transactions contemplated hereby, (iii) directed that this Agreement be
submitted for consideration by the sole stockholder of Merger Sub and (iv)
recommended that the sole stockholder of Merger Sub approve this Agreement
(including the Merger Consideration and the transactions contemplated by the
Subscription Agreement and the Letter Agreement) and execute the Merger Sub
Stockholder Consent. The Company is the sole stockholder of Merger Sub, and the
Merger Sub Stockholder Consent is the only approval of the holder or holders of
any class or series of Merger Sub's capital stock necessary to approve this
Agreement and the transactions contemplated hereby and to consummate the Merger.
(c) The sole member of Partners has, by resolutions duly adopted by
such sole member, as of July 19, 2004 and not subsequently rescinded or modified
in any way, unanimously (i) determined that this Agreement, the Merger, in
accordance with the terms of this Agreement, and the other transactions
contemplated hereby are advisable and in the best interests of Partners, (ii)
approved and adopted this Agreement and approved the Merger and the other
transactions contemplated hereby, (iii) directed that this Agreement be
submitted for consideration by the sole holder of all outstanding equity
interests in Partners and (iv) recommended that the sole holder of all
outstanding equity interests in Partners approve this Agreement. PFI is the sole
holder of all outstanding equity interests in Partners, and the written consent
of PFI approving this Agreement and the transactions contemplated hereby (the
"PFI CONSENT") is the only approval of the holder or holders of any class or
series of Partners' equity interests necessary to approve this Agreement and the
transactions contemplated hereby. PFI, as the sole holder of all outstanding
equity interests in Partners, has executed and delivered the PFI Consent.
(d) The only vote of the holders of any class or series of the
Company's capital stock that is or will be necessary to:
(i) approve this Agreement and adopt the plan of merger
contained herein is the affirmative vote of the holders of a majority of the
issued and outstanding shares of Company Common Stock;
(ii) amend and restate the Company Charter is either (A) the
affirmative vote of the holders of a majority of the issued and outstanding
shares of Company Common Stock, or (B) if the Company Board Approval is
rescinded and in any subsequent resolution relating to such amendment and
restatement, no Significant Holder Designee is included among those members of
the Board of Directors of the Company voting in favor of
18
such resolution, the affirmative vote of the holders of 75% of the issued and
outstanding shares of Company Common Stock; and
(iii) approve the Staffing Disposition is the adoption of a
resolution authorizing the Staffing Disposition by the holders of a majority of
the issued and outstanding shares of Company Common Stock entitled to vote
thereon, provided, however, that so long as the Staffing Disposition constitutes
a Related Party Transaction as defined in and pursuant to the Company Charter,
(A) each Five Percent Holder (as such term is defined in the Company Charter)
has approved such action and (B) such action also has been approved by the
affirmative vote of 80% of the entire Board of Directors of the Company, which
approval has been satisfied as of the date hereof by the Company Board Approval
and remains in full force and effect (such adoptions and approvals,
collectively, the "COMPANY STOCKHOLDER VOTE").
No vote of the holders of any class or series of the Company's capital stock is
or will be necessary to amend and restate the Company Bylaws, provided that the
Board of Directors of the Company, including at least one Significant Holder
Designee, has approved such action, which approval has been satisfied by the
Company Board Approval and the amendment and restatement of the Company Bylaws
contemplated by this Agreement will become effective without any further
corporate action by the Company at the Effective Time.
SECTION 3.12. Taxes.
(a) Each of the Company and each Company Subsidiary has timely filed
all material federal, state, local, and other Tax Returns required to be filed
by it in the manner prescribed by applicable law and all such Tax Returns are
true, complete and correct in all material respects. All Taxes shown as due on
such Tax Returns have been paid in full and the Company and each Company
Subsidiary has made adequate provision (or adequate provision has been made on
its behalf) for all accrued Taxes not yet due. The accruals and reserves for
Taxes reflected in the 2003 10-K are adequate to cover all Taxes accruing
through such date. The Company and the Company Subsidiaries have withheld and
paid over all material Taxes required to have been withheld and paid over, and
complied in all material respects with all information reporting and backup
withholding requirements, including the maintenance of required records with
respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party. There are no material
Liens on any of the assets, rights or properties of the Company or any Company
Subsidiary with respect to Taxes, other than Liens for Taxes not yet due and
payable or for Taxes that the Company or a Company Subsidiary is contesting in
good faith through appropriate proceedings.
(b) As of the date of this Agreement, no federal, state, local or
foreign audits or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of the Company or any
Company Subsidiary, and neither the Company nor any Company Subsidiary has
received a written notice of any material pending or proposed claims, audits or
proceedings with respect to Taxes. No material deficiencies have been asserted
in writing against the Company or any Company Subsidiary as a result of
examinations by any state, local, federal or foreign taxing authority and no
material issue has been raised by any examination conducted by any state, local,
federal or foreign taxing authority that, by application of the same principles,
might result in a proposed deficiency for any other
19
period not so examined which deficiency (or deficiencies), in either case, is
not (or are not) adequately reserved for in the most recent Company Financial
Statements. Each material deficiency resulting from any audit or examination
relating to Taxes of the Company or any Company Subsidiary by any taxing
authority has been paid or is being contested in good faith and in accordance
with law and is adequately reserved for on the balance sheets contained in the
Company Financial Statements in accordance with GAAP. No claim is pending and no
claim has ever been made that has not been resolved by an authority in a
jurisdiction where the Company or any of the Company Subsidiaries does not file
Tax Returns that the Company or any Company Subsidiary, as the case may be, is
or may be subject to Tax in that jurisdiction. Neither the Company nor any
Company Subsidiary is subject to any private letter ruling of the Internal
Revenue Service or comparable rulings of other tax authorities that will be
binding on the Company or any Company Subsidiary with respect to any period
following the Closing Date. Neither the Company nor any Company Subsidiary has
granted any power of attorney which is currently in force with respect to any
income, franchise or similar Taxes or any income, franchise or similar Tax
Returns.
(c) Neither the Company nor any Company Subsidiary has requested any
extension of time within which to file any material Tax Return which Tax Return
has not yet been filed. There are no agreements, waivers of statutes of
limitations, or other arrangements providing for extensions of time in respect
of the assessment or collection of any unpaid Taxes against the Company or any
Company Subsidiary. The Company and each Company Subsidiary have disclosed on
their federal income Tax Returns all positions taken therein that could, if not
so disclosed, give rise to a substantial understatement penalty within the
meaning of Section 6662 of the Code. Neither the Company nor any Company
Subsidiary has been a party to a "listed transaction" within the meaning of
Treas. Reg. Sec. 1.6011-4(b).
(d) Neither the Company nor any Company Subsidiary is a party to any
Tax sharing agreement, Tax indemnity obligation or similar agreement,
arrangement or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with any
taxing authority).
(e) To the knowledge of the Company, neither the Company nor any
Company Subsidiary is a party to any agreement, contract, or arrangement that,
individually or collectively, would give rise to the payment of any amount
(whether in cash or property, including shares of capital stock) that would not
be deductible pursuant to the terms of Section 280G of the Code or would be
subject to the excise tax under Section 4999 of the Code, or, to the knowledge
of the Company, that would not be deductible pursuant to the terms of Sections
162(a)(1), 162(m) or 162(n) of the Code.
(f) Neither the Company nor any affiliate of the Company has made
with respect to the Company, any Company Subsidiary, or any assets held by the
Company or any Company Subsidiary any consent under Section 341 of the Code.
(g) Neither the Company nor any Company Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355 (a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (A) in the two
years prior to the date of this Agreement, or (B) in a distribution
20
that could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with the Merger.
(h) The statutes of limitations for the federal income Tax Returns
of the Company and the Company Subsidiaries have expired or otherwise have been
closed for all taxable periods ending on or before January 3, 1999.
(i) Neither the Company nor any Company Subsidiary is a party to any
safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by The Tax Equity and Fiscal Responsibility Act of
1982. None of the property owned by the Company or a Company Subsidiary is
"TAX-EXEMPT USE PROPERTY" within the meaning of Section 168(h) of the Code.
Neither the Company nor any Company Subsidiary is required to make any
adjustment under Code Section 481(a) by reason of a change in accounting method
or otherwise.
(j) There have not been, within two years of the date of this
Agreement, any (i) redemptions by the Company or any Company Subsidiary, (ii)
transfers or disposition of property by the Company or any Company Subsidiary
for which the Company or the Company Subsidiary did not receive adequate
consideration, or (iii) distributions to the holders of Company Common Stock
with respect to their stock other than distributions of cash in the ordinary
course of business, excluding any redemptions, transfers or dispositions between
or among the Company and any Company Subsidiary.
(k) Section 3.12(k) of the Company Disclosure Letter accurately
reflects the tax basis of the assets listed therein.
(l) The Company's net operating loss and capital loss carryforwards
are no less than the amounts reflected in Section 3.12(l) of the Company
Disclosure Letter.
(m) Neither the Company nor any Company Subsidiary has been a member
of an affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was the Company). To the knowledge of
the Company, neither the Company nor any Company Subsidiary has been notified in
writing that it will be required to incur any liability for Taxes of any Person
(other than the Company or a Company Subsidiary) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law) with
respect to any Tax claim that has been made by a Tax authority with respect to
such other Person.
(n) Neither the Company nor any Company Subsidiary will be required
to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any intercompany transactions or any excess loss account
described in Treasury Regulations under Code section 1502 (or any corresponding
or similar provision of state, local or foreign law).
(o) Neither the Company nor any of the Company Subsidiaries has
taken any action or knows of any fact, agreement, plan or other circumstance
that could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
21
(p) As used in this Agreement, "TAX" or "TAXES" means, except as any
such item relates to a Company Employee Benefit Plan, (i) all taxes, levies or
other like assessments, charges or fees (including estimated taxes, charges and
fees), including, without limitation, income, franchise, profits, corporations,
advance corporation, gross receipts, transfer, excise, property, sales, use
value-added, ad valorem, license, capital, wage, employment, payroll,
withholding, social security, severance, occupation, import, custom, stamp,
alternative, add-on minimum, environmental or other governmental taxes or
charges, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions to tax applicable or related thereto; (ii) all liability for the
payment of any amounts of the type described in clause (i) as the result of
being a member of an affiliated, consolidated, combined or unitary group; and
(iii) all liability for the payment of any amounts as a result of an express or
implied obligation to indemnify any other Person with respect to the payment of
any amounts of the type described in clause (i) or clause (ii). As used in this
Agreement, "TAX RETURN" means any report, return, statement, declaration or
other written information required to be supplied to a taxing or other
governmental authority in connection with Taxes, except as any such item relates
to a Company Employee Benefit Plan.
SECTION 3.13. Environmental Matters. Except as, individually or in
the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect: (i) the Company and Company Subsidiaries are in compliance with
all applicable federal, state and local laws, regulations, and requirements
relating to pollution, protection of the environment, and human health and
safety ("ENVIRONMENTAL LAWS"); (ii) the Company and Company Subsidiaries are not
subject to any existing, pending or, to the Company's knowledge, threatened
proceedings regarding alleged violation of or liability under any Environmental
Law; (iii) there have been no unauthorized releases of pollutants, contaminants,
or other substance regulated under any Environmental Law (including petroleum
products) at any property owned, operated or occupied by the Company and Company
Subsidiaries; and (iv) the Company and Company Subsidiaries have obtained all
permits and other authorizations required under Environmental Laws, such permits
and other authorizations are currently in full force and effect, and the Company
and Company Subsidiaries are in compliance with such permits and other
authorizations. To the knowledge of the Company, there has been no material
environmental investigation, study, audit, test, review or other analysis
conducted by or on behalf of the Company (or any of its predecessors) in
relation to the current or prior business of the Company (or any of its
predecessors) or any Company Subsidiary or any property or facility now or
previously owned or leased by the Company or any Company Subsidiary.
SECTION 3.14. Compliance with Laws. The Company and the Company
Subsidiaries are in compliance in all material respects with all applicable
laws, rules or regulations of any United States federal, state or local or
foreign government or agency thereof that materially affect the business,
properties or assets owned or leased by the Company and the Company
Subsidiaries, and no notice, charge, claim, action or assertion has been
received by the Company or any Company Subsidiary or, to the Company's
knowledge, has been filed, commenced or threatened against the Company or any
Company Subsidiary alleging any such non-compliance. All licenses, permits and
approvals required under such laws, rules and regulations are in full force and
effect, except as would not be material to the Company and the Company
Subsidiaries or Partners, in each case considered as a single enterprise.
22
SECTION 3.15. Employment Matters.
(a) The Company and the Company Subsidiaries are in compliance in
all material respects with all applicable laws respecting labor, employment,
immigration, fair employment practices, terms and conditions of employment,
workers' compensation, occupational safety, plant closings, wages and hours, and
any other law applicable to any current or former employee or director of the
Company or any Company Subsidiary (each a "COMPANY EMPLOYEE"), or the
independent contractors and consultants of the Company and the Company
Subsidiaries (collectively, the "COMPANY INDEPENDENT CONTRACTORS"), or other
Persons providing services to the Company or any Company Subsidiary, including,
without limitation, all laws concerning the classification of employees and
independent contractors. Each of the Company and the Company Subsidiaries has
withheld all material amounts required by applicable law or by agreement to be
withheld from the wages, salaries and other payments to employees, and none of
the Company and the Company Subsidiaries is liable for any material arrears of
wages or any material penalty for failure to timely pay wages.
(b) To the Company's knowledge, no Company Employee, Company
Independent Contractor or any other Person providing services to the Company or
any Company Subsidiary is in violation of any term of any employment contract,
non-disclosure agreement, non-competition agreement, or any restrictive covenant
applicable to a former employer relating (i) to the right of any such Person to
be employed or retained by the Company or any Company Subsidiary, or (ii) to the
use by or for the benefit of any of the Company or a Company Subsidiary of the
trade secrets, intellectual property, or confidential or proprietary information
of others in each case, in any material respect. To the knowledge of the
Company, no Company Employee, Company Independent Contractor or any other Person
providing services to the Company or any Company Subsidiary is in violation of
any term of any employment contract, non-disclosure agreement, non-competition
agreement, or restrictive covenant relating to the business of the Company or
any Company Subsidiary, which violation or violations would, individually or in
the aggregate, have a Company Material Adverse Effect.
(c) The Company and the Company Subsidiaries have provided Holding
and Comsys with true, complete and correct copies of all current written
employment, management, change of control or severance agreements or
arrangements which have been entered into between the Company and any Company
Subsidiary, on the one hand, and any Company Employee, Company Independent
Contractor or any other Person providing services to the Company or any Company
Subsidiary, on the other hand, including any amendments thereto, in each case,
providing for annual compensation, change of control or severance benefits that
are in excess of $100,000 in the aggregate, and a list of any current officer of
the Company or a Company Subsidiary or any other employee of the Company or a
Company Subsidiary with a level of annual compensation (including base pay and
any bonus or other incentive payments) that is in excess of $100,000 per year
for the year ended December 31, 2003. Other than as expressly set forth in such
agreements or amendments or in this Agreement, there have been no material
changes, and there are no material proposed amendments or changes, to the
remuneration or benefits of any kind payable or due to any of such Company
Employees.
(d) Neither the Company nor any Company Subsidiary: (i) is a party
to or otherwise bound by any collective bargaining agreement, contract or other
agreement or
23
understanding with a labor union or labor organization, nor is any such contract
or agreement presently being negotiated, nor, to the knowledge of the Company,
is there, nor has there been in the last five years, a representation campaign
respecting any of the employees of the Company or any of the Company
Subsidiaries, and, to the knowledge of the Company, there are no campaigns being
conducted to solicit cards from employees of Company or any of the Company
Subsidiaries to authorize representation by any labor organization; (ii) is a
party to, or bound by, any consent decree with, or citation by, any governmental
agency relating to employees or employment practices; or (iii) is the subject of
any proceeding asserting that it has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization nor,
as of the date of this Agreement, is there pending or, to the knowledge of the
Company, threatened, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company or any of the Company Subsidiaries.
(e) In the 90-day period preceding the date of this Agreement,
neither the Company nor any of the Company Subsidiaries has effectuated (i) a
"PLANT CLOSING" (as defined in the Workers Adjustment and Retraining
Notification Act of 1989, as amended (the "WARN ACT")), affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of the Company Subsidiaries, or
(ii) a "MASS LAYOFF" (as defined in the WARN Act) affecting any site of
employment or facility of the Company or any of the Company Subsidiaries; nor
has the Company or any of the Company Subsidiaries been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any state, local or foreign law or regulation
similar to the WARN Act. Section 3.15(e) of the Company Disclosure Letter lists
the number of the Company's or the Company Subsidiaries' employees (other than
billable consultants) who have suffered an "EMPLOYMENT LOSS" (as defined in the
WARN Act) in the 90 days prior to the date of this Agreement or had a reduction
in hours of at least 50% in the 180 days prior to the date of this Agreement. To
the knowledge of the Company, the Company and the Company Subsidiaries have at
all times properly classified each of their respective employees as employees,
each of their respective "LEASED EMPLOYEES" (within the meaning of Section
414(n) of the Code) as leased employees, and each of their independent
contractors as independent contractors, as applicable.
SECTION 3.16. Foreign National Employees. Section 3.16 of the
Company Disclosure Letter sets forth a complete list of all employees of the
Company who, to the Company's knowledge, are working pursuant to visas sponsored
by the Company (collectively, the "COMPANY FOREIGN NATIONAL EMPLOYEES"). To the
knowledge of the Company, each Company Foreign National Employee holds a valid
visa and is permitted to work in his or her current capacity as a Company
Employee pursuant to such visa.
SECTION 3.17. Investment Company. Neither the Company nor any of the
Company Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations promulgated thereunder.
SECTION 3.18. Property. Neither the Company nor any of the Company
Subsidiaries owns or has owned any real property. Except as set forth in the
Company Disclosure Schedule, the Company and each of the Company Subsidiaries
has good and
24
marketable title to all of their respective properties and assets, free and
clear of all Liens except Liens for Taxes not yet due and payable, pledges to
secure deposits and such minor imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which, individually or in the aggregate, would not
be reasonably likely to have a Company Material Adverse Effect; and all leases
pursuant to which the Company or any of the Company Subsidiaries lease from
others material amounts of real or personal property are in good standing, valid
and effective in accordance with their respective terms, and there is not, under
any of such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material default
and in respect of which the Company or such Company Subsidiary has not taken
adequate steps to prevent such a default from occurring). All major items of
operating equipment owned or leased by the Company or any of the Company
Subsidiaries (i) are, in the aggregate, in a state of repair so as to be
adequate in all material respects for reasonably prudent operations in the areas
in which they are operated and (ii) are adequate, together with all other
properties of the Company and the Company Subsidiaries, to comply in all
material respects with the requirements of all applicable contracts of the
Company.
SECTION 3.19. Intellectual Property. Except as provided for in the
Buyer Agreement, the Company and the Company Subsidiaries own or possess all
necessary licenses or other valid rights to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, copyrights and
proprietary information used or held for use in connection with their respective
businesses (the "COMPANY INTELLECTUAL PROPERTY"), free and clear of all Liens,
and there are no assertions or claims challenging the validity of any of the
foregoing. Except as provided for in the Buyer Agreement, neither the Company
nor any Company Subsidiary has granted to any other Person any license to use
any of the foregoing. To the Company's knowledge, the conduct of the Company's
and the Company Subsidiaries' respective businesses does not conflict with any
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, copy rights and proprietary information of others in any way. The
Company has taken reasonable security measures to protect the secrecy,
confidentiality and value of the Company Intellectual Property, to the extent
such measures are appropriate. Neither the Company nor any Company Subsidiary is
required to pay any royalty or other amount to anyone with respect to any of the
Company Intellectual Property. Following consummation of the Staffing
Disposition in compliance with the terms of Section 6.13, the Company will
continue to own, free from any royalty, maintenance, renewal or other fees or
charges, all Company Intellectual Property that had been used by Staffing prior
to the consummation of the Staffing Disposition except as provided for in the
Buyer Agreement. The execution, delivery and performance of this Agreement by
the Company of the transactions contemplated by this Agreement will not alter,
impair, diminish or result in the loss of any rights or interests of the Company
or any Company Subsidiary (other than Staffing) of any Company Intellectual
Property.
