<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1996
REGISTRATION NO. 333-4276
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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REMEDYTEMP, INC.
(Exact name of registrant as specified in its charter)
32122 CAMINO CAPISTRANO
SAN JUAN CAPISTRANO, CALIFORNIA 92675
(714) 661-1211
(Address, including zip code, and telephone number, including area code, of
Registrant's Principal Executive Offices)
<TABLE>
<S> <C> <C>
CALIFORNIA 7363 95-2890471
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code Identification No.)
Number)
</TABLE>
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ROBERT E. MCDONOUGH, SR.
CHAIRMAN OF THE BOARD
REMEDYTEMP, INC.
32122 CAMINO CAPISTRANO
SAN JUAN CAPISTRANO, CALIFORNIA 92675
(714) 661-1211
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------
COPIES TO:
WALTER L. SCHINDLER, ESQ.
BRIAN W. COPPLE, ESQ.
GIBSON, DUNN & CRUTCHER LLP
4 PARK PLAZA, SUITE 1700
IRVINE, CALIFORNIA 92714
(714) 451-3800
SCOTT F. SMITH, ESQ.
STEPHEN A. INFANTE, ESQ.
HOWARD, DARBY & LEVIN
1330 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 841-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(e)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 3 to Registration Statement is filed solely for the
purpose of filing certain required exhibits not previously filed.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS.
Set forth below is a list of the exhibits included as part of this
Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
4.1 Specimen Stock Certificate
4.2 Shareholder Rights Agreement
5.1 Opinion of Gibson, Dunn & Crutcher LLP
10.1 Robert E. McDonough, Sr. Amended and Restated Employment Agreement
10.2 Paul W. Mikos Employment Agreement
10.3 R. Emmett McDonough Employment Agreement(1)
10.4 Allocation Agreement with R. Emmett McDonough and Related Trusts(1)
10.5 Registration Rights Agreement with R. Emmett McDonough and Related Trusts(1)
10.6 Letter regarding terms of employment and potential severance of Alan M. Purdy(1)
10.7 Deferred Compensation Agreement for Alan M. Purdy(1)
10.8 Letter regarding potential severance of Jeffrey A. Elias(1)
10.9 Form of Indemnification Agreement(1)
10.10 Lease Agreement between RemedyTemp, Inc. and Robert E. McDonough, Sr.(1)
10.11 RemedyTemp, Inc. 1996 Stock Incentive Plan
10.12 RemedyTemp, Inc. 1996 Employee Stock Purchase Plan
10.13 Form of Franchising Agreement for Licensed Offices(1)
10.14 Form of Franchising Agreement for Franchised Offices(2)
10.15 Form of Licensing Agreement for IntellisearchSM(1)
10.16 Credit Agreement among Bank of America National Trust and Savings Association,
Union Bank and RemedyTemp, Inc., as amended(1)
10.17 Paul W. Mikos Promissory Note(1)
10.18 Registration Rights Agreement with Robert E. McDonough, Sr.
11.1 Statement Regarding Computation of Per Share Earnings(3)
23.1 Consent of Price Waterhouse LLP(3)
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5)
24.1 Powers of Attorney(1)
27.1 Financial Data Schedule(2)
99.1 Consent of James L. Doti, Ph.D.(2)
</TABLE>
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* To be filed by amendment.
(1) Previously filed with this Registration Statement on May 1, 1996.
(2) Previously filed with Amendment No. 1 to this Registration Statement on June
7, 1996.
(3) Previously filed with Amendment No. 2 to this Registration Statement on June
17, 1996.
II-1
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Juan Capistrano, State of California, on July 5, 1996.
REMEDYTEMP, INC.
(Registrant)
By: /s/ Paul W. Mikos
------------------------------------
Paul W. Mikos
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ Robert E. McDonough, Sr. Director, Chairman of the Board July 5, 1996
- -------------------------------------
Robert E. McDonough, Sr.
/s/ Paul W. Mikos Director, President and Chief July 5, 1996
- ------------------------------------- Executive Officer (Principal
Paul W. Mikos Executive Officer)
/s/ Alan M. Purdy Chief Financial Officer (Principal July 5, 1996
- ------------------------------------- Financial Officer and Principal
Alan M. Purdy Accounting Officer)
* Director July 5, 1996
- -------------------------------------
Susan McDonough Mikos
* Director July 5, 1996
- -------------------------------------
John P. Unroe
* Director July 5, 1996
- -------------------------------------
John Zaepfel
*By: /s/ Alan M. Purdy
- -------------------------------------
Alan M. Purdy
Attorney-in-Fact
</TABLE>
II-2
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
4.1 Specimen Stock Certificate
4.2 Shareholder Rights Agreement
5.1 Opinion of Gibson, Dunn & Crutcher LLP
10.1 Robert E. McDonough, Sr. Amended and Restated Employment Agreement
10.2 Paul W. Mikos Employment Agreement
10.3 R. Emmett McDonough Employment Agreement(1)
10.4 Allocation Agreement with R. Emmett McDonough and Related Trusts(1)
10.5 Registration Rights Agreement with R. Emmett McDonough and Related Trusts(1)
10.6 Letter regarding terms of employment and potential severance of Alan M. Purdy(1)
10.7 Deferred Compensation Agreement for Alan M. Purdy(1)
10.8 Letter regarding potential severance of Jeffrey A. Elias(1)
10.9 Form of Indemnification Agreement(1)
10.10 Lease Agreement between RemedyTemp, Inc. and Robert E. McDonough, Sr.(1)
10.11 RemedyTemp, Inc. 1996 Stock Incentive Plan
10.12 RemedyTemp, Inc. 1996 Employee Stock Purchase Plan
10.13 Form of Franchising Agreement for Licensed Offices(1)
10.14 Form of Franchising Agreement for Franchised Offices(2)
10.15 Form of Licensing Agreement for IntellisearchSM(1)
10.16 Credit Agreement among Bank of America National Trust and Savings Association,
Union Bank and RemedyTemp, Inc., as amended(1)
10.17 Paul W. Mikos Promissory Note(1)
10.18 Registration Rights Agreement with Robert E. McDonough, Sr.
11.1 Statement Regarding Computation of Per Share Earnings(3)
23.1 Consent of Price Waterhouse LLP(3)
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5)
24.1 Powers of Attorney(1)
27.1 Financial Data Schedule(2)
99.1 Consent of James L. Doti, Ph.D.(2)
</TABLE>
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* To be filed by amendment.
(1) Previously filed with this Registration Statement on May 1, 1996.
(2) Previously filed with Amendment No. 1 to this Registration Statement on June
7, 1996.
(3) Previously filed with Amendment No. 2 to this Registration Statement on June
17, 1996.
<PAGE> 1
Exhibit 1.1
Draft 6.4.96
REMEDYTEMP, INC.
CLASS A COMMON STOCK
($0.01 Par Value)
UNDERWRITING AGREEMENT
, 1996
<PAGE> 2
UNDERWRITING AGREEMENT
, 1996
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, New York 10022
The Robinson-Humphrey Company, Inc.
Atlanta Financial Center
3333 Peachtree Road, N.E.
Atlanta, Georgia 30326
as Managing Underwriters
Dear Sirs:
RemedyTemp, Inc., a California corporation (the "Company"),
proposes to issue and sell, and the persons named in Schedule B (the "Selling
Shareholders") propose to sell, to the underwriters named in Schedule A (the
"Underwriters") an aggregate of 3,100,000 shares (the "Firm Shares") of Class A
Common Stock, par value $ 0.01 per share (the "Class A Common Stock"), of the
Company, of which 1,715,000 shares are to be issued and sold by the Company and
an aggregate of 1,385,000 shares are to be sold by the Selling Shareholders in
the respective amounts set forth opposite their names in Schedule B. In
addition, solely for the purpose of covering over-allotments, the Company
proposes to issue and sell, and the Selling Shareholder propose to sell in the
respective amounts set forth opposite their names in Schedule B, to the
Underwriters, at the Underwriters' option, up to 155,000 and 310,000 additional
shares, respectively, of Class A Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are collectively referred to as the
"Shares." The Shares are described in the Prospectus which is referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1, including a prospectus,
relating to the Shares. The Company has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses
(collectively, the "Preliminary Prospectus") relating to the Shares. Except
where the context otherwise requires, the registration statement as in effect at
the time of execution of this Agreement or, if the registration statement is not
yet effective, as amended when it becomes effective, including all documents
filed as a part thereof, and including any registration statement filed pursuant
to Rule 462(b) under the Act increasing the size of the offering registered
under the Act and any information contained in a
<PAGE> 3
prospectus subsequently filed with the Commission pursuant to Rule 424(b) under
the Act and deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is herein called the
"Registration Statement," and the prospectus in the form filed by the Company
with the Commission pursuant to Rule 424(b) under the Act or, if no such filing
is required, in the form of final prospectus included in the Registration
Statement at the time it became effective, is herein called the "Prospectus."
