SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission file number 0-20743
OPEN PLAN SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
Virginia 54-1515256
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4299 Carolina Avenue, 23222
Building C, Richmond, Virginia (Zip Code)
(Address of principal executive office)
(804) 228-5600
(Issuer's telephone number)
_____________________________________________________________
(Former name,former address and former fiscal year,if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes _X_ No __.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, no par value - 4,672,433 shares as of August 12, 1998.
Transitional Small Business Disclosure Format (check one): Yes No X
<PAGE>
OPEN PLAN SYSTEMS, INC.
Table of Contents
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1998 (unaudited) 1
and December 31, 1997
Consolidated Statements of Operations- Three and six months 2
ended June 30, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows - Six months 3
ended June 30, 1998 and 1997 (unaudited)
Notes to Consolidated Financial Statements - June 30, 1998 4
Item 2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of 12
Security Holders
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES
</TABLE>
<PAGE>
OPEN PLAN SYSTEMS, INC.
PART I
FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets
(amounts in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------------------------------
(Unaudited)
<S><C><C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 28 $ 73
Trade accounts receivable, net 6,011 5,486
Inventories 7,768 10,780
Prepaids and other 735 686
Refundable income taxes 795 795
Deferred income taxes - 106
-------------------------------------
Total current assets 15,337 17,926
Property and equipment, net 2,929 3,493
Goodwill, net 4,309 4,427
Other 465 468
-------------------------------------
Total assets $ 23,040 $ 26,314
=====================================
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ $ 2,411
1,724
Accrued compensation 1,022 393
Other accrued liabilities 657 280
Customer deposits 782 841
Line of credit 2,769
2,110
Current portion of long-term debt and capital lease
obligations 66 126
-------------------------------------
Total current liabilities 7,020 6,161
Deferred income taxes - 110
-------------------------------------
Total liabilities 7,020 6,271
Stockholders' equity:
Common stock, no par value:
Authorized shares - 50,000
Issued and outstanding shares - 4,672 at June 30, 1998 and 20,501 20,088
4,472 at Dec. 31, 1997
Additional capital 137 137
Retained earnings (4,618) (182)
-------------------------------------
Total stockholders' equity 16,020 20,043
-------------------------------------
Total liabilities and stockholders' equity $ 23,040 $ 26,314
=====================================
</TABLE>
See accompanying notes.
<PAGE>
OPEN PLAN SYSTEMS, INC.
Consolidated Statements of Operations (Unaudited)
(amounts in thousands, except per share)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
June 30 June 30
1998 1997 1998 1997
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 8,332 $ 7,164 $ 16,232 $ 13,601
Cost of sales 7,143 5,010 13,399 9,986
------------------------------------------------------------------------
Gross profit 1,189 2,154 2,833 3,615
Operating expenses:
Amortization of intangibles 69 69 138 138
Selling and marketing 2,048 1,504 4,020 2,754
General and administrative 939 573 1,683 1,301
Operational restructuring 1,290 - 1,290 -
------------------------------------------------------------------------
4,346 2,146 7,131 4,193
------------------------------------------------------------------------
Operating (loss) income (3,157) 8 (4,298) (578)
Other (income) expense:
Interest expense 66 11 132 19
Interest income (9) (24) (9) (59)
Other, net 15 (4) 15 (14)
------------------------------------------------------------------------
72 (17) 138 (54)
------------------------------------------------------------------------
(Loss) income before income taxes (3,229) 25 (4,436) (524)
Income tax benefit - - - (234)
------------------------------------------------------------------------
Net (loss) income $ (3,229) $ 25 $ (4,436) $ (290)
========================================================================
Basic and diluted (loss) income per common share $ (.72) $ .01 $ (.99) $ (.06)
========================================================================
Weighted average common shares outstanding 4,506 4,472 4,489 4,472
========================================================================
</TABLE>
See accompanying notes.
<PAGE>
OPEN PLAN SYSTEMS, INC.
Consolidated Statements of Cash Flows (Unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Six Months ended
June 30
1998 1997
----------------------------------
<S><C> <C> <C>
Operating activities
Net loss $ (4,436) $ (290)
Adjustments to reconcile net loss to net cash used in
operating activities:
Provision for losses on receivables 128 8
Depreciation and amortization 553 418
Operational restructuring 1,290 -
Loss on sale of property 28 4
Deferred income taxes 4 (46)
Changes in operating assets and liabilities:
Accounts receivable (653) 98
Inventories 3,012 (2,394)
Prepaids and other (113) (559)
Trade accounts payable (687) 488
Customer deposits (59) 40
Accrued and other liabilities 245 (23)
----------------------------------
Net cash used in operating activities (688) (2,210)
Investing activities
Purchases of property and equipment (369) (466)
----------------------------------
Net cash used in investing activities (369) (466)
Financing activities
Net borrowings on revolving line of credit 659 -
Issuance of common stock (net of expenses) 413 -
Principal payments on long-term debt and capital
lease obligations (60) (89)
----------------------------------
Net cash provided by (used in) financing activities 1,012 (89)
----------------------------------
Decrease in cash and cash equivalents (45) (2,765)
Cash and cash equivalents at beginning of period 73 3,066
----------------------------------
Cash and cash equivalents at end of period $ 28 $ 301
==================================
Supplemental disclosures
Interest paid $ 132 $ 11
==================================
Income taxes paid $ 12 $ 136
==================================
</TABLE>
See accompanying notes.
<PAGE>
OPEN PLAN SYSTEMS, INC.
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1998
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB of the Securities
and Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, these financial statements
reflect all adjustments of a normal recurring nature which the Company considers
necessary for a fair presentation. The results for the three month and six month
periods ending June 30, 1998 are not necessarily indicative of the results that
may be achieved for the entire year ending December 31, 1998 or for any other
interim period.
Certain reclassifications have been made to prior period amounts to conform to
the current period presentation.
2. Inventories
Inventories are in two main stages of completion and consisted of the following
(amounts in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------------------------------------
(Unaudited)
<S> <C> <C>
Components and fabric $5,318 $7,650
Jobs in process and finished goods 2,450 3,130
-------------------------------------
$7,768 $10,780
=====================================
</TABLE>
3. Income Taxes
As a result of recent operating losses and the uncertainty of the realization of
the potential tax benefits thereof, the Company has not recorded potential
income tax benefits of approximately $1,227,000 and $1,504,000 related to the
quarter and six months ended June 30, 1998. The deferred income tax asset of
$1,504,000 at June 30, 1998 has been offset by a valuation allowance. The
Company will reevaluate the potential realizability of the deferred tax assets
on a quarterly basis.
<PAGE>
4. Indebtedness
At June 30, 1998, the Company had outstanding borrowings of $2,769,000 on its
$4,000,000 line of credit. The Company was in violation of certain financial
covenants at June 30, 1998. On July 24, 1998, the Company and the financial
institution agreed that the non-compliance with the financial covenants would be
waived for the second quarter and the amount of the line reduced to $3,250,000
decreasing to $2,750,000 at scheduled intervals over the remaining term of the
commitment, which expires October 31, 1998. At August 12, 1998, the line of
credit balance was $2,255,000.
5. Common Stock
On June 15, 1998, the Company issued 200,000 shares of common stock in a private
offering pursuant to a management and investment agreement with a private
investment company. Additionally, the Company issued an option for 600,000
shares of common stock to the same party at varying strike prices. The option
carries strike prices between $3.00 and $7.50 per share.
6. Operational Restructuring
During the second quarter of 1998, the Company recorded a restructuring charge
of $1,290,000 related to warehouse consolidation, returning to a focus on
remanufacturing and a sales office consolidation plan. The operational
restructuring charge included amounts for severance pay, payouts under current
lease agreements and the estimated loss on the disposal of certain fixed assets.
In connection with this plan the Company, reduced sales and administrative
staffing by approximately 30 people. The Company anticipates completing the
asset sales and severance payments in the third quarter of 1998 and the lease
termination costs are anticipated to extend into the year 2000.
<PAGE>
OPEN PLAN SYSTEMS, INC.
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following table sets forth the relationship of costs and expenses as a
percentage of the Company's sales for the periods indicated:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 85.7 69.9 82.5 73.4
----------- ---------- ---------- -----------
Gross profit 14.3 30.1 17.5 26.6
Amortization of intangibles .8 1.0 0.9 1.0
Selling and marketing expenses 24.6 21.0 24.8 20.2
General and administrative expenses 11.3 8.0 10.4 9.6
Operational restructuring 15.5 - 7.9 -
----------- ---------- ---------- -----------
Operating (loss) income (37.9) 0.1 (26.5) (4.2)
Other (income) expense .9 (0.2) 0.8 (0.4)
----------- ---------- ---------- -----------
Income (loss) before income taxes (38.8) 0.3 (27.3) (3.8)
Benefit from income taxes - - - (1.7)
----------- ---------- ---------- -----------
Net income (loss) (38.8) 0.3% (27.3)% (2.1)%
=========== ========== ========== ===========
</TABLE>
Operational Restructuring. The Company recorded a charge of $1,290,000 in
the second quarter of 1998. The restructuring charge of $1,290,000 recognizes
the costs related to three important strategic initiatives: 1) A return to a
focus on the core remanufacturing business; 2) streamlining and consolidation of
warehouse operations; and 3) consolidation of existing sales offices and
reductions in sales training staff. As noted above, the Company will refocus on
producing remanufactured product, reducing excess warehouse space, divest
certain assets associated with the new workstation manufacturing capabilities
and continue streamlining operations. In connection with the aforementioned
plan, the Company reduced sales and administrative staffing by approximately 30
people. The Company anticipates completing the asset sales in the third quarter
of 1998 and the lease termination costs are anticipated to extend into the year
2000. Total anticipated costs of lease termination are expected to be
approximately $460,000. The Company believes that it will achieve annual cost
reductions of approximately $1,500,000 as a result of the restructuring.
In the announced restructuring plan, the Company will be reducing its
warehousing capacity in Dallas, Atlanta, Cincinnati and Richmond as well at its
Lansing, Michigan facility. The plan calls for the reduction of 156,000 square
feet of leased warehouse space. Additionally, the Company is in the process of
divesting certain metal working equipment originally acquired as part of the
Company's plan to make its own line of new workstations as well as writing off
its investment in new software acquired to support the new furniture
manufacturing operations totaling approximately $600,000. This supports the
Company's return to its focus on remanufacturing. The Company anticipates that
these assets will be sold in the third quarter. The Company believes that these
programs will reduce annual production costs by approximately $450,000 and will
help it to return to gross margins that are more in line with pre-1997 levels.
As part of the sales office restructuring program implemented at the end of
the quarter, the Company closed its sales offices in Dallas, Charlotte and
Baltimore and reduced sales training staff in certain other markets. The thrust
of this program was to reduce the number of non-producing sales offices and
personnel. The Charlotte and Baltimore markets will continue to be serviced by
company employees working from their homes while the Dallas market will be
serviced by independent sales representatives. The Company does not anticipate
that these changes will have a material impact on sales volumes in future
periods.
Sales. Sales for the three and six months ended June 30, 1998 were
$8,332,000 and $16,232,000, increases of approximately $1,168,000 and $2,631,000
or 16.3% and 19.3% over the same periods in 1997. The increase in sales was
principally due to sales from the Company's three sales offices opened during
1997 as well as additional sales from the Company's National Accounts group.
Among the offices open in excess of one year, seven achieved increased sales
during the period and five experienced declining sales. Three sales offices
closed in July 1998 as part of the restructuring program described above.
The Company continued to experience sales discounting pressure during the
most recent quarter. This discounting pressure came primarily from dealers and
large companies served by the National Accounts Group. The Company's sales
growth continued to be skewed toward this segment of the business during the
first and second quarters of 1998. The Company is in the process of implementing
new marketing initiatives aimed at its traditional core customer market where,
historically, there has been less discounting pressure.
During the year, the Company implemented initiatives in the branch office
network including increased management and sales personnel levels. The Company
also is continuing to evaluate the impact that its various marketing programs
are having on sales in each market.
Cost of Sales. The Company's cost of sales includes costs of raw materials
(new and used workstation components, new fabric, laminate, paint, and other
materials), labor, supplies, freight, utilities, and other manufacturing related
expenses. Cost of sales increased by $2,133,000 in the second quarter of 1998
from the $5,010,000 reported in the second quarter of 1997. Additionally, cost
of sales increased by $3,413,000 for the first six months of 1998 from the
$9,986,000 reported in the similar period for 1997. The primary reasons for the
increase in cost of sales was the additional sales recorded in 1998 along with
the items described in detail below.
The gross margin decreased to 14.3% and 17.5% in the second quarter of 1998
and for the first six months of 1998 from 30.1% and 26.6% for the respective
periods in 1997. During 1997, the Company used its manufacturing capacity to
increase work-in-process and finished goods inventory levels based on expected
sales volumes which did not materialize. As a result, the Company had excess
levels of inventories of certain parts. During the second quarter and first half
of 1998, the Company reduced inventory to levels more in line with expected
market needs. As a result, the Company had higher per unit costs as production
units decreased more rapidly than production costs. The Company's margins were
also impacted by some selective brokered sales. Additionally, the Company's
margins continued to be impacted by excess warehousing capacity in the Dallas,
Atlanta, Cincinnati and Richmond markets.
Operating Expenses. The Company's most significant operating expense is
selling and marketing expense. These costs are primarily related to salesperson
compensation, advertising and other marketing expenses and rents. The Company
compensates its salespeople through a combination of salaries and commissions.
While most of these expenses are directly related to the current year's sales,
certain other marketing expenses are incurred to build brand recognition and
generate sales leads that may contribute to sales in later periods.
Selling and marketing expenses for the second quarter of 1998 increased to
$2,048,000 from the $1,504,000 reported in the second quarter of 1997. Selling
and marketing expenses increased to $4,020,000 for the first six months of 1998
from the $2,754,000 reported in the first six months of 1997. The increases were
primarily related to adding new management and sales people in the branch
offices, increased advertising expenses related to coordinated national
marketing programs and other expenses related to providing adequate support
levels to the branch offices.
During the latter part of 1997 and early 1998, the Company increased the
level of sales people in branch offices at a rate faster than it was able to
train and manage the sales trainees. The Company, as part of its sales office
restructuring program noted previously, has reduced the number of branch offices
and sales trainees to levels that are manageable but, in management's opinion,
allow for a significant level of growth. Even though the company reduced the
number of direct sales people, the number of Company direct sales
representatives remains 50% higher than June 30, 1997. The Company believes that
this strategy will reduce the cost of selling and marketing by $600,000 annually
while having no material adverse impact on sales levels.
General and administrative expenses increased to $939,000 in the second
quarter of 1998 from the $573,000 reported in the second quarter of 1997. These
expenses increased to $1,683,000 for the first six months of 1998 from the
$1,301,000 recorded in the similar period in 1997. The increase in expenses in
the second quarter were primarily related to the termination of certain Company
car leases, higher levels of bad debt expense and higher legal and accounting
fees associated with the transition of management that has occurred over the
past quarter. The Company anticipates that its restructuring program will result
in lower levels of general and administrative expenses over the next several
quarters. As a result of the restructuring of production and the refocus on
remanufacturing, the Company has elected not to implement the new management
information system it acquired in 1997.
Other Non-Operating Income and Expense. Total other income and expense
changed from income of $17,000 for the second quarter of 1997 to expense of
$72,000 for the second quarter of 1998. Similarly, other income totaled $54,000
for the first six months of 1997 versus expense of $138,000 for the first six
months of 1998. The primary reason for the decrease is that the Company expended
the cash raised in its 1996 initial public offering during 1996 and 1997 and had
to borrow on its line of credit to fund operating expenses in 1998.
Income Taxes. The Company recorded no income tax benefit for the first six
months of 1998 versus the $234,000 benefit recorded in the previous year. This
was the result of recent operating losses and the uncertainty of the realization
of the potential tax benefits. The Company will reevaluate the potential
realizability of the deferred tax assets on a quarterly basis.
Liquidity and Capital Resources Cash Flows from Operating Activities. Net
cash used in operating activities was $688,000 for the six months ended June 30,
1998 as compared to $2,210,000 for the six months ended June 30, 1997. The
decrease in cash used by operating activities for the first half of 1998 was
primarily due to increased losses offset by reductions in inventories and the
operational restructuring. The Company's inventory reductions were achieved as
part of the Company's program to reduce its stock of raw materials and finished
goods to more closely match anticipated sales volumes. Trade accounts receivable
increased during the quarter and six months due to increases in sales. Days
sales outstanding decreased slightly. The Company continues to focus on
decreasing the number of days sales outstanding and would expect that future
changes in sales volumes will not have a direct correlation to changes in
accounts receivable.
Cash Flows from Investing Activities. Net cash used in investing activities
was $369,000 for the six months ended June 30, 1998 as compared to $466,000 for
the six months ended June 30, 1997. The cash used during the first half of 1998
was to purchase certain capital equipment related to continuing production
activities. These purchases are consistent with the Company's focus on producing
high-quality, affordable remanufactured office systems. The Company anticipates
that capital spending for 1998 will be less than $1.0 million. The source of
funds for anticipated capital spending will be funds from operations. At June
30, 1998, the Company had borrowings of $2,769,000 under its line of credit. The
Company was in violation of certain financial covenants at June 30, 1998. On
July 24, 1998, the Company and the lender agreed that the non-compliance with
the financial covenants would be waived for the second quarter and the amount of
the line reduced to $3,250,000 and declines at scheduled intervals to $2,750,000
over the term of the line. At August 12, 1998, the line of credit balance was
$2,255,000.
Cash Flows from Financing Activities. Net cash provided by financing
activities was $1,012,000 during the first half of 1998 as compared to net cash
used by financing activities of $89,000 during the comparable period in 1997.
This increase in cash flows from financing activities for the first half of 1998
represented reduced principal payments on outstanding long-term debt and capital
leases, short-term borrowings on the Company's line of credit, and the issuance
of common stock.
Expected Future Cash Flows. The Company expects that cash flow from
operating activities will increase over the next several quarters as decreases
in inventories, along with moderation of the decreases in accounts payable
associated with the Company's reduced inventory purchases, should improve the
Company's short term cash position. The Company is also in negotiations with
several financial institutions to extend and increase its credit limit which
will provide it additional flexibility to manage its cash position and to fund
any amount which might become due and payable under the terms of the TFM
acquisition agreement.
Seasonality and Impact of Inflation
Because the Company recognizes revenues upon shipment and typically ships
workstations within three weeks of an order, a substantial portion of the
Company's revenues in each quarter results from orders placed by customers
during that quarter. As a result, the Company's results may vary from quarter to
quarter and may not reflect a seasonal pattern.
Inflation has not had a material impact on the Company's net sales or
income to date. However, there can be no assurances that the Company's business
will not be affected in the future by inflation.
Forward-Looking Statements
The foregoing discussion contains certain forward-looking statements, which
may be identified by phrases such as "the Company expects" or words of similar
effect. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. The Company has identified certain
important factors that in some cases have affected, and in the future could
affect, the Company's actual results and could cause the Company's actual
results for fiscal 1998 and any interim period to differ materially from those
expressed or implied in any forward-looking statements made by, or on behalf of,
the Company. These factors are set forth under the caption "Forward-Looking
Statements" in Item 6 of the Company's Form 10-KSB for the fiscal year ended
December 31, 1997, a copy of which is on file with the Securities and Exchange
Commission. The Company assumes no duty to update any of the statements of this
report.
<PAGE>
OPEN PLAN SYSTEMS, INC.
PART II
OTHER INFORMATION
<TABLE>
<S> <C>
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
(c) On June 17, 1998, the Company entered into a Management and Consulting Agreement (the
Agreement with Great Lakes Capital, LLP. ("GLC") in consideration for, among other
things, the grant of an option to GLC to purchase up to 600,000 shares of Company common
stock over the next five years at prices ranging from $3.00 to $7.50 per share. To date
the option has not been exercised. In connection with the execution of the Agreement, GLC
was entitled to purchase 200,000 newly issued shares of common stock from the Company for a
purchase price of $2.175 per share or $435,000 in the aggregate. The Company has claimed
an exemption from registration for the issuances of the option (including any subsequent
exercise thereof) and the 200,000 shares of Common Stock to GLC under Section 4 (2) of the
Securities Act of 1933, as amended. These transactions were previously reported in the
Company's Current Report on Form 8-K filed with the Commission on June 18, 1998, as
described in Item 6(b) below.
Item 3. Defaults upon Senior Securities
In the second quarter of 1998, the Company was in violation of certain financial covenants
contained in its bank line of credit. These defaults were waived by the bank on July 24,
1998. See Note 4 to the Notes to the Consolidated Financial Statements set forth
elsewhere in this report.
Item 4. Submission of Matters to a Vote of Security Holders
On May 15, 1998, the Company held its annual meeting of shareholders (the "Meeting").
Three persons, two designated as Class I directors and one designated as a Class II
directors were elected to the Board of Directors at the meeting. Set forth below are the
names of the persons elected at the Meeting as directors, the class to which they were
elected, and the vote totals for each such director:
</TABLE>
<PAGE>
Item 4 (continued)
<TABLE>
<S> <C> <C> <C> <C>
Votes For Votes Withheld
Class I - Terms Expire 2001
Gary M. Farrell 3,619,700 258,024
E.W. Mugford 3,620,600 257,124
Class II - Terms Expire 1999
Paul A. Covert 2,362,158 1,515,611
The only other matter considered at the Meeting was the ratification of the
appointment of the firm of Ernst & Young LLP as independent auditors for the Company for
the fiscal year ending December 31, 1998. The vote total for approval of this matter is
set forth below:
Number
of Votes
For.................. 3,720,232
Against ............. 2,900
Abstain ............. 154,592
Item 5. Other Information
Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The registrant has included the following exhibits pursuant to Item 601 of Regulation S-B.