SECTION 3.20. Insurance. The Company and each Company Subsidiary is
covered by valid, outstanding enforceable policies of insurance issued by
reputable insurers covering its properties, assets and business against risks of
the nature normally insured against by similar entities in the same or similar
lines of business in coverage amounts typically and reasonably carried by such
entities (the "COMPANY INSURANCE POLICIES"). Section 3.20 of the Company
Disclosure Letter sets forth a complete and accurate list of the Company
Insurance
25
Policies. The Company Insurance Policies are in full force and effect, and all
premiums due thereon have been paid through the date of this Agreement and will
be paid through the Closing Date. The Company and each of the Company
Subsidiaries has complied in all material respects with the provisions of the
Company Insurance Policies applicable to it, and provided to Holding and Comsys
copies of all of the Company Insurance Policies and all amendments and riders
thereto. There are no pending claims under any of the Company Insurance
Policies, including any claim for loss or damage to the properties, assets or
business of the Company or any of the Company Subsidiaries. Neither the Company
nor any of the Company Subsidiaries has failed to give, in a timely manner, any
notice required under any of the Company Insurance Policies to preserve its
rights thereunder.
SECTION 3.21. Certain Contracts and Arrangements.
(a) Except with respect to any Company Employee Benefit Plan,
Section 3.21(a) of the Company Disclosure Letter sets forth a true and complete
list of (i) all material agreements to which the Company or any Company
Subsidiary is a party (which for customers shall be limited to the top fifty
Partners customers in terms of first quarter 2004 revenue); (ii) all loan or
credit agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which indebtedness of the Company or any Company
Subsidiary is outstanding or may be incurred; (iii) all agreements requiring
expenditures in excess of $50,000 individually or $200,000 in the aggregate; and
(iv) all contracts that cannot be terminated on 30 days' notice or less without
material cost or penalties (the agreements, contracts and obligations specified
above, collectively the "COMPANY CONTRACTS"). Each Company Contract is in full
force and effect, and is a legal, valid and binding obligation of the Company or
one of the Company Subsidiaries and, to the knowledge of the Company, each of
the other parties thereto, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization or other laws affecting the enforcement of
creditors' rights generally or by general equitable principles. No condition
exists or event has occurred which (whether with or without notice or lapse of
time or both) would constitute a violation, default or breach by the Company or
any Company Subsidiary or, to the knowledge of the Company, any other party
thereto under any Company Contract or result in a right of termination of any
Company Contract. Other than as contemplated by Section 3.3(c), no consents,
assignments, waivers, authorizations or other certificates are necessary in
connection with the transactions contemplated hereby (including the Staffing
Disposition) to provide for the continuation in full force and effect of all of
the Company Contracts after the Closing.
(b) Neither the Company nor any of the Company Subsidiaries is a
party to or bound by (i) any non-competition or other agreement or other
arrangement that purports to limit or otherwise materially restrict the Company
or any Company Subsidiary or any successor thereto, or that would, after the
Effective Time, to the knowledge of the Company, materially limit or restrict
the Company, the Surviving Entity or any of their subsidiaries or any successor
thereto, from engaging or competing in the information technology staffing
business or (ii) any agreement or other arrangement that contains a "MOST
FAVORED NATION" provision purporting to require the Company or any of the
Company Subsidiaries to provide services to a customer on terms at least as
favorable as those on which the Company or any Company Subsidiary provides
services to a third party unaffiliated with such customer.
26
SECTION 3.22. Company Financing Arrangements. The Company has on or
prior to the date hereof entered into a subscription agreement with Wachovia
(the "SUBSCRIPTION AGREEMENT"), a true and complete copy of which has been
furnished by the Company to Holding and Comsys, pursuant to which Wachovia has
agreed, subject to the terms and conditions contained in the Subscription
Agreement, to convert, at the Effective Time, specified amounts of outstanding
debt of Comsys (subject to adjustment as provided in the Subscription
Agreement), into shares of Company Preferred Stock to be issued by the Company
at the Effective Time. The Company has on or prior to the date hereof entered
into a letter agreement (the "LETTER AGREEMENT") with MatlinPatterson Global
Opportunities Partners, L.P. ("MGOP"), MatlinPatterson Global Opportunities
Partners (Bermuda), L.P., ("MGOPB"), Links Partners, L.P. ("LINKS") and Inland
Partners, L.P. ("INLAND") pursuant to which MGOP, MGOPB, Inland and Links have
agreed, severally and not jointly, to purchase at the Effective Time, under
certain circumstances, up to $7,000,000 of the Company Preferred Stock in
accordance with the terms of the subscription agreement attached to the Letter
Agreement as an exhibit. A true and complete copy of the Letter Agreement has
been furnished by the Company to Holding and Comsys. The Subscription Agreement
and the Letter Agreement are in full force and effect and, since the date
thereof, have not been withdrawn, amended or terminated in any manner. The
Company has taken all corporate and other actions required to cause the
Subscription Agreement and the Letter Agreement to be effective.
SECTION 3.23. Company Rights Plan; Takeover Statutes.
(a) The Company has delivered to Holding and Comsys a true and
complete copy of the Company Rights Plan. No "Distribution Date" or "Stockholder
Acquisition Date" (as each such term is defined in the Company Rights Plan) has
occurred prior to the date of this Agreement. The Company has taken all action
so that none of (i) this Agreement, (ii) the execution and delivery of this
Agreement by any party hereto, (iii) the performance by any party of its
obligations under this Agreement or (iv) the consummation of any of the
transactions contemplated by this Agreement (including the Merger and the
Staffing Disposition) will:
(i) cause any Person to become an Acquiring Person, cause a
Distribution Date or Stock Acquisition Date (as each such term is defined in the
Company Rights Plan) to occur or otherwise cause the rights to be issued
pursuant to the Company Rights Plan to become exercisable; or
(ii) trigger any "Significant Holder" or "Related Party"
provisions set forth in the Company Charter (as each such term is defined
therein).
(b) The Company has taken all actions so that the Company Rights
Plan will terminate immediately prior to the Effective Time.
(c) The approval by the Board of Directors of the Company of this
Agreement, the Merger, the amendment of the Company Charter, the amendment of
the Company Bylaws and the transactions contemplated hereby and thereby
(including the Staffing Disposition) is sufficient to render inapplicable to the
Merger, this Agreement and the transactions contemplated hereby the restrictions
contained in Section 203 of the DGCL, and no "fair price," "moratorium,"
"control share acquisition" or other anti-takeover law of any state is
27
applicable to or triggered by the Merger, this Agreement or the transactions
contemplated hereby.
SECTION 3.24. Activities of Merger Sub. Merger Sub conducts no
operations and, other than entering into this Agreement and performing its
obligations hereunder, has not entered into any agreement or conducted any
business.
SECTION 3.25. Agreement Regarding Staffing Disposition. The Company
is simultaneously entering into a definitive agreement with Compass CS Inc.
("BUYER"), a true and correct copy of which has been provided to Holding,
pursuant to which Buyer is required to purchase all of the issued and
outstanding capital stock of Venturi Staffing Partners, Inc. ("STAFFING"), for a
purchase price providing the Company with Net Cash Proceeds upon the closing of
such transaction of not less than $25 million, in a transaction that the parties
thereto agree to consummate at or prior to the Closing Date on terms consistent
with those set forth in Section 6.13 (the "BUYER AGREEMENT"). The Buyer
Agreement permits the Company to terminate the Buyer Agreement under certain
circumstances and enter into a definitive agreement with a third party (a
"REPLACEMENT AGREEMENT"). The terms of any Replacement Agreement must be on
terms that are acceptable to Holding and otherwise consistent with the terms set
forth in Section 6.13. Any Replacement Agreement shall require that the sale of
Staffing contemplated therein be consummated on or before the Closing Date. The
term "NET CASH PROCEEDS" refers to the amount in cash received by the Company as
consideration for the sale of Staffing (including funds placed in escrow in
connection with the Tax Liabilities), upon the closing of such transaction net
of (i) income taxes, (ii) broker, legal and accounting fees and other
transaction fees and expenses and any termination fees arising out of or in
connection with the sale of Staffing contemplated by this Agreement and (iii)
any other liabilities associated with Staffing, including any accrued
liabilities of Staffing which are not assumed by the Buyer at the time the sale
of Staffing is consummated (including but not limited to liabilities relating to
the Nonqualified Plan, the 401(K) Matter (as defined below), the Unemployment
Taxes and the Unclaimed Property Taxes) that are not assumed by the purchaser of
Staffing. The Company will not amend or waive any rights under the Buyer
Agreement without the prior written approval of Holding, or terminate the Buyer
Agreement except in accordance with its terms. The Company will comply with all
of its obligations in the Buyer Agreement and all representations and warranties
of the Company and Staffing in the Buyer Agreement are true and correct. If the
Company enters into a Replacement Agreement as permitted hereby, (i) the Company
will not amend or waive any rights under such Replacement Agreement without the
prior written approval of Holding, or terminate such Replacement Agreement
except in accordance with its terms, (ii) the Company will comply with all of
its obligations in such Replacement Agreement and (iii) all representations and
warranties of the Company and Staffing in the Replacement Agreement will be true
and correct. "401(K) MATTER" means liabilities and costs incurred or estimated
as of the Effective Time by the Company in good faith to be incurred in
connection with the correction of any form, operational or demographic error
associated with the VPI 401(K) Plan, provided, however, that liabilities for the
401(K) Matter for purposes of the Net Cash Proceeds shall not exceed $500,000.
SECTION 3.26. Books and Financial Records. The books of account and
other financial records of the Company are complete and correct and represent
actual, bona fide transactions and have been maintained in accordance with sound
business practices and the
28
requirements of Section 13(b)(2) of the Exchange Act (regardless of whether or
not the Company is subject to that Section), including the maintenance of a
system of internal controls that meets the requirements of such section.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HOLDING AND COMSYS
Except as set forth on the disclosure letter (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein) previously delivered by Holding and Comsys to
the Company (the "COMSYS DISCLOSURE LETTER"), Holding and Comsys hereby jointly
and severally represent and warrant to the Company as follows:
SECTION 4.1. Organization. Holding and each of the Subsidiaries of
Holding (the "HOLDING SUBSIDIARIES") is a corporation, limited liability company
or partnership duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite power and
authority to own, operate and lease its properties and to carry on its business
as now conducted. Holding and each of the Holding Subsidiaries is duly qualified
and/or licensed, as may be required, and in good standing in each of the
jurisdictions in which the nature of the business conducted by it or the
character of the property owned, leased or used by it makes such qualification
and/or licensing necessary, except in such jurisdictions where the failure to be
so qualified and/or licensed, individually or in the aggregate, would not be
material to Holding or the Holding Subsidiaries. The copies of the certificate
of incorporation and bylaws of Holding and Comsys that were delivered to the
Company prior to the date of this Agreement are complete and correct copies of
such documents and contain all amendments thereto as in effect on the date of
this Agreement.
SECTION 4.2. Capitalization.
(a) As of the date of this Agreement, the authorized capital stock
of Comsys consists of 5,000,000 shares of common stock, par value $.01 per
share, of Comsys (the "COMSYS COMMON STOCK"), 2,115,500 shares of which are
issued and outstanding. As of the date of this Agreement, no shares of Comsys
Common Stock were held by Comsys in its treasury. The issued and outstanding
shares of Comsys Common Stock have been duly authorized and validly issued,
fully paid and are nonassessable and free of preemptive rights. Comsys has not,
subsequent to December 31, 2003, declared or paid any dividend, or declared or
made any distribution on, or authorized the creation or issuance of, or issued,
authorized or effected any split up or any other recapitalization of, any of its
capital stock, or directly or indirectly redeemed, purchased or otherwise
acquired any of its outstanding capital stock, nor has Comsys heretofore agreed
to take any such action. There are no outstanding contractual obligations of
Comsys of any kind to redeem, purchase or otherwise acquire any outstanding
shares of capital stock of Comsys. Other than the Comsys Common Stock, there are
no outstanding bonds, debentures, notes or other indebtedness or securities of
Comsys having the right to vote on any matters on which stockholders of Comsys
may vote. Except as set forth above, no shares of capital stock or other voting
securities of Comsys are issued, reserved for issuance or outstanding, and there
are no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Comsys or any
29
other Holding Subsidiary is a party or by which any of them is bound obligating
Comsys or any other Holding Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of Comsys or of any other Holding Subsidiary or obligating Comsys or
any other Holding Subsidiary to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking.
(b) As of the date of this Agreement, the authorized capital stock
of Holding consists of: (i) 35,000,000 shares of Holding Common Stock,
20,844,060 shares of which are issued and outstanding; (ii) 150,000 shares of
Class A-1 preferred stock of Holding, par value $.01 per share (the "HOLDING
CLASS A-1 PREFERRED STOCK"), 92,553.653 shares of which are issued and
outstanding; (iii) 46,352 shares of Class A-2 preferred stock of Holding, par
value $.01 per share (the "HOLDING CLASS A-2 PREFERRED STOCK"), 46,351.073
shares of which are issued and outstanding; (iv) 3,000 shares of Holding Class
A-3 Preferred Stock, 3,000 shares of which are issued and outstanding; (v)
33,000 shares of Holding Class B Preferred Stock, 33,000 shares of which are
issued and outstanding; (vi) 62,500 shares of Holding Class C Preferred Stock,
62,500 shares of which are issued and outstanding; (vii) 1,000 shares of Holding
Class D Preferred Stock, 1,000 shares of which are issued and outstanding; and
(viii) 7,177.579 shares of Class E preferred stock of Holding, par value $.01
per share (the "HOLDING CLASS E PREFERRED STOCK"), 7,177.579 shares of which are
issued and outstanding. As of the date of this Agreement, no shares of any class
of Holding capital stock were held by Holding in its treasury. The issued and
outstanding shares of each class of Holding capital stock have been duly
authorized and validly issued, fully paid and are nonassessable and free of
preemptive rights. Holding has not, subsequent to December 31, 2003, declared or
paid any dividend, or declared or made any distribution on, or authorized the
creation or issuance of, or issued, authorized or effected any split up or any
recapitalization of, any of its capital stock, or directly or indirectly
redeemed, purchased or otherwise acquired any of its outstanding capital stock,
nor has Holding heretofore agreed to take any such action. There are no
outstanding contractual obligations of Holding of any kind to redeem, purchase
or otherwise acquire any outstanding shares of capital stock of Holding. Other
than the respective classes of Holding capital stock there are no outstanding
bonds, debentures, notes or other indebtedness or securities of Holding having
the right to vote on any matters on which stockholders of Holding may vote. No
shares of capital stock or other voting securities of Holding are issued,
reserved for issuance or outstanding, and there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Holding is a party or by which Holding is
bound obligating Holding to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of Holding or obligating Holding to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking.
SECTION 4.3. Authorization; No Conflict.
(a) Each of Holding and Comsys has the requisite corporate power and
authority to enter into and deliver this Agreement and all other agreements and
documents contemplated hereby to which it is a party and to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement by Holding and Comsys, the performance by Holding and Comsys of their
respective obligations hereunder and the
30
consummation by Holding and Comsys of the transactions contemplated hereby have
been duly authorized by the Board of Directors of Holding and Comsys,
respectively, and no other corporate proceedings on the part of Holding or any
of the Holding Subsidiaries are necessary to authorize the execution and
delivery of this Agreement, the performance by Holding and Comsys of their
respective obligations hereunder and the consummation by Holding and Comsys of
the transactions contemplated hereby, other than obtaining the Holding
Stockholder Consent (as defined in Section 4.3(c)). This Agreement has been duly
executed and delivered by each of Holding and Comsys and constitutes a valid and
binding obligation of Holding and Comsys respectively, enforceable in accordance
with its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization or other
laws affecting the enforcement of creditors' rights generally or by general
equitable principles.
(b) The Board of Directors of Comsys has, by resolutions duly
adopted by the requisite vote of the directors present at a meeting of such
board duly called and held on July 15, 2004 and not subsequently rescinded or
modified in any way, unanimously (i) determined that this Agreement, the Merger,
in accordance with the terms of this Agreement and the other transactions
contemplated hereby to which Comsys is a party are advisable and in the best
interests of Comsys and its stockholders, and (ii) approved and adopted this
Agreement and approved the Merger and the other transactions contemplated hereby
to which Comsys is a party. No vote of the holders of any class or series of
Comsys' capital stock is necessary to consummate the Merger.
(c) The Board of Directors of Holding has, by resolutions duly
adopted by the requisite vote of the directors present at a meeting of such
board duly called and held on July 15, 2004 and not subsequently rescinded or
modified in any way, unanimously (i) determined that this Agreement, the Merger,
in accordance with the terms of this Agreement and the other transactions
contemplated hereby to which Holding is a party are advisable and in the best
interests of Holding and its stockholders, and (ii) approved and adopted this
Agreement and approved the Merger and the other transactions contemplated hereby
to which Holding is a party. The only vote of the holders of any class or series
of Holding's capital stock necessary to consummate the Merger is the adoption of
this Agreement by the holders of a majority of the issued and outstanding shares
of Holding Common Stock (the "HOLDING STOCKHOLDER CONSENT").
(d) Neither the execution and delivery of this Agreement by Holding
or Comsys, nor the consummation by Holding or Comsys of the transactions
contemplated hereby nor compliance by Holding or Comsys with any of the
provisions herein will (i) result in a violation or breach of or conflict with
the certificate of incorporation or bylaws of Holding or Comsys or any similar
organizational documents of any Holding Subsidiaries, (ii) result in a violation
or breach of or conflict with any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination, cancellation of, or give rise to a right of
purchase under, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any Lien upon
any of the properties or assets owned or operated by Holding or any of the
Holding Subsidiaries under, or result in being declared void, voidable or
without further binding effect, or otherwise result in a detriment to Holding or
any Holding Subsidiary under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, contract, lease,
agreement or other instrument or obligation of any kind to which
31
Holding or any of the Holding Subsidiaries is a party or by which Holding or any
of the Holding Subsidiaries or any of their respective properties or assets may
be bound or (iii) subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to in
paragraph (e) below, violate any judgment, ruling, order, writ, injunction,
decree, statute, law (including the common law), rule or regulation applicable
to Holding or any of the Holding Subsidiaries or any of their respective
properties or assets other than any such event described in items (ii) or (iii)
which, individually or in the aggregate, has not had and would not reasonably be
expected to have or result in a Holding Material Adverse Effect. A "HOLDING
MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the business,
operations, assets, liabilities, condition (financial or otherwise) or results
of operations of Holding and the Holding Subsidiaries considered as a single
enterprise or (ii) the ability of Holding or Comsys to perform their respective
obligations under this Agreement or to consummate the transactions contemplated
by this Agreement; provided, however, that any event, condition, change,
occurrence, development or state of circumstances which (A) adversely affects
the securities markets in general or the information technology staffing
industry generally, including legal, accounting or regulatory changes, (B)
arises out of general economic or industry conditions (and in each case does not
disproportionately affect Holding and the Holding Subsidiaries considered as a
single enterprise) or (C) (other than with respect to a breach of either this
Section 4.3 or Section 4.20 that is not timely cured if susceptible to cure)
arise out of, result from or relate to the transactions contemplated by this
Agreement or the announcement thereof, shall not be considered in determining
whether a Holding Material Adverse Effect has occurred.
(e) No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental or regulatory
authority is necessary to be obtained or made by Comsys or any other Holding
Subsidiary in connection with Holding's or Comsys' respective execution,
delivery and performance of this Agreement or the consummation by Holding or
Comsys of the transactions contemplated hereby, except for (i) compliance with
the DGCL, with respect to the filing of the Certificate of Merger, (ii)
compliance with the HSR Act and applicable foreign competition and/or antitrust
laws, if any, and (iii) the filing with the SEC of such reports under Section
13(a), 13(d), 15(d) or 16(a) and Rule 14f-1 of the Exchange Act, as may be
required in connection with this Agreement and the transactions contemplated
hereby.
SECTION 4.4. Subsidiaries.
(a) Holding has no Subsidiaries other than Comsys. All of the
outstanding shares of capital stock or other equity securities of, or other
ownership interests in, Comsys are duly authorized, validly issued, fully paid
and nonassessable, and such shares, securities or interests are owned by Holding
free and clear of any Liens or limitations on voting rights. There are no
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character relating to the issuance, transfer,
sales, delivery, voting or redemption (including any rights of conversion or
exchange under any outstanding security or other instrument) for any of the
capital stock or other equity interests of, or other ownership interests in,
Comsys. There are no agreements requiring Holding to make contributions to the
capital of, or lend or advance funds to, Comsys.
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(b) The Holding Subsidiaries and their respective jurisdictions of
organization are identified in Section 4.4(a) of the Comsys Disclosure Letter.