The Company, the Selling Shareholders and the Underwriters agree
as follows:
1. Sale and Purchase. On the basis of the representations and
warranties and the other terms and conditions herein set forth, each of the
Company and each Selling Shareholder, severally and not jointly, agrees to sell
to the respective Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase from the Company and each Selling Shareholder the
respective number of Firm Shares (subject to such adjustment as you may
determine to avoid fractional shares) which bears the same proportion to the
number of Firm Shares to be sold by the Company or by that Selling Shareholder,
as the case may be, as the number of Firm Shares set forth opposite the name of
such Underwriter on Schedule A bears to the total number of Firm Shares to be
sold by the Company and the Selling Shareholders, in each case at a purchase
price of $____ per Share. You may release the Firm Shares for public sale
promptly after this Agreement becomes effective. You may from time to time
increase or decrease the public offering price after the initial public offering
to such extent as you may determine.
In addition, on the basis of the representations and warranties
and the other terms and conditions herein set forth, the Company and the Selling
Shareholders hereby grant to the several Underwriters an option to purchase, and
the Underwriters shall have the right to purchase, severally and not jointly,
from the Company and the Selling Shareholders all or a portion of the Additional
Shares as may be necessary to cover over-allotments made in connection with the
offering of the Firm Shares, at the same purchase price per share to be paid by
the several Underwriters to the Company and the Selling Shareholders for the
Firm Shares. This option may be exercised in whole or in part from time to time
on or before the thirtieth day following the date hereof, by written notice to
the Company and the Selling Shareholders. Any such notice shall set forth the
aggregate number of Additional Shares as to which the option is being exercised,
and the date and time when the Additional Shares are to be delivered (any such
date and time being herein referred to as an "additional time of purchase");
provided, however, that no additional time of purchase shall occur earlier than
the time of purchase (as defined below) nor earlier than the second business
day* after the date on which the option shall have been exercised nor later than
the eighth business day after the date on which the option shall have been
exercised. The notice shall also set forth the aggregate number of Additional
Shares to be sold by each of the Company and each Selling Shareholder at an
additional time of purchase, which in each case shall equal the product of (i)
the maximum number of Additional Shares which may be purchased from the Company
and each Selling Shareholder pursuant to the option (as indicated in the first
paragraph of this
- --------
* As used herein, "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
-2-
<PAGE> 4
Agreement) and (ii) a fraction, the numerator of which is the aggregate number
of Additional Shares as to which the option is being exercised at such
additional time of purchase, and the denominator of which is 465,000 (subject,
in each case to such adjustment as you may determine to eliminate fractional
shares). The number of respective Additional Shares to be sold by each of the
Company and each Selling Shareholder to each Underwriter at an additional time
of purchase shall be the number which bears the same proportion to the aggregate
number of Additional Shares being purchased from the Company or that Selling
Shareholder, as the case may be, at such additional time of purchase as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A bears to the total number of Firm Shares (subject, in each case, to
such adjustment as you may determine to eliminate fractional shares).
2. Payment and Delivery. Payment of the purchase price for the
Firm Shares shall be made to the Company and to the Attorney-in-Fact referred to
in Section 4(d) on behalf of the Selling Shareholders by certified or official
bank checks, in New York Clearing House funds, at the office of Dillon, Read &
Co. Inc. in New York City, against delivery of the certificates for the Firm
Shares to you for the respective accounts of the Underwriters. Such payment and
delivery shall be made at 9:30 A.M., New York City time, on ____________, 1996
(unless another time shall be agreed to by you, the Company and the Selling
Shareholders or unless postponed in accordance with the provisions of Section
9). The time at which such payment and delivery are actually made is called the
"time of purchase." Certificates for the Firm Shares shall be delivered to you
in definitive form in such names and in such denominations as you shall specify
on the second business day preceding the time of purchase. For the purpose of
expediting the checking of the certificates for the Firm Shares by you, the
Company and the Selling Shareholders agree to make such certificates available
to you for such purpose at least one full business day preceding the time of
purchase.
Payment of the purchase price for the Additional Shares shall be
made to the Company and to the Attorney-in-Fact on behalf of the Selling
Shareholders at the additional time of purchase in the same manner and at the
same office as the payment for the Firm Shares. Certificates for the Additional
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify on the second business day preceding the
additional time of purchase. For the purpose of expediting the checking of the
certificates for the Additional Shares by you, the Company and the Selling
Shareholders agree to make such certificates available to you for such purpose
at least one full business day preceding the additional time of purchase.
3. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) Each Preliminary Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the Act; when the Registration
Statement becomes or became effective and at all times subsequent
thereto up to the time of purchase and the additional time of purchase,
the Registration Statement and the Prospectus, and any supplements or
amendments thereto, complied and will comply in all
-3-
<PAGE> 5
material respects with the provisions of the Act; and the Registration
Statement at all such times did not and will not contain 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, and the Prospectus at all such times did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representation or warranty with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in
conformity with information concerning the Underwriters and furnished
in writing by or on behalf of any Underwriter through you to the
Company expressly for use in the Registration Statement or the
Prospectus and set forth in the section of the Registration Statement
and the Prospectus entitled "Underwriting."
(b) As of the date of this Agreement, the Company has an
authorized capitalization as set forth under the column entitled "March
31, 1996 Actual" in the section of the Registration Statement and the
Prospectus entitled "Capitalization" and, as of the time of purchase,
the capitalization of the Company will be as set forth under the column
entitled "March 31, 1996 Pro Forma As Adjusted" in the section of the
Registration Statement and the Prospectus entitled "Capitalization";
all of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and nonassessable and are free of statutory and contractual preemptive
rights.
(c) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of California with full power and authority to (i) own its properties
and conduct its business as described in the Registration Statement and
the Prospectus and (ii) execute and deliver this Agreement and to
issue, sell and deliver the Shares as herein contemplated. The
Company's Amended and Restated Articles of Incorporation and Amended
and Restated Bylaws (each in the form included as an exhibit to the
Registration Statement) have been duly authorized and adopted and are
in full force and effect as the Company's articles of incorporation and
bylaws, respectively; the Reclassification and the 1.812 for 1 split of
the Company's Class A Common Stock and Class B Common Stock, par value
$0.01 per share (the "Class B Common Stock"), in each case as described
in the Registration Statement and the Prospectus, have been
consummated.
(d) The Company has no subsidiaries.
(e) The Company is duly qualified or licensed by and is in
good standing in each jurisdiction in which it owns or leases property
or conducts its business and in each other jurisdiction in which the
failure, individually or in the aggregate, to be so qualified or
licensed could have a material adverse effect on the properties,
assets, operations, business, business prospects or condition
(financial or other) of the Company.
-4-
<PAGE> 6
(f) The Company is not in breach of, or in default under (nor
has any event occurred which with notice, lapse of time or both would
constitute a breach of, or default under), its charter or bylaws, or in
the performance or observance of any obligation, agreement, covenant or
condition contained in any license, indenture, lease, mortgage, deed of
trust, bank loan or credit agreement, material supply agreement or
other agreement or instrument to which the Company is a party or by
which the Company or its properties may be bound or affected. The
execution, delivery and performance of this Agreement, the issuance of
the Shares and the consummation of the transactions contemplated hereby
will not conflict with, or result in any breach of or constitute a
default under (nor constitute any event which with notice, lapse of
time or both would constitute a breach of, or default under), the
charter or bylaws of the Company or under any provision of any license,
indenture, lease, mortgage, deed of trust, bank loan or credit
agreement, material supply agreement or other agreement or instrument
to which the Company is a party or by which the Company or its
properties may be bound or affected, or under any federal, state, local
or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company.
(g) The Firm Shares and the Additional Shares, when issued and
delivered to and paid for by the Underwriters as contemplated hereby,
will be duly authorized and validly issued and fully paid and
nonassessable, free and clear of any pledge, lien, encumbrance,
security interest, preemptive right or other claim.
(h) This Agreement has been duly authorized, executed and
delivered by the Company.
(i) The capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained
in the Registration Statement and the Prospectus; and the certificates
for the Shares are in due and proper form and the holders of the Shares
after making payment therefor will not be subject to personal liability
by reason of being such holders. Each share of Class A Common Stock and
Class B Common Stock to be outstanding after giving effect to the sales
contemplated hereby, including the Shares, will have attached thereto
one right (collectively, the "Rights") to purchase one-thousandth of a
share of Series A Junior Participating Preferred Stock, par value $0.01
per share (the "Series A Preferred Stock"), of the Company. The Rights
are being issued pursuant to a Shareholders Rights Agreement, dated as
of June [__], 1996 (the "Rights Agreement"), between the Company and
American Stock Transfer & Trust Company, as Rights Agent. The Rights
Agreement has been duly authorized, executed and delivered by the
Company and constitutes the valid and binding agreement of the Company
and is enforceable against the Company in accordance with the terms
thereof; the Rights have been duly authorized by the Company and, when
issued upon issuance of the Shares, will be validly issued, and the
Series A Preferred Stock has been duly authorized by the Company and
validly reserved for issuance upon the exercise of the Rights and, when
issued upon such exercise in accordance with the terms of the Rights
Agreement, will be validly issued, fully paid and non-assessable. The
Class A Common Stock has been
-5-
<PAGE> 7
approved for quotation, subject to official notice of issuance, on the
Nasdaq National Market.