<S> <C><C> <C>
Exhibit No. Description
---------------- ----------------------------------------------------------------------------
10.16 $4,000,000 Line of Credit Agreement with Crestar Bank
10.17 Management and Consulting Agreement dated June 17,1998 between Open Plan
Systems and Great Lakes Capital, LLC.
10.18 Open Plan Systems, Inc. Non-Qualified Stock Option Agreement, dated June
17, 1998, by and between the Company and Great Lakes Capital
10.19 Voting and Standstill Agreement, dated June 17, 1998, by and between the
Company, Great Lakes Capital, LLC. And Great Lakes Capital, Inc.
10.20 Registration Rights Agreement, dated June 17, 1998 by and between the
Company and Great Lakes Capital LLC.
10.21 Employment Agreement dated June 17, 1998, by and between the Company and
John L. Hobey
10.22 Employment Agreement, dated June 17, 1998 by and between the Company and
William F. Crabtree.
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule (filed electronically only)
(b) Reports on Form 8-K
On June 18, 1998, the Company filed a Current Report on Form 8-k that incorporated by
reference under Item 5 a press release that announced the appointments of John L. Hobey as
Chief Executive Officer and William F. Crabtree as Chief Financial Officer of the Company
and the execution of a Management and Consulting Agreement with Great Lakes Capital, LLC to
provide management and consulting services for an 18 month term
</TABLE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OPEN PLAN SYSTEMS, INC.
------------------------------------------------------
(Registrant)
Date: August 14, 1998 /s/ John C. Hobey
-----------------------------------------------------
John C. Hobey
Chief Executive Officer
Date: August 14, 1998 /s/ William F. Crabtree
------------------------------------------------------
William F. Crabtree
Chief Financial Officer
Date: August 14, 1998 /s/ Neil F. Suffa
------------------------------------------------------
Neil F. Suffa
Corporate Controller
OPEN PLAN SYSTEMS, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
(a) Exhibits:
The registrant has included the following exhibits pursuant to Item 601 of Regulation S-B.
<S> <C><C> <C>
Exhibit No. Description
---------------- ----------------------------------------------------------------------------
10.16 $4,000,000 Line of Credit Agreement with Crestar Bank
10.17 Management and Consulting Agreement dated June 17,1998 between Open Plan
Systems and Great Lakes Capital, LLC.
10.18 Open Plan Systems, Inc. Non-Qualified Stock Option Agreement, dated June
17, 1998, by and between the Company and Great Lakes Capital
10.19 Voting and Standstill Agreement, dated June 17, 1998, by and between the
Company, Great Lakes Capital, LLC. And Great Lakes Capital, Inc.
10.20 Registration Rights Agreement, dated June 17, 1998 by and between the
Company and Great Lakes Capital LLC.
10.21 Employment Agreement dated June 17, 1998, by and between the Company and
John L. Hobey
10.22 Employment Agreement, dated June 17, 1998 by and between the Company and
William F. Crabtree.
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule (filed electronically only)
</TABLE>
OPEN PLAN SYSTEMS, INC.
EXHIBIT 11 - Statement Re: Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding during the
period 4,506 4,472 4,484 4,472
Assumed exercise of options less assumed - - - -
acquisition of shares
-------------------------------------------------------------------------------
Total 4,506 4,472 4,472 4,472
===============================================================================
Net earnings (loss) used in computation $ (3,229) $ 25 $ (4,436) $ (290)
===============================================================================
Earnings (loss) per common share $ (.72) $ .01 $ (.99) $ (.06)
===============================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF OPEN PLAN SYSTEMS, INC. AS OF JUNE 30, 1998 AND THE RELATED STATEMENTS
OF INCOME AND CASH FLOWS FOR THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001011738
<NAME> OPEN PLAN SYSTEMS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 28
<SECURITIES> 0
<RECEIVABLES> 6,308
<ALLOWANCES> (297)
<INVENTORY> 7,768
<CURRENT-ASSETS> 15,337
<PP&E> 4,653
<DEPRECIATION> (1,724)
<TOTAL-ASSETS> 23,040
<CURRENT-LIABILITIES> 7,020
<BONDS> 0
0
0
<COMMON> 20,501
<OTHER-SE> (4,481)
<TOTAL-LIABILITY-AND-EQUITY> 23,040
<SALES> 16,232
<TOTAL-REVENUES> 13,399
<CGS> 16,850
<TOTAL-COSTS> 16,850
<OTHER-EXPENSES> 5,847
<LOSS-PROVISION> 1,290
<INTEREST-EXPENSE> 132
<INCOME-PRETAX> (4,436)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,436)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,436)
<EPS-PRIMARY> (.99)
<EPS-DILUTED> (.99)
</TABLE>
MANAGEMENT AND CONSULTING AGREEMENT
THIS MANAGEMENT AND CONSULTING AGREEMENT (this "Agreement") is made as of
June 17, 1998, by and between OPEN PLAN SYSTEMS, INC., a Virginia corporation
("OPS"), and GREAT LAKES CAPITAL, LLC, a Delaware limited liability company
("LLC").
WITNESSETH:
WHEREAS, John L. Hobey ("Hobey") and William F. Crabtree ("Crabtree") are
members of LLC; and
WHEREAS, LLC will make Hobey and Crabtree available to OPS to serve as
full-time employees of OPS, and OPS desires to employ Hobey and Crabtree, in the
capacities of Chief Executive Officer and Chief Financial Officer, respectively;
and
WHEREAS, OPS and LLC desire to enter into a management and consulting
relationship on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties hereby agree as follows:
1. Management and Consulting Services.
(a) Chief Executive Officer. LLC will make Hobey available to OPS to serve
as a full-time employee of OPS in the capacity of OPS's Chief Executive Officer
("CEO"), and OPS will elect Hobey as CEO of OPS. Hobey will enter into an
employment agreement with OPS, substantially in the form attached hereto as
Exhibit A (the "Employment Agreement"), the provisions of which shall include an
18-month term, an annual base salary of $160,000.00, eligibility for cash
bonuses at the discretion of the Board of Directors of OPS, and the grant of
nonqualified stock options of up to 25,000 shares of OPS's common stock, without
par value ("Common Stock"), pursuant to the terms and conditions of a
nonqualified stock option agreement with OPS, substantially in the form attached
hereto as Exhibit B (the "Stock Option Agreement"). At the end of the term of
this Agreement, OPS and Hobey may negotiate with each other directly regarding a
continued employment relationship.
(b) Chief Financial Officer. LLC will make Crabtree available to OPS to
serve as a full-time employee of OPS in the capacity of OPS's Chief Financial
Officer ("CFO"), and OPS will elect Crabtree as CFO of OPS. Crabtree will enter
into an Employment Agreement, the provisions of which shall include an 18-month
term, an annual base salary of $120,000.00, eligibility for cash bonuses at the
discretion of the Board of Directors of OPS, and the grant of nonqualified stock
options of up to 12,500 shares of Common Stock, pursuant to the terms and
conditions of a Stock Option Agreement. At the end of the term of this
Agreement, OPS and Crabtree may negotiate with each other directly regarding a
continued employment relationship.
(c) Additional Consulting Services. In addition to making Hobey and
Crabtree available to serve as employees of OPS, LLC will make available to OPS
for consultation on an as needed basis the services of members of LLC (the
"Consultants"), including specifically, and without limitation, W. Sydnor Settle
("Settle"). Each of the Consultants will provide his or her personal services in
the form of consulting services (the "Services") as reasonably requested by OPS,
which Services of all Consultants shall not, in the aggregate, exceed ten (10)
hours per month..
(d) Performance of Services.
(i) During the term of this Agreement, LLC will, to the best of its ability,
impart knowledge, information, ideas, suggestions and advice to OPS in
furtherance of and relating to the Services as reasonably requested by OPS,
and OPS and its Affiliates (as defined in Section 9(c) below) will have the
right to make use of the same in their business at any time without
additional consideration to LLC or its Consultants, employees or agents,
other than that specifically stated herein. All reports, statistics,
drawings, documents, computer programs (including source codes) or other
property prepared by LLC and/or its Consultants, employees or agents in the
course of performing the Services will be the property of OPS and may be
used and reproduced by OPS for any purpose whatsoever; provided that all
methods of analysis that are the property of LLC and are used by LLC to
prepare such reports, statistics, drawings, documents or computer programs
(including source codes) shall remain the property of LLC, even if such
methods are developed specifically with regard to providing the Services.
(ii) During the term of this Agreement, LLC will be available to perform the
Services at such times and at such locations as OPS and LLC may from time
to time agree.
(iii)During the term of this Agreement, OPS will reimburse LLC for all
reasonable and customary expenses incurred in the performance of Services
that are requested by the Chairman of the Board of Directors of OPS.
2. Term. The term of this Agreement will be for a period of eighteen (18)
months, beginning on June 17, 1998; provided, however, that:
(a) if (1) OPS terminates the employment of Hobey for Proper Cause (as
defined in his Employment Agreement), (2) OPS terminates the employment of Hobey
due to death or disability (in accordance with his Employment Agreement), or (3)
Hobey voluntarily resigns as an employee of OPS, then (i) OPS may select Hobey's
replacement without consulting LLC or terminating this Agreement or (ii) OPS
may, in its sole discretion, terminate this Agreement with three (3) days prior
written notice to LLC; or
(b) if OPS terminates the employment of Hobey without Proper Cause and LLC
is unable to provide a replacement for Hobey, who in OPS's sole discretion is
acceptable to OPS, within five (5) days after such termination, then (i) OPS may
select Hobey's replacement without consulting LLC or terminating this Agreement,
or (ii) either OPS or LLC may, in its sole discretion, terminate this Agreement
with three (3) days prior written notice to the other party.
3. Consulting Consideration. In consideration for LLC making Hobey and
Crabtree available to serve as OPS's CEO and CFO, respectively, and the
agreement of LLC to perform the Services, OPS will deliver to LLC the following
consideration:
(a) Options. OPS will grant to LLC nonqualified stock options for 600,000
shares of Common Stock, pursuant to a nonqualified stock option agreement
substantially in the form attached hereto as Exhibit C (the "LLC Stock Option
Agreement").
(b) Cash Payment. OPS will pay and deliver to LLC for expense
reimbursement, by wire transfer, or by certified or bank check, the amount of
$22,500.00.
(c) Board Membership. In accordance with the terms and conditions of the
Voting and Standstill Agreement (as defined in Section 4(d) below), OPS will
take such action as may be necessary to increase the size of the OPS Board of
Directors to ten (10) directors, to elect Hobey and Settle to Class I
directorships (current term expiring in 2001) and to nominate and recommend
Hobey and Settle for election at the 1999 annual meeting of shareholders as
Class I directors. The parties hereby acknowledge that, for their services as
directors of OPS, Hobey will not receive any compensation and Settle will
receive the same compensation as other nonemployee directors.
4. Additional Agreements.
(a) Sale and Purchase of New Shares. OPS will sell and deliver to LLC
200,000 newly issued shares of Common Stock (the "Shares") for the purchase
price of $2.175 per share, or an aggregate purchase price of $435,000.00.
(b) Registration Rights Agreement. OPS will enter into a Registration
Rights Agreement with LLC, substantially in the form attached hereto as Exhibit
D.
(c) Listing Application. OPS will, at its expense, take such steps as shall
be necessary and advisable to effect the listing on The Nasdaq National Market
of the Shares issued to LLC, and to reserve for listing on The Nasdaq National
Market the shares of Common Stock that may be issued to LLC upon exercise of the
options contained in the LLC Stock Option Agreement.
(d) Voting and Standstill Agreement. OPS, LLC and Great Lakes Capital,
Inc., a Delaware corporation ("GLC"), will enter into a Voting and Standstill
Agreement, substantially in the form attached hereto as Exhibit E (the "Voting
and Standstill Agreement").
5. Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on June 17, 1998 (the "Closing Date"), at 11:00
a.m. (eastern time), at the offices of Williams, Mullen, Christian & Dobbins,
1021 East Cary Street, Suite 1600, Richmond, Virginia 23219, or such other date,
time and place as the parties hereto may agree.
6. Independent Contractor.
(a) LLC's relationship to OPS shall be that of an independent contractor
retained on a consulting basis. LLC will at all times retain control over the
performance of the Services and shall remain free from direction by OPS. Nothing
in this Agreement, including the employment relationships set forth in Sections
1(a) and 1(b) above, shall be construed as creating any type of agency
relationship, including, without limitation, that of employer and employee,
between OPS and LLC.
(b) LLC represents and warrants that, except as otherwise specifically
stated in writing, all of the persons so assigned to perform the Services for
OPS under this Agreement (including but not limited to Settle) shall be its
employees or agents and not employees of OPS. LLC will file all required returns
and reports, withhold and/or pay all required federal, state and local wage or
employment-related taxes, including but not limited to income taxes, social
security taxes, unemployment taxes and taxes measured by gross income or gross
receipts, with respect to the amounts paid to LLC, or any such employees in
connection with the performance of the Services; provided that it is
acknowledged and agreed that LLC shall not be responsible for the employment
relationships described in Sections 1(a) and (b) above.
(c) LLC will reimburse OPS for any wage, employment-related or other tax
not so withheld and/or remitted in accordance with Section 6(b) above and for
any costs and expenses, including reasonable attorney's fees, penalties and
interest, which OPS may incur by reason of LLC's failure to comply with its
obligations set forth in Section 6(b) above.
(d) LLC shall not use the name of OPS or any of its Affiliates in any
advertising, promotion or sales of any materials or services without OPS's prior
written concurrence.
7. Representations and Warranties of OPS. OPS represents, warrants and
covenants to LLC as follows:
(a) Valid Existence, Good Standing and Power. OPS is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, and is in good standing as a foreign corporation in
each jurisdiction in which the failure to qualify as a foreign corporation could
have, in the aggregate, an adverse effect in a material respect on OPS's
business, property or financial condition. OPS has all requisite corporate power
and authority to own, lease and operate its properties, and to carry on its
business as such business is now being conducted, and to enter into this
Agreement and perform its respective obligations hereunder.
(b) OPS Stock. The authorized capital stock of OPS consists of 50,000,000
shares of Common Stock, and 5,000,000 shares of preferred stock, without par
value. Of such shares, on the Closing Date, approximately 4,472,000 shares of
Common Stock, and no shares of OPS preferred stock, have been issued and are
outstanding. The outstanding shares of OPS capital stock have been validly
issued and are fully paid and nonassessable, and are free of any preemptive
rights, whether statutory or otherwise. There are no outstanding or authorized
subscriptions, options, warrants, calls or rights obligating OPS to issue any
additional shares of capital stock, except for options granted under OPS's 1996
Stock Incentive Plan, OPS's 1996 Stock Option Plan for Non-Employee Directors
and the LLC Stock Option Agreement. There are no limits or restrictions of any
kind on the voting of the Common Stock.
(c) Stock to be Issued to LLC. The Shares of Common Stock to be issued to
LLC are duly authorized and, when issued pursuant to this Agreement, will be
validly issued, fully paid, nonassessable, and free of any preemptive rights,
whether statutory or otherwise.
(d) Authorization and Validity of Agreements. The execution, delivery and
performance by OPS of this Agreement and all related documents contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action. No
shareholder approval is required. This Agreement and all related documents to
which OPS is a party have been duly executed and delivered by OPS, and upon
their execution and delivery as provided herein and therein, will be legal and
valid obligations of OPS, enforceable against it in accordance with the terms of
the respective document, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally, and subject to
general principles of equity (whether in law or in equity) and public policy
applicable to securities law.
(e) No Approvals or Notices Required; No Conflict with Instruments. The
execution, delivery and performance by OPS of this Agreement and all related
documents contemplated hereby, and the consummation by it of the transactions
contemplated hereby and thereby: (1) will not violate (with or without the
giving of notice or lapse of time or both) any judgment, ruling, order, writ,
injunction, statute, rule or regulation applicable to OPS; (2) will not require
any consent, approval, filing or notice under any provision of law applicable to
OPS; (3) will not (i) require any consent, approval or notice; (ii) conflict
with, result in the breach of any provision of, result in the termination of, or
constitute a default (or an event that, with notice or lapse of time or both,
would constitute a default); or (iii) result in the acceleration of (or give any
person the right to accelerate) the performance of any obligation of OPS under
any indenture, mortgage, deed of trust, lease, licensing agreement, contract,
instrument or other agreement to which OPS is a party or by which the assets or
properties of any of them are bound or encumbered; and (4) will not result in
the creation of a lien upon any properties, assets or business of OPS pursuant
to the articles of incorporation or bylaws of OPS or any indenture, mortgage,
deed of trust, lease, licensing agreement, contract, instrument or other
agreement to which OPS is a party or by which the assets or properties of any of
them are bound or encumbered.
(f) Legal Proceedings. Except as described in Schedule 7(f) to this
Agreement, (1) there is no pending legal, administrative, governmental or other
claim, action, suit, or proceeding or governmental investigation to which OPS is
a party or relating to any of its properties or rights or otherwise affecting
OPS; and (2) there is no threatened legal, administrative, governmental or other
claim, action, suit, or proceeding or governmental investigation, or any basis
for such claim, action, suit, proceeding or investigation against or relating to
OPS or any of its respective properties or rights or which would affect OPS,
which, if adversely determined, would have, either singly or in the aggregate, a
material adverse effect on the financial condition, properties, good will,
results of operations or business of OPS taken as a whole. OPS is not in
violation of any term of any judgment, ruling, writ, decree, injunction or order
outstanding against it.
(g) OPS SEC Documents. OPS has filed all reports, schedules, statements and
other documents required to be filed by it with the Securities and Exchange
Commission under Sections 13(a) and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), since May 30, 1996, the date upon which
it became subject to the reporting requirements of the Exchange Act
(collectively, the "OPS SEC Documents"). Each of the OPS SEC Documents complies
as to form in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations promulgated thereunder and, as of
their respective filing dates, does not contain any untrue statement of a
material fact or omits to state a 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.
(h) Affiliated Transaction. The transactions contemplated by this Agreement
have been approved, prior to the date hereof, by a majority of OPS's
"disinterested directors" (as defined in Article 14 of the Virginia Stock
Corporation Act, as amended, in effect on the date of this Agreement (the
"Virginia Act")), within the meaning of Section 13.1-727(B)(1)(iv) of Article 14
of the Virginia Act.
(i) No Brokers. Neither OPS nor any of its officers, directors or employees
acting on behalf of OPS, has employed any broker, investment banker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
(j) Full Disclosure. The representations and warranties made by OPS to LLC
in this Agreement do not contain any untrue statement of a material fact, or
omit to state a material fact which would be necessary to make the statements
contained herein, in light of the circumstances in which they were made, not
misleading.
8. Representations and Warranties of LLC. LLC represent, warrant and
covenant to OPS as follows:
(a) Valid Existence, Good Standing and Power. LLC is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware, and is in good standing as a foreign limited liability
company in each jurisdiction in which the failure to qualify as a foreign
limited liability company could have, in the aggregate, an adverse effect in a
material respect on LLC's business, property or financial condition. LLC has all
requisite power and authority to own, lease and operate its properties, and to
carry on its business as such business is now being conducted.
(b) Authorization and Validity of Agreements. The execution, delivery and
performance by LLC of this Agreement and the related documents contemplated
hereby to which LLC is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
action. This Agreement and the related documents contemplated hereby to which
LLC is a party have been duly executed and delivered by LLC, and upon its
execution and delivery as provided herein and therein, will be legal and valid
obligations of LLC, enforceable against it in accordance with the terms of the
respective documents, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally, and subject to
general principles of equity (whether in law or in equity) and public policy
applicable to securities law.
(c) No Approvals or Notices Required; No Conflict with Instruments. The
execution, delivery and performance by LLC of this Agreement and all related
documents to which LLC is a party, and the consummation of the transactions
contemplated hereby and thereby: (1) will not violate (with or without the
giving of notice or lapse of time or both) any judgment, ruling, order, writ,
injunction, statute, rule or regulation applicable to LLC; (2) will not require
any consent, approval, filing or notice under any provision of law applicable to
LLC; (3) will not (i) require any consent, approval or notice; (ii) conflict
with, result in the breach of any provision of, result in the termination of, or
constitute a default (or an event that, with notice or lapse of time or both,
would constitute a default); or (iii) result in the acceleration of (or give any
person the right to accelerate) the performance of any obligation of LLC under
any indenture, mortgage, deed of trust, lease, licensing agreement, contract,
instrument or other agreement to which LLC is a party or by which the assets or
properties of any of them are bound or encumbered; and (4) will not result in
the creation of a lien upon any properties, assets or business of LLC pursuant
to the respective certificate of organization, operating agreement, charter or
bylaws of LLC, or any indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which LLC is a party or by
which its assets or properties are bound or encumbered.
(d) Legal Proceedings. There is no: (1) pending legal, administrative,
governmental or other claim, action, suit, or proceeding or governmental
investigation to which LLC is a party or relating to any of its properties or
rights or otherwise affecting LLC; and (2) threatened legal, administrative,
governmental or other claim, action, suit, or proceeding or governmental
investigation, or any basis for such claim, action, suit, proceeding or
investigation against or relating to LLC or any of its respective properties or
rights or which would affect LLC, which, if adversely determined, would have,
either singly or in the aggregate, a material adverse effect on the financial
condition, properties, good will, results of operations or business of LLC taken
as a whole. LLC is not in violation of any term of any judgment, ruling, writ,
decree, injunction or order outstanding against it.