All of the outstanding shares of capital stock or other equity securities of, or
other ownership interests in, each Holding Subsidiary are duly authorized,
validly issued, fully paid and nonassessable, and such shares, securities or
interests are owned by Comsys or by another Holding Subsidiary free and clear of
any Liens or limitations on voting rights. There are no subscriptions, options,
warrants, calls, rights, convertible securities or other agreements or
commitments of any character relating to the issuance, transfer, sales,
delivery, voting or redemption (including any rights of conversion or exchange
under any outstanding security or other instrument) for any of the capital stock
or other equity interests of, or other ownership interests in, any Holding
Subsidiaries. There are no agreements requiring Comsys or any other Holding
Subsidiary to make contributions to the capital of, or lend or advance funds to,
any Holding Subsidiary.
SECTION 4.5. Financial Statements.
(a) The consolidated balance sheets and the related consolidated
statements of operations, consolidated statements of stockholders' equity and
comprehensive income (loss) and consolidated statements of cash flows
(including, in each case, any related notes and schedules thereto) of Holding
for the annual periods ending December 31, 2001, 2002 and 2003 and the quarterly
period ending March 31, 2004 (collectively, the "HOLDING FINANCIAL STATEMENTS")
delivered by Holding to the Company have been prepared from the books and
records of Holding and the Holding Subsidiaries, have been prepared in
conformity with GAAP (except, in the case of unaudited statements) applied on a
consistent basis during the periods involved (except as otherwise noted therein)
and present fairly the consolidated financial position and the consolidated
results of operations and cash flows of Holding and the Holding Subsidiaries as
of the dates or for the periods presented therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments in the
ordinary course of business). Except as reflected in the Holding Financial
Statements, neither Holding nor any of the Holding Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise), other than liabilities or obligations that (i) were not required
by GAAP to be disclosed or provided for in the Holding Financial Statements or
(ii) were incurred since December 31, 2003, and which, in each case, (A) were
incurred in the ordinary course of business consistent with past practice and
(B) individually or in the aggregate, have not had and would not reasonably be
expected to have a Holding Material Adverse Effect.
(b) Neither Holding nor Comsys has received written notice from any
governmental entity that any of its accounting policies or practices are or may
be the subject of any review, inquiry, investigation or challenge by any
governmental entity. Since January 1, 2001, neither Holding's nor Comsys'
respective independent public accounting firm has informed Holding or Comsys,
respectively, that it has any material questions, challenges or disagreements
regarding or pertaining to Holding's or Comsys' respective accounting policies
or practices. Since January 1, 2001, to the knowledge of Holding and Comsys, no
officer or director of Holding or Comsys has received, or is entitled to
receive, any material compensation from any entity that has engaged in or is
engaging in any material transaction with Holding or any Holding Subsidiary. Set
forth in Section 4.5(b) of the Comsys Disclosure Letter is a list of all
off-balance sheet special purpose entities and financing arrangements of Holding
and the Holding Subsidiaries.
33
SECTION 4.6. Absence of Material Adverse Changes, etc. Since March
31, 2004, Holding and the Holding Subsidiaries have conducted their respective
businesses in the ordinary course of business consistent with past practice and
there has not been or occurred:
(a) any event, condition, change, occurrence, development or state
of circumstances which, individually or in the aggregate, has had or would
reasonably be expected to have a Holding Material Adverse Effect;
(b) any material damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets owned or operated
by Holding or the Holding Subsidiaries; or
(c) any event, condition, action or occurrence that, if taken during
the period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.2(b).
SECTION 4.7. Litigation. There are no suits, actions or legal,
administrative, arbitration or other proceedings or governmental investigations
pending or, to the knowledge of Holding or Comsys, threatened, to which Holding
or any of the Holding Subsidiaries is a party. There are no judgments, decrees,
injunctions, rules, awards or orders of any governmental or regulatory entity or
arbitrator outstanding against Holding or any of the Holding Subsidiaries.
SECTION 4.8. Information Supplied. The information provided by
Holding and Comsys for inclusion in the Proxy Statement (including any
information required to be filed with the SEC and delivered to the Company
stockholders pursuant to Rule 14f-1 under the Exchange Act) and each amendment
or supplement thereto, at the time of filing thereof with the SEC and at the
time of its dissemination to the Company's stockholders will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.9. Broker's or Finder's Fees. No agent, broker, Person or
firm acting on behalf of Holding or any Holding Subsidiary or under Holding's or
any Holding Subsidiary's authority is or will be entitled to any advisory,
commission or broker's or finder's fee or commission from any of the parties
hereto in connection with any of the transactions contemplated hereby.
SECTION 4.10. Employee Plans.
(a) There are no current Comsys Employee Benefit Plans established,
maintained, adopted, participated in, sponsored, contributed or required to be
contributed to, provided, promised to be provided, terminated by, or resulting
in any material liability to Holding or Comsys or any entity with which Holding
or Comsys is considered a single employer under Section 414(b), (c) or (m) of
the Code ("COMSYS ERISA AFFILIATES"). As used in this Agreement, "COMSYS
EMPLOYEE BENEFIT PLAN" means any Holding or Holding Subsidiary plan, program,
policy, practice, agreement or other arrangement providing compensation or
benefits in any form to any current or former employee, independent contractor,
officer or director of Holding or any of the Holding Subsidiaries or any
beneficiary or dependent thereof, whether
34
written or unwritten, formal or informal, including without limitation any
"employee welfare benefit plan" within the meaning of Section 3(1) of ERISA
("COMSYS EMPLOYEE WELFARE BENEFIT PLAN"), any "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (whether or not such plan is subject
to ERISA) ("COMSYS EMPLOYEE PENSION BENEFIT PLAN") and any other pension,
profit-sharing, bonus, incentive compensation, deferred compensation, vacation,
sick pay, stock purchase, stock option, phantom equity, severance, employment,
consulting, unemployment, hospitalization or other medical, life, or other
insurance, long- or short-term disability, change of control, fringe benefit, or
any other plan, program or policy.
(b) With respect to each Comsys Employee Benefit Plan, Holding and
Comsys have made available to the Company a true, correct and complete copy of:
(i) each writing constituting a part of such Comsys Employee Benefit Plan
(including, but not limited to, the plan document(s), adoption agreement,
prototype or volume submitter documents, trust agreement, annuity contract,
third party administrative contracts and insurance contracts) and all amendments
thereto; (ii) the two most recent Annual Reports (Form 5500 Series) including
all applicable schedules, if required; (iii) the current summary plan
description and any material modifications thereto, if required to be furnished
under ERISA, or any written summary provided to participants with respect to any
plan for which no summary plan description exists; (iv) the most recent
determination letter (or if applicable, advisory or opinion letter) from the
Internal Revenue Service, if any, or if an application for a determination
letter is pending, the application with all attachments; and (v) all notices
given within the last three years relating to such Comsys Employee Benefit Plan,
any fiduciary thereof, Holding, Comsys, or any Comsys ERISA Affiliate by the
Internal Revenue Service, Department of Labor, Pension Benefit Guarantee
Corporation, or other governmental agency relating to such Comsys Employee
Benefit Plan.
(c) Each Comsys Employee Benefit Plan that is intended to be
"qualified" within the meaning of Section 401(a), 401(f) or 403(a) of the Code
and, to the extent applicable, Section 401(k) of the Code ("QUALIFIED COMSYS
EMPLOYEE BENEFIT PLAN"), has received a favorable determination letter from the
Internal Revenue Service that has not been revoked (or is within the remedial
amendment period for obtaining such letter), and no event has occurred and no
condition exists that could reasonably be expected to adversely affect the
qualified status of any such Comsys Employee Benefit Plan. For the avoidance of
doubt, the term "favorable determination letter" as used in this Section 4.10(c)
does not include an opinion letter or advisory letter issued with respect to a
master and prototype or volume submitter plan. Any favorable determination
letters referenced in this Section 4.10(c) cover "GUST" as defined in footnote 2
of IRS Notice 2003-49. Each Qualified Comsys Employee Benefit Plan has timely
made "GOOD FAITH" amendments to comply with the Economic Growth and Tax
Reconciliation Relief Act of 2001 as required by IRS Notice 2001-42.
(d) Holding or Comsys, as applicable, has (i) filed or caused to be
filed all material returns and reports on the Comsys Employee Benefit Plans that
it and/or any fiduciary of any such plan is required to file and (ii) paid or
made adequate provision for all fees, interest, penalties, assessments or
deficiencies that have become due pursuant to those returns or reports or
pursuant to any assessment or adjustment that has been made relating to those
returns or reports.
35
(e) The funding, if any, under each Comsys Employee Welfare Benefit
Plan does not exceed and has not exceeded the limitations under Sections 419A(b)
and 419A(c) of the Code. Neither Holding nor Comsys is subject to taxation on
the income of any Comsys Employee Welfare Benefit Plan's welfare benefit fund
(as such term is defined in Section 419(e) of the Code) under Section 419A(g) of
the Code. All Comsys Employee Welfare Benefit Plans required to comply with the
COBRA provisions of ERISA and the Code (and similar state law) have complied
with such requirements in all material respects.
(f) Each Comsys Employee Benefit Plan has been operated and
administered in all material respects in accordance with its provisions.
(g) Holding and the Holding Subsidiaries have complied, and are now
in compliance, in all material respects, with all provisions of ERISA, the Code
and all laws and regulations applicable to the Comsys Employee Benefit Plans.
(h) None of Holding, Comsys or any Comsys ERISA Affiliate has ever
established, maintained, contributed to, or had an obligation to contribute to,
any Comsys Employee Benefit Plan that is a "MULTIEMPLOYER PLAN," as that term is
defined in Section 3(37) of ERISA, or is subject to Title IV of ERISA. None of
Holding, Comsys or any Comsys ERISA Affiliate has any liability under Title IV
of ERISA (including a liability to pay premiums to the Pension Benefit Guaranty
Corporation), and no such liability has been or is expected to be incurred by
Holding or any of the Holding Subsidiaries.
(i) Neither Holding nor the Holding Subsidiaries is obligated to
provide life, health or medical benefits or insurance coverage to any
individual, or to the family members of any individual, for any period extending
beyond the termination of the individual's employment, except to the extent
required by the COBRA provisions in ERISA and the Code or any similar provisions
of state law.
(j) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not, either alone or
in connection with termination of employment, (i) entitle any current or former
employee, independent contractor, director, or officer of Holding or the Holding
Subsidiaries to severance pay, any change in control payment, or any other
material payment (including unemployment compensation, bonus or otherwise),
except as expressly provided in this Agreement, (ii) accelerate the time of
payment or vesting, change the form or method of payment, or increase the amount
of compensation due, any such employee, independent contractor, director, or
officer, (iii) materially increase any benefits otherwise payable under any
Comsys Employee Benefit Plan, agreement or otherwise, or (iv) entitle any such
employee, independent contractor, director or officer to any gross-up or similar
material payment in respect of the excise tax described in Section 4999 of the
Code. Neither Holding nor any Holding Subsidiary has taken any action that would
result in its incurring any obligation for any payments or benefits described in
clauses (i), (ii), (iii) or (iv) of this Section 4.10(j) (without regard to
whether the transactions contemplated by this Agreement are consummated) except
to the extent required in a written contract or agreement in existence as of the
date of this Agreement.
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(k) There are no suits, actions, proceedings, investigations, claims
or orders pending or, to the knowledge of Holding and Comsys, threatened against
Holding any Holding Subsidiary or any Comsys Employee Benefit Plan related to
any Comsys Employee Benefit Plan (other than claims for benefits or appeals of
denied claims in the ordinary course of business). No Comsys Employee Benefit
Plan is subject to any ongoing audit, investigation, or other administrative
proceeding of any governmental entity, and no Plan is the subject of any pending
application for administrative relief under any voluntary compliance program or
closing agreement program of the Internal Revenue Service or the Department of
Labor.
(l) Holding or Comsys, as applicable, has the right to amend or
terminate each Comsys Employee Benefit Plan at any time without incurring any
liability other than with respect to benefits that have already accrued under a
Comsys Employee Pension Benefit Plan.
(m) Without limiting the generality of any other representation
contained herein, there exists no Lien against Holding, any Holding Subsidiary,
any Comsys ERISA Affiliate, or any of their assets arising under sections 302(f)
or 4068(A) of ERISA or section 412(n) of the Code.
(n) None of Holding, Comsys or any Comsys ERISA Affiliate has a
formal plan, commitment, or proposal, whether legally binding or not, nor has
any of them made a commitment to employees, officers, directors, consultants or
independent contractors to create any additional Comsys Employee Benefit Plan or
modify, change or terminate any existing Comsys Employee Benefit Plan, and no
such plan, commitment or proposal is under serious consideration. No events have
occurred or are expected to occur with respect to any Comsys Employee Benefit
Plan that would cause a material change in the cost of providing the benefits
under such plan or would cause a material change in the cost of providing for
other liabilities of such plan other than an economic downturn, an increase in
the cost of healthcare, or similar event beyond the control of Holding and
Holding Subsidiaries.
SECTION 4.11. Taxes.
(a) Each of Holding and each Holding Subsidiary has timely filed all
material federal, state, local, and other Tax Returns required to be filed by it
in the manner prescribed by applicable law and all such Tax Returns are true,
complete and correct in all material respects. All Taxes shown as due on such
Tax Returns have been paid in full and Holding and each Holding Subsidiary has
made adequate provision (or adequate provision has been made on its behalf) for
all accrued Taxes not yet due. The accruals and reserves for Taxes reflected in
the Holding Financial Statements are adequate to cover all Taxes accruing
through such date. Holding and the Holding Subsidiaries have withheld and paid
over all material Taxes required to have been withheld and paid over, and
complied in all material respects with all information reporting and backup
withholding requirements, including the maintenance of required records with
respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party. There are no material
Liens on any of the assets, rights or properties of Holding or any Holding
Subsidiary with respect to Taxes, other than Liens for Taxes not yet due and
payable or for Taxes that Holding or a Holding Subsidiary is contesting in good
faith through appropriate proceedings.
37
(b) As of the date of this Agreement, no federal, state, local or
foreign audits or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of Holding or any
Holding Subsidiary, and neither Holding nor any Holding Subsidiary has received
a written notice of any material pending or proposed claims, audits or
proceedings with respect to Taxes. No material deficiencies have been asserted
in writing against Holding or any Holding Subsidiary as a result of examinations
by any state, local, federal or foreign taxing authority and no material issue
has been raised by any examination conducted by any state, local, federal or
foreign taxing authority that, by application of the same principles, might
result in a proposed deficiency for any other period not so examined which
deficiency (or deficiencies), in either case, is not (or are not) adequately
reserved for in the most recent Holding Financial Statements. Each material
deficiency resulting from any audit or examination relating to Taxes of Holding
or any Holding Subsidiary by any taxing authority has been paid or is being
contested in good faith and in accordance with law and is adequately reserved
for on the balance sheets contained in the Holding Financial Statements in
accordance with GAAP. No claim is pending and no claim has ever been made that
has not been resolved by an authority in a jurisdiction where Holding or any of
the Holding Subsidiaries does not file Tax Returns that Holding or any Holding
Subsidiary, as the case may be, is or may be subject to Tax in that
jurisdiction. Neither Holding nor any Holding Subsidiary is subject to any
private letter ruling of the Internal Revenue Service or comparable rulings of
other tax authorities that will be binding on Holding or any Holding Subsidiary
with respect to any period following the Closing Date. Neither Holding nor any
Holding Subsidiary has granted any power of attorney which is currently in force
with respect to any income, franchise or similar Taxes or any income, franchise
or similar Tax Returns.
(c) Neither Holding nor any Holding Subsidiary has requested any
extension of time within which to file any material Tax Return which Tax Return
has not yet been filed. There are no agreements, waivers of statutes of
limitations, or other arrangements providing for extensions of time in respect
of the assessment or collection of any unpaid Taxes against Holding or any
Holding Subsidiary. Holding and each Holding Subsidiary have disclosed on their
federal income Tax Returns all positions taken therein that could, if not so
disclosed, give rise to a substantial understatement penalty within the meaning
of Section 6662 of the Code. Neither Holding nor any Holding Subsidiary has been
a party to a "listed transaction" within the meaning of Treas. Reg. Sec.
1.6011-4(b).
(d) Neither Holding nor any Holding Subsidiary is a party to any Tax
sharing agreement, Tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any taxing authority).
(e) To the knowledge of Holding and Comsys, neither Holding nor any
Holding Subsidiary is party to any agreement, contract or arrangement that,
individually or collectively, would give rise to the payment of any amount
(whether in cash or property, including shares of capital stock), that would not
be deductible pursuant to the terms of Section 280G of the Code or would be
subject to any excise tax under Section 4999 of the Code, or, to the knowledge
of Holding, that would not be deductible pursuant to the terms of Section
162(a)(1), 162(m) or 162(n) of the Code.
38
(f) None of Holding, Comsys or any affiliate of Holding or Comsys
has made with respect to Holding any Holding Subsidiary, or any assets held by
Holding or any Holding Subsidiary any consent under Section 341 of the Code.
(g) Neither Holding nor any Holding Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355 (a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (A) in the two
years prior to the date of this Agreement, or (B) in a distribution that could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(h) The statutes of limitations for the federal income Tax Returns
of Holding and the Holding Subsidiaries have expired or otherwise have been
closed for all taxable periods ending on or before December 31, 1998.
(i) Neither Holding nor any Holding Subsidiary is a party to any
safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by The Tax Equity and Fiscal Responsibility Act of
1982. None of the property owned by Holding or a Holding Subsidiary is
"TAX-EXEMPT USE PROPERTY" within the meaning of Section 168(h) of the Code.
Neither Holding nor any Holding Subsidiary is required to make any adjustment
under Code Section 481(a) by reason of a change in accounting method or
otherwise.
(j) There have not been, within two years of the date of this
Agreement, any (i) redemptions by Holding or any Holding Subsidiary, (ii)
transfers or disposition of property by Holding or any Holding Subsidiary for
which Holding or Holding Subsidiary did not receive adequate consideration, or
(iii) distributions to the holders of Holding Common Stock with respect to their
stock other than distributions of cash in the ordinary course of business,
excluding any redemptions, transfers or dispositions between or among Holding
and any Holding Subsidiary.
(k) Section 4.11(k) of the Comsys Disclosure Letter accurately
reflects the tax basis of the assets listed therein.
(l) Holding's net operating loss and capital loss carryforwards are
no less than the amounts reflected in Section 4.11(l) of the Comsys Disclosure
Letter.
(m) Neither Holding nor any Holding Subsidiary has been a member of
an affiliated group filing a consolidated federal income Tax Return (other than
a group the common parent of which was Holding). To the knowledge of Holding and
Comsys, neither Holding nor any Holding Subsidiary has been notified in writing
that it will be required to incur any liability for Taxes of any Person (other
than Holding or a Holding Subsidiary) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law) with respect to any
Tax claim that has been made by a Tax authority with respect to such other
Person.
(n) Neither Holding nor any Holding Subsidiary will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any intercompany
39
transactions or any excess loss account described in Treasury Regulations under
Code section 1502 (or any corresponding or similar provision of state, local or
foreign law).
(o) Neither Holding nor any of the Holding Subsidiaries has taken
any action or knows of any fact, agreement, plan or other circumstance that
could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
SECTION 4.12. Environmental Matters. Except as, individually or in
the aggregate, would not reasonably be expected to have a Holding Material
Adverse Effect: (i) Holding and Holding Subsidiaries are in compliance with all
applicable Environmental Laws; (ii) Holding and Holding Subsidiaries are not
subject to any existing, pending or, to Holding and Comsys' knowledge,
threatened proceedings regarding alleged violation of or liability under any
Environmental Law; (iii) there have been no unauthorized releases of pollutants,
contaminants or other substances regulated under any Environmental Law
(including petroleum products) at any property owned, operated or occupied by
Holding and Holding Subsidiaries; and (iv) Holding and Holding Subsidiaries have
obtained all permits and other authorizations required under Environmental Laws,
such permits and other authorizations are currently in full force and effect,
and Holding and the Holding Subsidiaries are in compliance with such permits and
other authorizations. To the knowledge of Holding and Comsys, there has been no
material environmental investigation, study, audit, test, review or other
analysis conducted by or on behalf of Holding or Comsys (or any of their
respective predecessors) in relation to the current or prior business of Holding
(or any of its respective predecessors) or any Holding Subsidiary or any
property or facility now or previously owned or leased by Holding or any Holding
Subsidiary.