(j) No approval, authorization, consent or order of or filing
with any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares as contemplated hereby, other
than registration of the Shares under the Act, clearance of the
offering of the Shares with the National Association of Securities
Dealers, Inc. (the "NASD") and any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters.
(k) No person has the right, contractual or otherwise, to
cause the Company to issue to it any securities of the Company in
consequence of the issue and sale of the Shares to the Underwriters
hereunder. Each person who has the right, contractual or otherwise, to
cause the Company to register pursuant to the Act any securities of the
Company in consequence of the issue and sale of the Shares to the
Underwriters hereunder either included such securities in the
Registration Statement or duly waived such right.
(l) Price Waterhouse LLP, whose reports on the financial
statements of the Company are included in the Registration Statement
and the Prospectus, are independent public accountants with respect to
the Company as required by the Act and the applicable published rules
and regulations thereunder.
(m) All legal or governmental proceedings, contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required.
(n) There is no action, suit or proceeding pending or
threatened against the Company or any of its properties, at law or in
equity, or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency
that could result in a judgment, decree or order having a material
adverse effect on the properties, assets, operations, business,
business prospects or condition (financial or other) of the Company.
(o) The audited and unaudited financial statements included in
the Registration Statement and the Prospectus present fairly the
financial condition of the Company as of the dates indicated and the
results of operations and cash flows of the Company for the periods
specified; such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis during the periods involved. The pro forma financial data of the
Company included in the Registration Statement and the Prospectus are
based upon good faith estimates and assumptions believed by the Company
to be reasonable and have been prepared in accordance with the Act. No
other pro forma data is required by the Act to be included in the
Registration Statement or the Prospectus. The liability for accrued
workers' compensation costs and expenses set forth in the
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<PAGE> 8
Company's March 31, 1996 balance sheet included in the Registration
Statement and the Prospectus represents the Company's good faith
estimate as of such date (based upon assumptions believed by the
Company to be reasonable) of the Company's future costs with respect to
existing and incurred but not yet reported worker's compensation claims
covered by the Company's self-insurance program described in the
Registration and the Prospectus.
(p) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may be otherwise stated in the Registration Statement or the
Prospectus, there has not been: (i) any material adverse change in the
properties, assets, operations, business, business prospects or
condition (financial or other), present or prospective, of the Company;
(ii) any transaction contemplated or entered into by the Company that
is material to the Company; or (iii) any obligation, contingent or
otherwise, directly or indirectly incurred by the Company that is
material to the Company.
(q) The Company has obtained the agreement of the Company's
shareholders, directors and officers listed on Schedule C not to offer,
sell, contract to sell, grant any option to sell, transfer or otherwise
encumber or dispose of, directly or indirectly, any shares of Class A
Common Stock, or securities convertible into or exchangeable for Class
A Common Stock or warrants or other rights to purchase Class A Common
Stock for a period of 180 days from the date of the Prospectus without
the prior written consent of Dillon, Read & Co.
Inc.
(r) (i) The Company has been, and is, in compliance with all
applicable foreign, federal, state and local laws and regulations,
including without limitation those relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), federal and
state laws relating to employment of illegal aliens or to
discrimination in the hiring, promotion or pay of employees, federal
and state wages and hours laws and all applicable provisions of the
Employee Retirement Income Security Act and the rules and regulations
promulgated thereunder, except where the failure, individually or in
the aggregate, to be so in compliance would not have a material adverse
effect on the properties, assets, operations, business, business
prospects or condition (financial or other) of the Company.
(ii) The Company has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("permits"), including without limitation under any applicable
Environmental Laws, as are necessary to own, lease and operate its
properties and to conduct its business; the Company has fulfilled and
performed all of its material obligations with respect to such permits
and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such
permit; and, such permits contain no restrictions that are materially
burdensome to the Company.
-7-
<PAGE> 9
(iii) In the ordinary course of its business, the
Company conducts a periodic review of the effect of Environmental Laws
on the business, operations and properties of the Company, in the
course of which it identifies and evaluates associated costs and
liabilities (including without limitation any capital or operating
expenditure required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company reasonably has
concluded that such associated costs and liabilities, singly or in the
aggregate, would not have a material adverse effect on the properties,
assets, operations, business, business prospects or condition
(financial or other) of the Company.
(s) Neither the Company nor any employee of the Company has
made any payment of funds of the Company prohibited by law, and no
funds of the Company have been set aside to be used for any payment
prohibited by law.
(t) The Company has filed all federal or state income or
franchise tax returns required to be filed and has paid all taxes shown
thereon as due, and there is no material tax deficiency which has been
or might be asserted against the Company; all material tax liabilities
are adequately provided for on the books of the Company. The Company is
a "small business corporation" and has maintained a valid election to
be an "S corporation" under Subchapter S of the Internal Revenue Code
of 1986, as amended, and the equivalent provisions of all applicable
state income tax statutes since October 1, 1987.
(u) The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions
herein contemplated.
(v) (i) The Company has good title to all properties and
assets owned or leased by it, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, mortgages and
defects (except such as are described or referred to in the Prospectus
and the financial statements and the notes thereto contained therein or
such as do not interfere with the use made and proposed to be made of
such property by the Company).
(ii) The Company owns or possesses adequate rights to
use all patents, trademarks, trade names, service marks, copyrights,
trade secrets, know-how, technology, technical data and other rights
(collectively, "intellectual property") necessary for or incidental to
the conduct of its business as described in the Prospectus and the
Company has not received any notice of conflict with, or infringement
of, the asserted rights of others with respect to any such intellectual
property, and the Company does not know of any basis therefor. No
licenses or rights to intellectual property presently owned or held by
the Company are in dispute or are in any conflict with the right of any
other person or entity, and the Company (i) has the right to use, free
and clear of all liens, charges, claims, encumbrances, pledges,
security interests, defects, restrictions or equities of any kind
whatsoever all licenses and rights to the intellectual property used in
the conduct of its
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<PAGE> 10
business as now conducted or proposed to be conducted without
infringing upon or otherwise acting adversely to the right or claimed
right of any other person, and (ii) is not or will not be, as the case
may be, obligated or under any liability whatsoever to make any payment
by way of royalties, fees or otherwise (except as described in the
Prospectus) to any owner or licensee of, or other claimant to, any
intellectual property with respect to the use thereof or in connection
with the conduct of its business or otherwise.
(iii) The Company maintains insurance policies and
surety bonds including, but not limited to, general liability, workers'
compensation and property insurance, which insures the Company and its
employees against losses and risks severally insured against by
comparable companies in the temporary staffing services industry.
(w) The Company is not an "investment company" or a person
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and is not subject to
regulation under such Act.
4. Representations and Warranties of the Selling Shareholders.
Each Selling Shareholder, severally and not jointly, represents and warrants to
each Underwriter that:
(a) Such Selling Shareholder is and at the time of delivery of
the Shares to be sold by such Selling Shareholder will be the lawful
owner of the number of Shares or securities convertible into or
warrants exercisable for the number of Shares to be sold by such
Selling Shareholder pursuant to this Agreement and, at the time of
delivery thereof, will have valid and marketable title to such Shares,
and upon delivery of and payment for such Shares the Underwriters will
acquire valid and marketable title to such Shares free and clear of any
claim, lien, encumbrance, security interest, community property right,
restriction on transfer or other defect in title, assuming each of the
Underwriters has purchased the Shares purchased by it in good faith and
without notice of any adverse claim.
(b) Such Selling Shareholder has and at the time of delivery
of such Shares will have full legal right, power and capacity, and any
approval required by law to enter into this Agreement and the Power of
Attorney and Custody Agreement (as defined below) and to sell, assign,
transfer and deliver such Shares in the manner provided in this
Agreement.
(c) This Agreement and the Power of Attorney and Custody
Agreement executed by the Selling Shareholders (the "Power of Attorney
and Custody Agreement") among the Selling Shareholders and
[________________], as custodian, have been duly executed and delivered
by such Selling Shareholder. The Power of Attorney and Custody
Agreement is the legal, valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms.
(d) Such Selling Shareholder has duly and irrevocably
authorized the Attorney-inFact (as defined in the Power of Attorney and
Custody Agreement), on behalf of such Selling Shareholder, to execute
and deliver this Agreement and any other document
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<PAGE> 11
necessary or desirable in connection with the transactions contemplated
hereby and to deliver the Shares to be sold by such Selling Shareholder
and receive payment therefor pursuant hereto.