(e) Certain Securities Laws Matters. LLC is acquiring the Shares of Common
Stock for its own account, without a view to the resale, transfer or
distribution thereof, and not for the account of others. LLC agrees not to
resell or otherwise dispose of all or any such stock, except as permitted by
federal and state securities laws in the opinion of legal counsel reasonably
acceptable to OPS, including, without limitation, any and all applicable
provisions of this Agreement and any regulations under the Securities Act of
1933, as amended (the "Securities Act"). LLC fully understands and agrees that
it must bear the economic risk of the investment in the Shares for an indefinite
period of time. LLC further understands that this stock has not been registered
under any federal or state securities laws, and may not be assigned unless it is
first registered or the transaction is exempt from registration under federal or
applicable state securities laws. LLC understands and agrees that transfer of
such shares will be restricted in their resale and that each certificate
evidencing the shares will bear the following legend, or one substantially
similar thereto:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and no
transfer, sale, assignment, pledge, hypothecation or other disposition of the
shares represented by this certificate may be made except (A) pursuant to the
effective registration statement under the Act and any applicable state
securities laws or (B) pursuant to an exemption from the provisions of Section 5
of the Act, and the rules and regulations in effect thereunder, and state
securities laws.
(f) Accredited Investors. Settle, Hobey, Crabtree, Thomas H. Corson, Thomas
J. McGrath and Charles B. Kaufmann III are the only members of LLC, and each of
these individuals is an "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act.
(g) No Brokers. Neither LLC nor any of its members, managers or employees
acting on behalf of LLC has employed any broker, investment banker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
(h) Full Disclosure. The representations and warranties made by LLC to OPS
in this Agreement do not contain any untrue statement of a material fact, or
omit to state a material fact which would be necessary to make the statements
contained herein, in light of the circumstances in which they were made, not
misleading.
9. Covenants. In exchange for OPS's utilization of LLC's services and other
good and valuable consideration, the receipt and sufficiency of which LLC and
its Affiliates hereby acknowledge, LLC agrees, and shall use its best efforts to
cause its Affiliates to agree, to enter into the covenants set forth below in
this Section 9.
(a) Confidentiality. For purposes of this Agreement, "Confidential
Information" shall mean any information of a proprietary or confidential nature
and trade secrets of OPS and its Affiliates (as defined in Section 9(c) below)
relating to the business of OPS and its Affiliates that have not previously been
publicly released by duly authorized representatives of OPS. LLC and its
Affiliates agree to regard and preserve as confidential all Confidential
Information pertaining to OPS's business that has been or may be obtained by LLC
or any of its Affiliates in the course of its involvement with OPS. Neither LLC
nor any of its Affiliates will, without prior written authority from OPS to do
so, use for its personal benefit or its personal purposes, unrelated to the
business of OPS, nor disclose to others, either during the term of this
Agreement or for five (5) years thereafter, except as required by the conditions
of its engagement hereunder, any Confidential Information of OPS. This provision
shall not apply after the Confidential Information has been voluntarily
disclosed to the public by a duly authorized representative of OPS,
independently developed and disclosed by others, or otherwise enters the public
domain through lawful means.
(b) Removal Of Documents Or Objects. LLC and its Affiliates agree not to
remove from the premises of OPS, except as a consultant to OPS in pursuit of the
business of OPS or any of its Affiliates, or except as specifically permitted in
writing by OPS, any document or object containing or reflecting any Confidential
Information of OPS or its Affiliates. LLC and its Affiliates recognize that all
documents or material containing Confidential Information developed by it or by
someone else in the course of employment by OPS are the exclusive property of
OPS; provided that the methods of analysis that are the property of LLC and are
used by LLC to prepare such documents or material containing Confidential
Information in the course of performing the Services shall remain the property
of LLC.
(c) Nonpiracy Covenants.
(1) For the purpose of this Agreement, the following terms shall have the
following meanings:
(i) "OPS Customers" shall be limited to those customers of OPS or its
Affiliates for whom OPS or its Affiliates are rendering services as of the date
of termination of LLC's engagement hereunder;
(ii) "Affiliates" shall have the meaning ascribed to such term in Rule
12b-2 under the Exchange Act as in effect on the date of this Agreement;
(iii) "Prohibited Services" shall mean services in the new and
remanufactured office furniture industry performed by OPS or its Affiliates,
their agents or employees in any other business engaged in by OPS or its
Affiliates on the date of termination of LLC's engagement hereunder;
(iv) "Prospective Customers" shall be limited to those parties known by LLC
or any of its Affiliates to have been solicited for business within any
Prohibited Services within the twelve (12)-month period preceding the date of
termination of LLC's engagement hereunder, and with or from whom, within the
twelve (12)-month period preceding the date of termination of LLC's engagement
hereunder, someone acting on behalf of OPS or its Affiliates either had met for
the purpose of offering any Prohibited Services or had received a written
response to an earlier solicitation to provide any Prohibited Services;
(v) "Restricted Period" shall mean the period of five (5) years immediately
following the date of termination of LLC's engagement hereunder.
(2) LLC and its Affiliates recognize that over a period of years OPS has
developed, at considerable expense, relationships with, and knowledge about,
Customers and Prospective Customers which constitute a major part of the value
of OPS. During the course of its engagement by OPS, LLC and its Affiliates will
either have substantial contact with, or obtain substantial knowledge about,
these Customers and Prospective Customers. In order to protect the value of
OPS's business, LLC and its Affiliates covenant and agree that, in the event of
the termination of LLC's engagement hereunder, neither LLC nor any of its
Affiliates will, directly or indirectly, for its own account or for the account
of any other person or entity, as an owner, stockholder, partner, agent, broker,
consultant or other participant during the Restricted Period:
(i) solicit a Customer for the purpose of providing Prohibited Services to
such Customer;
(ii) accept an invitation from a Customer for the purpose of providing
Prohibited Services to such Customer;
(iii) solicit a Prospective Customer for the purpose of providing
Prohibited Services to such Prospective Customer; and
(iv) accept an invitation from a Prospective Customer for the purpose of
providing Prohibited Services to such Prospective Customer.
Subsections (i), (ii), (iii), and (iv) are separate and divisible
covenants; if for any reason any one covenant is held to be illegal, invalid or
unenforceable, in whole or in part, the remaining covenants shall remain valid
and enforceable and shall not be affected thereby. Further, the periods and
scope of the restrictions set forth in any such subsection shall be reduced by
the minimum amount necessary to reform such subsection to the maximum level of
enforcement permitted to OPS by the law governing this Agreement. Additionally,
LLC and its Affiliates agree that no separate geographic limitation is needed
for the foregoing nonpiracy covenants as such are not a prohibition on LLC's
involvement in the new and remanufactured office furniture industry and are
already limited to only those entities which are included within the definition
of "Customer" and "Prospective Customer."
(d) Nonraiding of Employees.
(1) LLC and its Affiliates covenant that, until LLC's engagement hereunder
has expired or terminated, neither LLC nor any of its Affiliates will solicit,
induce or encourage for the purposes of employing or offering employment to, or
directly or indirectly solicit, induce or encourage to seek employment with any
other business, whether or not LLC or any of its Affiliates is then affiliated
with such business, any individual who is an employee of OPS or its Affiliates,
including Hobey and Crabtree;
(2) LLC and its Affiliates covenant that, during the Restricted Period
specified in Section 9(c) hereof, neither LLC nor any of its Affiliates will
solicit, induce or encourage for the purposes of employing or offering
employment to, or directly or indirectly solicit, induce or encourage to seek
employment with any other business, whether or not LLC or any of its Affiliates
is then affiliated with such business, any individual who, as of the date of
termination of LLC's engagement hereunder, is an employee of OPS or its
Affiliates, other than Hobey and Crabtree;
(3) LLC and its Affiliates covenant that, if prior to the expiration or
termination of LLC's engagement hereunder (i) OPS terminates Hobey or Crabtree,
as the case may be, for Proper Cause (as defined in the respective Employment
Agreement) or (ii) Hobey or Crabtree, as the case may be, voluntarily resigns as
an employee of OPS, neither LLC nor any of its Affiliates will solicit, induce
or encourage for the purposes of employing or offering employment to, or
directly or indirectly solicit, induce or encourage to seek employment with any
other business, whether or not LLC or any of its Affiliates is then affiliated
with such business, Hobey or Crabtree, as the case may be, until the later of
(x) the expiration or termination of LLC's engagement hereunder or (y) six (6)
months after such termination for Proper Cause or voluntary resignation of Hobey
or Crabtree, as the case may be.
(e) Remedies Upon Breach of Agreement. Notwithstanding the provisions of
Section 12 below, if LLC or any of its Affiliates materially breaches any
provision of Section 9 of this Agreement and fails to cure any such material
breach within five (5) days after written notice of said material breach is
received from OPS, OPS reserves the right to avail itself of any reasonable
remedy available to it at law or in equity. LLC and its Affiliates acknowledge
and agree that OPS shall be entitled to injunctive relief against LLC or any of
its Affiliates for any material violation by LLC or any of its Affiliates of
Sections 9(a), (b), (c) or (d) of this Agreement that LLC or any of its
Affiliates fails to cure within five (5) days after receipt of written notice
from OPS. LLC and its Affiliates agree that the foregoing remedies shall be
cumulative and not exclusive, shall not be waived by any partial exercise or
nonexercise thereof and shall be in addition to any other remedies available to
OPS at law or in equity.
(f) Tolling of Restrictive Covenants During Violation. If a material breach
by LLC or any of its Affiliates of any of the restrictive covenants of this
Agreement occurs, LLC and its Affiliates agree that the restrictive period of
each such covenant so materially violated shall be extended by a period of time
equal to the period of such material violation by LLC or any of its Affiliates.
It is the intent of the parties regarding this Section 9 that the running of the
restricted period of a restrictive covenant shall be tolled during any period of
material violation of such covenant so that OPS shall get the full and
reasonable protection for which it contracted and so that neither LLC nor any of
its Affiliates may profit by its material breach.
10. Transferability of Options. To the extent requested by LLC after the
Closing, but prior to the expiration of the exercise periods of the options
granted to LLC pursuant to the LLC Stock Option Agreement, OPS will use its
prudent efforts to effect, following the expiration or termination of the
Consulting Agreement, the transferability of such options to members of LLC or
their immediate family members, LLC's Affiliates, or such other mutually agreed
upon parties in a manner that is in the best interests of both OPS and LLC.
11. LLC Approval of Press Releases. OPS will obtain the prior approval of
Settle, or such other person as LLC may from time to time designate, before
issuing or releasing any press releases or other public disclosures that contain
references to LLC or the Services; provided that, if time is of the essence with
respect to any such press release or other public disclosure, and Settle or the
LLC designee is not reasonably available for the review and approval of such
document, OPS may release such press release or other public disclosure as long
as OPS can provide to LLC evidence of its attempts to obtain the approval
required under this Section 11.
12. Indemnification; Survival.
(a) LLC Indemnification. LLC agrees to defend, indemnify and hold OPS and
its Affiliates, and their respective directors, officers and employees ("OPS
Indemnitees"), harmless from and against any and all liabilities, actions,
suits, claims, proceedings, costs, losses, damages, judgments, amounts paid in
settlement in accordance with Section 12(c) below and reasonable expenses
(including but not limited to reasonable attorney's fees and disbursements),
suffered or incurred by OPS or OPS Indemnitees for injury of any kind to persons
or damage to property resulting from or arising out of or in connection with (1)
any inaccuracy in or breach, violation or nonobservance of the representations,
warranties, covenants or agreements contained in this Agreement, or (2) any
activities or Services carried out under this Agreement that result from the
gross negligence or willful misconduct of the Consultants, or other employees or
agents of LLC; provided that LLC shall not be responsible for the acts of Hobey
and Crabtree in their capacities as employees of OPS or of Hobey and Settle in
their capacities as directors of OPS.
(b) OPS Indemnification. OPS agrees to defend, indemnify and hold LLC, and
its respective managers, members and employees ("LLC Indemnitees"), harmless
from and against any and all liabilities, actions, suits, claims, proceedings,
costs, losses, damages, judgments, amounts paid in settlement in accordance with
Section 12(c) below and reasonable expenses (including but not limited to
reasonable attorney's fees and disbursements), suffered or incurred by LLC or
LLC Indemnitees for injury of any kind to persons or damage to property
resulting from or arising out of or in connection with (1) any inaccuracy in or
breach, violation or nonobservance of the representations, warranties, covenants
or agreements contained in this Agreement, or (2) any activities or Services
carried out under this Agreement that do not result from the gross negligence or
willful misconduct of the Consultants, or other employees or agents of LLC.
(c) Notice of Indemnifiable Loss. Each indemnified party (the "Indemnified
Party") shall provide written notice to the indemnifying party (the
"Indemnifying Party") of any claim with respect to which it seeks
indemnification promptly after the discovery by the Indemnified Party of any
matters giving rise to a claim for indemnification, provided that the failure of
the Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligation under this Section 12, except if and to the
extent the Indemnifying Party has been materially prejudiced thereby. Provided
that the Indemnifying Party has agreed to indemnify the Indemnified Party with
respect to the noticed claim, the Indemnified Party shall have the control of
all litigation for which indemnity is available pursuant to this Section 12. The
Indemnifying Party shall not, without the Indemnified Party's prior written
consent, which shall not be unreasonably withheld, settle or compromise any
action, suit, claim or proceeding to which an Indemnified Party is a party or
consent to entry of any judgment in respect thereof. The Indemnifying Party
further agrees that it will not, without the Indemnified Party's prior written
consent, settle or compromise any claim or proceeding in respect of which
indemnification may be sought hereunder unless such settlement or compromise
includes unconditional release of the Indemnified Party from all liability
arising out of such action, suit, claim or proceeding.
(d) Survival. The respective representations and warranties, covenants and
indemnities of the parties hereto, including those made in or resulting from any
certificates, instruments or other documents delivered pursuant to this
Agreement, shall survive the Closing under this Agreement and, with respect to
representations and warranties, covenants and indemnities of LLC, LLC's
termination of Services to OPS.
13. No Rescission. Notwithstanding anything to the contrary in this
Agreement, OPS shall not possess as a remedy for a breach of this Agreement or
of any of the agreements contemplated herein any right of rescission or
termination with respect to the Shares or the options granted pursuant to the
LLC Stock Option Agreement, except that such options shall be subject to
termination to the extent expressly set forth in the LLC Stock Option Agreement.
14. Miscellaneous.
(a) Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if in writing (including telecopy or
similar teletransmission), addressed as follows:
If to OPS,
to it at: Open Plan Systems, Inc.
4299 Carolina Avenue
Building C
Richmond, Virginia 23222
Telecopier: (804) 228-5656
Attention: Anthony F. Markel
With a copy to: Williams Mullen Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Telecopier: (804) 783-6507
Attention: Theodore L. Chandler, Jr., Esquire
If to LLC,
to it at: Great Lakes Capital, LLC
310 South Street
Morristown, New Jersey 07960
Telecopier: (973) 539-7909
Attention: W. Sydnor Settle
With a copy to: Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243-1668
Telecopier: (313) 568-6915
Attention: Fredrick M. Miller, Esquire
Unless otherwise specified herein, such notices or other communications
shall be deemed received (a) in the case of any notice or communication sent
other than by mail, on the date actually delivered to such address (evidenced,
in the case of delivery by overnight courier, by confirmation of delivery from
the overnight courier service making such delivery, and in the case of a
telecopy, by receipt of a transmission confirmation form or the addressee's
confirmation of receipt), or (b) in the case of any notice or communication sent
by mail, three business days after being sent, if sent by registered or
certified mail, with first-class postage prepaid. Each of the parties hereto
shall be entitled to specify a different address by giving notice as aforesaid
to each of the other parties hereto.
(b) Entire Agreement; Amendment. This Agreement shall supersede any and all
existing agreements between LLC or any of its Affiliates and OPS or any of its
Affiliates. This Agreement contains the entire agreement and understanding of
the parties with respect to the subject matter hereof and there are no
agreements, undertakings or understandings, whether oral or written, that are
not fully set forth herein. Notwithstanding the foregoing, the Confidentiality
Letter Agreement between GLC and OPS, dated March 27, 1998, shall continue in
full force and effect. No provision of this Agreement shall be amended,
modified, waived or discharged except as agreed to in writing by LLC and OPS.
(c) Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver thereof
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(d) Assignment. This Agreement shall be binding upon and inure to the
benefit of LLC, and with respect to the amounts set forth in Section 4, its
distributees, successors and assigns, and OPS and its permitted assigns. Neither
this Agreement nor any of the rights of the parties hereunder may be transferred
to or assigned by either party hereto. Any assignment or transfer of this
Agreement in violation of this Section 14(d) shall be void.
(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia applicable to
agreements made in that state.
(f) Consent to Jurisdiction. Each party to this Agreement, by its execution
hereof, (i) hereby irrevocably submits, and agrees to cause each of its
Affiliates to submit, to the jurisdiction of the federal courts located in the
City of Richmond, Virginia, and in the event that such federal courts shall not
have subject matter jurisdiction over the relevant proceeding, then of the state
courts located in the City of Richmond, Virginia, for the purpose of any action
arising out of or based upon this Agreement or relating to the subject matter
hereof or the transactions contemplated hereby, (ii) hereby waives, and agrees
to cause each of its Affiliates to waive, to the extent not prohibited by
applicable law, and agrees not to assert, and agrees not to allow any of its
Affiliates to assert, by way of motion, as a defense or otherwise, in any such
action, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that any such proceeding brought in one of the above-named courts is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court and (iii) hereby agrees not to commence or to
permit any of its Affiliates to commence any action arising out of or based upon
this Agreement or relating to the subject matter hereof other than before one of
the above-named courts nor to make any motion or take any other action seeking
or intending to cause the transfer or removal of any such action to any court
other than one of the above-named courts whether on the grounds of inconvenient
forum or otherwise. Each party hereby consents to service of process in any such
proceeding in any manner permitted by Virginia law, as the case may be, and
agrees that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 14(a) above is
reasonably calculated to give actual notice. Notwithstanding anything contained
in this Section 14(f) to the contrary with respect to the parties' forum
selection, if an action is filed against a party to this Agreement, including
its Affiliates, by a person who or which is not a party to this Agreement, an
Affiliate of a party to this Agreement, or an assignee thereof (a "Third Party
Action"), in a forum other than the federal district court or a state court
located in the City of Richmond, Virginia, and such Third Party Action is based
upon, arises from, or implicates rights, obligations or liabilities existing
under this Agreement or acts or omissions pursuant to this Agreement, then the
party to this Agreement, including its Affiliates, joined as a defendant in such
Third Party Action shall have the right to file cross-claims or third-party
claims in the Third Party Action against the other party to this Agreement,
including its Affiliates, and even if not a defendant therein, to intervene in
such Third Party Action with or without also filing cross-claims or third-party
claims against the other party to this Agreement, including its Affiliates.
(g) Headings. Section headings are used herein for convenience of reference
only and shall not affect the meaning of any provision of this Agreement.
(h) Severability. LLC agrees that if any provision of this Agreement, or
any portion thereof, shall be adjudged by any court of competent jurisdiction to
be invalid or unenforceable for any reason, such determination shall be confined
to the operation of the provision at issue and shall not affect or invalidate
any other provision of this Agreement and such court shall be empowered to
substitute, to the extent enforceable, provisions similar thereto or other
provisions so as to provide to OPS to the fullest extent permitted by applicable
law the benefits intended by such provisions.
(i) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
[SIGNATURES ON THE NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date first written above.
OPEN PLAN SYSTEMS, INC.
By: /s/ Anthony F. Markel
Anthony F. Markel,
Chairman of the Board
GREAT LAKES CAPITAL, LLC
By: /s/ W. Sydnor Settle
W. Sydnor Settle,
Manager
OPEN PLAN SYSTEMS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of June 17, 1998, between Open Plan Systems, Inc.,
a Virginia corporation (the "Company"), and Great Lakes Capital, LLC, a Delaware
limited liability company ("Optionee"), is made pursuant and subject to the
provisions of that certain Management and Consulting Agreement, dated June 17,
1998, by and between the Company and Optionee (the "Consulting Agreement"). All
terms used herein that are defined in the Consulting Agreement shall have the
same meaning given them in the Consulting Agreement.
1. Grant of Option. Pursuant to the terms of the Consulting Agreement, the
Company hereby grants to Optionee, subject to the terms and conditions herein
set forth, the right and option to purchase from the Company all or any part of
an aggregate of Six Hundred Thousand (600,000) shares of the Common Stock,
without par value, of the Company (the "Common Stock") at an option price per
share as follows:
<TABLE>
<S> <C> <C>
Number of Strike
Shares Price
150,000 $3.00
150,000 $4.50
150,000 $6.00
150,000 $7.50
</TABLE>
Such option is to be exercisable as hereinafter provided.
2. Terms and Conditions. This option is subject to the following terms and
conditions:
(a) Expiration Date. The Expiration Date of this option is June 30, 2003.
(b) Exercise of Option. This option is immediately exercisable by Optionee,
in whole or in part, as of the date hereof. A partial exercise of this option
shall not affect Optionee's right to exercise subsequently this option with
respect to the remaining shares that are exercisable, subject to the conditions
of this Agreement.
(c) Method of Exercising and Payment for Shares. This option may be
exercised only by written notice delivered to the attention of the Company's
Secretary at the Company's principal office in Richmond, Virginia. The written
notice shall specify the number of shares being acquired pursuant to the
exercise of the option when such option is being exercised in part in accordance
with subparagraph 2(b) hereof. The exercise date shall be the date upon which
such notice is received by the Company. Such notice shall be accompanied by
payment of the option price in full for each share either in cash in United
States Dollars, or by the surrender of shares of Common Stock, or by cash
equivalent acceptable to the Company or any combination thereof having an
aggregate fair market value equal to the total option price for all the shares
being purchased.
(d) Nontransferability. This option is nontransferable.
3. Fractional Shares. Fractional shares shall not be issuable hereunder.
4. Investment Representation. Optionee agrees that, unless such shares
shall previously have been registered under the Securities Act of 1933, as
amended, (a) any shares purchased hereunder will be purchased for investment and
not with a view to distribution or resale, and (b) until such registration,
certificates representing such shares may bear an appropriate legend to assure
compliance with such Act. This investment representation shall terminate when
such shares have been registered under the Securities Act of 1933, as amended.