SECTION 4.13. Compliance with Laws. Holding and the Holding
Subsidiaries are in compliance in all material respects with all applicable
laws, rules or regulations of any United States federal, state or local or
foreign government or agency thereof that materially affect the business,
properties or assets owned or leased by Holding and the Holding Subsidiaries,
and no notice, charge, claim, action or assertion has been received by Holding
or any Holding Subsidiary or, to Holding's and Comsys' knowledge, has been
filed, commenced or threatened against Holding or any Holding Subsidiary
alleging any such non-compliance. All licenses, permits and approvals required
under such laws, rules and regulations are in full force and effect, except as
would not be material to Holding and the Holding Subsidiaries considered
together as a single enterprise.
SECTION 4.14. Employment Matters.
(a) Holding and the Holding Subsidiaries are in compliance in all
material respects with all applicable laws respecting labor, employment,
immigration, fair employment practices, terms and conditions of employment,
workers' compensation, occupational safety, plant closings, wages and hours, and
any other law applicable to any current or former employee or director of
Holding or any Holding Subsidiary (each a "COMSYS EMPLOYEE"), or the independent
contractors and consultants of Holding and the Holding Subsidiaries
(collectively, the "COMSYS INDEPENDENT CONTRACTORS"), or other Persons providing
services to Holding or any Holding Subsidiary, including, without limitation,
all laws concerning the classification of
40
employees and independent contractors. Each of Holding and the Holding
Subsidiaries has withheld all material amounts required by applicable law or by
agreement to be withheld from the wages, salaries and other payments to
employees, and neither Holding nor any Holding Subsidiary is liable for any
material arrears of wages or any material penalty for failure to timely pay
wages.
(b) To Holding's and Comsys' knowledge, no Comsys Employee, Comsys
Independent Contractor or any other Person providing services to Holding or any
Holding Subsidiary is in violation of any term of any employment contract,
non-disclosure agreement, non-competition agreement, or any restrictive covenant
applicable to a former employer relating (i) to the right of any such Person to
be employed or retained by Holding or any Holding Subsidiary, or (ii) to the use
by or for the benefit of Holding or any Holding Subsidiary of the trade secrets,
intellectual property, or confidential or proprietary information of others, in
each case, in any material respect. To the knowledge of Holding and Comsys, no
Comsys Employee, Comsys Independent Contractor or any other Person providing
services to Holding or any Holding Subsidiary is in violation of any term of any
employment contract, non-disclosure agreement, non-competition agreement, or
restrictive covenant relating to the business of Holding or any Holding
Subsidiary, which violation or violations would, individually or in the
aggregate, have a Holding Material Adverse Effect.
(c) Holding and the Holding Subsidiaries have provided the Company
with true, complete and correct copies of all current written employment,
management, change of control or severance agreements or arrangements which have
been entered into between Holding and any Holding Subsidiary, on the one hand,
and any Comsys Employee, Comsys Independent Contractor or any Person providing
services to Holding or any Holding Subsidiary, on the other hand, including any
amendments thereto, in each case, providing for annual compensation, change of
control or severance benefits that are in excess of $100,000 in the aggregate,
and a list of any current officer of Holding or a Holding Subsidiary or any
other employee of Holding or a Holding Subsidiary with a level of annual
compensation (including base pay and any bonus or other incentive payments) that
is in excess of $100,000 per year for the year ended December 31, 2003. Other
than as expressly set forth in such agreements or amendments or in this
Agreement, there have been no material changes, and there are no material
proposed amendments or changes, to the remuneration or benefits of any kind
payable or due to any of such Comsys Employees.
(d) Neither Holding nor any Holding Subsidiary: (i) is a party to or
otherwise bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is any
such contract or agreement presently being negotiated, nor, to the knowledge of
Holding and Comsys, is there, nor has there been in the last five years, a
representation campaign respecting any of the employees of Holding or any of the
Holding Subsidiaries, and, to the knowledge of Holding and Comsys, there are no
campaigns being conducted to solicit cards from employees of Holding or any of
the Holding Subsidiaries to authorize representation by any labor organization;
(ii) is a party to, or bound by, any consent decree with, or citation by, any
governmental agency relating to employees or employment practices; or (iii) is
the subject of any proceeding asserting that it has committed an unfair labor
practice or is seeking to compel it to bargain with any labor union or labor
organization nor, as of the date of this Agreement, is there pending or, to the
knowledge of Holding and Comsys,
41
threatened, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving Holding or any of the Holding Subsidiaries.
(e) In the 90-day period preceding the date of this Agreement,
neither Holding nor any of the Holding Subsidiaries has effectuated (i) a "PLANT
CLOSING" (as defined in the WARN Act), affecting any site of employment or one
or more facilities or operating units within any site of employment or facility
of Holding or any of the Holding Subsidiaries, or (ii) a "MASS LAYOFF" (as
defined in the WARN Act) affecting any site of employment or facility of Holding
or any of the Holding Subsidiaries; nor has Holding or any of the Holding
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
state, local or foreign law or regulation similar to the WARN Act. Section
4.14(e) of the Comsys Disclosure Letter lists the number of Holding's or the
Holding Subsidiaries' employees (other than billable consultants) who have
suffered an "EMPLOYMENT LOSS" (as defined in the WARN Act) in the 90 days prior
to the date of this Agreement or had a reduction in hours of at least 50% in the
180 days prior to the date of this Agreement. To the knowledge of Holding and
Comsys, Holding and the Holding Subsidiaries have at all times properly
classified each of their respective employees as employees, each of their
respective "leased employees" (within the meaning of Section 414(n) of the Code)
as leased employees, and each of its independent contractors as independent
contractors, as applicable.
SECTION 4.15. Foreign National Employees. Section 4.15 of the Comsys
Disclosure Letter sets forth a complete list of all employees of Holding or
Comsys who, to Holding's and Comsys' knowledge, are working pursuant to visas
sponsored by Holding or Comsys (collectively, the "COMSYS FOREIGN NATIONAL
EMPLOYEES"). To the knowledge of Holding and Comsys, each Comsys Foreign
National Employee holds a valid visa and is permitted to work in his or her
current capacity as a Comsys Employee pursuant to such visa.
SECTION 4.16. Investment Company. Neither Holding nor any of the
Holding Subsidiaries is an "investment company" or a company "controlled" by an
"INVESTMENT COMPANY" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations promulgated thereunder.
SECTION 4.17. Properties. Neither Holding nor any of the Holding
Subsidiaries owns or has owned any real property. Except as set forth in the
Comsys Disclosure Schedule, Holding and each of the Holding Subsidiaries has
good and marketable title to all of their respective properties and assets, free
and clear of all Liens except Liens for Taxes not yet due and payable, pledges
to secure deposits and such minor imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which, individually or in the aggregate, would not
be reasonably likely to have a Holding Material Adverse Effect; and all leases
pursuant to which Holding or any of the Holding Subsidiaries lease from others
material amounts of real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material default
and in respect of which Holding or such Holding Subsidiary has not taken
adequate steps to prevent such a default from occurring). All major items of
operating equipment owned or leased by Holding or any of the Holding
Subsidiaries (i) are, in the aggregate, in a state of repair so as to be
adequate in all material
42
respects for reasonably prudent operations in the areas in which they are
operated and (ii) are adequate, together with all other properties of Holding
and the Holding Subsidiaries, to comply in all material respects with the
requirements of all applicable contracts of Holding and Comsys.
SECTION 4.18. Intellectual Property. Holding and the Holding
Subsidiaries own or possess all necessary licenses or other valid rights to use
all patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, copyrights and proprietary information used or held for use in
connection with their respective businesses (the "COMSYS INTELLECTUAL
PROPERTY"), free and clear of all Liens, and there are no assertions or claims
challenging the validity of any of the foregoing. Neither Holding nor any
Holding Subsidiary has granted to any other Person any license to use any of the
foregoing. To Holding's and Comsys' knowledge, the conduct of Holding's and the
Holding Subsidiaries' respective businesses does not conflict with any patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copy rights and proprietary information of others in any way. Holding and Comsys
have taken reasonable security measures to protect the secrecy, confidentiality
and value of the Comsys Intellectual Property, to the extent such measures are
appropriate. Neither Holding nor any Holding Subsidiary is required to pay any
royalty or other amount to anyone with respect to any of the Comsys Intellectual
Property. The execution, delivery and performance of this Agreement by Holding
or Comsys of the transactions contemplated by this Agreement will not alter,
impair, diminish or result in the loss of any rights or interests of Holding or
any Holding Subsidiary of any Comsys Intellectual Property.
SECTION 4.19. Insurance. Holding and each Holding Subsidiary is
covered by valid, outstanding enforceable policies of insurance issued by
reputable insurers covering its properties, assets and business against risks of
the nature normally insured against by similar entities in the same or similar
lines of business in coverage amounts typically and reasonably carried by such
entities (the "COMSYS INSURANCE POLICIES"). Section 4.19 of the Comsys
Disclosure Letter sets forth a complete and accurate list of the Comsys
Insurance Policies. The Comsys Insurance Policies are in full force and effect,
and all premiums due thereon have been paid through the date of this Agreement
and will be paid through the Closing Date. Holding and each of the Holding
Subsidiaries has complied in all material respects with the provisions of the
Comsys Insurance Policies applicable to it, and provided to the Company copies
of all of the Comsys Insurance Policies and all amendments and riders thereto.
There are no pending claims under any of the Comsys Insurance Policies,
including any claim for loss or damage to the properties, assets or business of
Holding or any of the Holding Subsidiaries. Neither Holding nor any of the
Holding Subsidiaries has failed to give, in a timely manner, any notice required
under any of the Comsys Insurance Policies to preserve its rights thereunder.
SECTION 4.20. Certain Contracts and Arrangements.
(a) Except with respect to any Comsys Employee Benefit Plan, Section
4.20(a) of the Comsys Disclosure Letter sets forth a true and complete list of
(i) all material agreements to which Holding or any Holding Subsidiary is a
party (which for customers shall be limited to the top fifty Comsys customers in
terms of first quarter 2004 revenue); (ii) all loan or credit agreements, notes,
bonds, mortgages, indentures and other agreements and instruments pursuant to
which indebtedness of Holding or any Holding Subsidiary is outstanding or may be
incurred; (iii) all agreements requiring capital expenditures in excess of
$50,000 individually or
43
$200,000 in the aggregate; and (iv) all contracts that cannot be terminated on
30 days' notice or less without material cost or penalties (the agreements,
contracts and obligations specified above, collectively the "COMSYS CONTRACTS").
Each Comsys Contract is in full force and effect, and is a legal, valid and
binding obligation of Holding or one of the Holding Subsidiaries and, to the
knowledge of Holding and Comsys, each of the other parties thereto, enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization or other
laws affecting the enforcement of creditors' rights generally or by general
equitable principles. No condition exists or event has occurred which (whether
with or without notice or lapse of time or both) would constitute a violation,
default or breach by Holding or any Holding Subsidiary or, to the knowledge of
Holding and Comsys, any other party thereto under any Comsys Contract or result
in a right of termination of any Comsys Contract. Other than as contemplated by
Section 4.3(e), no consents, assignments, waivers, authorizations or other
certificates are necessary in connection with the transactions contemplated
hereby to provide for the continuation in full force and effect of all of the
Comsys Contracts after the Closing.
(b) Neither Holding nor any of the Holding Subsidiaries is a party
to or bound by (i) any non-competition or other agreement or other arrangement
that purports to limit or otherwise materially restrict Holding or any Holding
Subsidiary or any successor thereto, or that would, after the Effective Time, to
the knowledge of Holding and Comsys, materially limit or restrict the Company,
the Surviving Entity or any of their subsidiaries or any successor thereto, from
engaging or competing in the information technology staffing business or (ii)
any agreement or other arrangement that contains a "most favored nation"
provision purporting to require Holding or any of the Holding Subsidiaries to
provide services to a customer on terms at least as favorable as those on which
Holding or any Holding Subsidiary provides services to a third party
unaffiliated with such customer.
SECTION 4.21. Comsys Financing Arrangements. Comsys has obtained a
commitment letter from a third party lender (the "COMMITMENT LETTER"), a true
and complete copy of which has been furnished by Comsys to the Company, pursuant
to which the lender has agreed, subject to the terms and on the conditions set
forth in the Commitment Letter, to make available to the Company at the
Effective Time aggregate financing in the amount of $183 million (the
"FINANCING"). The Commitment Letter is in full force and effect and, since the
date thereof, has not been withdrawn, amended or terminated in any manner.
SECTION 4.22. Books and Financial Records. The respective books of
account and other financial records of Holding and Comsys are complete and
correct and represent actual, bona fide transactions and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Exchange Act (regardless of whether or not Holding or Comsys are
subject to that Section), including the maintenance of a system of internal
controls that would meet the requirements of such section if applicable. As of
the Effective Time, neither Holding nor any other Holding Subsidiary will have
any loans or extensions of credit outstanding with any of its respective
officers or directors that would cause the Company not to be in compliance with
Section 402 of the Xxxxxxxx-Xxxxx Act if applicable.
44
ARTICLE 4A
REPRESENTATIONS AND WARRANTIES OF THE HOLDING STOCKHOLDERS
Each Holding Stockholder, severally and not jointly, hereby represents and
warrants as to itself only and not as to any other Holding Stockholder to the
Company as follows:
SECTION 4A1. Status; Power and Authority. If the Holding Stockholder
is not a natural person, the Holding Stockholder is a corporation, limited
liability company or partnership, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite corporate, limited liability company or partnership power and
authority to execute and deliver this Agreement and the Holding Stockholder
Consent, to perform its obligations hereunder and to consummate the transactions
contemplated hereby and has taken all necessary corporate, limited liability
company or partnership action, as applicable, to authorize the execution and
delivery of this Agreement. If the Holding Stockholder is a natural person, the
Holding Stockholder has the requisite competence, power and authority to execute
and deliver this Agreement and the Holding Stockholder Consent, to perform his
or her obligations hereunder and to consummate the transactions contemplated
hereby.
SECTION 4A2. Enforceability. This Agreement has been duly executed
and delivered by the Holding Stockholder and is enforceable in accordance with
its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization or other
laws affecting the enforcement of creditors' rights generally or by general
equitable principles.
SECTION 4A3. Access to Information. The Holding Stockholder has had
an opportunity to review all documents and information provided by the Company
that such Holding Stockholder has requested and considers material to its
decision to enter into this Agreement and to ask questions of the Company or
persons acting on the Company's behalf, concerning the Company and the terms and
conditions of the Merger, and all such questions, if any, have been answered to
the full satisfaction of the Holding Stockholder.
SECTION 4A4. Knowledgeable and Sophisticated Investor. The Holding
Stockholder is a sophisticated investor with such knowledge and experience in
financial and business matters and investments in restricted securities that the
Holding Stockholder is capable of evaluating the merits and risks of acquiring
the shares of Company Common Stock to be issued to the Holding Stockholder in
connection with the Merger. The Holding Stockholder is aware that acquiring
shares of the Company Common Stock is a speculative investment and that there is
no guarantee that the Holding Stockholder will realize any gain from its
investment. The Holding Stockholder is (i) able to bear the economic risk of
this investment and (ii) able to hold the shares of Company Common Stock
indefinitely. The Holding Stockholder has consulted with its own attorney,
accountant or investment adviser with respect to the suitability of such
investment.
SECTION 4A5. Accredited Investor. The Holding Stockholder (x) is an
"accredited investor" as defined in Regulation D under the Securities Act, and
has executed and delivered to the Company, or will execute and deliver to the
Company within two days of the
45
date of this Agreement, an accredited investor questionnaire in the form
attached hereto as Exhibit E or (y) has retained or consulted with a "purchaser
representative" (as such term is defined in Rule 501 of Regulation D promulgated
under the Securities Act) in connection with the transactions contemplated by
this Agreement. The Holding Stockholder understands that the Company has relied
on the information contained therein in determining to issue shares of Company
Common Stock to the Holding Stockholder.
SECTION 4A6. No Other Representations. The Holding Stockholder
acknowledges that, except as expressly stated in Article 3 of this Agreement,
neither the Company (including any Company Subsidiary) nor any officer,
director, employee, agent or representative of the Company or any Company
Subsidiary has made any representations or warranties of any kind to the Holding
Stockholder with respect to its investment in the Company Common Stock.
SECTION 4A7. Investment Intent. The Holding Stockholder understands
that the shares of Company Common Stock to be issued to the Holding Stockholder
in connection with the Merger, when issued and delivered to the Holding
Stockholder, will not have not been registered under the Securities Act, or any
other applicable state or federal securities statutes. The Holding Stockholder
has no present intention of reselling, directly or indirectly participating in
any distribution of, or otherwise disposing of such shares of Company Common
Stock in violation of applicable securities laws. The Holding Stockholder
understands that it may bear the economic risk of holding such shares for an
indefinite period of time.
SECTION 4A8. Transfer Restrictions. The Holding Stockholder
understands that the shares of Company Common Stock to be issued to the Holding
Stockholder in connection with the Merger may not be offered for sale, sold or
transferred except pursuant to (i) an effective registration under the
Securities Act or in a transaction which is otherwise in compliance with the
Securities Act, (ii) an effective registration under any applicable state
securities statute or in a transaction otherwise in compliance with any
applicable state securities statute and (iii) compliance with the applicable
securities laws of other jurisdictions.
SECTION 4A9. No General Solicitation. The Holding Stockholder
acknowledges that the shares of Company Common Stock to be issued to the Holding
Stockholder in connection with the Merger were not offered to the Holding
Stockholder by means of any general solicitation, publicly disseminated
advertisement or sales literature.
SECTION 4A10. No Brokers. The Holding Stockholder has not authorized
any broker, dealer, agent or finder to act on its behalf, nor does the Holding
Stockholder have any knowledge of any broker, dealer, agent or finder purporting
to act on its behalf with respect to the Merger.
SECTION 4A11. Legend. The Holding Stockholder acknowledges that a
legend substantially as follows will be placed on the certificates representing
the shares of Company Common Stock issued to the Holding Stockholder in
connection with the Merger, along with any additional legend required by federal
or state law or required pursuant to any shareholder or similar agreement:
46
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.
SECTION 4A12. No Recommendation. The Holding Stockholder
acknowledges that no federal or state agency has made any finding or
determination relating to the fairness for investment of the Company Common
Stock and no federal or state agency has recommended or endorsed the Company
Common Stock.
SECTION 4A13. Other Activities. The Holding Stockholder was not
organized for the specific purpose of acquiring the shares of Company Common
Stock to be issued to the Holding Stockholder in connection with the Merger and
has other investments or business activities or will make other investments or
engage in other business activities, unless the Holding Stockholder has
indicated to the contrary to the Company and specified the number of beneficial
owners thereof and the Company has consented in writing thereto.
SECTION 4A14. Reliance. The Holding Stockholder understands that the
shares of Company Common Stock to be issued to the Holding Stockholder in
connection with the Merger are being transferred to it in reliance upon specific
provisions of federal and state securities laws and that the Company is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Holding Stockholder set forth herein
in order to determine the applicability of such provisions. The Holding
Stockholder shall indemnify and hold the Company harmless from damage, claim or
loss (including attorneys' fees) resulting from breach by such Holding
Stockholder of any representation set forth in this Article 4A with respect to
such Holding Stockholder.