(e) The sale of the Shares by such Selling Shareholder
pursuant hereto is not prompted by any material adverse information
concerning the Company; and all information furnished in writing by or
on behalf of such Selling Shareholder specifically for use in the
Registration Statement and the Prospectus, and any supplement or
amendment thereto, is and will be when the Registration Statement
became effective and at all times subsequent thereto up to the time of
purchase and the additional time of purchase, true and correct and
complete and at all such times did not and will not contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(f) Neither the execution, delivery or performance of this
Agreement or the Power of Attorney and Custody Agreement by such
Selling Shareholder, the compliance by such Selling Shareholder with
the provisions hereof and thereof or the consummation of the
transactions contemplated hereby or thereby (i) requires the consent,
approval, authorization or order of any court or regulatory agency or
body (except such as have been obtained under the Act and such as may
be required by the NASD or under state securities or blue sky laws in
connection with the purchase and distribution by the Underwriters of
the Shares to be sold by such Selling Shareholder), or (ii) will
conflict with, or result in a breach or violation of, or constitute a
default under the terms of any agreement, contract, indenture, lease or
other instrument to which such Selling Shareholder is a party or by
which such Selling Shareholder or any of such Selling Shareholder's
properties are bound, or (iii) will conflict with or violate any law,
regulation or rule, or any decree, judgment, order, consent or
memorandum of understanding applicable to such Selling Shareholder of
any court, regulatory body, administrative agency or governmental body
or arbitrator having jurisdiction over such Selling Shareholder or such
Selling Shareholder's property.
(g) At the time of purchase or additional time of purchase, as
the case may be, all stock transfer or other taxes (other than income
taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold by such Selling Shareholder to the
Underwriters will have been fully paid or provided for by such Selling
Shareholder and all laws imposing such taxes will have been fully
complied with.
(h) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of any of the Shares.
5. Certain Covenants of the Company. The Company hereby
agrees:
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<PAGE> 12
(a) to furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale
under the securities or blue sky laws of such states as you may
designate and to maintain such qualifications in effect as long as
required for the distribution of the Shares, provided that the Company
shall not be required to qualify as a foreign corporation or to consent
to the service of process under the laws of any such state (except
service of process with respect to the offering and sale of the
Shares); promptly to advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and to use its best efforts to obtain
the withdrawal of any order of suspension at the earliest practicable
moment;
(b) to make available to you in New York City, as soon as
practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many
copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendment or supplement
thereto after the effective date of the Registration Statement) as the
Underwriters may request for the purposes contemplated by the Act;
(c) to advise you promptly and if requested by you to confirm
such advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes
effective and (ii) when the Prospectus is filed with the Commission
pursuant to Rule 424(b) under the Act, if required under the Act (which
the Company agrees to file in a timely manner under such Rule);
(d) to advise you promptly, confirming such advice in writing,
of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information
with respect thereto, or of notice of institution of proceedings for or
the entry of a stop order suspending the effectiveness of the
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its
best efforts to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal to amend or supplement
the Registration Statement or the Prospectus and to file no such
amendment or supplement to which you shall object in writing;
(e) to furnish to you and, upon request, to each of the other
Underwriters for a period of five years from the date of this Agreement
(i) copies of all reports or other communications that the Company
shall send to its shareholders or from time to time shall publish or
publicly disseminate and (ii) copies of all annual, quarterly and
current reports filed with the Commission on Forms 10-K, 10-Q and 8-K,
or such other similar form as may be designated by the Commission, and
any other document filed by the Company pursuant to Section 12, 13, 14
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
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<PAGE> 13
(f) to advise the Underwriters promptly of the happening of
any event known to the Company within the time during which a
prospectus relating to the Shares is required to be delivered under the
Act that, in the reasonable judgment of the Company, would require the
making of any change in the Prospectus then being used, so that the
Prospectus, as then supplemented, would not include an untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they are made, not misleading and, during such time, promptly to
prepare and furnish, at the Company's expense, to the Underwriters such
amendments or supplements to such Prospectus as may be necessary to
reflect any such change in such quantities as requested by the
Underwriters, and to furnish to you a copy of such proposed amendment
or supplement before filing any such amendment or supplement with the
Commission;
(g) to make generally available to its security holders, and
to deliver to you, an earnings statement of the Company (which need not
be audited and which will satisfy the provisions of Section 11(a) of
the Act including, at the option of the Company, Rule 158) covering a
period of 12 months beginning after the effective date of the
Registration Statement but ending not later than 15 months after the
date of the Registration Statement, as soon as is reasonably
practicable after the termination of such 12-month period;
(h) to furnish to you three signed copies of the Registration
Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) and sufficient
conformed copies of the foregoing (other than exhibits) for
distribution of a copy to each of the other Underwriters;
(i) to furnish to you as early as practicable prior to the
time of purchase and the additional time of purchase, as the case may
be, but not later than two business days prior thereto, a copy of the
latest available unaudited interim financial statements, if any, of the
Company that have been read by the Company's independent certified
public accountants as stated in their letter to be furnished pursuant
to Section 8(c);
(j) to apply the net proceeds from the sale of the Shares sold
by the Company in the manner set forth under the caption "Use of
Proceeds" in the Registration Statement and the Prospectus;
(k) to use its best efforts to maintain the quotation of the
Shares on the Nasdaq National Market;
(l) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement otherwise becomes effective
or is terminated, to pay all expenses, fees and taxes (other than fees
and disbursements of your counsel except as set forth under Section 7
and clauses (iii) and (iv) below) in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus and any amendment or supplement thereto, and
the printing and furnishing of copies of each thereof to you and to
dealers (including costs of mailing and shipment), (ii) the issuance,
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<PAGE> 14
sale and delivery of the Shares, (iii) the word processing or printing
of this Agreement and any dealer agreements, and the reproduction or
printing and furnishing of copies of each thereof to you and to dealers
(including costs of mailing and shipment), (iv) the qualification of
the Shares for offering and sale under state laws as aforesaid
(including legal fees and filing fees and other disbursements of your
counsel) and the printing and furnishing of copies of any blue sky
surveys to you and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for inclusion in the
Nasdaq National Market and any registration thereof under the Exchange
Act, (vi) any filing for review of the public offering of the Shares by
the NASD and (viii) the performance of the Company's and the Selling
Shareholders' other obligations hereunder;
(m) not to offer, sell, contract to sell, grant any option to
sell, transfer or otherwise encumber or dispose of, directly or
indirectly, any shares of Class A Common Stock or securities
convertible into or exchangeable for Class A Common Stock or warrants
or other rights to purchase Class A Common Stock or permit the
registration under the Act of any shares of Class A Common Stock, in
each case, for a period commencing on the date hereof and continuing
for 180 days after the date of the Prospectus, without the prior
written consent of Dillon, Read & Co. Inc., except for (i) the
registration of the Shares and the sales to you pursuant to this
Agreement, (ii) the issuance of Class A Common Stock upon the exercise
of options granted under the Company's 1996 Employee Stock Incentive
Plan as described in footnote (1) to the table under the caption
"Capitalization" in the Preliminary Prospectus and (iii) the granting
of options to purchase shares of Class A Common Stock under the
Company's 1996 Employee Stock Incentive Plan; and
(n) to refrain from investing the proceeds from the sale of
the Shares in a manner to cause the Company to become an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
6. Certain Covenants of the Selling Shareholders. Each Selling
Shareholder agrees with each Underwriter that:
(a) such Selling Shareholder will not offer, sell, contract to
sell, grant any option to sell, transfer or otherwise encumber or
dispose of, directly or indirectly, any shares of Class A Common Stock
or securities convertible into or exchangeable for Class A Common Stock
or warrants or other rights to purchase Class A Common Stock, except for
the sales to you pursuant to this Agreement, for a period commencing on
the date hereof and continuing for 180 days after the date of the
Prospectus, without the prior written consent of Dillon, Read & Co.
Inc.; and
(b) such Selling Shareholder will advise the Underwriters
promptly of the happening of any event known to such Selling Shareholder
within the time during which a Prospectus relating to the Shares is
required to be delivered under the Act that, in the reasonable judgment
of such Selling Shareholder, would require the making of any change in
the Prospectus then being used, so that the Prospectus, as then
supplemented, would not
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<PAGE> 15
include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading.