Optionee understands and agrees that transfer of such shares will be restricted
in their resale and that each certificate evidencing the shares will bear the
following legend, or one substantially similar thereto:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and no
transfer, sale, assignment, pledge, hypothecation or other disposition of the
shares represented by this certificate may be made except (A) pursuant to the
effective registration statement under the Act and any applicable state
securities laws or (B) pursuant to an exemption from the provisions of Section 5
of the Act, and the rules and regulations in effect thereunder, and state
securities laws.
5. Change in Capital Structure. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
this option, and the price per share thereof, shall be proportionately adjusted
and its terms shall be adjusted, to reflect (i) any increase or decrease in the
number of issued and outstanding shares of Common Stock resulting from any stock
dividend (but only on, or payable in, Common Stock), stock split, subdivision,
combination, reclassification or recapitalization, (ii) the issuance of rights,
options, warrants or other securities exercisable for or convertible into Common
Stock having an exercise or conversion price below the fair market value of the
Common Stock on the date of such issuance, (iii) any change in the number of
such shares outstanding resulting from the issuance of Common Stock for cash or
property or labor or services by the Company, if the amount of cash, or, if
other than cash consideration is received, the value of such other consideration
(as determined in good faith by the Company's Board of Directors) is less than
the fair market value of the Common Stock on the date of such issuance, or (iv)
any spin-off, spin-out, split-up, split-off or other distribution of assets to
shareholders.
In the event of a change in the Common Stock of the Company as presently
constituted, which is limited to a change of all of its authorized shares with
par value or without par value, the shares resulting from any such change shall
be deemed to be the Common Stock.
The grant of this option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
6. Sale of the Company. In the event that the Company enters into an
agreement prior to the Expiration Date of this option whereby the Company shall
be acquired by merger, share exchange or consolidation, or shall sell
substantially all of its assets, the Board of Directors of the Company shall use
its reasonable best efforts to see that this option is converted into an option
to purchase the acquiring company's stock upon consummation of such transaction.
In the event this option is not converted into an option for the purchase of
shares in the acquiring company, then any unexercised portion of this option at
such time shall be deemed to have a value equal to the price computed by using
the Black-Scholes option pricing model using as inputs each option's expiration
date and strike price, a price for the Common Stock of the Company equal to the
acquisition price per share and an assumed volatility rate of 45%. The Company
shall pay to Optionee such value on the date of consummation of such
transaction.
7. Continued Employment of C.E.O. If at any time prior to December 17,
1998, John L. Hobey ("Hobey") voluntarily terminates his employment with the
Company as its Chief Executive Officer for any reason, or is terminated by the
Company for (i) "Proper Cause" (as that term is defined in that certain
Employment Agreement, dated June 17, 1998, between Hobey and the Company (the
"Hobey Employment Agreement")) or (ii) death or disability (in accordance with
the Hobey Employment Agreement), any unexercised portion of this option shall be
immediately forfeited by the Optionee and shall be immediately null and void and
without effect. If after December 17, 1998, but prior to June 17, 1999, Hobey's
employment with the Company as its Chief Executive Officer is voluntarily
terminated by him for any reason, or at any time is terminated by the Company
for (x) "Proper Cause" (as that term is defined in the Hobey Employment
Agreement) or (y) death or disability (in accordance with the Hobey Employment
Agreement), then any unexercised portion of this option must be exercised within
one (1) year from the date on which Hobey's employment with the Company as its
Chief Executive Officer ceases, or this option will be forfeited by the Optionee
and shall be immediately null and void and without effect. If, after June 17,
1999, Hobey's employment with the Company as its Chief Executive Officer is
terminated for any reason (including voluntary resignation), there shall be no
effect on this option and this option shall continue in accordance with its
terms.
8. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if in writing (including telecopy or
similar teletransmission), addressed as follows:
(A) If to the Company, to it at the following address:
4299 Carolina Avenue
Building C
Richmond, Virginia 23222
Telecopier: (804) 228-5656
Attn: Chairman of the Board
with a copy to:
Williams Mullen Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Telecopier: (804) 783-6507
Attention: Theodore L. Chandler, Jr., Esquire
(B) If to the Optionee, to it at the following address:
Great Lakes Capital, LLC
310 South Street
Morristown, New Jersey 07960
Telecopier: (973) 539-7909
Attention: W. Sydnor Settle
with a copy to:
Dykema, Gossett P.C.
400 Renaissance Center
Detroit, Michigan 48243-1668
Telecopier: (313) 568-6915
Attention: Fredrick M. Miller, Esquire
Unless otherwise specified herein, such notices or other communications
shall be deemed received (a) in the case of any notice or communication sent
other than by mail, on the date actually delivered to such address (evidenced,
in the case of delivery by overnight courier, by confirmation of delivery from
the overnight courier service making such delivery, and in the case of a
telecopy, by receipt of a transmission confirmation form or the addressee's
confirmation of receipt), or (b) in the case of any notice or communication sent
by mail, three Business Days after being sent, if sent by registered or
certified mail, with first-class postage prepaid. Each of the parties hereto
shall be entitled to specify a different address by giving notice as aforesaid
to each of the other parties hereto.
9. Amendments. This Agreement may not be amended, changed, supplemented,
waived or otherwise modified or terminated except by an instrument in writing
signed by the Company and Optionee.
10. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties and their respective successors and assigns,
including without limitation in the case of any corporate party hereto any
corporate successor by merger or otherwise; provided that no party may assign
this Agreement without the other party's prior written consent.
11. Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.
12. Consent to Jurisdiction. Each party to this Agreement, by its execution
hereof, (i) hereby irrevocably submits, and agrees to cause each of its
Affiliates to submit, to the jurisdiction of the federal courts located in the
City of Richmond, Virginia, and in the event that such federal courts shall not
have subject matter jurisdiction over the relevant proceeding, then of the state
courts located in the City of Richmond, Virginia, for the purpose of any action
arising out of or based upon this Agreement or relating to the subject matter
hereof or the transactions contemplated hereby, (ii) hereby waives, and agrees
to cause each of its Affiliates to waive, to the extent not prohibited by
applicable law, and agrees not to assert, and agrees not to allow any of its
Affiliates to assert, by way of motion, as a defense or otherwise, in any such
action, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that any such proceeding brought in one of the above-named courts is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court and (iii) hereby agrees not to commence or to
permit any of its Affiliates to commence any action arising out of or based upon
this Agreement or relating to the subject matter hereof other than before one of
the above-named courts nor to make any motion or take any other action seeking
or intending to cause the transfer or removal of any such action to any court
other than one of the above-named courts whether on the grounds of inconvenient
forum or otherwise. Each party hereby consents to service of process in any such
proceeding in any manner permitted by Virginia law, as the case may be, and
agrees that service of process by registered or certified mail, return receipt
requested, is reasonably calculated to give actual notice. Notwithstanding
anything contained in this paragraph 12 to the contrary with respect to the
parties' forum selection, if an action is filed against a party to this
Agreement, including its Affiliates, by a person who or which is not a party to
this Agreement, an Affiliate of a party to this Agreement, or an assignee
thereof (a "Third Party Action"), in a forum other than the federal district
court or a state court located in the City of Richmond, Virginia, and such Third
Party Action is based upon, arises from, or implicates rights, obligations or
liabilities existing under this Agreement or acts or omissions pursuant to this
Agreement, then the party to this Agreement, including its Affiliates, joined as
a defendant in such Third Party Action shall have the right to file cross-claims
or third-party claims in the Third Party Action against the other party to this
Agreement, including its Affiliates, and even if not a defendant therein, to
intervene in such Third Party Action with or without also filing cross-claims or
third-party claims against the other party to this Agreement, including its
Affiliates.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive law of the Commonwealth of Virginia,
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the law of any other jurisdiction.
14. Name, Captions. The name assigned to this Agreement and the section
captions used herein are for convenience of reference only and shall not affect
the interpretation or construction hereof.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
[SIGNATURES ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the Company and Optionee have caused this Agreement to
be signed by duly authorized officers and managers, respectively, as of the date
first above written.
GREAT LAKES CAPITAL, LLC OPEN PLAN SYSTEMS, INC.
By: /s/ W. Sydnor Settle By: /s/ Anthony F. Markel
W. Sydnor Settle Anthony F. Markel
Manager Chairman of the Board
VOTING AND STANDSTILL AGREEMENT
THIS VOTING AND STANDSTILL AGREEMENT (the "Agreement"), dated as of June
17, 1998, is made between OPEN PLAN SYSTEMS, INC., a Virginia corporation
("OPS"), GREAT LAKES CAPITAL, LLC, a Delaware limited liability company ("LLC"),
and GREAT LAKES CAPITAL, INC., a Delaware corporation ("GLC").
W I T N E S S E T H:
WHEREAS, OPS and LLC have entered into a Management and Consulting
Agreement, dated as of June 17, 1998 (the "Consulting Agreement"), under which
LLC and agreed to provide certain management and consulting services; and
WHEREAS, pursuant to the Consulting Agreement, LLC has acquired (i) 200,000
shares of the Common Stock, without par value, of OPS ("Common Stock") and (ii)
an option to purchase 600,000 shares of Common Stock, and, as a result,
beneficially owns as of the date hereof approximately 15.2% of the issued and
outstanding shares of Common Stock on a diluted basis; and
WHEREAS, OPS, LLC and GLC desire to establish in this Agreement certain
conditions of LLC's and GLC's relationship with OPS.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and in the Consulting Agreement, OPS, LLC and GLC hereby agree as
follows:
ARTICLE I
Definitions; Representations and Warranties
Section 1.1. Definitions. For purposes of this Agreement, the following
terms have the following meanings:
(a) "Additional Shares" shall mean shares of Common Stock that LLC and its
Affiliates may acquire following the date of the Consulting Agreement on the
open market, in privately negotiated transactions and/or directly from OPS so
that LLC and its Affiliates would beneficially own no greater than 21.0% of the
issued and outstanding shares of Common Stock on a fully diluted basis; provided
that shares of Common Stock that LLC and its Affiliates may acquire pursuant to
OPS's 1996 Stock Incentive Plan and 1996 Stock Option Plan for Non-Employee
Directors shall not be deemed to be Additional Shares.
(b) "Adjusted Outstanding Shares" shall mean, at any time and with respect
to the determination of (i) the LLC Ownership Percentage as it relates to LLC
and its Affiliates, (ii) the Standstill Percentage as it relates to LLC and its
Affiliates, and (iii) any other percentage of the beneficial ownership of Common
Stock as it relates to a Person or Group, the total number of shares of Common
Stock then issued and outstanding together with the total number of shares of
Common Stock not then issued and outstanding that would be outstanding if (x)
all then existing shares of convertible preferred stock had been converted into
shares of Common Stock and (y) all then existing warrants and options
exercisable into shares of Common Stock had been exercised (other than
underwriters' overallotment options and stock options granted under benefit
plans of OPS or any of its Affiliates), but excluding any rights that may be
exercisable under any Rights Agreement that may be adopted by OPS.
(c) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
in effect on the date of this Agreement, and shall include, with respect to a
determination of the Affiliates of LLC, any Affiliate of GLC.
(d) "Beneficial ownership," "beneficial owner" and "beneficially own" shall
have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act as
in effect on the date of this Agreement; provided that LLC and each of its
Affiliates and any Person or Group shall be deemed to be the beneficial owners
of any shares of Common Stock that LLC or such Affiliate, Person and/or Group,
as the case may be, has the right to acquire within one year pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion or
exchange rights, warrants, options or otherwise.
(e) "Common Stock" shall have the meaning set forth in the recitals to this
Agreement.
(f) "Consulting Agreement" shall have the meaning set forth in the recitals
to this Agreement.
(g) "Continuing Directors" shall mean the members of the Board of Directors
of OPS immediately prior to the closing of the transactions contemplated by the
Consulting Agreement and any future members of the Board of Directors nominated
by the Board of Directors; provided, however, that no LLC Director shall
constitute a Continuing Director or be counted in determining the presence of a
quorum of Continuing Directors.
(h) "Control" shall mean, with respect to a Person or a Group, (i)
beneficial ownership by such Person or Group of securities that entitle it to
exercise in the aggregate more than fifty percent (50%) of the votes in any
election of directors or other governing body of the entity in question; or (ii)
possession by such Person or Group of the power, directly or indirectly, (x) to
elect a majority of the board of directors (or equivalent governing body) of the
entity in question or (y) in case of a non-corporate entity, to manage or govern
the business, operations or investments of any such non-corporate entity.
(i) "Group" shall have the meaning comprehended by Section 13(d)(3) of the
Exchange Act as in effect on the date of this Agreement.
(j) "Hobey Termination" shall mean (i) the termination by OPS of the
employment of John L. Hobey ("Hobey") as Chief Executive Officer of OPS for
Proper Cause (as defined in the Employment Agreement, effective June 17, 1998,
by and between John L. Hobey and OPS (the "Employment Agreement")), (ii) the
termination by OPS of Hobey as Chief Executive Officer of OPS due to death or
disability (in accordance with the Employment Agreement) or (iii) the voluntary
resignation of Hobey as Chief Executive Officer of OPS, whichever is the first
to occur.
(k) "LLC Directors" shall mean Hobey and W. Sydnor Settle ("Settle"), each
of whom OPS has agreed to appoint to the OPS Board of Directors pursuant to the
Consulting Agreement.
(l) "LLC Ownership Percentage" shall mean, at any time, the percentage of
the Adjusted Outstanding Shares that is beneficially owned in the aggregate by
LLC and its Affiliates.
(m) "LLC Shares" shall mean collectively (i) the 200,000 shares of Common
Stock owned by LLC, (ii) the 600,000 shares of Common Stock that LLC has the
option to acquire pursuant to the terms of the Stock Option Agreement, (iii) the
3,000 shares of Common Stock owned by Settle, (iv) the 5,000 shares of Common
Stock owned by Hobey, (v) the 25,000 shares of Common Stock that Hobey has the
option to acquire pursuant to the terms of an Employee Nonqualified Stock Option
Agreement, dated as of June 17, 1998, between OPS and Hobey, (vi) the 3,000
shares of Common Stock owned by William F. Crabtree ("Crabtree"), (vii) the
12,500 shares of Common Stock that Crabtree has the option to acquire pursuant
to the terms of an Employee Nonqualified Stock Option Agreement, dated as of
June 17, 1998, between OPS and Crabtree, (viii) the Additional Shares and (ix)
such additional shares of Common Stock that OPS may issue with respect to such
shares pursuant to any stock splits, stock dividends, recapitalizations,
restructurings, reclassifications or similar transactions.
(n) "Person" shall have the meaning set forth in Section 3(a)(9) of the
Exchange Act as in effect on the date of this Agreement.
(o) "Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated June 17, 1998, executed by OPS and LLC in connection with the
Consulting Agreement.
(p) "Standstill Percentage" shall mean, at any time, not more than 21.0% of
the Adjusted Outstanding Shares.
(q) "Stock Option Agreement" shall mean the Nonqualified Stock Option
Agreement, dated June 17, 1998, executed by OPS and LLC in connection with the
Consulting Agreement.
(r) "Transfer" shall mean sell, transfer, assign, pledge, hypothecate, give
away or in any manner dispose of any Common Stock.
Section 1.2. Representations and Warranties of LLC. LLC represents and
warrants to OPS as follows:
(a) LLC is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware.
(b) Except for the LLC Shares, neither LLC nor any of its Affiliates
beneficially owns any Common Stock or any options, warrants or rights of any
nature (including conversion and exchange rights) to acquire beneficial
ownership of any Common Stock.
(c) LLC has full legal right, power and authority to enter into and perform
this Agreement, and the execution and delivery of this Agreement by LLC have
been duly authorized by all necessary action on behalf of LLC. This Agreement is
enforceable against LLC.
(d) The execution, delivery and performance of this Agreement by LLC does
not and will not conflict with or constitute a violation of or default under the
Charter or Operating Agreement (or comparable documents) of LLC, or any statute,
law, regulation, order or decree applicable to LLC, or any contract, commitment,
agreement, arrangement or restriction of any kind to which LLC is a party or by
which LLC is bound, other than such violations as would not prevent or
materially delay the performance by LLC of its obligations hereunder or
otherwise subject OPS to any claim or liability.
Section 1.3. Representations and Warranties of GLC. GLC represents and
warrants to OPS as follows:
(a) GLC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) GLC has full legal right, power and authority to enter into and perform
this Agreement, and the execution and delivery of this Agreement by GLC have
been duly authorized by all necessary corporate action on behalf of GLC. This
Agreement is enforceable against GLC.
(d) The execution, delivery and performance of this Agreement by GLC does
not and will not conflict with or constitute a violation of or default under the
Charter or Bylaws (or comparable documents) of GLC, or any statute, law,
regulation, order or decree applicable to GLC, or any contract, commitment,
agreement, arrangement or restriction of any kind to which GLC is a party or by
which GLC is bound, other than such violations as would not prevent or
materially delay the performance by GLC of its obligations hereunder or
otherwise subject OPS to any claim or liability.
Section 1.4. Representations and Warranties of OPS. OPS hereby represents
and warrants to LLC and GLC as follows:
(a) OPS is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia.
(b) OPS has full legal right, power and authority to enter into and perform
this Agreement, and the execution and delivery of this Agreement by OPS have
been duly authorized by all necessary corporate action on behalf of OPS. This
Agreement is enforceable against OPS.
(c) The execution, delivery and performance of this Agreement by OPS does
not and will not conflict with or constitute a violation of or default under the
Charter or Bylaws of OPS, or any statute, law, regulation, order or decree
applicable to OPS, or any contract, commitment, agreement, arrangement or
restriction of any kind to which OPS is a party or by which OPS is bound, other
than such violations as would not prevent or materially delay the performance by
OPS of its obligations hereunder or otherwise subject LLC to any claim or
liability.
ARTICLE II
Board Representation
Section 2.1. Election of LLC Directors. On the date of this Agreement, OPS
will (i)take such action as may be necessary to increase the size of the OPS
Board of Directors (the "Board of Directors") to ten (10) directors, and (ii)
upon receipt from each LLC Director of an executed letter agreement regarding
resignation in the form attached to this Agreement as Exhibit A, fill the two
(2) vacancies created thereby with the LLC Directors in accordance with the
applicable provisions of the Charter and Bylaws of OPS. OPS will appoint each
LLC Director to Class I (current term expiring in 2001) and agrees to nominate
and recommend each LLC Director not subject to resignation pursuant to Section
2.3 below for election at the next annual meeting of OPS's shareholders
following such appointments as Class I directors; provided that, if any such LLC
Director is not elected by the shareholders of OPS, OPS shall have no further
obligations under this Section 2.1; and provided further that OPS shall be under
no obligation to appoint or recommend for election any LLC Director to the Board
of Directors unless and until it has received from such LLC Director an executed
letter agreement regarding resignation in the form attached to this Agreement as
Exhibit A.
Section 2.2. Continuing Board Representation. Until the termination or
expiration of the Consulting Agreement, OPS agrees that it will not take or
recommend to its shareholders any action that would (i) cause the Board of
Directors to consist of greater than ten (10) directors; provided that if a LLC
Director resigns from the Board of Directors, OPS shall have the right to reduce
the size of the Board of Directors to eliminate the vacancy or to fill the
vacancy thereby created with a nominee approved by the Continuing Directors, or
(ii) result in any amendment to the Bylaws of OPS in effect on the date hereof
that would impose any qualifications on the eligibility of directors of OPS to
serve on any committee of the Board of Directors, except as may be required by
the then-current rules and regulations of the Nasdaq National Market (the
"Nasdaq Rules"), the rules and regulations under the Internal Revenue Code of
1986, as amended, relating to the qualification of employee stock benefit plans
and the deductibility of compensation paid to executive officers, the rules and
regulations under Section 16(b) of the Exchange Act, including Rule 16b-3
thereunder or any successor rule, and OPS's Bylaws.
Section 2.3. Required Resignations.
(a) Upon the earlier of the Hobey Termination and the expiration of the
Consulting Agreement, LLC shall, if requested by OPS, require Hobey to resign
immediately from the Board of Directors.
(b) In the event that the Hobey Termination occurs on or before December
17, 1998, LLC shall, if requested by OPS, require Settle to resign immediately
from the Board of Directors.
(c) If LLC does not cause the resignation of a LLC Director as required by
this Section 2.3, OPS may seek such resignation or, in the alternative, the
Continuing Directors may seek the removal of the LLC Directors that are subject
to such resignation. Upon any shareholder vote relating to the removal of a LLC
Director for failure to resign pursuant to this Section 2.3, LLC and its
Affiliates shall (i) attend any meeting either in person or by proxy and (ii)
vote in favor of such removal. At such time as a LLC Director becomes subject to
resignation pursuant to this Section 2.3, OPS may amend its Bylaws or take such
other action as it deems appropriate to reduce the number of directors
constituting the Board of Directors proportionately or fill the vacancy caused
by such resignation with its own nominee in accordance with the applicable
provisions of the Charter and Bylaws of OPS.
Section 2.4. Charter and Bylaws. The obligations of OPS set forth in this
Article II shall be subject to compliance with the applicable provisions of the
Charter and Bylaws of OPS.
Section 2.5. No Voting Trust. This Agreement does not create or constitute,
and shall not be construed as creating or constituting, a voting trust agreement
under the Virginia Stock Corporation Act or any other applicable corporation
law.
Section 2.6. No Duty to Serve; Reduction of Board Representation. Nothing
contained in this Article II shall be construed as requiring any LLC Director to
serve in office if such LLC Director elects to resign. In the event of any
vacancy created by the death, resignation or removal of a LLC Director, OPS may
amend its Bylaws or take such other action as it deems appropriate to reduce the
number of directors constituting the Board of Directors proportionately or fill
the vacancy caused by such resignation with its own nominee in accordance with
the applicable provisions of the Charter and Bylaws of OPS.