ARTICLE 5
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, prior to the Effective Time, unless
Holding shall otherwise consent in writing (which consent shall not be
unreasonably withheld, conditioned or delayed), or except as expressly permitted
or required pursuant to this Agreement or any agreement the form of which is
attached hereto as an exhibit (including the Staffing Disposition in conformity
with the terms of this Agreement):
(a) The businesses of the Company and the Company Subsidiaries shall
be conducted only in the ordinary and usual course of business and consistent
with past practices, and the Company and the Company Subsidiaries shall use
their commercially reasonable efforts to maintain and preserve intact their
respective business organizations and to maintain significant beneficial
business relationships with suppliers, contractors, distributors, customers,
licensors,
47
licensees and others having business relationships with them to keep available
the services of their current key officers and employees; and
(b) Without limiting the generality of the foregoing Section 5.1(a),
except as set forth in Section 5.1 of the Company Disclosure Letter or except as
expressly permitted or required pursuant to this Agreement or any agreement the
form of which is attached hereto as an exhibit, the Company shall not directly
or indirectly, and shall not permit any of the Company Subsidiaries to, do any
of the following:
(i) acquire, sell, lease, transfer or dispose of any assets,
rights or securities that are material to the Company and the Company
Subsidiaries or Partners, in each case considered as a single enterprise, or
terminate, cancel, materially modify or enter into any material commitment,
transaction, line of business or other agreement, in each case outside of the
ordinary course of business consistent with past practice;
(ii) acquire by merging or consolidating with or by purchasing
any equity interest in or a substantial portion of the assets of, or by any
other manner, any business, corporation, partnership, association or other
business organization or division thereof;
(iii) amend or propose to amend its certificate of
incorporation or bylaws or, in the case of the Company Subsidiaries, their
respective constituent documents;
(iv) declare, set aside or pay any dividend or other
distribution payable in cash, capital stock, property or otherwise with respect
to any shares of its capital stock other than intra-company transfers from any
Company Subsidiary to its parent entity;
(v) purchase, redeem or otherwise acquire, or offer to
purchase, redeem or otherwise acquire, any shares of its capital stock, other
equity securities, other ownership interests or any options, warrants or rights
to acquire any such stock, securities or interests;
(vi) split, combine or reclassify any outstanding shares of
its capital stock;
(vii) except for Company Common Stock issuable upon exercise
of options, warrants or convertible debt outstanding on the date hereof, issue,
sell, dispose of or authorize, propose or agree to the issuance, sale or
disposition by the Company or any of the Company Subsidiaries of, any shares of,
or any options, warrants or rights of any kind to acquire any shares of, or any
securities convertible into or exchangeable for any shares of, its capital stock
of any class, or any other securities in respect of, in lieu of, or in
substitution for any class of its capital stock outstanding on the date hereof;
(viii) modify the terms of any existing indebtedness for
borrowed money or security issued by the Company or any Company Subsidiary;
(ix) incur any indebtedness for borrowed money, except for
borrowings made in the ordinary course of business under the Second Amended and
Restated
48
Credit Facility dated as of April 14, 2003, as amended, among the Company, its
subsidiary guarantors and CIT Group as a successor to Bank of America, N.A., as
Agent;
(x) assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any other Person, or
make any loans or advances, except to or for the benefit of Partners;
(xi) create or assume any material Lien on any material asset;
(xii) authorize, recommend or propose any change in its
capitalization;
(xiii) (A) take any action with respect to the grant of or
increase in any severance or termination pay to any current or former director,
executive officer or employee of the Company or any Company Subsidiary, except
as may be required by any existing severance plan or other agreement, (B)
execute any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any such director, executive
officer or employee of the Company or any Company Subsidiary, (C) increase the
benefits payable under any existing severance or termination pay policies or
employment agreements, (D) increase the compensation, bonus or other benefits of
current or former directors, executive officers or employees of the Company or
any Company Subsidiary other than billable consultants and, in the case of
non-executive officer employees, increases provided for in the Company's 2004
budget as previously delivered to Holding and Comsys (provided, however, that
the Company is operating within the limits of such budget at the time of any
such increase), (E) adopt or establish any new employee benefit plan or amend in
any material respect any existing employee benefit plan, (F) provide any
material benefit to a current or former director, executive officer or employee
of the Company or any Company Subsidiary not required by any existing agreement
or employee benefit plan, other than for clauses (A), (B) and (D) above, in the
case of employees who are not directors and executive officers, in the ordinary
course of business, (G) hire any person (other than billable consultants) at a
level of annual compensation (including base pay and any guaranteed or signing
bonus or other incentive payments not in accordance with the Company's standard
plans) greater than or equal to $150,000, or (H) take any action that would
result in its incurring any obligation for any payments or benefits described in
clauses (i), (ii), (iii) or (iv) of Section 3.10(j) (without regard to whether
the transactions contemplated by this Agreement are consummated) except to the
extent required in a written contract or agreement in existence as of the date
of this Agreement or by applicable law;
(xiv) other than in the ordinary course of business consistent
with past practice, execute or amend (other than as required by existing
employee benefit plans or employment agreements or by applicable law) in any
material respect any employment, consulting, severance or indemnification
agreement between the Company or any of the Company Subsidiaries and any of
their respective directors, officers, agents, consultants or employees, or any
collective bargaining agreement or other obligation to any labor organization or
employee incurred or entered into by the Company or any of the Company
Subsidiaries (other than as required by existing employee benefit plans or
employment agreements or by applicable law);
49
(xv) make any changes in its method of reporting for taxes or
accounting methods other than as required by GAAP or applicable law; make or
rescind any Tax election; make any change to its method of reporting income,
deductions, or other Tax items for Tax purposes; settle or compromise any Tax
liability or enter into any transaction with an affiliate outside the ordinary
course of business if such transaction would give rise to a material tax
liability;
(xvi) settle, compromise or otherwise resolve any litigation
or other legal proceedings involving a payment of more than $100,000 in any one
case by the Company or any of the Company Subsidiaries;
(xvii) other than in the ordinary course of business, pay or
discharge any claims, Liens or liabilities involving more than $100,000
individually or $200,000 in the aggregate, which are not reserved for or
reflected on the balance sheets included in the Company Financial Statements;
(xviii) write off any accounts or notes receivable in excess
of $250,000 in the aggregate;
(xix) make or commit to make capital expenditures in excess of
the aggregate budgeted amount set forth in the Company's fiscal 2004 capital
expenditure plan previously provided to Comsys;
(xx) enter into any agreement, arrangement or commitment that
limits or otherwise restricts the Company or any Company Subsidiary, or that
would reasonably be expected to, after the Effective Time, limit or restrict
Comsys or any of its Subsidiaries or any of their respective affiliates or any
successor thereto, from engaging or competing in any line of business in which
it is currently engaged or in any geographic area material to the business or
operations of the Company and the Company Subsidiaries or Partners, in each case
considered as a single enterprise;
(xxi) other than in the ordinary course of business consistent
with past practice, terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it is a party;
(xxii) except as permitted by Section 6.10, knowingly take, or
agree to commit to take, any action that would or would reasonably be expected
to result in the failure of a condition set forth in Section 7.2(a) or (b) at,
or as of any time prior to, the Effective Time, or that would materially impair
the ability of the Company, Holding, Comsys, Merger Sub, the Holding
Stockholders or the holders of Company Common Stock to consummate the Merger in
accordance with the terms hereof or materially delay such consummation;
(xxiii) knowingly take any action that would or could
reasonably be expected to disqualify the Merger as a reorganization within the
meaning of Section 368(a) of the Code;
(xxiv) make any payments to any Person that beneficially holds
ten percent (10%) or more of any class of issued and outstanding capital stock
of the Company or is
50
a senior officer of the Company, or any affiliate of any such Person, whether in
respect of such capital stock, as a management or consulting fee or otherwise,
provided, however, that the Company may pay to any such Person (A) interest that
is then due and owing on existing indebtedness that is otherwise permissible
hereunder or (B) compensation and benefits payable to any such Person that is
otherwise permissible hereunder; or
(xxv) take or agree in writing or otherwise to take any of the
actions precluded by Sections 5.1(a) or (b).
SECTION 5.2. Conduct of Business by Holding and Comsys Pending the
Merger. Holding and Comsys covenant and agree that, prior to the Effective Time,
unless the Company shall otherwise consent in writing (which consent shall not
be unreasonably withheld, conditioned or delayed) or except as expressly
permitted or required pursuant to this Agreement or any agreement the form of
which is attached hereto as an exhibit:
(a) The businesses of Holding and the Holding Subsidiaries shall be
conducted only in the ordinary and usual course of business and consistent with
past practices, and Holding and the Holding Subsidiaries shall use their
commercially reasonable efforts to maintain and preserve intact their respective
business organizations and to maintain significant beneficial business
relationships with suppliers, contractors, distributors, customers, licensors,
licensees and others having business relationships with them to keep available
the services of their current key officers and employees; and
(b) Without limiting the generality of the foregoing Section 5.2(a),
except as set forth in Section 5.2 of the Comsys Disclosure Letter or except as
expressly permitted or required pursuant to this Agreement or any agreement the
form of which is attached hereto as an exhibit, Holding and Comsys shall not
directly or indirectly, and shall not permit any of the Holding Subsidiaries to,
do any of the following:
(i) acquire, sell, lease, transfer or dispose of any assets,
rights or securities that are material to Holding and the Holding Subsidiaries
or terminate, cancel, materially modify or enter into any material commitment,
transaction, line of business or other agreement, in each case outside of the
ordinary course of business consistent with past practice;
(ii) acquire by merging or consolidating with or by purchasing
any equity interest in or a substantial portion of the assets of, or by any
other manner, any business, corporation, partnership, association or other
business organization or division thereof;
(iii) amend or propose to amend Holding's certificates of
incorporation or bylaws or, in the case of the Holding Subsidiaries, their
respective constituent documents;
(iv) declare, set aside or pay any dividend or other
distribution payable in cash, capital stock, property or otherwise with respect
to any shares of its capital stock other than intra-company transfers from any
Holding Subsidiary to its parent entity;
(v) except for the redemption of the Holding Class A-1
Preferred Stock, Holding Class A-2 Preferred Stock and Holding Class E Preferred
Stock, purchase,
51
redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire,
any shares of its capital stock, other equity securities, other ownership
interests or any options, warrants or rights to acquire any such stock,
securities or interests;
(vi) split, combine or reclassify any outstanding shares of
its capital stock;
(vii) except for Comsys Common Stock issuable upon exercise of
options, warrants or convertible debt outstanding on the date hereof, issue,
sell, dispose of or authorize, propose or agree to the issuance, sale or
disposition by Holding or any of the Holding Subsidiaries of, any shares of, or
any options, warrants or rights of any kind to acquire any shares of, or any
securities convertible into or exchangeable for any shares of, their respective
capital stock of any class, or any other securities in respect of, in lieu of,
or in substitution for any class of their respective capital stock outstanding
on the date hereof;
(viii) modify the terms of any existing indebtedness for
borrowed money or security issued by Holding or any Holding Subsidiary (except
as provided in Section 5.2(b)(i));
(ix) incur any indebtedness for borrowed money, except for
borrowings made in the ordinary course of business under the Second Amended and
Restated Credit Agreement dated as of June 30, 2000, as amended (the "CREDIT
FACILITY"), among Comsys, Holding, various guarantors named therein and Wachovia
Bank, N.A. (successor to First Union National Bank), as Administrative Agent;
(x) assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any other Person, or
make any loans or advances, except to or for the benefit of the Holding
Subsidiaries;
(xi) create or assume any material Lien on any material asset
except for Liens created in connection with the Replacement Facility (as defined
below);
(xii) authorize, recommend or propose any change in its
capitalization;
(xiii) (A) take any action with respect to the grant of or
increase in any severance or termination pay to any current or former director,
executive officer or employee of Holding or any Holding Subsidiary, except as
may be required by any existing severance plan or other agreement, (B) execute
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any such director, executive
officer or employee of Holding or any Holding Subsidiary, (C) increase the
benefits payable under any existing severance or termination pay policies or
employment agreements, (D) increase the compensation, bonus or other benefits of
current or former directors, executive officers or employees of Holding or any
Holding Subsidiary other than billable consultants and, in the case of
non-executive officer employees of Comsys, increases provided for in Comsys'
2004 budget as previously delivered to the Company (provided, however, that
Comsys is operating within the limits of such budget at the time of any such
increase), (E) adopt or establish any new employee benefit plan or amend in any
material respect any existing employee benefit plan, (F) provide any material
benefit to a current or former director,
52
executive officer or employee of the Company or any Company Subsidiary not
required by any existing agreement or employee benefit plan, other than for
clauses (A), (B) and (D) above, in the case of employees who are not directors
and executive officers, in the ordinary course of business, (G) hire any person
(other than billable consultants) at a level of annual compensation (including
base pay and any guaranteed or signing bonus or other incentive payments not in
accordance with the Company's standard plans) greater than or equal to $150,000,
or (H) take any action that would result in its incurring any obligation for any
payments or benefits described in clauses (i), (ii), (iii) or (iv) of Section
3.10(j) (without regard to whether the transactions contemplated by this
Agreement are consummated) except to the extent required in a written contract
or agreement in existence as of the date of this Agreement or by applicable law;
(xiv) other than in the ordinary course of business consistent
with past practice, execute or amend (other than as required by existing
employee benefit plans or employment agreements or by applicable law) in any
material respect any employment, consulting, severance or indemnification
agreement between the Company or any of the Company Subsidiaries and any of
their respective directors, officers, agents, consultants or employees, or any
collective bargaining agreement or other obligation to any labor organization or
employee incurred or entered into by the Company or any of the Company
Subsidiaries (other than as required by existing employee benefit plans or
employment agreements or by applicable law);
(xv) make any changes in its method of reporting for taxes or
accounting methods other than as required by GAAP or applicable law; make or
rescind any Tax election; make any change to its method of reporting income,
deductions, or other Tax items for Tax purposes; settle or compromise any Tax
liability or enter into any transaction with an affiliate outside the ordinary
course of business if such transaction would give rise to a material tax
liability;
(xvi) settle, compromise or otherwise resolve any litigation
or other legal proceedings involving a payment of more than $100,000 in any one
case by the Company or any of the Company Subsidiaries;
(xvii) other than in the ordinary course of business, pay or
discharge any claims, Liens or liabilities involving more than $100,000
individually or $200,000 in the aggregate, which are not reserved for or
reflected on the balance sheets included in the Company Financial Statements;
(xviii) write off any accounts or notes receivable in excess
of $250,000 in the aggregate;
(xix) make or commit to make capital expenditures in excess of
the aggregate budgeted amount set forth in the Company's fiscal 2004 capital
expenditure plan previously provided to Comsys;
(xx) enter into any agreement, arrangement or commitment that
limits or otherwise restricts the Company or any Company Subsidiary, or that
would reasonably be expected to, after the Effective Time, limit or restrict
Comsys or any of
53
their respective affiliates or any successor thereto, from engaging or competing
in any line of business in which it is currently engaged or in any geographic
area material to the business or operations of the Company and the Company
Subsidiaries or Partners, in each case considered as a single enterprise;
(xxi) other than in the ordinary course of business consistent
with past practice, terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it is a party;
(xxii) knowingly take, or agree to commit to take, any action
that would or would reasonably be expected to result in the failure of a
condition set forth in Section 7.3(a) or (b) at, or as of any time prior to, the
Effective Time, or that would materially impair the ability of the Company,
Holding, Comsys, Merger Sub, the Holding Stockholders or the holders of Company
Common Stock to consummate the Merger in accordance with the terms hereof or
materially delay such consummation;
(xxiii) knowingly take any action that would or could
reasonably be expected to disqualify the Merger as a reorganization within the
meaning of Section 368(a) of the Code;
(xxiv) make any payments to any Holding Stockholder or any
affiliate of such Person, whether in respect of Holding Shares, as a management
or consulting fee or otherwise, provided, however, that Holding or Comsys may
pay to any such Person interest that is then due and owing on existing
indebtedness that is otherwise permissible hereunder or (B) compensation and
benefits payable to any such Person that is otherwise permissible hereunder; or
(xxv) take or agree in writing or otherwise to take any of the
actions precluded by Sections 5.2(a) or (b).
Notwithstanding any other provision of this Section 5.2, Holding and Comsys are
expressly permitted to enter into a new credit facility with Xxxxxxx Xxxxx
Capital and other lenders party thereto to replace the Credit Facility (the
"REPLACEMENT FACILITY").
ARTICLE 6
ADDITIONAL AGREEMENTS
SECTION 6.1. Preparation of Proxy Statement.
(a) The Company shall prepare and file the Proxy Statement with the
SEC pursuant to the Exchange Act no later than August 2, 2004; provided that
Holding and its counsel shall be given reasonable opportunity prior to such
filing to review and comment on the Proxy Statement prior to the filing thereof
with the SEC. The Company will cause the Proxy Statement to comply as to form in
all material respects with the applicable provisions of the Exchange Act and the
rules and regulations promulgated thereunder, including Regulation 14C and Rule
14f-1 of the Exchange Act, and will provide notice to Holding, promptly after
receiving notice thereof, of any request by the SEC for amendment of the Proxy
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. The Company
54
agrees to use its commercially reasonable efforts, after consultation with
Holding, to respond promptly to any comments or requests made by the SEC with
respect to the Proxy Statement. No filing of, or amendment or supplement
(including by incorporation by reference) to, or correspondence to the SEC or
its staff with respect to, the Proxy Statement will be made by the Company
without the approval of Holding, which approval shall not be unreasonably
withheld or delayed; provided that with respect to documents filed by the
Company which are incorporated by reference in the Proxy Statement, this right
of approval shall apply only with respect to information relating to Holding,
Comsys or their respective businesses, financial condition or results of
operations, or this Agreement or the transactions contemplated hereby.
(b) Holding and Comsys agree to use their commercially reasonable
efforts to cooperate and to provide the Company with such information as it may
reasonably request in connection with the preparation of the Proxy Statement.
Each party agrees promptly to supplement, update and correct any information
provided by it for use in the Proxy Statement if and to the extent that it is or
shall have become incomplete, false or misleading.
(c) The Company will use commercially reasonable efforts to cause
the Proxy Statement to be mailed to its stockholders as promptly as practicable
after the date that the SEC completes its review of the Proxy Statement or, if
the SEC chooses not to review the Proxy Statement, within five days after the
date that the SEC notifies the Company that it will not review the Proxy
Statement.
(d) The Company shall, as soon as practicable after the date hereof,
and in accordance with the Company Charter, Company Bylaws and applicable law,
establish a record date (which will be as soon as practicable after the date
hereof) for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "COMPANY STOCKHOLDERS MEETING") solely for the purpose of
considering and taking action upon (i) this Agreement, (ii) the amendment and
restatement of the Company Charter and (iii) the Staffing Disposition, provided,
however, that the Company may elect to include for consideration at the Company
Stockholders Meeting (and include in the Proxy Statement) (x) its annual
election of directors and (y) the ratification of its auditors for fiscal 2004.
Notwithstanding anything herein to the contrary, and subject to applicable law
and applicable NASD rules, the Company may, provided it has fully complied with
Sections 6.1(a), (b) and (c), hold its Company Stockholders Meeting at a time of
its choosing, provided, however, that such Company Stockholders Meeting shall be
held not later than 30 days following the mailing by the Company of its Proxy
Statement to the Company Stockholders or such shorter period as necessary to
ensure that the Company Stockholders Meeting is held no later than five business
days before the expiration date of the Commitment Letter as set forth in the
Commitment Letter. Once the Company Stockholders Meeting has been called and
noticed, the Company shall not postpone or adjourn the Company Stockholders
Meeting without the consent of Holding, which shall not be unreasonably
withheld, conditioned or delayed; provided, however, that the Company may so
postpone or adjourn the Company Stockholders Meeting without the consent of
Holding under the following circumstances: (A) for the absence of a quorum, or
(B) to allow reasonable additional time for the filing and mailing of any
supplemental or amended disclosure which the Company believes in good faith is
necessary under applicable law and for such supplemental or amended disclosure
to be disseminated and reviewed by the Company's stockholders prior to the
Company Stockholders Meeting, or (C) in the event the Board of Directors of the
Company withdraws, modifies or changes in accordance
55
with the terms of this Agreement its recommendation that this Agreement and the
Merger are in the best interests of the Company and its stockholders; provided,
further, that in the event that the Company Stockholders Meeting is delayed to a
date after the Termination Date (as defined in Section 8.1(b)) as a result of
either (A) or (B) above, then the Termination Date shall be extended to the
fifth business day after such date). Each of the proposals set forth in clauses
(i) through (iii) shall be conditioned upon approval of all of the other
proposals set forth in clauses (i) through (iii), and no such proposal shall be
implemented unless all four proposals are implemented, and the Company shall
include statements to that effect in the Proxy Statement. The Board of Directors
of the Company shall declare that this Agreement and the Merger and each of the
matters set forth in clauses (ii) and (iii) above are advisable and in the best
interests of the Company and its stockholders and recommend that this Agreement
and each of the matters set forth in clauses (ii) and (iii) above be approved by
the stockholders of the Company and include in the Proxy Statement a copy of
such recommendations; provided, however, that the Board of Directors of the
Company may withdraw, modify or change its recommendation with respect to this
Agreement, the Merger and/or any of the other matters set forth in clauses (ii)
or (iii) above if, but only if it has determined in good faith, after
consultation with outside counsel, that withdrawal, modification or change of
any such recommendation is, in the good faith judgment of the Board of Directors
of the Company, required by the Board of Directors to comply with its fiduciary
duties imposed by applicable law. Unless the Board of Directors of the Company
has withdrawn or modified its recommendation of this Agreement and any of the
matters contained in clauses (ii) or (iii) above in compliance with this Section
6.1(d), the Company shall use its commercially reasonable best efforts to
solicit from stockholders of the Company proxies in favor of (i) the adoption of
this Agreement, (ii) the amendment and restatement of the Company Charter and
(iii) the approval of the Staffing Disposition, and shall take all other
commercially reasonable action necessary or advisable to secure the vote or
consent of stockholders required by applicable law to effect the Merger and
other transactions contemplated by this Agreement.