7. Reimbursement of Underwriters' Expenses. If the Firm Shares
or the Additional Shares are not delivered for any reason, other than the
failure of the Underwriters to purchase the Firm Shares or the Additional Shares
as provided herein (unless such failure is permitted under the provisions of
Section 8 or Section 9(b) of this Agreement), the Company will reimburse the
Underwriters for all of their out-of-pocket expenses, including the fees and
disbursements of their counsel.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders on the date hereof and at the time of purchase (and the several
obligations of the Underwriters at any additional time of purchase are subject
to the accuracy of the representations and warranties on the part of the Company
and the Selling Shareholders on the date hereof and at the time of purchase and
at such additional time of purchase, as the case may be), the performance by
each of the Company and the Selling Shareholders of its and their obligations
hereunder and to the following conditions:
(a) The Company shall furnish to you at the time of purchase
and at such additional time of purchase, as the case may be, an opinion
of Gibson, Dunn & Crutcher LLP, counsel for the Company, addressed to
the Underwriters and dated the time of purchase or such additional time
of purchase, as the case may be, with reproduced copies for each of the
other Underwriters and in form satisfactory to you, stating that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of California, with full corporate power and
authority (A) to own its properties and conduct its business
as described in the Registration Statement and the Prospectus
and (B) to execute and deliver this Agreement and to issue,
sell and deliver the Shares as herein contemplated. The
Company's Amended and Restated Articles of Incorporation and
Amended and Restated Bylaws (each in the form included as an
exhibit to the Registration Statement) have been duly
authorized and adopted and are in full force and effect as the
Company's articles of incorporation and bylaws, respectively;
the Reclassification and the 1.812 for 1 split of the Class A
Common Stock and the Class B Common Stock, in each case as
described in the Registration Statement and the Prospectus,
have been consummated;
(ii) to the best of such counsel's knowledge, after
due inquiry, the Company has no subsidiaries;
(iii) the Company is duly qualified or licensed to do
business by, and is in good standing as a foreign corporation
in, each jurisdiction in which it conducts
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<PAGE> 16
business or owns property and in each other jurisdiction in
which the failure, individually or in the aggregate, to be so
licensed or qualified could have a material adverse effect on
the properties, assets, operations, business, business
prospects or condition (financial or other) of the Company;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Rights Agreement has been duly authorized,
executed and delivered by the Company and constitutes the
valid and binding agreement of the Company and is enforceable
against the Company in accordance with the terms thereof,
except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and general
principles of equity; the Rights have been duly authorized by
the Company and, when issued upon issuance of the Shares, will
be validly issued, and the Series A Preferred Stock has been
duly authorized by the Company and validly reserved for
issuance upon the exercise of the Rights and, when issued upon
such exercise in accordance with the terms of the Rights
Agreement, will be validly issued, fully paid and
non-assessable;
(vi) the Shares, when delivered to and paid for by
the Underwriters, will be duly authorized, validly issued,
fully paid and nonassessable, and will be free of any pledge,
lien, encumbrance, claim or preemptive right; and the
certificates for the Shares are in due and proper form and the
holders of the Shares will not be subject to personal
liability by reason of being such holders;
(vii) the Company has an authorized capitalization as
set forth under the column entitled "March 31, 1996 Pro Forma
As Adjusted" under the heading in the Registration Statement
and the Prospectus entitled "Capitalization", and the
outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid,
nonassessable and free of statutory and contractual preemptive
rights;
(viii) the capital stock of the Company, including
the Shares, conforms in all material respects to the
description thereof contained in the Registration Statement
and the Prospectus;
(ix) the Registration Statement and the Prospectus
(except as to the financial statements and schedules contained
therein as to which such counsel need express no opinion)
comply as to form in all material respects with the
requirements of the Act;
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<PAGE> 17
(x) the Registration Statement has become effective
under the Act and, to the best of such counsel's knowledge, no
stop order proceedings with respect thereto are pending or
threatened under the Act;
(xi) no approval, authorization, consent or order of
or filing with any federal, state, local or foreign
governmental or regulatory commission, board, body, authority
or agency is required in connection with the issuance or sale
of the Shares as contemplated hereby, other than registration
of the Shares under the Act (except such counsel need express
no opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in
which the Shares are being offered by the Underwriters);
(xii) the execution, delivery and performance of this
Agreement by the Company, the issuance of the Shares and the
consummation by the Company of the transactions contemplated
hereby do not and will not conflict with, or result in any
breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time or both would
constitute a breach of or default under), the charter or
bylaws of the Company or under any provision of any license,
indenture, lease, mortgage, deed of trust, bank loan or credit
agreement or other agreement or instrument to which the
Company is a party or by which the Company or its properties
are bound or affected, or under any federal, state, local or
foreign law, regulation or rule or any decree, judgment or
order applicable to the Company;
(xiii) the Company is not in breach of or in default
under (nor has any event occurred which with notice, lapse of
time or both would constitute a breach of or default under)
its charter or bylaws, or in the performance or observance of
any obligation, agreement, covenant or condition contained in
any license, indenture, lease, mortgage, deed of trust, bank
loan or credit agreement or any other agreement or instrument
to which the Company or by which the Company or its properties
are bound or affected, except for such matters as could not,
individually or in the aggregate, have a material adverse
effect on the properties, assets, operations, business,
business prospects or condition (financial or other) of the
Company;
(xiv) (1) to the best of such counsel's knowledge,
after due inquiry, the Company is in compliance with all
applicable foreign, federal, state and local laws and
regulations, including without limitation Environmental Laws,
federal and state laws relating to employment of illegal
aliens or to discrimination in the hiring, promotion or pay of
employees, federal and state wages and hours laws and all
applicable provisions of the Employee Retirement Income
Security Act and the rules and regulations promulgated
thereunder, except where the failure, individually or in the
aggregate, to be so in compliance would not have a material
adverse effect on the properties, assets, operations,
business, business prospects or condition (financial or other)
of the Company;
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<PAGE> 18
(2) the Company has such permits, licenses,
franchises and authorizations of governmental or regulatory
authorities ("permits"), including without limitation under
any applicable Environmental Laws, as are necessary to own,
lease and operate its respective properties and to conduct its
business in the manner described in the Prospectus; to the
best of such counsel's knowledge, after due inquiry, the
Company has fulfilled and performed all of its material
obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any
such permit; and such permits contain no restrictions that are
materially burdensome to the Company;
(xv) all contracts or documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration
Statement have been so described or filed;
(xvi) except as described in the Registration
Statement and the Prospectus, there are no actions, suits or
proceedings of which such counsel has knowledge pending or
threatened against the Company or any of its properties, at
law or in equity, or before or by any federal, state, local or
foreign governmental or regulatory commission, board, body,
authority or agency that individually or in the aggregate
could result in a judgment, decree or order having a material
adverse effect on the properties, assets, operations,
business, business prospects or condition (financial or other)
of the Company;
(xvii) no person has the right, contractual or
otherwise, to cause the Company to issue to it any securities
of the Company in consequence of the issue and sale of the
Shares to the Underwriters hereunder; each person who has the
right, contractual or otherwise, to cause the Company to
register pursuant to the Act any securities of the Company in
consequence of the issue and sale of the Shares to the
Underwriters hereunder either included such securities in the
Registration Statement or duly waived such rights;
(xviii) the statements in the Registration Statement
and the Prospectus under the captions "Prospectus Summary,"
"Risk Factors," "Prior S Corporation Status and
Distributions," "Business," "Management," " Certain
Transactions," "Description of Capital Stock" and "Shares
Eligible For Future Sale," insofar as they are descriptions of
laws, regulations and rules, of legal and governmental
proceedings or of contracts, agreements, leases and other
legal documents, or refer to statements of law or legal
conclusions, have been reviewed by such counsel and are
accurate in all material respects;
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<PAGE> 19
(xix) the Company is not an "investment company" or a
person "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xx) nothing has come to the attention of such
counsel that causes them to believe that the Registration
Statement or any amendment thereto at the time such
Registration Statement or amendment became effective contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus or any supplement thereto at the date of such
Prospectus or such supplement, and at all times up to and
including the time of purchase or additional of purchase, as
the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading (it being understood that such counsel need express
no opinion with respect to the financial statements and
schedules and other financial data included in the
Registration Statement or Prospectus).