ARTICLE III
Standstill Restrictions; Voting Matters
Section 3.1. Standstill Restrictions.
(a) During the term of this Agreement, unless approved in advance by a
resolution adopted by a majority of the Continuing Directors or otherwise
permitted under this Agreement, LLC and GLC covenant and agree that they shall
not, and shall not permit any of their Affiliates to, either individually or as
part of a Group, directly or indirectly:
(i) acquire (other than acquisitions (x) pursuant to or contemplated by the
Consulting Agreement, including without limitation the exercise of options under
the Stock Option Agreement, or (y) resulting from corporate action taken by the
Board of Directors with respect to any pro rata distribution of shares of Common
Stock in connection with any stock split, stock dividend, recapitalization,
reclassification or similar transaction), propose to acquire (or publicly
announce or otherwise disclose an intention to propose to acquire), offer to
acquire, or agree to acquire any Common Stock if the effect of such acquisition
would cause the LLC Ownership Percentage to exceed the Standstill Percentage
(other than as a result of any stock purchases or repurchases by OPS); provided
that this Section 3.1(a)(i) shall not apply to any acquisition (a) of options,
Common Stock, warrants, rights or other securities convertible or exchangeable
into Common Stock granted to any person, including without limitation the LLC
Directors, pursuant to any benefit plan of OPS or any of its Affiliates or the
exercise of any such option, warrant or right or conversion or exchange of any
convertible or exchangeable security or (b) upon the exercise by LLC or its
Affiliates of rights pursuant to any Rights Agreement that may be adopted by
OPS, provided that all of the shares of Common Stock so acquired upon the
exercise of the rights shall be subject to all of the terms of this Agreement;
(ii) propose (or publicly announce or otherwise disclose an intention to
propose), solicit, offer, seek to effect, negotiate with or provide any
confidential information relating to OPS or its business to any other Person
with respect to, any tender or exchange offer, merger, consolidation, share
exchange, business combination, restructuring, recapitalization or similar
transaction involving OPS;
(iii) make, or in any way participate in, any "solicitation" of "proxies"
to vote (as such terms are defined in Rule 14a-1 under the Exchange Act),
solicit any consent or communicate with or seek to advise or influence any
person or entity with respect to the voting of any Common Stock or become a
"participant" in any "election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) with respect to OPS; provided that nothing
in this Section 3.1(a)(iii) shall apply to any deemed solicitation of proxies by
the LLC Directors that may result from such LLC Directors' position or status as
a director of OPS at the time of any general solicitation of proxies by the
management of OPS;
(iv) form, participate in or join any Person or Group (other than a Group
comprised of the six members of LLC and its Affiliates as of the date of this
Agreement) with respect to any Common Stock, or otherwise act in concert with
any third Person for the purpose of (x) acquiring any Common Stock or (y)
holding or disposing of Common Stock for any purpose prohibited by this Section
3.1(a);
(v) deposit any Common Stock into a voting trust or subject any Common
Stock to any arrangement or agreement with respect to the voting thereof;
(vi) initiate, propose or otherwise solicit shareholders for the approval
of any shareholder proposal with respect to OPS as described in Rule 14a-8 under
the Exchange Act, or induce or attempt to induce any other Person to initiate,
propose or otherwise solicit any such shareholder proposal;
(vii) except as specifically provided in Article II of this Agreement, seek
election to or seek to place a representative on the Board of Directors, or seek
the removal of any member of the Board of Directors (other than a LLC Director);
(viii) call or seek to have called any meeting of the shareholders of OPS
for any purpose;
(ix) except through the LLC Directors, take any other action to seek to
control, disrupt or influence the management or policies of OPS;
(x) agree to do any of the foregoing.
(b) LLC and GLC agree that they will notify OPS promptly if any inquiries
or proposals are received by, any information is exchanged with respect to, or
any negotiations or discussions are initiated or continued by or with, LLC, GLC
or any of their Affiliates regarding any matter described in Section 3.1(a)
above. LLC and OPS shall mutually agree upon an appropriate response to be made
to any such proposals received by LLC, GLC or any of their Affiliates.
(c) Nothing contained in this Article III shall be deemed to restrict the
manner in which the LLC Directors may participate in deliberations or
discussions of the Board of Directors or individual consultations with the
Chairman of the Board or any other members of the Board of Directors or the
manner in which the LLC Directors may vote on matters brought for consideration
before the Board of Directors, so long as such actions do not otherwise violate
any provision of Section 3.1(a) above.
(d) With respect to any acquisition of, proposal to acquire, offer to
acquire, or agreement to acquire any Common Stock by LLC and its Affiliates not
otherwise prohibited by Section 3.1(a) above, OPS and LLC agree to take such
actions as may be deemed necessary or advisable (including without limitation
the acquisition of Common Stock directly from OPS) consistent with the prudent
discharge of their fiduciary duties to their shareholders and members,
respectively, so that the provisions of the Control Shares Acquisition Statute,
as set forth in Article 14.1 of the Virginia Stock Corporation Act, as amended,
in effect on the date of this Agreement, shall not apply to such acquisition,
proposal, offer or agreement.
Section 3.2. Voting Matters.
(a) During the term of this Agreement, LLC and GLC will take all such
action as may be required so that the Common Stock beneficially owned and
entitled to be voted by LLC, GLC and their Affiliates, as a Group, are voted or
caused to be voted (in person or by proxy):
(i) with respect to the Continuing Director's nominees to the Board of
Directors, in accordance with the recommendation of the Board of Directors, or a
nominating or similar committee of the Board of Directors, if any such committee
exists and makes a recommendation;
(ii) with respect to any "election contest" (as such term is defined or
used in Rule 14a-11 under the Exchange Act as in effect on the date of this
Agreement) initiated by any Person in connection with any tender offer, in the
same proportion as the total votes cast by or on behalf of all shareholders of
OPS (other than LLC, GLC and their Affiliates) with respect to such proxy
contest;
(iii) with respect to all matters brought before OPS's shareholders for a
vote not otherwise provided for in this Section 3.2(a) or Section 2.3 above, in
accordance with the independent judgment of LLC, GLC and their Affiliates,
without regard to any request or recommendation of the Board of Directors.
(b) LLC and its Affiliates who beneficially own any of the LLC Shares shall
be present, in person or by proxy, at all duly held meetings of shareholders of
OPS so that the Common Stock held by LLC and its Affiliates may be counted for
the purposes of determining the presence of a quorum at such meetings.
ARTICLE IV
Transfers of LLC Shares
Section 4.1 Permitted Transfers. During the term of this Agreement, LLC
shall not, directly or indirectly, Transfer any of the LLC Shares to any Person
or Group without the prior written consent of OPS (which consent shall not be
unreasonably withheld), if, as a result of such Transfer, such Person or Group
would have beneficial ownership of Common Stock representing in the aggregate
more than 9.9% of the issued and outstanding shares of Common Stock. Subject to
the foregoing limitation, LLC may Transfer the LLC Shares without the prior
written consent of OPS in the following manner:
(a) to OPS or any Affiliate of OPS;
(b) pursuant to an effective registration statement under the Securities
Act as provided in the Registration Rights Agreement; provided that the rights
of LLC under this Agreement shall not transfer to any transferee(s) of such LLC
Shares;
(c) pursuant to Rule 144, Rule 144A, Regulation S or any other applicable
exemption from registration under the Securities Act; provided that the rights
of LLC under this Agreement shall not transfer to any transferee(s) of such LLC
Shares;
(d) pursuant to a distribution (including any such distribution pursuant to
any liquidation or dissolution of LLC) by LLC to its members; provided that the
rights of LLC under this Agreement shall not transfer to any distributee of such
LLC Shares; provided further that, LLC shall not distribute any of the LLC
Shares to its members pursuant to this Section 4.2(d) or otherwise unless LLC
has obtained an agreement in writing by the distributee to be bound by the terms
and conditions of this Agreement;
(e) pursuant to a merger or consolidation of OPS or pursuant to a plan of
liquidation of OPS, which has been approved by the affirmative vote of a
majority of the members of the Board of Directors then in office; or
(f) pursuant to a tender offer or exchange offer that the Board of
Directors, by action taken by the affirmative vote of a majority of the members
of the Board of Directors then in office, has determined not to oppose.
Section 4.2 Transfers to Affiliates. In the event that any Affiliate of LLC
receives a distribution of any of the LLC Shares under Section 4.1 above, or
otherwise becomes the beneficial owner of any of the LLC Shares, LLC shall use
its best efforts to cause such Affiliate to comply with all of the provisions of
this Agreement, including without limitation this Article IV.
Section 4.3 Confidential Information. In connection with any permitted
Transfer of the LLC Shares pursuant to this Article IV, neither LLC nor its
Affiliates shall disclose any confidential information relating to OPS or its
business to any Person except as required by applicable law, including without
limitation Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, but only
to the extent that any required disclosure of such confidential information has
been preceded by notice to OPS of the expected disclosure of such information
and the execution of a confidentiality agreement by LLC (or its Affiliates, as
the case may be) and such Person in the form attached hereto as Exhibit B. Such
confidentiality agreement shall be promptly forwarded to OPS for its execution,
which execution by OPS may be subsequent to the disclosure described in this
proviso; provided that the failure of OPS to so execute such confidentiality
agreement shall in no way be construed to be a failure on the part of LLC (or
its Affiliates, as the case may be) to fulfill its obligations under this
paragraph or to limit or affect the validity of such confidentiality agreement
as between LLC (or its Affiliates, as the case may be) and such Person.
ARTICLE V
Further Assurances
Each party shall execute and deliver such additional instruments and other
documents and shall take such further actions as may be necessary or appropriate
to effectuate, carry out and comply with all of its respective obligations under
this Agreement. If reasonably requested by OPS at any time during the term of
this Agreement, LLC agrees to execute a letter to OPS confirming the number of
LLC Shares held, beneficially and of record, by LLC and its Affiliates as of the
latest practicable date.
ARTICLE VI
Termination
Unless earlier terminated by written agreement of the parties hereto, this
Agreement shall terminate five (5) years from the date of this Agreement. Any
termination of this Agreement as provided herein shall be without prejudice to
the rights of any party arising out of the breach by any other party of any
provisions of this Agreement that occurred prior to the termination.
ARTICLE VII
Miscellaneous
Section 7.1. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing (including
telecopy or similar teletransmission), addressed as follows:
If to OPS,
to it at: Open Plan Systems, Inc.
4299 Carolina Avenue
Building C
Richmond, Virginia 23222
Telecopier: (804) 228-5656
Attention: Anthony F. Markel
With a copy to: Williams Mullen Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Telecopier: (804) 783-6507
Attention: Theodore L. Chandler, Jr., Esquire
If to LLC,
to it at: Great Lakes Capital, LLC
310 South Street
Morristown, New Jersey 07960
Telecopier: (973) 539-7909
Attention: W. Sydnor Settle
With a copy to:Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243-1668
Telecopier: (313) 568-6915
Attention: Fredrick M. Miller, Esquire
If to GLC,
to it at: Great Lakes Capital, Inc.
310 South Street
Morristown, New Jersey 07960
Telecopier: (973) 539-7909
Attention: W. Sydnor Settle
With a copy to:Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243-1668
Telecopier: (313) 568-6915
Attention: Fredrick M. Miller, Esquire
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) in the case of any notice or communication sent other than
by mail, on the date actually delivered to such address (evidenced, in the case
of delivery by overnight courier, by confirmation of delivery from the overnight
courier service making such delivery, and in the case of a telecopy, by receipt
of a transmission confirmation form or the addressee's confirmation of receipt),
or (b) in the case of any notice or communication sent by mail, three business
days after being sent, if sent by registered or certified mail, with first-class
postage prepaid. Each of the parties hereto shall be entitled to specify a
different address by giving notice as aforesaid to each of the other parties
hereto.
Section 7.2. Amendments. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an instrument
in writing signed by LLC, GLC and OPS.
Section 7.3. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties and their respective successors and assigns,
including without limitation in the case of any corporate party hereto any
corporate successor by merger or otherwise; provided that no party may assign
this Agreement without the other party's prior written consent.
Section 7.4. Entire Agreement. This Agreement embodies the entire agreement
and understanding among the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. There are no representations, warranties or covenants by the parties
hereto relating to such subject matter other than those expressly set forth in
this Agreement, the Consulting Agreement, the Registration Rights Agreement and
the Stock Option Agreement.
Section 7.5. Specific Performance. The parties acknowledge that money
damages are not an adequate remedy for violations of this Agreement and that any
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
Section 7.6. Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
Section 7.7. No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
Section 7.8. No Third Party Beneficiaries. This Agreement is not intended
to be for the benefit of and shall not be enforceable by any Person who or which
is not a party hereto.
Section 7.9. Consent to Jurisdiction. Each party to this Agreement, by its
execution hereof, (i) hereby irrevocably submits, and agrees to cause each of
its Affiliates to submit, to the jurisdiction of the federal courts located in
the City of Richmond, Virginia, and in the event that such federal courts shall
not have subject matter jurisdiction over the relevant proceeding, then of the
state courts located in the City of Richmond, Virginia, for the purpose of any
action arising out of or based upon this Agreement or relating to the subject
matter hereof or the transactions contemplated hereby, (ii) hereby waives, and
agrees to cause each of its Affiliates to waive, to the extent not prohibited by
applicable law, and agrees not to assert, and agrees not to allow any of its
Affiliates to assert, by way of motion, as a defense or otherwise, in any such
action, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that any such proceeding brought in one of the above-named courts is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court and (iii) hereby agrees not to commence or to
permit any of its Affiliates to commence any action arising out of or based upon
this Agreement or relating to the subject matter hereof other than before one of
the above-named courts nor to make any motion or take any other action seeking
or intending to cause the transfer or removal of any such action to any court
other than one of the above-named courts whether on the grounds of inconvenient
forum or otherwise. Each party hereby consents to service of process in any such
proceeding in any manner permitted by Virginia law, as the case may be, and
agrees that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 7.1 above is reasonably
calculated to give actual notice. Notwithstanding anything contained in this
Section 7.9 to the contrary with respect to the parties' forum selection, if an
action is filed against a party to this Agreement, including its Affiliates, by
a person who or which is not a party to this Agreement, an Affiliate of a party
to this Agreement, or an assignee thereof (a "Third Party Action"), in a forum
other than the federal district court or a state court located in the City of
Richmond, Virginia, and such Third Party Action is based upon, arises from, or
implicates rights, obligations or liabilities existing under this Agreement or
acts or omissions pursuant to this Agreement, then the party to this Agreement,
including its Affiliates, joined as a defendant in such Third Party Action shall
have the right to file cross-claims or third-party claims in the Third Party
Action against the other party to this Agreement, including its Affiliates, and
even if not a defendant therein, to intervene in such Third Party Action with or
without also filing cross-claims or third-party claims against the other party
to this Agreement, including its Affiliates.
Section 7.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive law of the Commonwealth of
Virginia, without giving effect to any choice or conflict of law provision or
rule that would cause the application of the law of any other jurisdiction.
Section 7.11. Name, Captions. The name assigned to this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof.
Section 7.12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
Section 7.13. Expenses. Each of the parties hereto shall bear their own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, except that in the event of a dispute concerning the terms
or enforcement of this Agreement, the prevailing party in any such dispute shall
be entitled to reimbursement of reasonable legal fees and disbursements from the
other party or parties to such dispute.
[SIGNATURES ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Voting and Standstill Agreement to be executed, as of
the date first above written, by their respective officers thereunto duly
authorized.
OPEN PLAN SYSTEMS, INC.
By: /s/ Anthony F. Markel
Anthony F. Markel
Chairman of the Board
GREAT LAKES CAPITAL, LLC
By: /s/ W. Sydnor Settle
W. Sydnor Settle
Manager
GREAT LAKES CAPITAL, INC.
By: /s/ W. Sydnor Settle
W. Sydnor Settle
Chairman
<PAGE>
' Exhibit A
Form of Resignation Agreement
Open Plan Systems, Inc.
4299 Carolina Avenue
Building C
Richmond, Virginia 23222
Great Lakes Capital, LLC
310 South Street
Morristown, New Jersey 07960
Ladies and Gentlemen:
I hereby acknowledge that my position on the Board of Directors of Open
Plan Systems, Inc. ("OPS") is subject to the provisions of a Voting and
Standstill Agreement (the "Agreement"), dated June 17, 1998, between OPS, Great
Lakes Capital, LLC ("LLC") and Great Lakes Capital, Inc. Accordingly, I hereby
agree to resign immediately from such Board of Directors under the terms of
Article II of the Agreement in the event that LLC requests such resignation. I
understand that, if I do not resign immediately as requested pursuant to such
Article II, OPS may seek specific performance of this letter agreement through
court proceedings or otherwise may seek to remove me from office. I agree that
any failure to resign upon request pursuant to such Article II shall be deemed
to be "cause" for my removal from the Board of Directors pursuant to the Charter
and Bylaws of OPS.
Date: June ___, 1998
______________________________
Name
Agreed to and Accepted:
Open Plan Systems, Inc.
By:___________________________
Anthony F. Markel
Chairman of the Board
<PAGE>
Form of Confidentiality Agreement
________ __, 19__
CONFIDENTIAL
[Name]
[Address]
Re: Confidentiality Agreement
Ladies and Gentlemen:
In connection with the proposed sale or transfer of shares of the Common
Stock, without par value, of Open Plan Systems, Inc. (the "Company"), we are
prepared to make available to you certain confidential information relating to
the Company and its business (the "Confidential Information"). As a condition to
your being furnished the Confidential Information, you agree to comply with the
terms and conditions of this letter agreement (this "Agreement").
For the purposes of this Agreement, the term "Representatives" shall mean
your employees, agents and advisors and the directors, officers, employees and
agents of any of your advisors. The term "Third Party" shall be broadly
interpreted to include without limitation any corporation, company, group,
partnership, other entity or individual. The term "Confidential Information"
shall not include information that (i) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives, or
(ii) was or becomes available to you on a non-confidential basis from a source
other than the Company or its advisors.
You hereby agree to treat the Confidential Information as confidential and
you shall not, and shall direct your Representatives not to, use in any way or
to disclose, directly or indirectly, the Confidential Information to any Third
Party without the written consent of the Company.
It is understood and agreed that money damages would not be a sufficient
remedy for any breach of this Agreement by you and that the Company shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy for any such breach, and you further agree to waive any requirement for
the securing or posting of any bond in connection with such remedy. Such remedy
shall not be deemed to be the exclusive remedy for your breach of this
Agreement, but shall be in addition to all other remedies available at law or
equity to the Company.
If you are in agreement with the foregoing, please so indicate by signing
and returning one copy of this Agreement, whereupon it will constitute our
agreement with respect to the subject matter hereof.
Very truly yours,
[Name]
Officer of [LLC or Affiliate]
CONFIRMED AND AGREED as of
the date first written above:
[NAME]
By:______________________________
Name:
Title:
OPEN PLAN SYSTEMS, INC.
By:_____________________________
Name:
Title:
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of June 17,
1998, is made between OPEN PLAN SYSTEMS, INC., a Virginia corporation ("OPS"),
and GREAT LAKES CAPITAL, LLC, a Delaware limited liability company ("LLC").
W I T N E S S E T H:
WHEREAS, OPS and LLC have entered into a Management and Consulting
Agreement, dated as of June 17, 1998 (the "Consulting Agreement"), under which
LLC agreed to provide certain management and consulting services to OPS; and
WHEREAS, in consideration for such management and consulting services to be
provided by LLC under the Consulting Agreement, OPS has entered into a
Nonqualified Stock Option Agreement with LLC, dated as of June 17, 1998 (the
"Stock Option Agreement"), for the purchase by LLC of up to 600,000 shares (the
"Option Shares") of the Common Stock, without par value, of OPS (the "Common
Stock"); and
WHEREAS, in connection with the execution of the Consulting Agreement, OPS
has issued 200,000 shares of Common Stock to LLC upon payment of the purchase
price therefor as stated in the Consulting Agreement (the "Common Shares"); and
WHEREAS, OPS has agreed to enter into this Agreement to provide certain
registration rights to LLC in order to facilitate the resale of the Option
Shares, the Common Shares and certain additional shares of Common Stock that LLC
and its Affiliates may acquire following the date of the Consulting Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and in the Consulting Agreement, OPS and LLC hereby agree as
follows:
ARTICLE I
Definitions
For purposes of this Agreement, the following terms have the following
meanings:
(a) "Additional Shares" shall mean shares of Common Stock that LLC and its
Affiliates may acquire following the date of the Consulting Agreement on the
open market, in privately negotiated transactions and/or directly from OPS so
that LLC and its Affiliates would beneficially own no greater than 21.0% of the
issued and outstanding shares of Common Stock on a fully diluted basis; provided
that shares of Common Stock that LLC and its Affiliates may acquire pursuant to
OPS's 1996 Stock Incentive Plan and 1996 Stock Option Plan for Non-Employee
Directors shall not be deemed to be Additional Shares.
(b) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act as in effect on the date of this Agreement.
(c) "Blue Sky Filing" shall mean a filing made in connection with the
registration or qualification of the LLC Shares under a particular state's
securities or blue sky laws.
(d) "Common Shares" shall have the meaning set forth in the recitals to
this Agreement.
(e) "Common Stock" shall have the meaning set forth in the recitals to this
Agreement.
(f) "Consulting Agreement" shall have the meaning set forth in the recitals
to this Agreement.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "LLC Shares" shall mean collectively (i) the Common Shares, (ii) the
Option Shares, (iii) the Additional Shares and (iv) such additional shares of
Common Stock that OPS may issue with respect to such shares pursuant to any
stock splits, stock dividends, recapitalizations, restructurings,
reclassifications or similar transactions.
(i) 'Nasdaq National Market" shall mean the National Market System of The
Nasdaq Stock Market, Inc.
(j) "Option Shares" shall have the meaning set forth in the recitals to
this Agreement.