(e) As soon as practicable (and in any event not later than one
business day) following the execution of this Agreement:
(i) Holding will obtain from the Holding Stockholders the
Holding Stockholder Consent and promptly deliver to the Company a true and
correct copy thereof; and
(ii) The Company will execute the Merger Sub Stockholder
Consent and promptly deliver to Comsys a true and correct copy thereof.
SECTION 6.2. Blue Sky Laws. The Company shall take all actions as
may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of the Company Common Stock
in connection with the Merger, and Holding and Comsys shall use their
commercially reasonable best efforts to assist the Company as may be necessary
to comply with such laws.
SECTION 6.3. Consents and Approvals.
(a) The Company, Holding, Comsys, Merger Sub and the Holding
Stockholders shall each, as promptly as practicable, and in any event not later
than August 2,
56
2004, file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice any notifications required to be filed under the
HSR Act with respect to the transactions contemplated hereby. The parties shall
use reasonable best efforts to respond promptly to any requests for additional
information made by either of such agencies, and to cause the waiting periods
under the HSR Act to terminate or expire at the earliest possible date after the
date of filing.
(b) The Company, Holding, Comsys, Merger Sub and the Holding
Stockholders shall consult and cooperate with each other and (i) promptly
prepare and file all necessary documentation, (ii) effect all necessary
applications, notices, petitions and filings and execute all agreements and
documents, (iii) use all commercially reasonable efforts to obtain all necessary
permits, consents, approvals and authorizations of all governmental bodies, (iv)
provide all necessary information to effect the Financing and (v) use all
commercially reasonable efforts to obtain all necessary permits, consents,
approvals and authorizations of all other parties, in the case of each of the
foregoing clauses (i), (ii), (iii), (iv) and (v), necessary to consummate the
transactions contemplated by this Agreement or required by the terms of any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument to which the Company, Holding,
Merger Sub, Comsys or any of their respective Subsidiaries is a party or by
which any of them is bound; provided, however, that no note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument shall be amended or modified to increase in any
material respect the amount payable thereunder or to be otherwise more
burdensome, or less favorable, in each case in any material respect, to the
Company and the Company Subsidiaries or Partners, on the one hand, or Holding
and the Holding Subsidiaries, on the other hand, in each case considered as a
single enterprise, in order to obtain any permit, consent, approval or
authorization without first obtaining the written consent of Holding, on the one
hand, or the Company, on the other hand, which consent shall not be unreasonably
withheld, conditioned or delayed; and provided, further, that other than with
respect to the Staffing Disposition neither the Company and the Company
Subsidiaries or Partners, on the one hand, or Holding and the Holding
Subsidiaries, on the other hand, in each case considered as a single enterprise,
shall be required hereby to divest itself of any material part of its assets or
business in order to obtain any such permit, consent, approval or authorization.
The Company shall have the right to review and approve in advance all
characterizations of the information relating to the Company or Merger Sub;
Holding shall have the right to review and approve in advance all
characterizations of the information relating to Holding or Comsys; and each of
the Company and Holding shall have the right to review and approve in advance
all characterizations of the information relating to the transactions
contemplated by this Agreement, in each case which appear in any material filing
(including the Proxy Statement) made in connection with the transactions
contemplated hereby. The Company, Holding, Comsys and Merger Sub agree that they
will consult with each other with respect to the obtaining of all such necessary
permits, consents, approvals and authorizations of all third parties and
governmental bodies. Notwithstanding the foregoing, nothing in this Section
6.3(b) shall restrict or prohibit Holding or Comsys from entering into the
Replacement Facility or granting any Lien in favor of the lenders in connection
therewith.
SECTION 6.4. Public Statements. The Company, Holding, Comsys and
Merger Sub shall consult with each other prior to issuing, and provide each
other with the opportunity to review and comment upon, any public announcement,
statement or other
57
disclosure with respect to this Agreement or the transactions contemplated
hereby (including the Staffing Disposition) and shall not issue any such public
announcement or statement prior to such consultation, except as may be required
by law or any listing agreement with any securities exchange or trading market
applicable to any such party.
SECTION 6.5. Registration Rights.
(a) At or prior to the Closing, the Company and the Holding
Stockholders will enter into a Registration Rights Agreement with respect to the
shares of Company Common Stock issued to the Holding Stockholders in connection
with the Merger and substantially in the form attached as Exhibit F hereto. At
or prior to the Closing, the Company shall, and shall use commercially
reasonable efforts to cause, the Company stockholders who are a party thereto,
to enter into an Amended and Restated Registration Rights Agreement amending
certain provisions of the Registration Rights Agreement dated as of April 14,
2003, by and among the Company and the investors signatory thereto which amended
and restated agreement (the "AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT") shall be substantially in the form attached hereto as Exhibit G.
(b) The Company agrees to use all commercially reasonable efforts to
file a Registration Statement on Form S-8 ("FORM S-8") with the SEC within 60
days after the Closing for the registration of shares issuable pursuant to the
Company's existing 2003 Equity Incentive Plan.
SECTION 6.6. Further Assurances. Subject to the terms and conditions
provided herein (including Section 6.10), each of the Company, Holding, Comsys
and Merger Sub agrees to use all commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including obtaining all consents, approvals and authorizations
required for or in connection with the consummation by the parties hereto of the
transactions contemplated by this Agreement, and, only if Holding and the
Company mutually agree, contesting and resisting of any action, including any
legislative, administrative or judicial action, and seeking to have vacated,
lifted, reversed or overturned, any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) that restricts, prevents or
prohibits the consummation of the transactions contemplated by this Agreement.
In the event any litigation is commenced by any Person involving the Company or
its directors and relating to the transactions contemplated by this Agreement,
including any other Takeover Proposal (as defined in Section 6.10(c)), Holding
shall have the right, at its own expense, to participate therein; provided,
however, that the Company shall be entitled to control its own defense in any
such litigation.
SECTION 6.7. Tax Treatment. Each of Holding and the Company shall
use all commercially reasonable efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368 of the Code and to obtain the
opinions of counsel referred to in Sections 7.2(c) and 7.3(c). Each of Holding
and the Company shall execute the officers' certificates substantially in the
form attached as Exhibits H and I hereto, as of the date the Proxy Statement is
mailed to the Company's stockholders and as of the Closing Date; provided,
however, that the failure of Holding or the Company to certify as to any matter
in such officer
58
certificate because of an event, or change in facts or law, in any such case
outside of such party's control, shall not constitute a breach of this covenant.
SECTION 6.8. Notification of Certain Matters. Each of the Company
and Merger Sub agrees to give prompt notice to Holding and Comsys, and to use
all reasonable efforts to prevent or promptly remedy, (i) the occurrence or
failure to occur, or (ii) the impending or threatened occurrence or failure to
occur, of any event which occurrence or failure to occur would be reasonably
likely to cause the failure of any of the conditions set forth in Section 7.2(a)
or (b); provided, however, that the delivery of any notice pursuant to this
Section 6.8 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice. The Company and Merger Sub will provide to
Holding and Comsys, not more than five nor less than three business days prior
to the Closing Date, a revised and updated copy of the Company Disclosure Letter
accurate and complete as of that date; provided, however, that such revised and
updated Company Disclosure Letter will be provided for informational purposes
only and will not amend or supplement the Company Disclosure Letter or otherwise
limit or affect the remedies available to Holding or Comsys under this
Agreement. Holding and Comsys agree to give prompt notice to the Company, and to
use all reasonable efforts to prevent or promptly remedy, (i) the occurrence or
failure to occur, or (ii) the impending or threatened occurrence or failure to
occur, of any event which occurrence or failure to occur would be reasonably
likely to cause the failure of any of the conditions set forth in Section 7.3(a)
or (b); provided, however, that the delivery of any notice pursuant to this
Section 6.8 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice. Holding and Comsys will provide to the
Company and Merger Sub, not more than five nor less than three business days
prior to the Closing Date, a revised and updated copy of the Comsys Disclosure
Letter accurate and complete as of that date; provided, however, that such
revised and updated Comsys Disclosure Letter will be provided for informational
purposes only and will not amend or supplement the Comsys Disclosure Letter or
otherwise limit or affect the remedies available to the Company and Merger Sub
under this Agreement.
SECTION 6.9. Access to Information; Confidentiality.
(a) The Company shall, and shall cause the Company Subsidiaries and
the officers, directors, employees and agents of the Company and the Company
Subsidiaries to, afford the officers, employees and agents of Holding and
Comsys, at their sole cost and risk, reasonable access at all reasonable times
from the date hereof through the Effective Date to their respective officers,
employees, agents, properties, facilities, books, records, contracts and other
assets and shall furnish Holding and Comsys all financial, operating and other
data and information as Holding or Comsys through their respective officers,
employees or agents may reasonably request. Holding and Comsys, at their sole
cost and risk, shall have the right to make such due diligence investigations as
they shall deem necessary or reasonable, upon reasonable notice to the Company
and without disruption or damage to the Company's operations or properties. No
additional investigations or disclosures shall affect the Company's and Merger
Sub's representations and warranties contained herein, or limit or otherwise
affect the remedies available to Holding or Comsys pursuant to this Agreement.
(b) Holding shall, and shall cause the Holding Subsidiaries and the
officers, directors, employees and agents of Holding and the Holding
Subsidiaries to, afford the officers,
59
employees and agents of the Company, at its sole cost and risk, reasonable
access at all reasonable times from the date hereof through the Effective Date
to their respective officers, employees, agents, properties, facilities, books,
records, contracts and other assets and shall furnish the Company all financial,
operating and other data and information as the Company through its officers,
employees or agents may reasonably request. The Company, at its sole cost and
risk, shall have the right to make such due diligence investigations as it shall
deem necessary or reasonable, upon reasonable notice to Holding and Comsys and
without disruption or damage to Holding's or Comsys' respective operations or
properties. No additional investigations or disclosures shall affect Holding's
or Comsys' representations and warranties contained herein, or limit or
otherwise affect the remedies available to the Company pursuant to this
Agreement.
(c) The provisions of the Confidentiality Agreement, dated July 16,
2003, as amended, between Comsys and the Company (as so amended, the
"CONFIDENTIALITY AGREEMENT") shall remain in full force and effect in accordance
with its terms.
SECTION 6.10. No Solicitation.
(a) From the date of this Agreement until the Effective Time or, if
earlier, the termination of this Agreement in accordance with its terms, the
Company shall not, nor shall it permit any of the Company Subsidiaries to, nor
shall it authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of the Company Subsidiaries to:
(i) solicit, initiate or encourage the submission of any
Takeover Proposal (as hereinafter defined);
(ii) approve or recommend any Takeover Proposal, enter into
any agreement, agreement-in-principle or letter of intent with respect to or
accept any Takeover Proposal (or resolve to or publicly propose to do any of the
foregoing); or
(iii) participate or engage in any discussions or negotiations
regarding, or furnish to any Person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or could reasonably be expected to lead to, any Takeover Proposal;
provided, however, that:
(w) the Company and Holding shall issue a joint press release
announcing the entering into of the Agreement, among other matters, which press
release has been attached hereto as Exhibit J, and the Company shall promptly
file a current report on Form 8-K that will include as an attachment, among
other things, a copy of this Agreement;
(x) nothing contained in clauses (i) or (ii) above or the
Confidentiality Agreement shall prohibit the Company or its Board of Directors
from disclosing to the Company's stockholders a position with respect to a
tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act, provided that the Board of Directors of the
Company shall not recommend that the stockholders of the Company tender their
Company Common Stock in connection with any such tender or exchange offer unless
the
60
Board of Directors of the Company determines in good faith (after receiving the
advice of a financial adviser of nationally recognized reputation, which shall
include the Company Financial Advisor) that such Takeover Proposal is a Superior
Proposal (as hereinafter defined);
(y) if (under circumstances in which the Company has complied
with all of its obligations under this Section 6.10(a)), prior to receipt of the
Company Stockholder Vote, the Company receives an unsolicited written Takeover
Proposal from a third party that the Board of Directors of the Company
determines in good faith (after receiving the advice of a financial adviser of
nationally recognized reputation, which shall include the Company Financial
Advisor) is or is reasonably likely to lead to a Superior Proposal, the Company
and its representatives may conduct such additional discussions and negotiations
or provide such information as the Board of Directors of the Company shall
determine, but only if, prior to such provision of information or conduct of
such additional discussions or negotiations (A) such third party shall have
entered into a confidentiality agreement in customary form that is no less
favorable to the Company than is the Confidentiality Agreement (and containing
additional provisions that expressly permit the Company to comply with the
provisions of this Section 6.10) and (B) the Board of Directors of the Company
determines in its good faith judgment, after consultation with outside legal
counsel, that it is required to do so in order to comply with its fiduciary
duties under applicable law; and
(z) it shall not be a breach by the Company of the provisions
of this Section 6.10 if its efforts to effect the Staffing Disposition in
accordance with the terms of this Agreement and in compliance with the Buyer
Agreement (or Replacement Agreement, as applicable) result in an unsolicited
Superior Proposal.
(b) The Company shall immediately cease and cause to be terminated,
and shall cause its affiliates and the Company Subsidiaries and its or their
respective officers, directors, employees, representatives or agents to
terminate, all existing discussions or negotiations, if any, with any Persons
conducted heretofore with respect to, or that could reasonably be expected to
lead to, a Takeover Proposal (other than with respect to Staffing as
contemplated by Section 6.13 hereof and in compliance with the Buyer Agreement
(or the Replacement Agreement, as applicable)) and will cause any such parties
(and their agents or advisors) in possession of confidential information
regarding the Company or any of the Company Subsidiaries to return or destroy
such information. The Company shall ensure that its officers, directors and key
employees and its investment bankers, attorneys and other representatives are
aware of the provisions of this Section.
(c) For purposes of this Agreement, (i) "TAKEOVER PROPOSAL" shall
mean any inquiry, proposal or offer from any Person (other than Holding, Comsys
or any of their respective affiliates) relating to any merger, consolidation,
reorganization, share exchange, recapitalization, liquidation, direct or
indirect business combination, or other similar transaction involving the
Company or any Company Subsidiary or the issuance or acquisition of shares of
capital stock or other equity securities of the Company or any Company
Subsidiary representing 15% or more (by
61
voting power) of the outstanding capital stock of the Company or such Company
Subsidiary or any tender or exchange offer that if consummated would result in
any Person, together with all affiliates thereof, beneficially owning shares of
capital stock or other equity securities of the Company or any Company
Subsidiary representing 15% or more (by voting power) of the outstanding capital
stock of the Company or such Company Subsidiary, or the acquisition, license,
purchase or other disposition of a substantial portion of the technology,
business or assets of the Company or any Company Subsidiary outside the ordinary
course of business or inconsistent with past practice; and (ii) the term
"SUPERIOR PROPOSAL" means any bona fide written Takeover Proposal to effect a
merger, consolidation, reorganization, share exchange, recapitalization,
liquidation, direct or indirect business combination, or other similar
transaction as a result of which the Company's stockholders cease to own at
least 50% of the voting securities of the ultimate parent entity resulting from
such transaction or a sale of all or substantially all of the assets of the
businesses conducted by both (x) Staffing and its Subsidiaries and (y) Partners
and its Subsidiaries, which in any such case is on terms that the Board of
Directors of the Company determines in its good faith judgment (after receipt of
the advice of a financial advisor of nationally recognized reputation (it being
acknowledged that the Company Financial Advisor meets such qualification) and
outside counsel), taking into account all relevant factors, including any
conditions to such Takeover Proposal, the timing of the closing thereof, the
risk of nonconsummation, the ability of the Person making the Takeover Proposal
to finance the transaction contemplated thereby, any required governmental or
other consents, filings and approvals, (A) would, if consummated, result in a
transaction that is more favorable to the Company's stockholders from a
financial point of view than the transactions contemplated by this Agreement
(including the terms of any proposal by Comsys to modify the terms of the
transactions contemplated by this Agreement) and (B) is reasonably likely to be
completed (including as to any financing) without undue delay.
(d) In addition to the other obligations of the Company set forth in
this Section 6.10, the Company shall promptly, and in any event within 48 hours,
advise Comsys orally and in writing of any request for information with respect
to any Takeover Proposal, or any inquiry with respect to or which the Company
reasonably believes could result in a Takeover Proposal, the material terms and
conditions of such request, Takeover Proposal or inquiry, and the identity of
the Person making the same. The Company shall inform Comsys on a prompt and
current basis (and in any event within 48 hours) of the status and content of
any discussions regarding any Takeover Proposal with a third party and as
promptly as practicable of any change in the price, structure or form of the
consideration or material terms of and conditions regarding the Takeover
Proposal or of any other developments or circumstances which could reasonably be
expected to culminate in the taking of any of the actions referred to in Section
6.10(a) or Section 8.1(f)(i).
SECTION 6.11. Company Charter; Bylaws. Immediately prior to the
Effective Time, the Company shall (i) cause to be filed with the office of the
Secretary of State of the State of Delaware an amendment and restatement of the
Company Charter in the form attached as Exhibit K hereto (the "AMENDED
CHARTER"); and (ii) amend and restate the Company Bylaws in the form attached as
Exhibit L hereto.
SECTION 6.12. Allocation of Financing Fees. Not later than two
business days following the date of this Agreement with respect to amounts paid
to date and thereafter not later than two business days following presentation
by Comsys of invoices therefor, the Company will deliver to Comsys a payment
equal to one-half of the amount (if any) of any origination, commitment and/or
other fees and expenses specified in the Commitment Letter and paid by Comsys to
its third party lender pursuant thereto. The Company will deliver such payment
by
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wire transfer of immediately available funds to an account specified by Comsys.
Notwithstanding anything to the contrary in Section 8.1: (i) such payment shall
be refundable to the Company in the event of a termination of this Agreement
pursuant to Section 8.1(f)(ii) without regard to whether Comsys receives a
refund of such fees and (ii) in the event this Agreement is terminated pursuant
to Section 8.1(e), the Company will deliver to Comsys an additional payment
equal to the other one-half of the amount (if any) of any origination,
commitment and/or other fees specified in the Commitment Letter and paid by
Comsys to its third party lender pursuant thereto. If (x) this Agreement is
terminated pursuant to any provision of Section 8.1 (other than Section
8.1(f)(ii)), (y) Holding is not entitled to receive reimbursement of any
Expenses pursuant to Section 8.3, and (z) Comsys receives a refund of any
portion of such financing fees, then Comsys shall refund to the Company its pro
rata share of such refund.
SECTION 6.13. Staffing Disposition.
(a) The Company will use its commercially reasonable efforts to
cause to be sold, at or prior to the Effective Time, all of the business and
liabilities of Staffing in a stock-for-cash transaction in which the parties to
such transaction each elect, under Section 338(h)(10) of the Code, to treat the
transaction as a sale of the assets of Staffing for federal income tax purposes
(the "STAFFING DISPOSITION").
(b) A sale of the stock of Staffing shall qualify as a Staffing
Disposition only if the following is true:
(i) the Net Cash Proceeds received by the Company as
consideration for the disposition are at least $25 million, which shall be paid
to the Company in full in immediately available funds at the closing of such
transaction;
(ii) the cash proceeds received by the Company as
consideration for the disposition are at least $30.3 million (including funds
placed in escrow in connection with the Tax Liabilities), which shall be paid to
the Company in full in immediately available funds at the closing of such
transaction;
(iii) the Company will not be required to provide any letters
of credit associated with workers compensation insurance claims of the Staffing
business unless the Company receives from the prospective buyer of Staffing
letters of credit that may be drawn on to satisfy the Staffing workers
compensation insurance claims;
(iv) with the exception of any working capital adjustment
required to be made with respect to the Staffing Disposition, the Company will
cause the Staffing Disposition to be effected on terms providing (i) that the
purchaser of Staffing will bear any and all costs associated with the
post-closing transition of ownership of Staffing (including any administrative,
accounting, technical, back-office or similar support services provided by the
Company or any Company Subsidiary) and (ii) upon consummation of the disposition
(A) all of the representations and warranties of the Company or any Company
Subsidiary made in the definitive agreement pursuant to which the Staffing
Disposition is effected terminate, (B) neither the Company nor any Company
Subsidiary will have any liabilities or obligations, whether known or unknown,
absolute or contingent, accrued or unaccrued, relating to or arising
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out of the ownership or operation of Staffing, and (C) except as provided for in
the Buyer Agreement, the Company will continue to own (free from any royalty,
maintenance, renewal or other fees or charges) all Company Intellectual Property
that had been used by Staffing prior to consummation of the Staffing
Disposition;
(v) the definitive agreement pursuant to which the Staffing
Disposition is effected requires that Staffing and the purchaser of Staffing
will provide the Company with the right to use the name "Venturi Partners, Inc."
for a transition period of not less than 180 days after Closing; and
(vi) the Company reserves all of the Net Cash Proceeds from
the Staffing Disposition for, and at the Effective Time applies such amount
toward, the repayment of the Company's senior debt, as more particularly
described in Section 6.13 of the Company Disclosure Letter.