(b) The Selling Shareholders shall furnish to you at the time
of purchase and at such additional time of purchase, as the case may
be, an opinion of [_________], counsel for the Selling Shareholders,
addressed to the Underwriters and dated the time of purchase or such
additional time of purchase, as the case may be, with reproduced copies
for each of the other Underwriters and in form satisfactory to you,
stating that:
(i) this Agreement and the Power of Attorney and
Custody Agreement have been duly executed and delivered by
each of the Selling Shareholders; the Power of Attorney and
Custody Agreement is a legal, valid and binding agreement of
each of the Selling Shareholders enforceable in accordance
with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and
general principles of equity;
(ii) each of the Selling Shareholders has full legal
right and power, and has obtained any authorization or
approval required by law (other than those imposed by the Act
and the securities or blue sky laws of certain jurisdictions),
to enter into this Agreement and the Power of Attorney and
Custody Agreement and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Shareholder in the
manner provided in this Agreement;
(iii) delivery of certificates for the Shares to be
sold by the Selling Shareholders pursuant hereto will pass
title thereto to the Underwriters severally, free and clear of
any claim, lien, encumbrance, security interest, community
property right, restriction on transfer or other defect in
title assuming that the
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<PAGE> 20
several Underwriters are good faith purchasers and without
notice of any adverse claim;
(iv) the consummation of the transactions
contemplated hereby and by the Power of Attorney and Custody
Agreement and the fulfillment of the terms hereof and thereof
will not (a) conflict with or result in any breach of or
constitute a default under the terms of any indenture,
mortgage, deed of trust, lease or other agreement or
instrument to which any of the Selling Shareholders is a party
or by which any of the Selling Shareholders or any of their
respective properties is bound or (b) will conflict with or
violate any law, regulation or rule, or any decree, judgment,
order, consent or memorandum of understanding applicable to
any Selling Stockholder of any court, regulatory body,
administrative agency or governmental body or arbitrator
having jurisdiction over any Selling Stockholder or any
Selling Stockholder's property;
(v) the Attorney-in-Fact has been duly authorized by
each Selling Shareholder to execute and deliver on behalf of
each Selling Shareholder this Agreement and any other document
necessary or desirable in connection with the transactions
contemplated hereby and to deliver the Shares to be sold by
the Selling Shareholder and receive payment therefor pursuant
hereto;
(vi) no approval, authorization, consent or order of
or filing with any federal, state, local or foreign
governmental or regulatory commission, board, body, authority
or agency is required in connection with the sale of the
Shares to be sold by the Selling Shareholders as contemplated
hereby other than registration of the Shares under the Act
(except such counsel need express no opinion as to any
necessary qualification under the state securities or blue sky
laws of the various jurisdictions in which the Shares are
being offered by the Underwriters); and
(vii) there are no transfer or similar taxes payable
in connection with the sale and delivery of Shares by the
Selling Shareholders to the several Underwriters.
(c) You shall have received from Price Waterhouse LLP letters
dated, respectively, the date of this Agreement and the time of
purchase and additional time of purchase, as the case may be, and
addressed to the Underwriters (with reproduced copies for each of the
Underwriters) in form and substance satisfactory to you.
(d) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, an opinion of Howard,
Darby & Levin in form and substance satisfactory to you.
(e) No amendment or supplement to the Registration Statement
or the Prospectus shall be filed prior to the time the Registration
Statement becomes effective to which you shall have objected in
writing.
-19-
<PAGE> 21
(f) The Registration Statement shall become effective at or
before 12:00 Noon, New York City time, on the date of this Agreement
and, if Rule 430A under the Act is used, the Prospectus shall have been
filed with the Commission pursuant to Rule 424(b) under the Act at or
before 5:00 P.M., New York City time, on the second full business day
after the date of this Agreement; provided, however, that the Company,
the Selling Shareholders and you and any group of Underwriters,
including you, who have agreed hereunder to purchase in the aggregate
at least 50% of the Firm Shares from time to time may agree in writing
or by telephone, confirmed in writing, on a later date.
(g) Prior to the time of purchase or the additional time of
purchase, as the case may be: (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued
under the Act or proceedings initiated under Section 8(d) or 8(e) of
the Act; (ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain 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; and
(iii) the Prospectus and all amendments or supplements thereto, or
modifications thereof, if any, shall not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) Between the time of execution of this Agreement and the
time of purchase or the additional time of purchase, as the case may
be, there has not been: (i) any material and adverse change, present or
prospective, in the properties, assets, operations, business, business
prospects or condition (financial or other) of the Company other than
as described in the Registration Statement and the Prospectus; (ii) any
transaction that is material to the Company contemplated or entered
into by the Company other than as described in the Registration
Statement and the Prospectus; or (iii) any obligation, contingent or
otherwise, directly or indirectly, incurred by the Company that is
material to the Company other than as described in the Registration
Statement and the Prospectus.
(i) The Company, at the time of purchase or additional time of
purchase, as the case may be, will deliver to you a certificate of two
of its executive officers to the effect that the representations and
warranties of the Company as set forth in this Agreement are true and
correct as of each such date and the conditions set forth in Section
8(g) and Section 8(l) have been met.
(j) You shall have received a signed letter, dated the date of
this Agreement, from each of the Company's shareholders, directors, and
officers listed in Schedule C to the effect that such persons shall not
offer, sell, contract to sell, grant any option to sell, transfer or
otherwise encumber or dispose of, directly or indirectly, any shares of
Class A Common Stock or securities convertible into or exchangeable for
Class A Common Stock or warrants or other rights to purchase Class A
Common Stock for a period of 180 days
-20-
<PAGE> 22
from the date of the Prospectus without the prior written consent of
Dillon, Read & Co. Inc.
(k) The Company and the Selling Shareholders shall have
furnished to you such other documents and certificates as to the
accuracy and completeness of any statement in the Registration
Statement or the Prospectus as of the time of purchase and the
additional time of purchase, as the case may be, as you reasonably may
request.
(l) The Company and the Selling Shareholders shall have
performed such of their respective obligations under this Agreement as
are to be performed by the terms hereof at or before the time of
purchase and at or before the additional time of purchase, as the case
may be.
(m) The Shares shall have been duly approved for quotation on
the Nasdaq National Market.
(n) Each Selling Shareholder at the time of purchase or
additional time of purchase, as the case may be, shall have delivered
to you a certificate (which may be signed by the Attorney-in-Fact) to
the effect that the representations and warranties of such Selling
Shareholder as set forth in this Agreement are true and correct as of
such date and the conditions set forth in Section 8(l) with respect to
such Selling Shareholder have been met.
9. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective (i) if Rule 430A under
the Act is not used, when you shall have received notification of the
effectiveness of the Registration Statement, or (ii) if Rule 430A under the Act
is used, when the parties hereto have executed and delivered this Agreement.
(b) The obligations of the several Underwriters hereunder shall
be subject to termination in the absolute discretion of you or any group of
Underwriters (which may include you) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares if, at any time prior to the time of
purchase or, with respect to the purchase of any Additional Shares, the
additional time of purchase, as the case may be, trading in securities on the
New York Stock Exchange shall have been suspended or minimum prices shall have
been established on the New York Stock Exchange or if a banking moratorium shall
have been declared either by the United States or New York State authorities, or
if the United States shall have declared war in accordance with its
constitutional processes or there shall have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in your judgment or in the judgment of
such group of Underwriters, makes it impracticable to market the Shares. If you
or any group of Underwriters elect to terminate this Agreement as provided in
this Section 9(b), the Company and each other Underwriter shall be notified
promptly by letter or telegram.
-21-
<PAGE> 23
(c) If any Underwriter shall default in its obligation to take
up and pay for the Firm Shares to be purchased by it hereunder and if the number
of Firm Shares which all Underwriters so defaulting shall have agreed but failed
to take up and pay for does not exceed 10% of the total number of Firm Shares,
the non-defaulting Underwriters shall take up and pay for (in addition to the
aggregate principal amount of Firm Shares they are obligated to purchase
pursuant to Section 1) the number of Firm Shares agreed to be purchased by all
such defaulting Underwriters as hereinafter provided. Such Shares shall be taken
up and paid for by such non-defaulting Underwriter or Underwriters in such
amount or amounts as you may designate with the consent of each Underwriter so
designated or, in the event no such designation is made, such Shares shall be
taken up and paid for by all non-defaulting Underwriters pro rata in proportion
to the aggregate number of Firm Shares set opposite the names of such
non-defaulting Underwriters in Schedule A.
(d) If any Underwriter shall default in its obligation to take
up and pay for the Firm Shares to be purchased by it hereunder and if the number
of Firm Shares which all Underwriters so defaulting shall have agreed but failed
to take up and pay for exceeds 10% of the total number of Firm Shares, and
arrangements satisfactory to you and the Company are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter.
(e) Without relieving any defaulting Underwriter from its
obligations hereunder, the Company and the Selling Shareholders agree with the
non-defaulting Underwriters that they will not sell any Firm Shares hereunder
unless all of the Firm Shares are purchased by the Underwriters (or by
substituted underwriters selected by you with the approval of the Company or
selected by the Company with your approval pursuant to Section 9(d)). If a new
Underwriter or Underwriters are substituted for a defaulting Underwriter or
Underwriters in accordance with Section 9(d), the Company or you shall have the
right to postpone the time of purchase for a period not exceeding five business
days in order that any necessary change in the Registration Statement and the
Prospectus and other documents may be effected. The term Underwriter as used in
this Agreement shall refer to and include any Underwriter substituted under this
Section 9 with like effect as if such substituted Underwriter had originally
been named in Schedule A.