(k) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act as in effect on the date of this Agreement.
(l) "Prospectus" shall mean the prospectus included in the Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the LLC Shares covered by such Registration Statement, and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in any such prospectus.
(m) "Registration Expenses" shall mean any and all out-of-pocket expenses
incident to OPS's performance of or compliance with this Agreement, including,
without limitation, (i) all registration and filing fees with the SEC and the
National Association of Securities Dealers, Inc., (ii) all fees and expenses of
complying with state securities or blue sky laws, (iii) all printing, messenger
and delivery expenses, (iv) all fees and expenses incurred in connection with
the listing of the LLC Shares on the Nasdaq National Market, or any other
exchange or automated interdealer quotation system as then applicable, (v) the
fees and disbursements of OPS's counsel and of its independent public
accountants, and (vi) the fees and expenses of any special experts retained by
OPS in connection with the requested registration; provided that such expenses
shall not include (x) any fees or disbursements of counsel to LLC or any
underwriter and (y) any brokerage commissions and fees, underwriting discounts
and commissions, transfer taxes and documentary stamp taxes, if any, relating to
the sale or disposition of the LLC Shares.
(n) "Registration Statement" shall mean the registration statement of OPS
under the Securities Act that covers the resale of the LLC Shares pursuant to
the terms of this Agreement, including the related Prospectus, all amendments
and supplements to such registration statement, including pre- and
post-effective amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference in any such registration
statement.
(o) "SEC" shall mean the Securities and Exchange Commission.
(p) "Securities Act" shall mean the Securities Act of 1933, as amended.
(q) 'Stock Option Agreement" shall have the meaning set forth in the
recitals to this Agreement.
ARTICLE II
Registration of Securities
Section 2.1. Securities Subject to this Agreement. The securities entitled
to the benefits of this Agreement are the LLC Shares. For the purposes of this
Agreement, one or more of the LLC Shares will no longer be subject to this
Agreement when and to the extent that (i) a Registration Statement covering such
LLC Shares has been declared effective under the Securities Act and such LLC
Shares have been sold pursuant to such effective Registration Statement, (ii)
such LLC Shares are distributed to the public pursuant to Rule 144 under the
Securities Act, (iii) such LLC Shares shall have been otherwise transferred or
disposed of, new certificates therefor not bearing a legend restricting further
transfer or disposition shall have been delivered by OPS and, at such time,
subsequent transfer or disposition of such securities shall not require
registration or qualification of such LLC Shares under the Securities Act or any
similar state law then in force, or (iv) such LLC Shares have ceased to be
outstanding.
Section 2.2. Registration Requirements.
(a) Following the expiration or termination of the Consulting Agreement,
LLC shall be entitled to request that OPS effect the registration of the LLC
Shares in accordance with this Section 2.2. Such request shall be made prior to
the date that is five years after the date of this Agreement and shall be in
writing to OPS at the address and in the manner determined in accordance with
Section 5.1 hereof. Such written request shall set forth the names and addresses
of LLC and any Affiliate of LLC that owns, either beneficially or of record, any
LLC Shares and the amount of LLC Shares to be sold by such holder. The demand
registration rights granted pursuant to this Section 2.2 may be exercised only
by LLC on behalf of LLC and its Affiliates, and OPS shall not be required to
effect more than one registration of the LLC Shares.
(b) If all of the terms and conditions relating to the demand registration
have been met by LLC and its Affiliates, including, but not limited to, the
affirmative obligation of LLC and its Affiliates pursuant to Section 2.4 hereof
to provide correct and complete information regarding LLC and its Affiliates,
OPS agrees that it will use its best efforts to effect the registration of the
number of LLC Shares set forth in the written request from LLC. Such
registration shall be filed with the SEC as soon as practicable, but not later
than ninety (90) days after the receipt by OPS of the written request under
Section 2.2(a) above. In addition, OPS shall, as soon as practicable, list on
the Nasdaq National Market the Common Shares and reserve for listing, on a when
issued basis, the Option Shares issuable upon exercise of the options set forth
in the Stock Option Agreement.
(c) OPS shall use its best efforts to maintain the effectiveness of the
registration relating to the LLC Shares, and to maintain the listing of such LLC
Shares on the Nasdaq National Market or any exchange or automated interdealer
quotation system on which the Common Stock is then listed or quoted, for the
period from the effective date of the Registration Statement relating to such
LLC Shares to the date that is the earlier of (i) two years after the date by
which LLC has exercised all options set forth in the Stock Option Agreement and
(ii) seven years after the date of this Agreement.
Section 2.3 Piggy-Back Registration Rights.
(a) In the event that, prior to the expiration or termination of the
Consulting Agreement, OPS shall propose to file a registration statement under
the Securities Act relating to a public offering by or through one or more
underwriters of Common Stock for OPS's own account (other than pursuant to a
registration statement on Form S-4 or Form S-8 or any successor forms, or filed
in connection with an exchange offer or an offering of Common Stock solely to
existing shareholders or employees of OPS) and on a form and in a manner that
would permit the registration of the LLC Shares for sale to the public under the
Securities Act, OPS shall (i) give written notice to LLC of its intention to do
so and of the right of LLC and its Affiliates to have any or all of the LLC
Shares then held by LLC and its Affiliates included among the securities to be
covered by such registration statement and (ii) at the written request of LLC
given to OPS within 20 days after OPS provides such notice, use its best efforts
to include among the securities covered by such registration statement the
number of such LLC Shares that LLC and its Affiliates shall have requested be so
included (subject, however, to reduction in accordance with Section 2.3(b)
below).
(b) If the lead managing underwriter selected by OPS for an underwritten
offering pursuant to Section 2.3(a) above determines that marketing factors
require a limitation on the number of LLC Shares to be offered and sold by LLC
and its Affiliates in such offering, there shall be included in such offering
only that number of LLC Shares, if any, that such lead managing underwriter
reasonably and in good faith believes will not jeopardize the success of the
offering of all shares of Common Stock that OPS desires to sell for its own
account. In such event and provided that the lead managing underwriter has so
notified OPS in writing, the shares of Common Stock to be included in such
offering shall consist of (i) the securities that OPS proposes to sell, and (ii)
the number, if any, of LLC Shares requested to be included in such registration
that, in the opinion of such lead managing underwriter, can be sold without
jeopardizing the success of the offering of the shares of Common Stock that OPS
desires to sell for its own account.
(c) Nothing in this Section 2.3 shall create any liability on the part of
OPS to LLC if OPS for any reason should decide not to file a registration
statement proposed to be filed under Section 2.3(a) above or to withdraw such
registration statement subsequent to its filing, regardless of any action
whatsoever that LLC may have taken, whether as a result of the issuance by OPS
of any notice hereunder or otherwise.
(d) If any LLC Shares are to be included in any underwritten offering
pursuant to Section 2.3(a) above, LLC shall be a party to the underwriting
agreement between OPS and such underwriters, and LLC agrees to comply with the
terms and conditions that may be imposed on such offering by the underwriters.
Section 2.4. Registration Procedures. In order to comply with the
requirements of Section 2.2 above, OPS will:
(a) prepare and file with the SEC a Registration Statement covering the LLC
Shares on any SEC form or forms for which OPS then qualifies and that counsel
for OPS shall deem appropriate, and which form shall be available for the sale
of the LLC Shares in accordance with the intended methods of distribution
thereof;
(b) prepare and file with the SEC pre- and post-effective amendments to the
Registration Statement and such amendments and supplements to the Prospectus
used in connection therewith as may be necessary to maintain the effectiveness
of such registration, or as may be required by the rules, regulations or
instructions applicable to the registration form utilized by OPS, or by the
Securities Act or the rules and regulations thereunder, necessary to keep such
Registration Statement effective, and cause the Prospectus as so supplemented to
be filed pursuant to Rule 424 under the Securities Act, and otherwise comply
with the provisions of the Securities Act with respect to the disposition of the
LLC Shares;
(c) furnish to LLC (or any Affiliate of LLC that owns, either beneficially
or of record, any LLC Shares), and the underwriters if any, such number of
copies of the Registration Statement and each pre- and post-effective amendment
thereto, any Prospectus or Prospectus supplement and each amendment thereto and
such other documents as LLC (or any Affiliate of LLC that owns, either
beneficially or of record, any LLC Shares), and the underwriters if any, may
reasonably request in order to facilitate the transfer or disposition of the LLC
Shares by LLC (or any Affiliate of LLC that owns, either beneficially or of
record, any LLC Shares);
(d) make such Blue Sky Filings to register or qualify the LLC Shares under
such state securities or blue sky laws of such jurisdictions as LLC (or any
Affiliate of LLC that owns, either beneficially or of record, any LLC Shares),
and the underwriters if any, may reasonably request, and do any and all other
acts that may be reasonably necessary or advisable to enable LLC to consummate
the transfer or disposition in such jurisdictions of the LLC Shares, except that
OPS shall not for any such purpose be required (i) to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 2.4(d), it would not be obligated to be so
qualified, (ii) to subject itself to taxation in any such jurisdiction, or
(iii) to consent to general service of process in any such jurisdiction;
(e) notify LLC, and the underwriters if any, at any time when a Prospectus
is required to be delivered under the Securities Act while the LLC Shares are
subject to this Agreement, of OPS's becoming aware that a Prospectus included in
a Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and prepare and furnish to LLC, and the underwriters if
any, a reasonable number of copies of an amendment to such Prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such LLC Shares,
such Prospectus shall not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(f) promptly notify LLC, and the underwriters if any,
(1) when any Prospectus or Prospectus supplement or pre- or post-effective
amendment has been filed, and, with respect to the Registration Statement or
post-effective amendment, when such Registration Statement or post-effective
amendment has become effective;
(2) of any request by the SEC or any other applicable regulatory authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information;
(3) of the issuance by the SEC or any other applicable regulatory authority
of any stop order of which OPS or its counsel is aware or should be aware
suspending the effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation or any threats of
any proceedings for such purpose; and
(4) of the receipt by OPS of any written notification of the suspension of
the registration or qualification of any of the LLC Shares for sale in any
jurisdiction, or the initiation or any threats of any proceeding for such
purpose;
(g) use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to its shareholders, as soon as
reasonably practicable, an earnings statement that shall satisfy the provisions
of Section 11(a) of the Securities Act, provided that OPS shall be deemed to
have complied with this Section 2.4(g) if it has complied with Rule 158 under
the Securities Act;
(h) use its best efforts to provide a transfer agent and registrar for the
LLC Shares covered by the Registration Statement no later than the effective
date of such Registration Statement;
(i) if the LLC Shares are to be sold in an underwritten offering, enter
into a customary underwriting agreement and in connection therewith:
(1) make such representations and warranties to the underwriters and to LLC
and any Affiliate of LLC, to the extent that LLC and such Affiliate(s) are
selling shareholders, in form, substance and scope as are customarily made by
issuers to underwriters and selling shareholders in comparable underwritten
offerings;
(2) obtain opinions of counsel to OPS (in form, substance and scope
reasonably satisfactory to the managing underwriters), addressed to the
underwriters, and covering the matters customarily covered in opinions requested
in comparable underwritten offerings, including, if requested by LLC or any
Affiliate of LLC, a statement to the effect that such opinions may be relied
upon by LLC and such Affiliate(s) of LLC, to the extent that LLC and such
Affiliate(s) are selling shareholders;
(3) obtain "cold comfort" letters and bring-downs thereof from OPS's
independent certified public accountants addressed to the underwriters and LLC,
such letters to be in customary form and covering the matters customarily
covered in "cold comfort" letters by independent accountants in comparable
underwritten offerings;
(4) if requested, provide indemnification in accordance with the provisions
and procedures of Article IV of this Agreement to all parties to be indemnified
pursuant to such Article;
(5) deliver such documents and certificates as the managing underwriters or
LLC may reasonably request to evidence compliance with Section 2.4(f) above and
with any customary conditions contained in the underwriting agreement; and
(6) make its officers and directors reasonably available for "roadshows."
(j) cooperate with LLC, and the underwriters if any, to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legends) representing the securities to be sold under the Registration
Statement, and enable such securities to be in such denominations and registered
in such names as LLC, or the underwriters if any, may request;
(k) if the managing underwriter or underwriters or LLC reasonably request,
incorporate in a Prospectus supplement or post-effective amendment thereto such
information as the managing underwriter or underwriters and LLC agree should be
included therein relating to OPS and its business and financial condition and
the plan of distribution with respect to such LLC Shares, including, without
limitation, information with respect to the number of LLC Shares being sold to
such underwriters, the purchase price being paid therefor by such underwriters
and with respect to any other terms of the underwritten offering of the LLC
Shares to be sold in such offering and make all required filings of such
Prospectus supplement or post-effective amendment as promptly as practicable
upon being notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(l) provide LLC, any underwriter and any attorney, accountant or other
agent retained by LLC or underwriter (collectively, the "Inspectors") with (i)
the opportunity to participate in the preparation of the Registration Statement,
any Prospectus, and any amendment or supplement thereto and (ii) reasonable
access during normal business hours to appropriate officers of OPS and its
subsidiaries to ask questions and to obtain information that any such Inspector
may reasonably request and make available for inspection all financial and other
records, pertinent corporate documents and properties of any of OPS and its
subsidiaries and affiliates (collectively, the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility; provided, however, that the Records that OPS determines, in good
faith, to be confidential and that it notifies the Inspectors in writing are
confidential shall not be disclosed to any Inspector unless such Inspector signs
or is otherwise bound by a confidentiality agreement reasonably satisfactory to
OPS; and
(m) in the event of the issuance of any stop order of which OPS or its
counsel is aware or should be aware suspending the effectiveness of the
Registration Statement or any order suspending or preventing the use of any
related Prospectus or suspending the registration or qualification of any LLC
Shares for sale in any jurisdiction, OPS promptly will use its best efforts to
obtain its withdrawal.
LLC shall furnish to OPS in writing such information regarding LLC and its
Affiliates as is required to be disclosed pursuant to the Securities Act. LLC
agrees to notify OPS promptly of any inaccuracy or change in information
previously furnished by LLC to OPS or of the happening of any event in either
case as a result of which the Registration Statement, a Prospectus, or any
amendment or supplement thereto contains an untrue statement of a material fact
regarding LLC or omits to state a material fact regarding LLC required to be
stated therein or necessary to make the statements therein not misleading and to
furnish promptly to OPS any additional information required to correct and
update any previously furnished information or required so that such
Registration Statement, Prospectus, or amendment or supplement, shall not
contain, with respect to LLC, 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 not misleading.
LLC agrees that, upon receipt of any notice from OPS of the happening of
any event of the kind described in Sections 2.4(e) or (m) above, LLC will
forthwith discontinue the transfer or disposition of any LLC Shares pursuant to
the Prospectus relating to the Registration Statement covering such LLC Shares
until LLC's receipt of the copies of the amended or supplemented Prospectus
contemplated by Section 2.4(e) or the withdrawal of any order contemplated by
Section 2.4(m), and, if so directed by OPS, LLC will deliver to OPS all copies,
other than permanent file copies then in LLC's possession, of the Prospectus
covering such LLC Shares at the time of receipt of such notice. The period
during which any discontinuance under this paragraph is in effect is referred to
herein as a "Discontinuance Period."
Section 2.4. Registration Expenses. OPS will pay all Registration Expenses
in connection with the registration of the LLC Shares pursuant to Section 2.4
above, and LLC shall pay (x) any fees or disbursements of counsel to LLC or any
underwriter and (y) any brokerage commissions and fees, underwriting discounts
and commissions, transfer taxes and documentary stamp taxes, if any, relating to
the sale or disposition of the LLC Shares.
Section 2.5. Selection of Underwriters. In connection with any underwritten
offering pursuant to the Registration Statement filed pursuant to Section 2.4
above, LLC shall have the right to select a lead managing underwriter or
underwriters to administer such offering, which lead managing underwriter or
underwriters shall be reasonably satisfactory to OPS; provided, however, that
OPS shall have the right to select a co-managing underwriter or underwriters for
such offering, which co-managing underwriter or underwriters shall be reasonably
satisfactory to LLC.
ARTICLE III
Holdback Period
If one or more underwritten public offerings of shares of Common Stock
(other than the LLC Shares) by OPS occur during the period of the effectiveness
of the registration relating to the LLC Shares under Section 2.2(c) above, then,
in connection with each such public offering, OPS may require LLC and its
Affiliates to refrain from, and LLC and its Affiliates will refrain from,
selling any of the LLC Shares for a period determined by OPS but not to exceed
ninety (90) days (each such period referred to as a "Holdback Period") so long
as OPS delivers written notice to LLC of OPS's requirement of a Holdback Period,
and the length of such Holdback Period, no less than three days prior to the
inception of the Holdback Period; provided that OPS may require LLC to refrain
from selling any of the LLC Shares during no more than three such Holdback
Periods; and provided further that OPS may require LLC to refrain from selling
any of the LLC Shares during no more than two Holdback Periods in any one
calendar year.
ARTICLE IV
Indemnification; Contribution
Section 4.1. Indemnification by OPS. OPS will, and hereby does indemnify
and hold harmless, to the fullest extent permitted by law, and, subject to
Section 4.3 below, defend LLC and LLC's members, managers, employees, agents,
representatives and each other Person, if any, who controls LLC within the
meaning of the Securities Act, against any and all losses, claims, damages,
liabilities and expenses, joint or several, to which they or any of them may
become subject under the Securities Act or any other statute or common law,
including any amount paid in settlement of any litigation, commenced or
threatened, and to reimburse them for any reasonable legal or other expenses
incurred by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities, expenses or
actions arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any pre- or post-effective amendment thereto or in any Blue Sky Filing, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the indemnification
agreement contained herein shall not apply to such losses, claims, damages,
liabilities, expenses or actions arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission or alleged omission,
if such statement or omission was made in reliance upon and in conformity with
information furnished in writing to OPS by LLC from time to time specifically
for use in the Registration Statement, the Prospectus or any such amendment or
supplement thereto or any Blue Sky Filing. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of LLC or
any other Person and shall survive the transfer of such securities by LLC.
Section 4.2. Indemnification by LLC. LLC will, and hereby does, indemnify
and hold harmless and, subject to Section 4.3 below, defend (in the same manner
and to the same extent as set forth in Section 4.1 above) OPS and OPS's
officers, directors, employees, agents, representatives and each other Person,
if any, who controls OPS within the meaning of the Securities Act, with respect
to any such untrue statement or alleged untrue statement in, or any such
omission or alleged omission from, the Registration Statement, any Prospectus,
or any amendment or supplement thereto, if such statement or omission was made
in reliance upon and in conformity with information furnished in writing to OPS
by LLC from time to time specifically for use in the Registration Statement, the
Prospectus, and any such amendment or supplement thereto. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of OPS or any such director, officer or any other Person and shall
survive the transfer of such securities by LLC.
Section 4.3. Notices of Claims. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Sections 4.1 and 4.2 above, such indemnified party will
give, if a claim in respect thereof is to be made against an indemnifying party,
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Article IV, except
to the extent that the indemnifying party is actually prejudiced in any material
respect by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
reasonable investigation. If the indemnifying party advises an indemnified party
that it will contest a claim for indemnification hereunder, or fails, within
thirty (30) days of receipt of any indemnification notice to notify, in writing,
such Person of its election to defend, settle or compromise, at its sole cost
and expense, any action, proceeding or claim (or discontinues its defense at any
time after it commences such defense), then the indemnified party may, at its
option, defend, settle or otherwise compromise or pay such action or claim in
each case at the indemnifying party's expense. In any event, unless and until
the indemnifying party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the indemnified party's
reasonable costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party that relates
to such action or claim. The indemnifying party shall keep the indemnified party
fully informed at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense, except that the indemnifying party shall be liable for such reasonable
costs and expenses if, in such indemnified party's reasonable judgment, a
conflict of interest between such indemnified and indemnifying parties may exist
as described above. If the indemnifying party does not assume such defense, the
indemnified party shall keep the indemnifying party informed at all times as to
the status of the defense; provided, however, that the failure to keep the
indemnifying party so informed shall not affect the obligations of the
indemnifying party hereunder. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a general
written release from all liability with respect to such claim or litigation.
Section 4.4. Indemnification Payments. The indemnification required by this
Article IV shall be made by periodic payments of the amount thereof during the
course of the investigation or defense as and when bills are received or
expense, loss, damage or liability is incurred, subject to the receipt of such
documentary support therefor as the indemnifying party may reasonably request.
Section 4.5. Contribution. If the indemnification provided for in this
Article IV is unavailable to or insufficient to hold harmless a party otherwise
entitled to be indemnified thereunder in respect to any losses, claims, damages
and expenses (or actions, whether commenced or threatened, in respect thereof)
referred to therein, then OPS and LLC shall contribute to the amount paid or
payable by such party as a result of such losses, claims, damages, liabilities,
expenses or actions in such proportion as is appropriate to reflect the relative
fault of OPS and LLC in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities, expenses or actions. The
relative fault of OPS and LLC shall be determined by reference to whether the
untrue statement or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by
OPS or by LLC and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. OPS and LLC
agree that it would not be just and equitable if contributions pursuant to this
Section 4.5 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to above in this Section 4.5. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
Section 4.6. Other Rights and Liabilities. The indemnity and contribution
agreements contained herein shall be in addition to (i) any cause of action or
similar right of the indemnified party against the indemnifying party or others
and (ii) any liabilities the indemnifying party may be subject to pursuant to
the law.
ARTICLE V
Miscellaneous
Section 5.1. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing (including
telecopy or similar teletransmission), addressed as follows:
If to OPS,
to it at: Open Plan Systems, Inc.