(c) The Buyer Agreement, in the form presented to Holding on the
date hereof, qualifies as a Staffing Disposition so long as the conditions
specified in Section 6.13(b) (other than those set forth in Section 6.13(b)(iii)
and Sections 6.13(b)(iv)(ii)(A) and (B)) are satisfied as of the Closing Date.
SECTION 6.14. Indemnification and Insurance.
(a) The Company and Merger Sub agree that, to the full extent
permitted by applicable law, all rights to indemnification by Holding or Comsys
now existing with respect to any matter existing or occurring, or any acts or
omissions occurring at or prior to the Effective Time in favor of each Person
who is now, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time an officer or director of Holding or any Holding
Subsidiary or an employee of Holding or any Holding Subsidiary or any individual
who has been specifically designated by the board of directors of Holdings as a
"Covered Person" within the meaning of Article Nine of its Fifth Amended and
Restated Certificate of Incorporation or who acts as a fiduciary under any of
the Comsys Employee Benefit Plans (each an "INDEMNIFIED PARTY") as provided in
Holding's or Comsys' respective certificate of incorporation or bylaws, in each
case as in effect on the date of this Agreement, or pursuant to any other
agreements in effect on the date hereof, copies of which have been provided to
the Company, including provisions relating to the advancement of expenses
incurred in the defense of any action or suit, shall survive the Merger and
shall remain in full force and effect. From and after the Effective Time, the
Company and the Surviving Entity shall be jointly and severally liable to pay
and perform in a timely manner such indemnification obligations.
(b) For six years after the Effective Time, to the full extent
permitted under applicable law, the Company and the Surviving Entity (the
"INDEMNIFYING PARTIES") shall, jointly and severally indemnify, defend and hold
harmless each Indemnified Party against all losses, claims, damages,
liabilities, fees, expenses, judgments and fines arising in whole or in part out
of actions or omissions in their capacity as such occurring at or prior to the
Effective Time, and will reimburse each Indemnified Party for any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such losses, claims, damages, liabilities, fees,
expenses, judgments and fines as such expenses are incurred; provided,
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however, that nothing herein shall impair any rights to indemnification of any
Indemnified Party referred to in clause (a) above. Promptly after receipt by an
Indemnified Party under this Section 6.14(b) of notice of the commencement of
any action, such Indemnified Party will, if a claim in respect thereof is to be
made against an Indemnifying Party under this Section 6.14(b), notify the
Indemnifying Party of the commencement thereof; but the omission so to notify an
Indemnifying Party will not relieve it from any liability which it may have to
any Indemnified Party except to the extent that the Indemnifying Party is
actually and materially prejudiced by such omission. In case any such action is
brought against any Indemnified Party and it notifies an Indemnifying Party of
the commencement thereof, the Indemnifying Party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other Indemnifying
Party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party (who shall not, except with the consent
of the Indemnified Party (which consent will not be unreasonably withheld,
conditioned or delayed), be counsel to the Indemnifying Party), and after notice
from the Indemnifying Party to such Indemnified Party of its election so to
assume the defense thereof (and so long as the Indemnifying Party satisfies such
obligations), the Indemnifying Party will not be liable to such Indemnified
Party under this Section 6.14(b) for any legal or other expenses subsequently
incurred by such Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party (which consent will not be
unreasonably withheld, conditioned or delayed), effect any settlement of any
pending or threatened action in respect of which any Indemnified Party is or
would reasonably be expected to be have been a party and indemnity could
properly have been sought hereunder by such Indemnified Party unless such
settlement (i) includes an unconditional release of such Indemnified Party from
all liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to, or an admission of, fault, culpability or a
failure to act by or on behalf of an Indemnified Party. Notwithstanding anything
to the contrary set forth herein, no Indemnifying Party shall be obligated
pursuant to this Section 6.14(b) to pay the fees and disbursements of more than
one counsel for all Indemnified Parties in any single action in any one
jurisdiction except to the extent that, in the opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action.
(c) (i) The Company shall cause the Surviving Entity to maintain
Holding's and Comsys' respective officers' and directors' liability insurance
policies, in effect on the date of this Agreement (the "D&O INSURANCE"), for a
period of not less than six years after the Effective Time, but only to the
extent related to actions or omissions prior to the Effective Time; provided,
however, that (A) the Surviving Entity may substitute therefor policies of at
least the same coverage and amounts containing terms no less advantageous to
such former directors or officers and (B) such substitution shall not result in
gaps or lapses of coverage with respect to matters occurring prior to the
Effective Time; provided, further, that in no event shall the Company or the
Surviving Entity be required to expend more than an amount per year equal to
300% of current annual premiums paid by Holding and Comsys in the aggregate for
such insurance (the "MAXIMUM AMOUNT") to maintain or procure insurance coverage
pursuant hereto; provided, further, that if the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, the Company and the Surviving Entity shall procure and maintain for such
six-year period as much coverage as reasonably practicable for the Maximum
Amount. The Company shall have the right to cause coverage to be extended under
the D&O Insurance by obtaining a six-year "tail" policy on terms and conditions
no less
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advantageous than the existing D&O Insurance, and such "tail" policy shall
satisfy the provisions of this Section 6.14(c)(i).
(ii) The Company shall maintain for a period of not less than
six years after the Effective Time such directors' and officers' liability
insurance policies as it has in effect on the date of this Agreement with
respect to actions or omissions occurring with respect to the Company and the
Company Subsidiaries prior to the Effective Time, including with respect to both
current and former officers and directors; provided, however, that (A) the
Company may substitute therefor policies of at least the same coverage and
amounts containing terms no less advantageous to those insured thereunder, and
(B) such substitution shall not result in gaps or lapses of coverage with
respect to matters occurring prior to the Effective Time; provided, further,
that in no event shall the Company be required to expend more than 300% of the
premiums currently being paid for such insurance to maintain or procure
insurance coverage pursuant hereto; provided, further, that if the amount of the
annual premiums necessary to maintain or procure such insurance coverage exceeds
such premium amount, the Company shall procure and maintain for such six-year
period as much coverage as reasonably practicable for such amount. The Company
shall have the right to cause coverage to be extended under such insurance by
maintaining or obtaining a six-year "tail" policy on terms and conditions no
less advantageous that the existing such insurance, and such "tail" policy shall
satisfy the conditions of this Section 6.14(c)(ii).
(d) The obligations of the Company and the Surviving Entity under
this Section 6.14 shall survive the consummation of the Merger and shall not be
terminated or modified in such a manner as to adversely affect any Indemnified
Party to whom this Section 6.14 applies without the consent of such affected
Indemnified Party.
(e) If the Company or the Surviving Entity or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or Surviving Entity or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Entity, as the case may, be shall assume the obligations set forth in
this Section 6.14.
(f) Any Indemnified Party shall, as a condition of the
indemnification provided herein, reasonably cooperate with the Indemnifying
Parties in the defense or investigation of any matter giving rise to an
indemnity obligation hereunder.
SECTION 6.15. Company Board of Directors; Officers.
(a) The Company shall take all commercially reasonable actions as
are necessary and within its powers (including seeking the resignation of one or
more existing members of or expanding the size of the Company's Board of
Directors and recommending to its stockholders the Amended Charter) to cause:
(i) five individuals identified by Holding (each a "GROUP B DESIGNEE") to be
elected or appointed to the Board of Directors of the Company effective
immediately after the Effective Time, to serve until the earlier of such
individual's resignation or removal or until his successor is duly elected and
qualified in accordance with the certificate of incorporation and bylaws of the
Company, (ii) the Board of Directors of the
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Company effective immediately after Effective Time to be expanded to a total of
nine directors, five of whom shall be Group B Designees (who shall be elected or
appointed as provided in subclause (i) above) and four of whom shall be
designated by the Company from its existing directors (the "GROUP A DESIGNEES"),
all as set forth in the Amended Charter, (iii) Group B Designees to constitute a
majority of each committee of the Company's Board of Directors (other than the
audit committee) effective immediately after the Effective Time and (iv)
designees of Holding to hold all director and officer positions at each of the
Company Subsidiaries effective immediately after the Effective Time. If at any
time prior to the Effective Time, any Group B Designee shall be unable or
unwilling to serve as a director of the Company effective immediately after the
Effective Time, the Board of Directors of Holding shall, by written notice to
the Company, designate another individual to serve in his or her place as
provided above, and the Company shall take all commercially reasonable actions
as are necessary and within its powers to cause such replacement designee to be
elected or appointed to the Board of Directors of the Company in accordance with
the foregoing. Holding will specify which Group B Designees will be the
"WACHOVIA DIRECTORS" for purposes of the Voting Agreement.
(b) The Company shall take all such actions as are necessary to
cause the officers of the Company listed on Exhibit M to tender, effective as of
the Effective Time, written resignation letters pursuant to which each such
individual will resign from their respective position(s) listed on Exhibit M,
effective as of the Effective Time. Any such individual who fails to tender a
resignation letter shall be removed from his or her respective positions set
forth on Exhibit M by the Board of Directors of the Company, effective as of the
Effective Time. The Board of Directors of the Company shall appoint the
individuals listed on Exhibit N to serve in the positions set forth opposite
their respective names on Exhibit N, in each case effective as of the Effective
Time.
SECTION 6.16. Wachovia Option Grant. Prior to the Effective Time,
the Company shall take all actions that are required to permit under the
Company's Xxxxxxx Xxxxxxx Policy Statement the grants of call options by
Wachovia Investors, Inc. or any affiliate successor thereto (collectively,
"WACHOVIA"), pursuant to the Option Agreements dated as of the date hereof
between Wachovia and certain Holding Stockholders.
SECTION 6.17. Section 16 Matters. Prior to the Effective Time, the
Company shall take all such steps as may be required to cause the transactions
contemplated by Article 2 and any other acquisitions of equity securities of the
Company (including derivative securities) in connection with this Agreement by
each Person (including any Person who is deemed to be a "director by
deputization" under applicable securities laws) who is or will become subject to
the reporting requirements of Section 16(a) of the Exchange Act with respect to
the Company to be exempt under Rule 16b-3 under the Exchange Act.
SECTION 6.18. NASDAQ Listing. From the date of this Agreement
through the Effective Time, the Company, Holding and Comsys will cooperate and
use commercially reasonable efforts to provide information, complete requisite
documentation and will otherwise take such actions as are reasonably necessary
to complete the NASDAQ listing application process for the continued listing of
the Company Common Stock on NASDAQ following the Effective Time.
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SECTION 6.19. Redemption of Holding Preferred Stock. Prior to the
Effective Time, each issued and outstanding share of the Holding Class A-1
Preferred Stock and Holding Class A-2 Preferred Stock will be repurchased by
Holding and each issued and outstanding share of Holding Class E Preferred
Stock, will be redeemed by Holding in accordance with the terms thereof.
SECTION 6.20. Cancellation of Warrants. Prior to the Effective Time,
each issued and outstanding warrant to purchase Holding Common Stock will be
cancelled by Holding and each holder of any issued and outstanding warrants
SECTION 6.21. Employee Benefit Matters.
(a) Company Employee Benefit Plans. Effective as of the Effective
Date, Company shall, or shall cause a Subsidiary to, (i) terminate or merge with
the corresponding Comsys Employee Benefit Plan, as specified by Comsys, each of
the Company Employee Benefit Plans designated by Comsys, (ii) cause Surviving
Entity and its Subsidiaries to become participating employers in each Company
Employee Benefit Plan designated by Comsys that is not so terminated or merged,
(iii) cause each Company Employee Benefit Plan that is not so terminated or
merged and in which Surviving Entity and/or its Subsidiaries have become
participating employers to exclude coverage of each Employee who is covered
under a corresponding Comsys Employee Benefit Plan, with such exclusion to be
effective for the duration of such coverage under such Comsys Employee Benefit
Plan, and (iv) correct any operational error or form defect associated with any
Company Employee Benefit Plan that has been identified by Comsys.
(b) Company Employee Benefit Plans Covering Staffing Employees.
Effective as of or prior to the Effective Date, Company shall (i) cause the
Personnel Group of America, Inc. Non-qualified Profit Sharing Plan (the
"NONQUALIFIED PLAN") to be terminated and all benefit obligations under such
plan to participants to be satisfied, (ii) cause the participation (including
all associated liabilities and obligations) attributable to the employees and
former employees (and their dependents) of Staffing and each Staffing Subsidiary
in each Company Employee Benefit Plan (other than the Venturi Partners, Inc.
401(k) Plan (formerly known as the Personnel Group of America, Inc. 401(k) Plan)
("VPI 401(k) PLAN") and the Nonqualified Plan) to be spun off from such Company
Employee Benefit Plan and transferred to Staffing (and cause Staffing to accept
such spun-off plans), and (iii) cause Staffing and each Staffing Subsidiary to
cease to be a participating employer in each Company Employee Benefit Plan
(other than the VPI 401(k) Plan and the Nonqualified Plan).
(c) Transfer of Employment of Certain Staffing Employees.
Effective as of the Effective Date, Company shall cause the employees of
Staffing and Staffing Subsidiaries who have been identified by Comsys and are
listed on Section 6.21(c) of the Company Disclosure Letter to be transferred to
employment with Partners.
SECTION 6.22. Subscription Agreements. The Company shall cause (a)
the transactions contemplated by the Subscription Agreement to be completed and
(b) MGOP, MGOPB, Links and Inland or other investors to purchase up to
$7,000,000 of the Company
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Preferred Stock in accordance with the subscription agreement attached as an
exhibit to the Letter Agreement, in each case at or prior to the Effective Time.
ARTICLE 7
CONDITIONS
SECTION 7.1. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or, to the extent permitted by applicable law,
waiver on or prior to the Closing Date of each of the following conditions:
(a) Company Stockholder Vote. The Company shall have received the
Company Stockholder Vote.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger and the other transactions contemplated by this
Agreement under the HSR Act shall have been terminated or shall have expired.
(c) Proxy Statement. The Proxy Statement (including any
information required pursuant to Rule 14f-1 under the Exchange Act) shall have
been mailed to the Company's stockholders and all required waiting periods
related thereto under applicable law shall have expired.
(d) No Injunctions or Restraints. No preliminary injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental regulatory or administrative agency or commission, nor any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, shall be in effect that would make the Merger illegal or
otherwise prevent the consummation thereof.
(e) Financing. The Company and Comsys shall have received or have
available the proceeds of the Financing, provided, however, that this condition
precedent shall be considered satisfied if, on the Effective Date, the only
remaining condition precedent to such financing is the delivery to the issuer
thereof of a certified and/or date-stamped copy of the Certificate of Merger.
(f) Subscription Agreement. Each of the Subscription Agreement and
Letter Agreement shall be in full force and effect and shall not have been
withdrawn, amended or terminated in any manner, and none of the investors party
thereto shall have breached or otherwise failed to perform their respective
obligations set forth in the applicable agreement and the transactions
contemplated thereby shall have been performed in full.
(g) Holding Stockholder Consent. The Holding Stockholder Consent
shall have been obtained.
(h) Merger Sub Stockholder Consent. The Merger Sub Stockholder
Consent shall have been obtained.
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(i) Voting Agreement. Each of the Company and each "Significant
Holder" (as such term is defined in the Company Charter) of the Company as of
the Effective Date shall have executed and delivered a counterpart copy of an
agreement substantially in the form of Exhibit O attached hereto with respect to
voting for nominees for the Board of Directors of the Company for a specified
period of time following the Effective Time, all as more fully set forth in such
agreement (the "VOTING AGREEMENT").
(j) Holding shall have repurchased the Holding Class A-1 Preferred
Stock and the Holding Class A-2 Preferred Stock and redeemed the Holding Class E
Preferred Stock.
SECTION 7.2. Conditions to Obligations of Holding and Comsys. The
obligations of Holding and Comsys to effect the Merger are further subject to
the satisfaction or, to the extent permitted by applicable law, the waiver of
each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company and Merger Sub set forth in this Agreement and in any
document delivered in connection herewith (i) to the extent qualified by Company
Material Adverse Effect or any other materiality qualifications shall be true
and correct and (ii) to the extent not so qualified shall be true and correct in
all material respects (other than the representations and warranties set forth
in Section 3.2, which shall be true and correct in all respects), in each case
as of the date hereof and as of the Closing Date (except to the extent expressly
made as of a specified date, in which case as of such date), and Holding and
Comsys shall each have received a certificate signed on behalf of each of the
Company and Merger Sub by an executive officer of such entity to such effect.
(b) Performance of Obligations of the Company and Merger Sub. Each
of the Company and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date (other than the obligations set forth in Section 6.15, 6.16 and
6.17, which shall have been performed in all respects), and Holding and Comsys
shall each have received a certificate signed on behalf of each of the Company
and Merger Sub by an executive officer of such entity to such effect; provided
that this condition shall not be waived by Comsys or Holding with respect to
performance by the Company of its obligations under Section 6.16 or 6.17 without
the prior written consent of Wachovia.
(c) Tax Opinion. Holding and Comsys shall have received from Akin
Gump Xxxxxxx Xxxxx & Xxxx LLP, counsel to Holding and Comsys, on the date on
which the Proxy Statement is mailed to the Company's stockholders and on the
Closing Date, an opinion, in each case dated as of such respective date and
stating that the Merger will qualify for U.S. federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code (the issuance of
such opinion shall be conditioned upon the receipt by such tax counsel of
officer's letters from each of Holding and the Company, in each case,
substantially in the form attached as Exhibits H and I hereto).
(d) Separation and Release Agreement. Each employee of the Company
listed on Exhibit P shall have executed and delivered a Separation and Release
Agreement in favor of the Company substantially in the form of Exhibit Q
attached hereto.
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(e) Severance and Retention Agreement. Employees of the Company
identified by Comsys or Holding prior to the Closing shall have executed and
delivered a Severance and Retention Agreement with the Company substantially in
the form of Exhibit R attached hereto.
(f) Staffing Disposition. The Staffing Disposition shall have
occurred on terms and subject to conditions as contemplated by Section 6.13 and
otherwise reasonably acceptable to Holding.
(g) Notification of Staffing Disposition. The Company shall have
delivered to each of Holding and Comsys a certificate notifying Holding and
Comsys of (i) the completion of the Staffing Disposition and (ii) the amount of
the Net Cash Proceeds (which must equal or exceed $25 million).
(h) Registration Rights Agreement and Amended and Restated
Registration Rights Agreement. The Company shall have executed and delivered the
Registration Rights Agreement and the Company and the Company stockholders party
thereto shall each have executed and delivered the Amended and Restated
Registration Rights Agreement.
(i) Guarantees of Staffing Leases. Buyer shall have agreed to
indemnify the Company and its Subsidiaries on terms reasonably acceptable to
Holding from and against any and all costs, damages, liabilities and expenses,
including attorneys' fees, arising after the Effective Time under or in
connection with any guarantees by the Company or its Subsidiaries of leases for
properties leased by Staffing or any of its Subsidiaries.
SECTION 7.3. Conditions to Obligation of the Company and Merger Sub.
The obligations of the Company and Merger Sub to effect the Merger are further
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Holding and Comsys set forth in this Agreement and in any document
delivered in connection herewith (i) to the extent qualified by Holding Material
Adverse Effect or any other materiality qualifications shall be true and correct
and (ii) to the extent not so qualified shall be true and correct in all
material respects (other than the representations and warranties set forth in
Section 4.2, which shall be true and correct in all respects), in each case as
of the date hereof and as of the Closing Date (except to the extent expressly
made as of a specified date, in which case as of such date), and the Company and
Merger Sub shall have received a certificate signed on behalf of Holding and
Comsys by their respective chief executive officers and the chief financial
officers to such effect.
(b) Performance of Obligations of Holding and Comsys. Holding and
Comsys shall each have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and the Company and Merger Sub shall have received a certificate signed on
behalf of Holding and Comsys by their respective chief executive officers and
the chief financial officers to such effect.
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(c) Tax Opinion. The Company and Merger Sub shall have received
from PricewaterhouseCoopers LLP, tax counsel to the Company, on the date on
which the Proxy Statement is mailed to the Company's stockholders and on the
Closing Date, an opinion, in each case dated as of such respective date and
stating that the Merger will qualify for U.S. federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code (the issuance of
such opinion shall be conditioned upon the receipt by such tax counsel of
officer's letters from each of Holding and the Company, in each case,
substantially in the form attached as Exhibits H and I hereto).