(f) If the purchase of the Shares by the Underwriters, as
contemplated by this Agreement, is not consummated for any reason permitted
under this Agreement or if such purchase is not consummated because the Company
shall be unable to comply with any of the terms of this Agreement, the Company
shall not be under any obligation or liability under this Agreement (except to
the extent provided in Sections 5(l), 7 and 10), and the Underwriters shall be
under no obligation or liability to the Company or the Selling Shareholders
under this Agreement (except to the extent provided in Section 10).
10. Indemnity by the Company, the Selling Shareholders and the
Underwriters.
(a) The Company and the Selling Shareholders, jointly and
severally, agree to indemnify, defend and hold harmless each Underwriter, each
person that controls any Underwriter
-22-
<PAGE> 24
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and each Underwriter's agents, employees, officers and directors and the agents,
employees, officers and directors of any such controlling person (collectively,
the "Underwriter indemnified parties") from and against any and all losses,
claims, damages, judgments, liabilities and expenses (including the fees and
expenses of counsel and other expenses in connection with investigating,
defending or settling any such action or claim) which, jointly or severally, any
Underwriter indemnified party may incur as they are incurred (and regardless of
whether such Underwriter indemnified party is a party to the litigation, if any)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the registration statement relating to the Shares
or the Prospectus or any Preliminary Prospectus, or arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, judgments, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or alleged untrue statement or omission based upon and in conformity with
information with respect to any Underwriter furnished in writing by any
Underwriter through you to the Company expressly for use therein with reference
to such Underwriter; provided, however, that no Selling Shareholder shall be
liable under this Section 10 in an amount exceeding the total price at which the
Shares sold by such Selling Shareholder were offered to the public. This
indemnity agreement will be in addition to any liability the Company or the
Selling Shareholders otherwise may have.
(b) If any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
Underwriter indemnified party, with respect to which indemnity may be sought
against the Company or a Selling Shareholder pursuant to this Section 10, such
Underwriter indemnified party shall promptly notify the Company and each Selling
Shareholder in writing, and the Company and the Selling Shareholders shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Underwriter indemnified party and payment of all fees and
expenses; provided that the omission so to notify the Company and the Selling
Shareholders shall not relieve them from any liability that they may have to any
Underwriter indemnified party. An Underwriter indemnified party shall have the
right to employ separate counsel in any such action or proceeding and to assume
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter indemnified party unless (i) the employment of such
counsel has been authorized in writing by the Company or the Selling
Shareholders, (ii) the Company and the Selling Shareholders have failed promptly
to assume the defense and employ counsel satisfactory to the Underwriter
indemnified party or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Underwriter indemnified party
and the Company or the Selling Shareholders and such Underwriter indemnified
party shall have reasonably concluded that there may be one or more legal
defenses available to it that are different from or additional to those
available to the Company and the Selling Shareholders (in which case the Company
and the Selling Shareholders shall not have the right to assume the defense of
such action on behalf of such Underwriter indemnified party), in any of which
events such fees and expenses shall be borne by the Company and the Selling
Shareholders and reimbursed as they are incurred. It is understood, however,
that the Company and the Selling Shareholders shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same
-23-
<PAGE> 25
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Underwriter indemnified
parties, which firm shall be designated in writing by Dillon, Read & Co. Inc.,
and that all such fees and expenses shall be reimbursed as they are incurred.
The Company and the Selling Shareholders shall not be liable for any settlement
of any such action effected without the written consent of the Company or the
Selling Shareholders (which consent shall not be unreasonably withheld or
delayed), but if settled with the written consent of the Company or the Selling
Shareholders, or if there is a final judgment with respect thereto, the Company
and the Selling Shareholders agree to indemnify and hold harmless each
Underwriter indemnified party from and against any loss or liability by reason
of such settlement or judgment.
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, and any person that controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (collectively, the
"Company indemnified parties") and each Selling Shareholder to the same extent
as the foregoing indemnity from the Company and the Selling Shareholders to the
Underwriter indemnified parties, but only with respect to information concerning
such Underwriter furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use with respect to such Underwriter in
the Registration Statement, any Preliminary Prospectus or the Prospectus. In
case any action shall be brought against any Company indemnified party or any
Selling Shareholder based on the Registration Statement, any Preliminary
Prospectus or the Prospectus and in respect of which indemnity may be sought
against any Underwriter pursuant to this Section 10(c), such Underwriter shall
have the rights and duties given to the Company and the Selling Shareholders by
Section 10(b) (except that if the Company and the Selling Shareholders shall
have assumed the defense thereof such Underwriter shall not be required to do
so, but may employ separate counsel therein and participate in the defense
thereof, provided that the fees and expenses of such separate counsel shall be
at the expense of such Underwriter), and the Company indemnified parties and the
Selling Shareholders shall have the rights and duties given to the Underwriter
indemnified parties by Section 10(b).
The statements under the caption "Underwriting" in the
Registration Statement and the Prospectus (to the extent such statements relate
to an Underwriter) constitute the only information furnished to the Company in
writing by such Underwriter expressly for use in the Registration Statement, any
Preliminary Prospectus or the Prospectus.
(d) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless any Underwriter indemnified
party or any Company indemnified party or any Selling Shareholder, then the
party required to indemnify such indemnified party under this Section 10, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, judgments, liabilities and expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand from
the offering of the Shares, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the
-24-
<PAGE> 26
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Shareholders on the one hand and of the Underwriters
on the other hand in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
hand shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Selling Shareholders on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, 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 the Company, by the Selling Shareholders or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
judgments, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any claim or action.
The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
10(d) were determined by pro rata allocation or by any other method of
allocation (even if the Underwriters were treated as one entity for such
purpose) that does not take account of the equitable considerations referred to
in this Section 10(d). Notwithstanding the provisions of this Section 10(d), no
Underwriter indemnified party shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by such Underwriter indemnified party and distributed to the public were offered
to the public exceeds the amount of any damages which such Underwriter
indemnified party otherwise has been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 10 are several in proportion to their respective
underwriting commitments and are not joint.
(e) The indemnity and contribution agreements contained in this
Section 10 and the representations, warranties and covenants of the Company and
the Selling Shareholders contained in this Agreement shall remain in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter indemnified party or by or on behalf of any Company indemnified
party or any Selling Shareholder, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. Subject to the provisions
of Section 10(b) and Section 10(c), the Company, each Selling Shareholder and
each Underwriter agree promptly to notify the other of the commencement of any
litigation or proceeding against it in connection with the issuance and sale of
the Shares or in connection with the Registration Statement or the Prospectus.
-25-
<PAGE> 27
11. Notices. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered or
sent to Dillon, Read & Co. Inc., 535 Madison Avenue, New York, New York 10022,
Attention: Syndicate Department; if to the Company, shall be sufficient in all
respects if delivered or sent to the Company at the offices of the Company at
RemedyTemp, Inc., 32122 Camino Capistrano, San Juan Capistrano, California
96275, Attention: [____________]; and if to the Selling Shareholders, shall be
sufficient in all respects, if delivered or sent to [____________].
12. Construction. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE SECTION HEADINGS
IN THIS AGREEMENT HAVE BEEN INSERTED AS A MATTER OF CONVENIENCE OF
REFERENCE AND ARE NOT A PART OF THIS AGREEMENT.
13. Parties at Interest. The Agreement herein set forth has been
and is made solely for the benefit of the Underwriters, the Company, the Selling
Shareholders, the Underwriter indemnified parties and the Company indemnified
parties, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
14. Counterparts. This Agreement may be signed by the parties in
counterparts which together shall constitute one and the same agreement among
the parties.
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<PAGE> 28
If the foregoing correctly sets forth the understanding among
the Company, the Selling Shareholders and the Underwriters, please so indicate
in the space provided below for such purpose, whereupon this letter and your
acceptance shall constitute a binding agreement among the Company, the Selling
Shareholders and the Underwriters, severally.
Very truly yours,
REMEDYTEMP, INC.
By:
------------------------------
Name:
Title:
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE B ATTACHED HERETO
By:
-----------------------------
Attorney-in-fact
Accepted and agreed to as of
the date first above written,
on behalf of themselves,
The Robinson-Humphrey Company, Inc.
and the other several
Underwriters named in
Schedule A
DILLON, READ & CO. INC., as
Managing Underwriter
By:
------------------------------
Name:
Title:
-27-
<PAGE> 29
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Underwriters Firm Shares
- ------------ -----------
<S> <C>
Dillon, Read & Co. Inc.....................
The Robinson-Humphrey Company, Inc.........
Total.............................. 3,100,000
=========
</TABLE>
<PAGE> 30
SCHEDULE B
<TABLE>
<CAPTION>
Number of Firm
Name Shares to be Sold
- ---- -----------------
<S> <C>
</TABLE>
<PAGE> 31
SCHEDULE C
SHAREHOLDERS, DIRECTORS AND OFFICERS
WHO HAVE EXECUTED LOCK-UP AGREEMENTS
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF REMEDYTEMP, INC.