4299 Carolina Avenue
Building C
Richmond, Virginia 23222
Telecopier: (804) 228-5656
Attention: Anthony F. Markel
With a copy to: Williams Mullen Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Telecopier: (804) 783-6507
Attention: Theodore L. Chandler, Jr.,Esquire
If to LLC,
to it at: Great Lakes Capital, LLC
310 South Street
Morristown, New Jersey 07960
Telecopier: (973) 539-7909
Attention: W. Sydnor Settle
With a copy to: Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243-1668
Telecopier: (313) 568-6915
Attention: Fredrick M. Miller, Esquire
Unless otherwise specified herein, such notices or other communications
shall be deemed received (a) in the case of any notice or communication sent
other than by mail, on the date actually delivered to such address (evidenced,
in the case of delivery by overnight courier, by confirmation of delivery from
the overnight courier service making such delivery, and in the case of a
telecopy, by receipt of a transmission confirmation form or the addressee's
confirmation of receipt), or (b) in the case of any notice or communication sent
by mail, three business days after being sent, if sent by registered or
certified mail, with first-class postage prepaid. Each of the parties hereto
shall be entitled to specify a different address by giving notice as aforesaid
to each of the other parties hereto.
Section 5.2. Amendments. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an instrument
in writing signed by LLC and by OPS.
Section 5.3. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties and their respective successors and assigns,
including without limitation in the case of any corporate party hereto any
corporate successor by merger or otherwise; provided that no party may assign
this Agreement without the other party's prior written consent.
Section 5.4. Entire Agreement. This Agreement embodies the entire agreement
and understanding among the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. There are no representations, warranties or covenants by the parties
hereto relating to such subject matter other than those expressly set forth in
this Agreement, the Consulting Agreement and the Stock Option Agreement.
Section 5.5. Specific Performance. The parties acknowledge that money
damages are not an adequate remedy for violations of this Agreement and that any
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
Section 5.6. Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
Section 5.7. No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
Section 5.8. No Third Party Beneficiaries. Except as provided in Article IV
above, this Agreement is not intended to be for the benefit of and shall not be
enforceable by any Person who or which is not a party hereto.
Section 5.9. Consent to Jurisdiction. Each party to this Agreement, by its
execution hereof, (i) hereby irrevocably submits, and agrees to cause each of
its Affiliates to submit, to the jurisdiction of the federal courts located in
the City of Richmond, Virginia, and in the event that such federal courts shall
not have subject matter jurisdiction over the relevant proceeding, then of the
state courts located in the City of Richmond, Virginia, for the purpose of any
action arising out of or based upon this Agreement or relating to the subject
matter hereof or the transactions contemplated hereby, (ii) hereby waives, and
agrees to cause each of its Affiliates to waive, to the extent not prohibited by
applicable law, and agrees not to assert, and agrees not to allow any of its
Affiliates to assert, by way of motion, as a defense or otherwise, in any such
action, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that any such proceeding brought in one of the above-named courts is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court and (iii) hereby agrees not to commence or to
permit any of its Affiliates to commence any action arising out of or based upon
this Agreement or relating to the subject matter hereof other than before one of
the above-named courts nor to make any motion or take any other action seeking
or intending to cause the transfer or removal of any such action to any court
other than one of the above-named courts whether on the grounds of inconvenient
forum or otherwise. Each party hereby consents to service of process in any such
proceeding in any manner permitted by Virginia law, as the case may be, and
agrees that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 5.1 above is reasonably
calculated to give actual notice. Notwithstanding anything contained in this
Section 5.9 to the contrary with respect to the parties' forum selection, if an
action is filed against a party to this Agreement, including its Affiliates, by
a person who or which is not a party to this Agreement, an Affiliate of a party
to this Agreement, or an assignee thereof (a "Third Party Action"), in a forum
other than the federal district court or a state court located in the City of
Richmond, Virginia, and such Third Party Action is based upon, arises from, or
implicates rights, obligations or liabilities existing under this Agreement or
acts or omissions pursuant to this Agreement, then the party to this Agreement,
including its Affiliates, joined as a defendant in such Third Party Action shall
have the right to file cross-claims or third-party claims in the Third Party
Action against the other party to this Agreement, including its Affiliates, and
even if not a defendant therein, to intervene in such Third Party Action with or
without also filing cross-claims or third-party claims against the other party
to this Agreement, including its Affiliates.
Section 5.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive law of the Commonwealth of
Virginia, without giving effect to any choice or conflict of law provision or
rule that would cause the application of the law of any other jurisdiction.
Section 5.11. Name, Captions. The name assigned to this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof.
Section 5.12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
Section 5.13. Expenses. Each of the parties hereto shall bear their own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, except that in the event of a dispute concerning the terms
or enforcement of this Agreement, the prevailing party in any such dispute shall
be entitled to reimbursement of reasonable legal fees and disbursements from the
other party or parties to such dispute.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Registration Rights Agreement to be executed, as of the
date first above written by their respective officers thereunto duly authorized.
OPEN PLAN SYSTEMS, INC.
By: /s/ Anthony F. Markel
Anthony F. Markel
Chairman of the Board
GREAT LAKES CAPITAL, LLC
By: /s/ W. Sydnor Settle
W. Sydnor Settle
Manager
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective the 17th day of June, 1998, by and between JOHN
L. HOBEY, an individual residing in the County of Ingham, Michigan (the
"Executive") and OPEN PLAN SYSTEMS, INC., a Virginia corporation with corporate
offices located at 4299 Carolina Avenue, Richmond, Virginia (the "Company").
WITNESSETH:
WHEREAS, pursuant to the terms of that certain Management and Consulting
Agreement, dated June 17, 1998, between the Company and Great Lakes Capital,
Inc., the Company has appointed the Executive to the position of Chief Executive
Officer of the Company and wants to assure itself of the benefit of the
Executive's services and experience; and
WHEREAS, the Executive has assumed the position of Chief Executive Officer
and is willing to work in the employ of the Company upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
I. Term Of Employment.
(A) The term of the employment of the Executive under this Agreement shall
be for an eighteen (18)-month period commencing on June 17, 1998, and ending on
December 16, 1999.
(B) Notwithstanding the foregoing provision (A) of this Section I., the
term of employment of the Executive under this Agreement shall be subject to
earlier termination by:
(1) determination of disability of the Executive pursuant to Section IV.;
or
(2) dismissal of the Executive from his position as Chief Executive Officer
pursuant to resolution by the Board of Directors of the Company; or
(3) death of the Executive;
provided, however, that
(i) in the event of termination for determination of disability pursuant to
Paragraph (1) above, Section IV. shall apply;
(ii) in the event of termination pursuant to Paragraph (2) above for
"Proper Cause" (defined in Section V.(A)), Section V.(B) shall apply;
(iii) in the event of termination pursuant to Paragraph (2) above without
"Proper Cause" (defined in Section V.(A)), Section VI. shall apply; or
(iv) in the event of termination due to the death of the Executive pursuant
to Paragraph (3) above, Section VII. shall apply.
II. Services To Be Rendered.
The Company agrees to employ the Executive as the Chief Executive Officer
of the Company, subject to the terms, conditions and provisions of this
Agreement. The Executive hereby accepts such employment and agrees that he shall
devote the proper degree of skill and diligence in rendering services to the
Company under this Agreement. The Executive shall report to and be subject to
the direction of the Board of Directors of the Company. The Executive agrees
that his employment as Chief Executive Officer of the Company pursuant to this
Agreement is a full time position, based at the Company's headquarters located
in Richmond, Virginia. The Executive shall not accept or retain any position as
a director, officer, employee or agent of any for-profit business organization
which is unaffiliated with the Company without the prior written approval of the
Board of Directors of the Company (which approval will not be unreasonably
withheld).
III. Compensation.
In consideration for the services rendered to the Company under this
Agreement, the Company shall pay and provide to the Executive the following
compensation and benefits:
(A) Salary.
The Company shall pay the Executive an annual base salary of $160,000.00,
payable in twelve equal monthly installments on the Company's regularly
scheduled pay days and commencing with the first pay day following the date of
this Agreement. This annual base salary shall be reviewed annually by the
Compensation Committee of the Board of Directors (the "Compensation Committee")
to consider appropriate increases, but in no event shall the amount of the base
salary be reduced.
(B) Annual Incentive Bonus.
In addition to the base salary to be paid to the Executive under Section
III.(A), the Executive shall also be entitled to an annual incentive bonus as
established and modified, from time to time, by the Compensation Committee.
(C) Ancillary Benefits.
(1) The Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses approved in writing by the Chairman of the Board of
Directors of the Company, which approval shall not be unreasonably withheld,
incurred by the Executive in connection with his planned weekend travel to and
from his primary residence in Michigan.
(2) During the term of this Agreement, while the Executive is working as
Chief Executive Officer of the Company in Richmond, Virginia, the Executive
shall be entitled to the use of the corporate apartment maintained by the
Company, or similar accommodations to be provided by the Company as approved in
writing by the Chairman of the Board of Directors of the Company.
(3) The Executive shall also be entitled to other ancillary benefits
provided by the Company, consistent with the compensation policies and practices
of the Company from time to time, prevailing with respect to persons who are
executive officers of the Company.
IV. Disability.
(A) The term of employment of the Executive may be terminated at the
election of the Company upon a determination by the Board of Directors of the
Company, made based upon a qualified medical opinion, that the Executive will be
unable, by reason of physical or mental incapacity, to perform the reasonably
expected or customary duties of Chief Executive Officer of the Company on a
full-time basis for a period longer than three (3) consecutive months or more
than six (6) months in any consecutive twelve (12)-month period. In the exercise
of its determination, the Board of Directors shall give due consideration to the
opinion of the Executive's personal physician or physicians and to the opinion
of any physician or physicians selected by the Board of Directors for these
purposes. If the Executive's personal physician disagrees with the physician
retained by the Company, the Board of Directors will retain an impartial
physician selected by the Executive's personal physician and the Company's
physician and the opinion of the impartial physician shall be binding upon the
Company and the Executive. The Executive shall submit to examination by any
physician or physicians so selected by the Board of Directors, and shall
otherwise cooperate with the Board of Directors in making the determination
contemplated hereunder, such cooperation to include, without limitation,
consenting to the release of information by any such physician(s) to the Board
of Directors. Notwithstanding the foregoing, the Company shall comply with all
requirements of the Americans with Disabilities Act, 42 U.S.C. 12101 et. seq.
(B) In the event of such termination for disability, the Company shall
thereupon be relieved of its obligations to pay any compensation and benefits
under Section III., except for accrued and unpaid items, but shall, in addition,
pay to the Executive such disability compensation as set forth in any disability
plan established by the Company for its executive offices.
V. Termination For Proper Cause.
(A) The occurrence of any of the following events shall constitute "Proper
Cause" for termination of the employment of the Executive under this Agreement,
at the election of the Board of Directors of the Company:
(1) the Executive shall voluntarily resign as a director, officer or
employee of the Company without the prior written consent of the Board of
Directors of the Company;
(2) the Executive shall fail to favorably perform as Chief Executive
Officer based on a reasonable determination made by the Board of Directors of
the Company and fail to cure such deficient performance within five (5) calendar
days after receiving written notice of such deficient performance from the
Company;
(3) the Executive shall fail to fulfill his duties and obligations as Chief
Executive Officer on a full time basis from the Company's headquarters located
in Richmond, Virginia except as otherwise agreed or approved by the Chairman of
the Board of Directors of the Company;
(4) the Executive shall breach this Agreement in any material respect and
fail to cure such breach within five (5) calendar days after receiving written
notice of such breach from the Company; or
(5) the commission of a fraud, or other criminal act, by the Executive
directly involving the Company or any Affiliates of the Company which would
constitute a felony if prosecuted under criminal law.
(B) In the event of termination of the Executive's employment pursuant to
Section I.(B)(2) for Proper Cause, the Company shall thereupon be relieved of
its obligations to pay any compensation and benefits under Section III., except
for accrued and unpaid items.
VI. Termination Without Proper Cause.
In the event of termination of the Executive pursuant to Section I.(B)(2)
without Proper Cause (as defined in Section V.(A) above), the Company shall
thereafter be and remain obligated to pay to the Executive (or his estate or
designated beneficiary) the compensation and benefits provided under Section
III.(A) and III.(B) and such benefits under III.(C) as are payable to a
terminated employee until expiration of the eighteen (18)-month term of
employment established by Section I.(A). In the event of a dispute as to whether
Executive was terminated for or without "Proper Cause," or regarding the amount
of compensation Executive is entitled to receive under this Section VI., the
Company shall be obligated to continue to pay to the Executive (or his estate or
designated beneficiary) all of the compensation and benefits reserved under
Section III. until the dispute is resolved by an arbitrator pursuant to Section
XVII. hereof.
VII. Death.
In the event of termination of the Executive's employment pursuant to
Section I.(B)(3) above, the Company shall pay the Executive's estate or
designated beneficiary such death benefits as may be set forth in any life
insurance plan established by the Company for its executive officers plus all
accrued and unpaid items.
VIII. Confidentiality.
For purposes of this Agreement, "Confidential Information" shall mean any
information of a proprietary or confidential nature and trade secrets of the
Company and Affiliates of the Company relating to the business of the Company
and Affiliates of the Company that have not previously been publicly released by
duly authorized representatives of the Company. The Executive agrees to regard
and preserve as confidential all Confidential Information pertaining to the
Company's business that has been or may be obtained by the Executive in the
course of his employment with the Company, whether he has such information in
his memory or in writing or other physical form. The Executive shall not,
without written authority from the Company to do so, use for his personal
benefit or his personal purposes, unrelated to business of the Company, nor
disclose to others, either during the term of his employment hereunder or for
five (5) years thereafter, except as required by the conditions of his
employment hereunder, any Confidential Information of the Company. This
provision shall not apply after the Confidential Information has been
voluntarily disclosed to the public by a duly authorized representative of the
Company, independently developed and disclosed by others, or otherwise enters
the public domain through lawful means.
IX. Removal Of Documents Or Objects.
The Executive agrees not to remove from the premises of the Company, except
as an officer, director or employee of the Company in pursuit of the business of
the Company or any Affiliates of the Company, or except as specifically
permitted in writing by the Company, any document or object containing or
reflecting any Confidential Information of the Company or any Affiliates of the
Company. The Executive recognizes that all documents or material containing
Confidential Information developed by him or by someone else in the course of
employment by the Company, are the exclusive property of the Company.
X. Nonpiracy Covenants.
(A) For the purpose of this Agreement, the following terms shall have the
following meanings:
(1) "OPS Customers" shall be limited to those customers of the Company or
Affiliates of the Company for whom the Company or Affiliates of the Company are
rendering services as of the date of termination of the Executive's employment;
(2) "Affiliates of the Company" shall have the meaning ascribed to such
term in Rule 12b-2 under the Exchange Act as in effect on the date of this
Agreement;
(3) "Prohibited Services" shall mean services in the new and remanufactured
office furniture industry performed by the Company or Affiliates of the Company,
their agents or employees in any other business engaged in by the Company or
Affiliates of the Company on the date of termination of the Executive's
employment;
(4) "Prospective Customers" shall be limited to those parties known by the
Executive to have been solicited for business within any Prohibited Services
within the twelve (12)-month period preceding the date of termination of the
Executive's employment, and with or from whom, within the twelve (12)-month
period preceding the date of termination of the Executive's employment, someone
acting on behalf of the Company or Affiliates of the Company either had met for
the purpose of offering any Prohibited Services or had received a written
response to an earlier solicitation to provide any Prohibited Services;
(5) "Restricted Period" shall mean the period of five (5) years immediately
following the date of termination of the Executive's employment.
(B) The Executive recognizes that over a period of years the Company has
developed, at considerable expense, relationships with, and knowledge about,
Customers and Prospective Customers which constitute a major part of the value
of the Company. During the course of his employment by the Company, the
Executive will either have substantial contact with, or obtain substantial
knowledge about, these Customers and Prospective Customers. In order to protect
the value of the Company's business, the Executive covenants and agrees that, in
the event of the termination of his employment, but only if said termination is
voluntary or for Proper Cause, he shall not, directly or indirectly, for his own
account or for the account of any other person or entity, as an owner,
stockholder, director, employee, partner, agent, broker, consultant or other
participant during the Restricted Period:
(1) solicit a Customer for the purpose of providing Prohibited Services to
such Customer;
(2) accept an invitation from a Customer for the purpose of providing
Prohibited Services to such Customer;
(3) solicit a Prospective Customer for the purpose of providing Prohibited
Services to such Prospective Customer; and
(4) accept an invitation from a Prospective Customer for the purpose of
providing Prohibited Services to such Prospective Customer.
Subsections (1), (2), (3), and (4) are separate and divisible covenants; if
for any reason any one covenant is held to be illegal, invalid or unenforceable,
in whole or in part, the remaining covenants shall remain valid and enforceable
and shall not be affected thereby. Further, the periods and scope of the
restrictions set forth in any such subsection shall be reduced by the minimum
amount necessary to reform such subsection to the maximum level of enforcement
permitted to the Company by the law governing this Agreement. Additionally, the
Executive agrees that no separate geographic limitation is needed for the
foregoing nonpiracy covenants as such are not a prohibition on the Executive's
employment in the new and remanufactured office furniture industry and are
already limited to only those entities which are included within the definition
of "Customer" and "rospective Customer."
XI. Nonraiding of Employees.
(A) Executive covenants that during the term of this Agreement, he will not
solicit, induce or encourage for the purposes of employing or offering
employment to, or directly or indirectly solicit, induce or encourage to seek
employment with any other business, whether or not Executive is then affiliated
with such business, any individual who is then an employee of OPS or its
Affiliates, including William F. Crabtree ("Crabtree");
(B) Executive covenants that, during the Restricted Period specified in
Section X(A) hereof, but only if said termination is voluntary or for Proper
Cause, he will not solicit, induce or encourage for the purposes of employing or
offering employment to, or directly or indirectly solicit, induce or encourage
to seek employment with any other business, whether or not Executive is then
affiliated with such business, any individual who, as of the date of termination
of Executive's employment hereunder, is an employee of OPS or its Affiliates,
other than Crabtree;
(C) Executive covenants that, if prior to the expiration or termination of
this Agreement, (i) OPS terminates Executive for Proper Cause (as defined in his
Employment Agreement) or (ii) Executive voluntarily resigns as an employee of
OPS, Executive will not initiate the solicitation or inducement for the purposes
of employing or offering employment to, or directly or indirectly initiate the
solicitation or inducement to seek employment with any other business, whether
or not Executive is then affiliated with such business, of Crabtree, until the
later of (x) the expiration or termination of this Agreement or (y) six (6)
months after such termination for Proper Cause or voluntary resignation of
Crabtree.
XII. Notification of Former and New Employment.
During the term of this Agreement and the Restricted Period specified in
Section X. hereof, but only if the termination of employment by the Executive is
voluntary or for Proper Cause, the Executive covenants to notify any prospective
employer or joint venturer, which is a competitor of the Company of this
Agreement with the Company; and if the Executive accepts employment or
establishes a relationship with such competitor, the Executive covenants to
notify the Company immediately of such relationship. If the Company reasonably
believes that the Executive is affiliated or employed by or with a competitor of
the Company during the Restricted Period, after termination of his employment
voluntarily or for Proper Cause, then the Executive grants the Company the right
to forward a copy of this Agreement to such competitor.
XIII. Remedies Upon Employee Breach of Agreement.
If the Executive materially breaches any provision of this Agreement and
fails to cure any such material breach within five (5) days after written notice
of said material breach is received from the Company, the Company reserves the
right to avail itself of any reasonable remedy available to it at law or in
equity. Further, if the Executive fails to cure any such material breach after
five (5) days from receipt of written notice of the material breach, the Company
may, at its sole option, employ reasonable disciplinary procedures against the
Executive for any material breach, up to and including discharge. The Executive
acknowledges and agrees that the Company shall be entitled to injunctive relief
against the Executive for any material violation by the Executive of Sections
VIII. IX., X., XI., or XII. of this Agreement which the Executive fails to cure
within five (5) days after receipt of written notice from the Company. The
Executive agrees that the foregoing remedies shall be cumulative and not
exclusive, shall not be waived by any partial exercise or nonexercise thereof
and shall be in addition to any other remedies available to the Company at law
or in equity.
XIV. Tolling of Restrictive Covenants During Violation.
If a material breach by the Executive of any of the restrictive covenants
of this Agreement occurs, the Executive agrees that the restrictive period of
each such covenant so materially violated shall be extended by a period of time
equal to the period of such material violation by the Executive. It is the
intent of this Section that the running of the restricted period of a
restrictive covenant shall be tolled during any period of material violation of
such covenant so that the Company shall get the full and reasonable protection
for which it contracted and so that the Executive may not profit by his material
breach.
XV. Notices.
Any notices or other communications required or permitted hereunder shall
be sufficiently given if in writing (including telecopy or similar
teletransmission), addressed as follows:
(A) If to the Company, to it at the following address:
4299 Carolina Avenue
Building C
Richmond, Virginia 23222
Telecopier: (804) 228-5656
Attn: Chairman of the Board
with a copy to:
Williams Mullen Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Telecopier: (804) 783-6507
Attention: Theodore L. Chandler, Jr., Esquire
(B) If to the Executive, to him at the following address:
John L. Hobey
1777 Hitching Post
East Lansing, Michigan 48823
Telecopier: (517) 351-0743
Unless otherwise specified herein, such notices or other communications
shall be deemed received (a) in the case of any notice or communication sent
other than by mail, on the date actually delivered to such address (evidenced,
in the case of delivery by overnight courier, by confirmation of delivery from
the overnight courier service making such delivery, and in the case of a
telecopy, by receipt of a transmission confirmation form or the addressee's
confirmation of receipt), or (b) in the case of any notice or communication sent
by mail, three Business Days after being sent, if sent by registered or
certified mail, with first-class postage prepaid. Each of the parties hereto
shall be entitled to specify a different address by giving notice as aforesaid
to each of the other parties hereto.