(d) Registration Rights Agreement. The Holding Stockholders shall
each have executed and delivered the Registration Rights Agreement.
(e) Staffing Disposition. The Staffing Disposition shall have
occurred.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after this Agreement has been adopted by the Company Stockholder Vote:
(a) by mutual written consent of Holding, Comsys, Merger Sub and
the Company, each consent to have been approved by such Person's respective
board of directors;
(b) by the Company, Holding or Comsys, if the Merger has not been
consummated by December 31, 2004, or such other date as the Company, Holding and
Comsys shall mutually agree upon or as is provided in Section 6.1(d) (the
"TERMINATION DATE"); provided, however, that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose
breach of any representation, warranty, covenant or agreement in this Agreement
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date;
(c) by the Company, Holding or Comsys, if any judgment, order,
decree, statute, law, ordinance, rule, regulation or other legal restraint or
prohibition having the effects set forth in Section 7.1(d) shall be in effect
and shall have become final and nonappealable; provided, however, that such
terminating party did not initiate such action;
(d) by the Company, Holding or Comsys, if a Company Stockholder
Vote in favor of each of the matters described in clauses (i) through (iii) of
Section 3.11(d) shall not have been obtained at the Company Stockholders
Meeting;
(e) by Holding or Comsys, if:
(i) the Board of Directors of the Company (or any committee
thereof) shall have withdrawn or modified or amended in any respect adverse to
Comsys its adoption of or recommendation in favor of this Agreement or any of
the other matters described in clauses (i) through (iii) of Section 3.11(d) or
shall have failed to make such favorable recommendation;
72
(ii) the Board of Directors of the Company (or any committee
thereof) shall have recommended to the stockholders of the Company any Takeover
Proposal or shall have resolved or publicly announced an intention to do so;
(iii) the Company shall have breached Section 6.10 in any
material respect, and Holding or Comsys shall have been adversely affected
thereby;
(iv) the Company shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (A)
would give rise to the failure of a condition set forth in Section 7.2(a) or
(b), and (B) is incapable of being cured or has not been cured by the Company
within five business days after written notice has been given by Holding or
Comsys to the Company of such breach or failure to perform;
(v) the Company and/or its stockholders or directors shall
not have taken all actions necessary to cause (A) each Group B Designee (or
replacement designee thereof as contemplated by Section 6.15(a)) to be elected
or appointed to the Board of Directors of the Company effective immediately
after the Effective Time, to serve until the earlier of such individual's
resignation or removal or until his successor is duly elected and qualified in
accordance with the certificate of incorporation and bylaws of the Company; (B)
the Board of Directors effective immediately after the Effective Time to consist
of a total of nine directors, five of whom shall be Group B Designees; (C) Group
B Designees to constitute a majority of each committee (other than the Company's
audit committee) of the Company's Board of Directors effective immediately after
the Effective Time; and (D) designees of Holding to be elected or appointed to
hold all director and officer positions of each of the Company Subsidiaries
effective immediately after the Effective Time; or
(vi) the Staffing Disposition is not consummated in
accordance with Section 7.2(f);
(f) by the Company, if:
(i) prior to the Company Stockholders Meeting, (A) the
Company shall not have breached Section 6.10 in any material respect, (B) the
Board of Directors of the Company authorizes the Company, subject to complying
with the terms of Section 6.10 and this Section 8.1(f)(i), to enter into a
binding written agreement concerning a transaction that constitutes a Superior
Proposal and the Company notifies Holding and Comsys in writing that it intends
to enter into such an agreement, attaching the most current version of such
agreement to such notice, (C) Comsys does not make, within five business days of
receipt of the Company's written notification of its intention to enter into
such agreement, an offer that the Board of Directors of the Company determines,
in its good faith judgment (after receipt of the advice of its financial
advisor), is at least as favorable to the Company's stockholders from a
financial point of view as the Superior Proposal and (D) the Company
simultaneously with such termination pays to Comsys in immediately available
funds any fees and expenses required to be paid or reimbursed pursuant to
Section 8.3; or
73
(ii) Holding, Comsys or any Holding Stockholder shall have
breached or failed to perform in any material respect any of their respective
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform (A) would give rise to the failure
of a condition set forth in Section 7.3(a), (b), (c) or (d) and (B) is incapable
of being cured or has not been cured by Holding, Comsys or such Holding
Stockholders, as applicable, within five business days after written notice has
been given by the Company to Holding, Comsys or such Holding Stockholder, as
applicable, of such breach or failure to perform.
(iii) the Staffing Disposition is not consummated; provided,
however, that the right to terminate this Agreement under this Section
8.1(f)(iii) shall not be available to the Company if the Staffing Disposition is
not consummated because of the Company's breach of any representation, warranty,
covenant or agreement in the Buyer Agreement, or, if applicable, the Replacement
Agreement, or any breach of any representation, warranty, covenant or agreement
in this Agreement pertaining to Staffing.
The party desiring to terminate this Agreement shall give written notice of such
termination to the other parties.
SECTION 8.2. Effect of Termination. Upon the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become null
and void except as set forth in Section 8.3 and for the provisions of Article 9,
which shall survive such termination; provided, however, that nothing herein
shall relieve any party from liability for any intentional breach of this
Agreement prior to such termination. In addition, the Confidentiality Agreement
shall not be affected by the termination of this Agreement.
74
SECTION 8.3. Fees and Expenses. If (x) this Agreement is terminated
pursuant to Sections 8.1(e)(i), 8.1(e)(ii), 8.1(e)(iii), 8.1(e)(v) (except for a
failure of the Company stockholders to cause the conditions in Section 8.1(e)(v)
to occur) or 8.1(f)(i) or (y) (A) a Takeover Proposal in respect of the Company
(other than a Takeover Proposal relating solely to Staffing) is publicly
announced or is proposed or offered or made to the Company or the Company's
stockholders prior to this Agreement having been approved by the Company
Stockholder Vote, (B) this Agreement is terminated by any party, as applicable,
pursuant to Section 8.1(b) or by Holding or Comsys, pursuant to Section
8.1(e)(iv) due to the Company's having intentionally breached (and not cured
after notice thereof) any of its representations, warranties, covenants or
agreements set forth in this Agreement and (C) within 12 months following such
termination the Company shall consummate or enter into, directly or indirectly,
any agreement with respect to a Takeover Proposal, or (z) this Agreement is
terminated by any party pursuant to Section 8.1(b) or by Holding or Comsys
pursuant to Section 8.1(e)(vi) and the Company prior to such termination shall
have breached (and not cured after notice thereof) any of its representations,
warranties, covenants or agreements set forth in the Buyer Agreement or, if
applicable, the Replacement Agreement or any of its representations, warranties,
covenants or agreements set forth in this Agreement pertaining to the Staffing
Disposition, which breach shall have materially contributed to the failure of
the Effective Time to occur prior to the termination of this Agreement, the
Company shall promptly, but in no event later than one business day after
termination of this Agreement (or on the date of such consummation or, if
earlier, entry into such agreement in the case of (y) above), pay Holding a fee
in immediately available funds of $4 million (the "TERMINATION FEE"). If this
Agreement is terminated pursuant to Section 8.1(d), the Company shall promptly,
but in no event later than one business day after termination of this Agreement,
pay Holding a fee in immediately available funds of $1.5 million. For purposes
of this Section 8.3, the references in the definition of Takeover Proposal to
15% shall be changed to 40%.
Except as set forth in this Section 8.3 and Section 6.12, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that Holding and the Company will
share equally any filing fees in connection with their respective filings
required under the HSR Act and provided, further, that (x) if this Agreement is
terminated and the Termination Fee is payable as a result thereof, in addition
to the payment of the Termination Fee, the Company shall assume and pay, or
reimburse Holding for, all Expenses, but not more than $2.5 million in the
aggregate (the "EXPENSE CAP") for all such Expenses; (y) if this Agreement is
terminated pursuant to Section 8.1(d), the Company shall assume and pay, or
reimburse Holding for, all of its Expenses up to the Expense Cap; and (z) (I) if
this Agreement is terminated by any party pursuant to Section 8.1(b) or by the
Company pursuant to Section 8.1(f)(iii) or by Holding or Comsys pursuant to
Section 8.1(e)(vi) and (II) the Company prior to such termination shall not have
breached (or if breached, failed to cure) any of its representations,
warranties, covenants or agreements set forth in the Buyer Agreement or, if
applicable, the Replacement Agreement or any of its representations, warranties,
covenants or agreements set forth in this Agreement pertaining to the Staffing
Disposition, then (A) the Company shall assume and pay, or reimburse Holding
for, all of its Expenses up to the Expense Cap, and (B) in the event the Company
recovers from any third party damages for breach of the Buyer Agreement and/or
Replacement Agreement, the Company shall pay Holding one half of the amount of
such recovery (net of litigation and collection costs) up to a maximum of $1.5
75
million. Any such assumption, payment or reimbursement shall be made promptly,
and in any event not more than five business days following request by Holding.
As used herein, "EXPENSES" means all expenses incurred or committed to by or on
behalf of Holding in connection with the investigation and evaluation of the
Company, Partners, Staffing and their respective Subsidiaries and operations,
and with the preparation, execution and performance of this Agreement, each
other agreement or document contemplated by this Agreement, including, without
limitation, all fees and expenses of agents, representatives, counsel and
accountants and all commitment and other fees and costs to secure and preserve
the availability of financing necessary to consummate such transactions.
SECTION 8.4. Amendment. This Agreement may not be amended or
modified except by a writing signed by all of the parties. Such amendment or
amendments may be made at any time before or after the effectiveness of the
Company Stockholder Vote; provided, however, that after the effectiveness of
such Company Stockholder Vote, no amendment shall be made without the further
approval of such stockholders if such amendment would (a) in any way materially
adversely affect the rights of the Company stockholders (other than a
termination of this Agreement in accordance with the provisions hereof) or (b)
require a shareholder vote under applicable law, the Company's listing agreement
with NASDAQ or rules promulgated by the National Association of Securities
Dealers applicable to Persons listed on NASDAQ.
SECTION 8.5. Waiver. Any party may, for itself only, (a) extend the
time for the performance of any of the obligations of any other party under this
Agreement, (b) waive any inaccuracies in the representations and warranties of
any other party contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any such extension or waiver will be
valid only if set forth in a writing signed by the party to be bound thereby. No
waiver by any party of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, may be deemed to extend to any
prior or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising because of any prior or
subsequent such occurrence. Neither the failure nor any delay on the part of any
party to exercise any right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or remedy
preclude any other or further exercise of the same or of any other right or
remedy.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission and
electronic mail transmission, so long as a receipt of such electronic mail
transmission is requested and received) and shall be given,
(a) if to Holding or Comsys:
COMSYS Holding, Inc.
0000 Xxxx Xxx Xxxxxxx
00
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, P.C.
Fax: 000-000-0000
(b) if to the Company, Partners or Merger Sub
Venturi Partners, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Fax: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxx & Xxxxxxxx LLP
000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax: 000-000-0000
(c) if to the Holding Stockholders:
c/o COMSYS Holding, Inc.
0000 Xxxx Xxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
Fax: 000-000-0000
or to such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests or other communications will be deemed received on the date of receipt
by the recipient thereof if received prior to 5:00 p.m. on a business day in the
place of receipt. Otherwise, any such notice, request or communication shall be
deemed to have been received on the next succeeding business day in the place of
receipt.
SECTION 9.2. Non-Survival of Representations and Warranties. All
representations and warranties set forth in this Agreement and/or in any
instrument delivered
77
pursuant to this Agreement shall not survive the Effective Time, but shall
terminate at the Effective Time.
SECTION 9.3. Knowledge Qualifiers. "To the knowledge of the Company"
and similar phrases mean (a) the actual knowledge of the individuals described
in Section 9.3 of the Company Disclosure Letter (the "COMPANY KNOWLEDGEABLE
OFFICERS") and (b) the constructive knowledge of the Company Knowledgeable
Officers to the extent such knowledge would have been obtained by their due
inquiry of the employees charged with responsibility for the particular matter
that is the subject of such representation or warranty. "To the knowledge of
Holding and Comsys" and similar phrases mean (a) the actual knowledge of the
individuals described in Section 9.3 of the Comsys Disclosure Letter (the
"COMSYS KNOWLEDGEABLE OFFICERS") and (b) the constructive knowledge of the
Comsys Knowledgeable Officers to the extent such knowledge would have been
obtained by their due inquiry of the employees charged with responsibility for
the particular matter that is the subject of such representation or warranty
SECTION 9.4. Construction. This Agreement has been freely and fairly
negotiated among the parties. If an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the parties and no presumption or burden of proof will arise favoring or
disfavoring any party because of the authorship of any provision of this
Agreement. Any reference to any law will be deemed to refer to such law as in
effect on the date hereof and all rules and regulations promulgated thereunder,
unless the context requires otherwise. The words "include," "includes," and
"including" will be deemed to be followed by "without limitation." Pronouns in
masculine, feminine, and neuter genders will be construed to include any other
gender, and words in the singular form will be construed to include the plural
and vice versa, unless the context otherwise requires. The words "this
Agreement," "herein," "hereof," "hereby," "hereunder," and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The parties intend that each representation,
warranty, and covenant contained herein will have independent significance. If
any party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached will not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty, or covenant. Time is of the essence in the performance
of this Agreement. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 9.5. Governing Law; Jurisdiction.
(a) This Agreement will be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to any choice of
law principles or conflicts of law rules (whether of the State of Delaware or
any other jurisdiction) that would result in the application of the substantive
or procedural laws of any other jurisdiction and, as applicable the federal laws
of the United States.
(b) Any action, suit or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall only be brought in the
Court of Chancery in and for New Castle
78
County, Delaware, and each party consents to the exclusive jurisdiction and
venue of such courts (and of the appropriate appellate courts therefrom) in any
such action, suit or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such, action, suit or proceeding in any such court or that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. Process in any such action, suit or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, service of
process on such party as provided in Section 9.1 shall be deemed effective
service of process on such party. Partners hereby appoints the Company as its
agent and each Holding Stockholder hereby appoints Holding as its agent to
receive on its behalf service of copies of the summons and complaint and any
other process that might be served in an action, suit or proceeding as
contemplated by this Section 9.5.
SECTION 9.6. Counterparts; Facsimile Transmission of Signatures.
This Agreement may be executed in two or more counterparts, each of which will
be deemed an original but all of which together will constitute one and the same
instrument, and delivered by means of a facsimile transmission. This Agreement
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. For purposes of determining
whether a party has signed this Agreement or any document contemplated hereby or
any amendment or waiver hereof, only a handwritten original signature on a paper
document or a facsimile copy of such a handwritten original signature shall
constitute a signature, notwithstanding any law relating to or enabling the
creation, execution or delivery of any contract or signature by electronic
means.
SECTION 9.7. Assignment; Binding Effect; Third Party Beneficiaries.
(a) No party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other parties; provided, however, that a Holding Stockholder may assign this
Agreement and its rights, interests and obligations hereunder in connection with
its sale of Holding Shares so long as the transferee, if it is not already a
party hereto, executes and delivers a signature page to become a party to this
Agreement and executes and delivers an accredited investor questionnaire in the
form attached hereto as Exhibit E indicating that such transferee is an
accredited investor. Any purported assignment in breach of this provision shall
be null and void. All of the terms, agreements, covenants, representations,
warranties and conditions of this Agreement are binding upon, and inure to the
benefit of and are enforceable by, the parties and their respective successors
and permitted assigns.
(b) Nothing in this Agreement shall be construed as giving any
Person, other than the parties hereto and their heirs, successors, legal
representatives and permitted assigns, any right, remedy or claim under or in
respect of this Agreement or any provision hereof; except that (i) each Holding
Stockholder is and is intended to be a third party beneficiary of Section 2.3(a)
and Section 6.1(e) and may specifically enforce the terms of such provision,
(ii) each Indemnified Party is and is intended to be a third party beneficiary
of Section 6.14 and may specifically enforce the terms of such provision and
(iii) each Holding Stockholder and each Group B Designee is and is intended to
be a third party beneficiary under Section 6.15, and may specifically enforce
the terms of such provision.
79
SECTION 9.8. Severability. The provisions of this Agreement will be
deemed severable and the invalidity or unenforceability of any provision will
not affect the validity or enforceability of the other provisions hereof;
provided that if any provision of this Agreement, as applied to any party or to
any circumstance, is judicially determined not to be enforceable in accordance
with its terms, the parties agree that the court judicially making such
determination may modify the provision in a manner consistent with its
objectives such that it is enforceable, and/or to delete specific words or
phrases, and in its modified form, such provision will then be enforceable and
will be enforced.
SECTION 9.9. Entire Agreement. This Agreement, together with the
Confidentiality Agreement and the Exhibits and Disclosure Letters hereto and the
certificates, documents, instruments and writings that are delivered pursuant
hereto, constitutes the entire agreement and understanding of the parties in
respect of the subject matter hereof and supersedes all prior understandings,
agreements or representations by or among the parties, written or oral, to the
extent they relate in any way to the subject matter hereof.
SECTION 9.10. Specific Performance; Remedies. Each party
acknowledges and agrees that the other parties would be damaged irreparably if
any provision of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and its provisions
in any action or proceeding instituted in any state or federal court sitting in
the State of Delaware having jurisdiction over the parties and the matter, in
addition to any other remedy to which they may be entitled, at law or in equity.
Except as expressly provided herein, the rights, obligations and remedies
created by this Agreement are cumulative and in addition to any other rights,
obligations or remedies otherwise available at law or in equity. Except as
expressly provided herein, nothing herein will be considered an election of
remedies.
SECTION 9.11. Incorporation of Exhibits and Disclosure Letters. The
Exhibits and Disclosure Letters identified in this Agreement are incorporated
herein by reference and made a part hereof.
[SIGNATURE PAGE FOLLOWS]
80
IN WITNESS WHEREOF, Holding, Comsys, Merger Sub, Partners, the Company and
the Holding Stockholders have caused this Agreement to be executed as of the
date first written above.
VENTURI PARTNERS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chairman and Chief Executive Officer
VENTURI TECHNOLOGY PARTNERS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
VTP, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chief Executive Officer and President
[Signature Page to Agreement and Plan of Merger]
COMSYS HOLDING, INC.
By: /s/ Xxxxx X. Xxxx
--------------------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
COMSYS INFORMATION TECHNOLOGY SERVICES, INC.
By: /s/ Xxxxx X. Xxxx
--------------------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
[Signature Page to Agreement and Plan of Merger]
HOLDING STOCKHOLDERS:
OLD TRAFFORD INVESTMENT PTE LTD.
By: /s/ Xxx-Xxxx Tay
--------------------------------------------
Name: Xxx-Xxxx Tay
Title: Director
[Signature Page to Agreement and Plan of Merger]
HOLDING STOCKHOLDERS:
GTCR FUND VI, L.P.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
GTCR VI EXECUTIVE FUND, L.P.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
GTCR ASSOCIATES VI
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman
[Signature Page to Agreement and Plan of Merger]
HOLDING STOCKHOLDERS:
X. X. XXXXXX DIRECT CORPORATE FINANCE INSTITUTIONAL
INVESTORS LLC
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
X. X. XXXXXX DIRECT CORPORATE FINANCE PRIVATE
INVESTORS LLC
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
000 XXXXX XXXXXX FUND, L.P.
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
[Signature Page to Agreement and Plan of Merger]
HOLDING STOCKHOLDERS:
WACHOVIA INVESTORS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Director
[Signature Page to Agreement and Plan of Merger]
HOLDING STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------------
Xxxxxxx X. Xxxxxx, individually
/s/ Xxxxx X. Xxxx
---------------------------------------------------
Xxxxx X. Xxxx, individually
/s/ Xxxxxxxx X. Xxxx
---------------------------------------------------
Xxxxxxxx X. Xxxx, individually
/s/ Xxxxxx X. Xxxx, Xx.
---------------------------------------------------
Xxxxxx X. Xxxx, Xx. , individually
/s/ Xxxxxx X. Xxxxxx XX
---------------------------------------------------
Xxxxxx X. Xxxxxx XX, individually
/s/ Xxxx X. Xxxxxxx
---------------------------------------------------
Xxxx X. Xxxxxxx, individually
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------------
Xxxxxxx X. Xxxxxx, individually
/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------------------
Xxxxxxx X. Xxxxxxxxx, individually
[Signature Page to Agreement and Plan of Merger]