XVI. Governmental Regulation.
Nothing contained in this Agreement shall be construed so as to require
commission of any act contrary to law and whenever there is any conflict between
any provision of this Agreement and any statute, law, ordinance, order or
regulation, the latter shall prevail, but in such event any such provision of
this Agreement shall be curtailed and limited only to the extent necessary to
bring it within the legal requirements.
XVII. Arbitration.
Any dispute or controversy as to the interpretation, construction,
application or enforcement of, or otherwise arising under or in connection with
this Agreement, shall be submitted at the request of either party hereto for
mandatory, final and binding arbitration in the City of Richmond, Virginia, in
accordance with the applicable arbitration rules then prevailing of the American
Arbitration Association. The Company and Executive waive the right to submit any
controversy or dispute to a Court and/or a jury. Any award rendered therein
shall provide the full remedies available to the parties under the applicable
law and shall be final and binding on each of the parties hereto and their
heirs, executors, administrators, successors and assigns and judgment may be
entered thereon in any court having jurisdiction.
XVIII. Indemnification by the Company.
The Company shall defend, indemnify and hold harmless the Executive against
any all claims, causes of actions, damages and expenses (including all legal
fees and expenses) in any threatened, pending or completed action, arising out
of or relating in any way to action or conduct by the Executive by reason of the
fact that he was a representative of the Company or was serving at the request
of the Company or acts or conduct within the course of his employment pursuant
to this Agreement or in his capacity as a director of the Company. If the
Company contends that any action or conduct by the Executive was not within the
course of his employment or is otherwise not subject to this provision, the
Company shall pay to the Executive all defense costs and expenses to defend such
an action and shall only be entitled to reimbursement of such fees and expenses
if after a final adjudication, including all available appeals, there is a
holding that the Executive was not entitled to the defense and indemnification
under this provision.
XIX. Amendments, Waivers, Etc.
This Agreement may not be amended, changed, supplemented, waived or
otherwise modified or terminated except by an instrument in writing signed by
the Company and Executive.
XX. Successors and Assigns.
Except as otherwise provided herein, this Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by the parties and their
respective successors and assigns, including without limitation in the case of
any corporate party hereto any corporate successor by merger or otherwise;
provided that no party may assign this Agreement without the other party's prior
written consent.
XXI. Entire Agreement.
This Agreement embodies the entire agreement and understanding between the
parties relating to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter.
XXII. Governing Law.
This Agreement shall be governed by and construed in accordance with the
domestic substantive law of the Commonwealth of Virginia, without giving effect
to any choice or conflict of law provision or rule that would cause the
application of the law of any other jurisdiction.
XXIII. Name, Captions.
The name assigned to this Agreement and the section captions used herein
are for convenience of reference only and shall not affect the interpretation or
construction hereof.
XXIV. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies each signed
by less than all, but together signed by all, the parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WITNESS:
______________________________ /s/ John L. Hobey
John L. Hobey
ATTEST: OPEN PLAN SYSTEMS, INC.
_________________________________ By: /s/ Anthony F. Markel
Anthony F. Markel
Chairman of the Board
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective the 17th day of June, 1998, by and between
WILLIAM F. CRABTREE, an individual residing in the County of Ingham, Michigan
(the "Executive") and OPEN PLAN SYSTEMS, INC., a Virginia corporation with
corporate offices located at 4299 Carolina Avenue, Richmond, Virginia (the
"Company").
WITNESSETH:
WHEREAS, pursuant to the terms of that certain Management and Consulting
Agreement, dated June 17, 1998, between the Company and Great Lakes Capital,
Inc., the Company has appointed the Executive to the position of Chief Financial
Officer of the Company and wants to assure itself of the benefit of the
Executive's services and experience; and
WHEREAS, the Executive has assumed the position of Chief Financial Officer
and is willing to work in the employ of the Company upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
I. Term Of Employment.
(A) The term of the employment of the Executive under this Agreement shall
be for an eighteen (18)-month period commencing on June 17, 1998, and ending on
December 16, 1999.
(B) Notwithstanding the foregoing provision (A) of this Section I., the
term of employment of the Executive under this Agreement shall be subject to
earlier termination by:
(1) determination of disability of the Executive pursuant to Section IV.;
or
(2) dismissal of the Executive from his position as Chief Financial Officer
pursuant to resolution by the Board of Directors of the Company; or
(3) death of the Executive;
provided, however, that
(i) in the event of termination for determination of disability pursuant to
Paragraph (1) above, Section IV. shall apply;
(ii) in the event of termination pursuant to Paragraph (2) above for
"proper Cause" (defined in Section V.(A)), Section V.(B) shall apply;
(iii) in the event of termination pursuant to Paragraph (2) above without
"Proper Cause" (defined in Section V.(A)), Section VI. shall apply; or
(iv) in the event of termination due to the death of the Executive pursuant
to Paragraph (3) above, Section VII. shall apply.
II. Services To Be Rendered.
The Company agrees to employ the Executive as the Chief Financial Officer
of the Company, subject to the terms, conditions and provisions of this
Agreement. The Executive hereby accepts such employment and agrees that he shall
devote the proper degree of skill and diligence in rendering services to the
Company under this Agreement. The Executive shall report to and be subject to
the direction of the Board of Directors of the Company. The Executive agrees
that his employment as Chief Financial Officer of the Company pursuant to this
Agreement is a full time position, based at the Company's headquarters located
in Richmond, Virginia and that Executive will relocate to Richmond, Virginia for
the purpose of fulfilling his obligations hereunder. The Executive shall not
accept or retain any position as a director, officer, employee or agent of any
for-profit business organization which is unaffiliated with the Company without
prior approval of the Board of Directors of the Company (which approval will not
be unreasonably withheld).
III. Compensation.
In consideration for the services rendered to the Company under this
Agreement, the Company shall pay and provide to the Executive the following
compensation and benefits:
(A) Salary.
The Company shall pay the Executive an annual base salary of $120,000.00,
payable in twelve equal monthly installments on the Company's regularly
scheduled pay days and commencing with the first pay day following the date of
this Agreement. This annual base salary shall be reviewed annually by the
Compensation Committee of the Board of Directors (the "Compensation Committee")
to consider appropriate increases, but in no event shall the amount of the base
salary be reduced.
(B) Annual Incentive Bonus.
In addition to the base salary to be paid to the Executive under Section
III.(A), the Executive shall also be entitled to an annual incentive bonus as
established and modified, from time to time, by the Compensation Committee.
(C) Ancillary Benefits.
(1) The Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses approved in writing by the Chairman of the Board of
Directors of the Company, which approval shall not be unreasonably withheld,
incurred by the Executive in connection with his relocation to Richmond,
Virginia.
(2) The Executive shall also be entitled to other ancillary benefits
provided by the Company, consistent with the compensation policies and practices
of the Company from time to time, prevailing with respect to persons who are
executive officers of the Company.
IV. Disability.
(A) The term of employment of the Executive may be terminated at the
election of the Company upon a determination by the Board of Directors of the
Company, made based upon a qualified medical opinion, that the Executive will be
unable, by reason of physical or mental incapacity, to perform the reasonably
expected or customary duties of Chief Financial Officer of the Company on a
full-time basis for a period longer than three (3) consecutive months or more
than six (6) months in any consecutive twelve (12)-month period. In the exercise
of its determination, the Board of Directors shall give due consideration to the
opinion of the Executive's personal physician or physicians and to the opinion
of any physician or physicians selected by the Board of Directors for these
purposes. If the Executive's personal physician disagrees with the physician
retained by the Company, the Board of Directors will retain an impartial
physician selected by the Executive's personal physician and the Company's
physician and the opinion of the impartial physician shall be binding upon the
Company and the Executive. The Executive shall submit to examination by any
physician or physicians so selected by the Board of Directors, and shall
otherwise cooperate with the Board of Directors in making the determination
contemplated hereunder, such cooperation to include, without limitation,
consenting to the release of information by any such physician(s) to the Board
of Directors. Notwithstanding the foregoing, the Corporation shall comply with
all requirements of the Americans with Disabilities Act, 42 U.S.C. 12101 et.
seq.
(B) In the event of such termination for disability, the Company shall
thereupon be relieved of its obligations to pay any compensation and benefits
under Section III., except for accrued and unpaid items, but shall, in addition,
pay to the Executive such disability compensation as set forth in any disability
plan established by the Company for its executive offices.
V. Termination For Proper Cause.
(A) The occurrence of any of the following events shall constitute "Proper
Cause" for termination of the employment of the Executive under this Agreement,
at the election of the Board of Directors of the Company:
(1) the Executive shall voluntarily resign as a director, officer or
employee of the Company without the prior written consent of the Board of
Directors of the Company;
(2) the Executive shall fail to favorably perform as Chief Financial
Officer based on a reasonable determination made by the Board of Directors of
the Company and fail to cure such deficient performance within five (5) calendar
days after receiving notice of such deficient performance from the Company;
(3) the Executive shall fail to fulfill his duties and obligations as Chief
Financial Officer on a full time basis from the Company's headquarters located
in Richmond, Virginia except as otherwise agreed or approved by the Chairman of
the Board of Directors of the Company;
(4) the Executive shall breach this Agreement in any material respect and
fail to cure such breach within five (5) calendar days after receiving written
notice of such breach from the Company; or
(5) the commission of a fraud, or other criminal act, by the Executive
directly involving the Company or any Affiliates of the Company which would
constitute a felony if prosecuted under criminal law.
(B) In the event of termination of the Executive's employment pursuant to
Section I.(B)(2) for Proper Cause, the Company shall thereupon be relieved of
its obligations to pay any compensation and benefits under Section III., except
for accrued and unpaid items.
VI. Termination Without Proper Cause.
In the event of termination of the Executive pursuant to Section I.(B)(2)
without Proper Cause (as defined in Section V.(A) above), the Company shall
thereafter be and remain obligated to pay to the Executive (or his estate or
designated beneficiary) the compensation and benefits provided under Section
III.(A) and III.(B) and such benefits under III.(C) as are payable to a
terminated employee until expiration of the eighteen (18)-month term of
employment established by Section I.(A). In the event of a dispute as to whether
Executive was terminated for or without "Proper Cause," or regarding the amount
of compensation Executive is entitled to receive under this Section VI., the
Company shall be obligated to continue to pay to the Executive (or his estate or
designated beneficiary) all of the compensation and benefits reserved under
Section III. until the dispute is resolved by an arbitrator pursuant to Section
XVII. hereof.
VII. Death.
In the event of termination of the Executive's employment pursuant to
Section I.(B)(3) above, the Company shall pay the Executive's estate or
designated beneficiary such death benefits as may be set forth in any life
insurance plan established by the Company for its executive officers plus all
accrued and unpaid items.
VIII. Confidentiality.
For purposes of this Agreement, "Confidential Information" shall mean any
information of a proprietary or confidential nature and trade secrets of the
Company and Affiliates of the Company relating to the business of the Company
and Affiliates of the Company that have not previously been publicly released by
duly authorized representatives of the Company. The Executive agrees to regard
and preserve as confidential all Confidential Information pertaining to the
Company's business that has been or may be obtained by the Executive in the
course of his employment with the Company, whether he has such information in
his memory or in writing or other physical form. The Executive shall not,
without written authority from the Company to do so, use for his personal
benefit or his personal purposes, unrelated to business of the Company, nor
disclose to others, either during the term of his employment hereunder or for
five (5) years thereafter, except as required by the conditions of his
employment hereunder, any Confidential Information of the Company. This
provision shall not apply after the Confidential Information has been
voluntarily disclosed to the public by a duly authorized representative of the
Company, independently developed and disclosed by others, or otherwise enters
the public domain through lawful means.
IX. Removal Of Documents Or Objects.
The Executive agrees not to remove from the premises of the Company, except
as an officer, director or employee of the Company in pursuit of the business of
the Company or any Affiliates of the Company, or except as specifically
permitted in writing by the Company, any document or object containing or
reflecting any Confidential Information of the Company. The Executive recognizes
that all documents or material containing Confidential Information developed by
him or by someone else in the course of employment by the Company, are the
exclusive property of the Company.
X. Nonpiracy Covenants.
(A) For the purpose of this Agreement, the following terms shall have the
following meanings:
(1) "OPS Customers" shall be limited to those customers of the Company or
Affiliates of the Company for whom the Company or Affiliates of the Company are
rendering services as of the date of termination of the Executive's employment;
(2) "Affiliates of the Company" shall have the meaning ascribed to such
term in Rule 12b-2 under the Exchange Act as in effect on the date of this
Agreement;
(3) "Prohibited Services" shall mean services in the new and remanufactured
office furniture industry performed by the Company or Affiliates of the Company,
their agents or employees in any other business engaged in by the Company or
Affiliates of the Company on the date of termination of the Executive's
employment;
(4) "Prospective Customers" shall be limited to those parties known by the
Executive to have been solicited for business within any Prohibited Services
within the twelve (12)-month period preceding the date of termination of the
Executive's employment, and with or from whom, within the twelve (12)-month
period preceding the date of termination of the Executive's employment, someone
acting on behalf of the Company or Affiliates of the Company either had met for
the purpose of offering any Prohibited Services or had received a written
response to an earlier solicitation to provide any Prohibited Services;
(5) "Restricted Period" shall mean the period of five (5) years immediately
following the date of termination of the Executive's employment.
(B) The Executive recognizes that over a period of years the Company has
developed, at considerable expense, relationships with, and knowledge about,
Customers and Prospective Customers which constitute a major part of the value
of the Company. During the course of his employment by the Company, the
Executive will either have substantial contact with, or obtain substantial
knowledge about, these Customers and Prospective Customers. In order to protect
the value of the Company's business, the Executive covenants and agrees that, in
the event of the termination of his employment, but only if said termination is
voluntary or for Proper Cause, he shall not, directly or indirectly, for his own
account or for the account of any other person or entity, as an owner,
stockholder, director, employee, partner, agent, broker, consultant or other
participant during the Restricted Period:
(1) solicit a Customer for the purpose of providing Prohibited Services to
such Customer;
(2) accept an invitation from a Customer for the purpose of providing
Prohibited Services to such Customer;
(3) solicit a Prospective Customer for the purpose of providing Prohibited
Services to such Prospective Customer; and
(4) accept an invitation from a Prospective Customer for the purpose of
providing Prohibited Services to such Prospective Customer.
Subsections (1), (2), (3), and (4) are separate and divisible covenants; if
for any reason any one covenant is held to be illegal, invalid or unenforceable,
in whole or in part, the remaining covenants shall remain valid and enforceable
and shall not be affected thereby. Further, the periods and scope of the
restrictions set forth in any such subsection shall be reduced by the minimum
amount necessary to reform such subsection to the maximum level of enforcement
permitted to the Company by the law governing this Agreement. Additionally, the
Executive agrees that no separate geographic limitation is needed for the
foregoing nonpiracy covenants as such are not a prohibition on the Executive's
employment in the new and remanufactured office furniture industry and are
already limited to only those entities which are included within the definition
of "Customer" and "Prospective Customer."
XI. Nonraiding of Employees.
(A) Executive covenants that during the term of this Agreement, he will not
solicit, induce or encourage for the purposes of employing or offering
employment to, or directly or indirectly solicit, induce or encourage to seek
employment with any other business, whether or not Executive is then affiliated
with such business, any individual who is then an employee of OPS or its
Affiliates, including John L. Hobey ("Hobey");
(B) Executive covenants that, during the Restricted Period specified in
Section X(A) hereof, but only if said termination is voluntary or for Proper
Cause, he will not solicit, induce or encourage for the purposes of employing or
offering employment to, or directly or indirectly solicit, induce or encourage
to seek employment with any other business, whether or not Executive is then
affiliated with such business, any individual who, as of the date of termination
of Executive's employment hereunder, is an employee of OPS or its Affiliates,
other than Hobey;
(C) Executive covenants that, if prior to the expiration or termination of
this Agreement, (i) OPS terminates Executive for Proper Cause (as defined in his
Employment Agreement) or (ii) Executive voluntarily resigns as an employee of
OPS, Executive will not initiate the solicitation or inducement for the purposes
of employing or offering employment to, or directly or indirectly initiate the
solicitation or inducement to seek employment with any other business, whether
or not Executive is then affiliated with such business, of Hobey, until the
later of (x) the expiration or termination of this Agreement or (y) six (6)
months after such termination for Proper Cause or voluntary resignation of
Hobey.
XII. Notification of Former and New Employment.
During the term of this Agreement and the Restricted Period specified in
Section X. hereof, but only if the termination of employment by the Executive is
voluntary or for Proper Cause, the Executive covenants to notify any prospective
employer or joint venturer, which is a competitor of the Company of this
Agreement with the Company; and if the Executive accepts employment or
establishes a relationship with such competitor, the Executive covenants to
notify the Company immediately of such relationship. If the Company reasonably
believes that the Executive is affiliated or employed by or with a competitor of
the Company during the Restricted Period, after termination of his employment
voluntarily or for Proper Cause, then the Executive grants the Company the right
to forward a copy of this Agreement to such competitor.
XIII. Remedies Upon Employee Breach of Agreement.
If the Executive materially breaches any provision of this Agreement and
fails to cure any such material breach within five (5) days after written notice
of said material breach is received from the Company, the Company reserves the
right to avail itself of any reasonable remedy available to it at law or in
equity. Further, if the Executive fails to cure any such material breach after
five (5) days from receipt of written notice of the material breach, the Company
may, at its sole option, employ reasonable disciplinary procedures against the
Executive for any material breach, up to and including discharge. The Executive
acknowledges and agrees that the Company shall be entitled to injunctive relief
against the Executive for any material violation by the Executive of Sections
VIII. IX., X., XI., or XII. of this Agreement which the Executive fails to cure
within five (5) days after receipt of written notice from the Company. The
Executive agrees that the foregoing remedies shall be cumulative and not
exclusive, shall not be waived by any partial exercise or nonexercise thereof
and shall be in addition to any other remedies available to the Company at law
or in equity.
XIV. Tolling of Restrictive Covenants During Violation.
If a material breach by the Executive of any of the restrictive covenants
of this Agreement occurs, the Executive agrees that the restrictive period of
each such covenant so materially violated shall be extended by a period of time
equal to the period of such material violation by the Executive. It is the
intent of this Section that the running of the restricted period of a
restrictive covenant shall be tolled during any period of material violation of
such covenant so that the Company shall get the full and reasonable protection
for which it contracted and so that the Executive may not profit by his material
breach.
XV. Notices.
All notices and other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been given
if delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid:
(A) If to the Company, to it at the following address:
4299 Carolina Avenue
Building C
Richmond, Virginia 23222
Telecopier: (804) 228-5656
Attn: Chairman of the Board
with a copy to:
Williams Mullen Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Telecopier: (804) 783-6507
Attention: Theodore L. Chandler, Jr., Esquire
(B) If to the Executive, to him at the following address:
William Crabtree
4925 North Williamston Road
Williamston, Michigan 48895
or to such other place as either party shall have specified by notice in
writing to the other. A copy of any notice or other communication given under
this Agreement shall also be sent to the Secretary and the Treasurer of the
Company addressed to such officers at the then principal office of the Company.
XVI. Governmental Regulation.
Nothing contained in this Agreement shall be construed so as to require
commission of any act contrary to law and whenever there is any conflict between
any provision of this Agreement and any statute, law, ordinance, order or
regulation, the latter shall prevail, but in such event any such provision of
this Agreement shall be curtailed and limited only to the extent necessary to
bring it within the legal requirements.
XVII. Arbitration.
Any dispute or controversy as to the interpretation, construction,
application or enforcement of, or otherwise arising under or in connection with
this Agreement, shall be submitted at the request of either party hereto for
mandatory, final and binding arbitration in the City of Richmond, Virginia, in
accordance with the applicable arbitration rules then prevailing of the American
Arbitration Association. The Company and Executive waive the right to submit any
controversy or dispute to a Court and/or a jury. Any award rendered therein
shall provide the full remedies available to the parties under the applicable
law and shall be final and binding on each of the parties hereto and their
heirs, executors, administrators, successors and assigns and judgment may be
entered thereon in any court having jurisdiction.
XVIII. Indemnification by the Company.
The Company shall defend, indemnify and hold harmless the Executive against
any all claims, causes of actions, damages and expenses (including all legal
fees and expenses) in any threatened, pending or completed action, arising out
of or relating in any way to action or conduct by the Executive by reason of the
fact that he was a representative of the Company or was serving at the request
of the Company or acts or conduct within the course of his employment pursuant
to this Agreement or in his capacity as a director of the Company. If the
Company contends that any action or conduct by the Executive was not within the
course of his employment or is otherwise not subject to this provision, the
Company shall pay to the Executive all defense costs and expenses to defend such
an action and shall only be entitled to reimbursement of such fees and expenses
if after a final adjudication, including all available appeals, there is a
holding that the Executive was not entitled to the defense and indemnification
under this provision.
XIX. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia without reference to principles of
conflicts of laws.
XX. Divisibility.
Should an arbitrator declare any provision of this Agreement to be invalid,
such declaration shall not affect the validity of the remaining portion of any
such provision or the validity of any other term or provision of the Agreement
as a whole or any part thereof, other than the specific portion declared to be
invalid.
XXI. Headings.
The headings to the Sections and Paragraphs of this Agreement are for
convenience of reference only and in case of any conflict the text of this
Agreement, rather than the headings, shall control.
XXII. Successors and Assigns.
This Agreement is binding upon and shall inure to the benefit of the
successors and assigns of the Company and the heirs, executors and legal
representatives of the Executive.
XXIII. Entire Agreement.
This Agreement contains the entire understanding of the parties with
respect to the subject matter contained herein and supersedes all prior
agreements, arrangements and understandings relating to the subject matter and
may only be amended by a written agreement signed by the parties hereto or their
duly authorized representatives.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WITNESS:
_______________________________ /s/ William F. Crabtree
William F. Crabtree
ATTEST: OPEN PLAN SYSTEMS, INC.
________________________________ By: /s/ Anthony F. Markel
Anthony F. Markel
Chairman of the Board