Robert E. McDonough and Alan M. Purdy certify that:
1. They are the Chairman of the Board of Directors and
Assistant Secretary, respectively, of RemedyTemp, Inc., a California
corporation.
2. The articles of incorporation of this corporation are
amended and restated to read as follows:
ARTICLE I
NAME
The name of this corporation is RemedyTemp, Inc.
ARTICLE II
PURPOSE
The purpose of this corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust company
business or the practice of a profession permitted to be incorporated by the
California Corporations Code.
ARTICLE III
LIABILITY OF DIRECTORS
Section 1. Limitation on Liability. The liability of the
directors of this corporation for monetary damages shall be eliminated to the
fullest extent permissible under California law.
Section 2. Indemnification of Agents. This corporation is
authorized to indemnify agents (as defined in Section 317(a) of the California
Corporations Code) through bylaw provisions, agreements with the agents, or
otherwise, in excess of the indemnification expressly permitted by Section 317
of the California General Corporation Law for breach of duty to this corporation
and its shareholders, subject only to the applicable limits set forth in
Sections 204 and 317 of the California General Corporation Law.
<PAGE> 2
ARTICLE IV
SHARES
Section l. Classes and Number of Shares. This corporation is
authorized to issue only one class of shares of stock, which shall be issuable
in two series designated as Series A Common Stock and Series B Common Stock,
respectively. The aggregate number of shares this corporation is authorized to
issue is Ten Million (10,000,000), consisting of Two Million Five Hundred
Thousand (2,500,000) shares of Series A Common Stock, par value $0.01, and Seven
Million Five Hundred Thousand (7,500,000) shares of Series B Common Stock, par
value $0.01.
Section 2. Voting Rights. Holders of Series A Common Stock
shall have and possess sole and exclusive voting power with respect to all
matters on which shareholders of this corporation are entitled to vote, and each
such shareholder shall be entitled to cast one vote on each such matter for each
share of Series A Common Stock held by that shareholder; provided that, with
respect to the election of directors, holders of shares of Series A Common Stock
shall be entitled to cumulate their votes in the manner and to the fullest
extent permitted under Section 708 of the California Corporations Code. Holders
of Series B Common Stock shall have and possess no voting rights or powers
except as otherwise required by the California Corporations Code.
Section 3. Other Rights. Except as otherwise required by the
California Corporations Code or as otherwise provided in these Articles of
Incorporation or this corporation's Bylaws, each share of the Series A Common
Stock and each share of the Series B Common Stock shall have identical powers,
preferences, and rights, including without limitation liquidation rights.
ARTICLE V
SHARES
A. GENERAL PROVISIONS
At all times up to the time immediately prior to the
consummation of an initial public offering of this corporation's equity
securities ("Initial Public Offering"), this Article V shall have no effect.
Effective immediately prior to the consummation of the Initial Public Offering,
Article IV hereof shall be eliminated and this Article V shall become effective.
Section 1. Authorized Shares. The aggregate number of shares
this corporation is authorized to issue is Fifty-Nine Million Five Hundred
Thirty Thousand (59,530,000), consisting of Fifty Million (50,000,000) shares of
Class A Common Stock, par value $0.01 per share, Four Million Five Hundred
Thirty Thousand (4,530,000) shares of Class B Common Stock, par value $0.01 per
share, and Five Million (5,000,000) shares
2
<PAGE> 3
of Preferred Stock, par value $0.01 per share. The Class A Common Stock and the
Class B Common Stock collectively are referred to herein as the "Common Stock."
The Preferred Stock may be divided into such number of series
as the Board may from time to time determine. The Board is authorized to
determine the designation of any such series. The Board is also authorized to
determine or alter the rights, preferences, privileges, qualifications,
limitations and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock, including, without limitation, the dividend rights
and rates (and whether dividends are cumulative), conversion rights, if any,
voting rights (including the number of votes, if any, per share, as well as the
number of members, if any, of the Board or the percentage of members, if any, of
the Board that each series of Preferred Stock may be entitled to elect), rights
and terms of redemption (including sinking fund provisions, if any), redemption
price and liquidation preferences, and, within the limits and restrictions
stated in any resolution or resolutions of the Board originally fixing the
number of shares constituting any series, to increase or decrease (but not below
the number of shares of such series then outstanding) the number of shares of
any such series subsequent to the issuance of shares of that series. In case the
number of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the adoption of
the resolution originally fixing the number of shares of such series.
Fifty-Four Thousand Five Hundred and Thirty (54,530) Shares of
the Preferred Stock shall be designated as Series A Junior Participating
Preferred Stock (hereinafter referred to as the "Series A Preferred Stock"),
with the rights, preferences, privileges and restrictions set forth in Article
V.B below. The remainder of the Preferred Stock shall be undesignated, subject
to the Board's authority described in the immediately preceding paragraph.
Section 2. Reclassification and Stock Split of Common Stock.
Upon effectiveness of this Article V, (a) all shares of Series A Common Stock
outstanding prior to the effectiveness of this Article V shall be automatically
reclassified as Class A Common Stock; (b) all shares of Series B Common Stock
outstanding prior to the effectiveness of this Article V shall be automatically
reclassified as Class B Common Stock (such reclassification of the Series A
Common Stock and the Series B Common Stock being referred to herein as the
"Reclassification"); and (c) immediately after the Reclassification and prior to
the consummation of the Initial Public Offering, each outstanding share of Class
A Common Stock shall be split up and converted into 1.812 shares of Class A
Common Stock, and each outstanding share of Class B Common Stock shall be split
up and converted into 1.812 shares of Class B Common Stock.
Section 3. Voting Rights. Except as otherwise required by
applicable law, holders of Class A Common Stock shall have and possess sole and
exclusive voting power with respect to all matters on which shareholders of this
corporation are entitled to vote, and each such shareholder shall be entitled to
cast one vote on each such matter for each share of Class A Common Stock held by
that shareholder. Holders of Class B Common
3
<PAGE> 4
Stock shall have and possess no voting rights or powers except as required by
applicable law.
Section 4. Automatic Conversion of Class B Common Stock. Each
share of Class B Common Stock shall automatically convert into one share of
Class A Common Stock without the requirement of any further action upon the
earliest to occur of: (i) a transfer of such share to a transferee who is not an
affiliate of the holder thereof in an underwritten public offering pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act") or Rule 144 promulgated under the Securities Act ; (ii)
the death or legal incapacity of Robert E. McDonough, Sr.; or (iii) the tenth
anniversary of the consummation of the Initial Public Offering, but is not
otherwise convertible. For purposes hereof, an "affiliate" of a holder of Class
B Common Stock is a person or entity controlling, controlled by, or under common
control with, and/or party to any agreement or understanding regarding voting of
shares, governance or control of the corporation with, the holder of Class B
Common Stock. For purposes hereof, "legal incapacity" means incapable of
entering into a valid and binding contract under California law.
Section 5. Dividend and Liquidation Rights. Holders of the
outstanding shares of Class A Common Stock and Class B Common Stock shall be
entitled to receive dividends and distributions when, as and if declared by the
Board of Directors out of funds legally available therefor. Any cash dividends
or other distributions declared or paid must be paid equally on a per share
basis on the Class A Common Stock and the Class B Common Stock. In the event of
a liquidation, dissolution or winding up of the corporation, holders of Class A
Common Stock and Class B Common Stock will be entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation preference of
any outstanding preferred stock.
Section 6. Other Rights. Except as otherwise required by the
California Corporations Code, the bylaws of this corporation, or as otherwise
provided in these Articles of Incorporation, each share of Class A Common Stock
and each share of the Class B Common Stock shall have identical powers,
preferences, and rights. The holders of the Class A Common Stock and the Class B
Common Stock shall have no preemptive, subscription, conversion or redemption
rights other than the conversion rights of the Class B Common Stock described
herein.
B. SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Section 1. Designation and Amount. The number of authorized
shares of Series A Preferred Stock may be increased or decreased by resolution
of the Board of Directors, provided that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of shares of
Series A Preferred Stock then outstanding plus the number of shares of Series A
Preferred Stock reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the
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<PAGE> 5
conversion of any outstanding securities issued by the corporation convertible
into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock ranking superior to the shares of Series A Preferred
Stock with respect to dividends, the holders of shares of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the 15th day of January, April, July and October in each year
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to, subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on any Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the corporation shall at any time after the effectiveness of this
Article V (the "Rights Declaration Date") (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of outstanding shares
of Series A Preferred Stock were entitled immediately prior to such event under
the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) above, and set
aside funds or other assets, as the case may be, for payment thereof,
concurrently with any declaration of a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
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<PAGE> 6
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the shareholders of the
corporation. In the event the corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each case the
number of votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common Stock
(entitled to vote) shall vote together as one class on all matters submitted to
a vote of stockholders of the corporation.
(C) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock (entitled to vote) as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) The corporation shall not declare any dividend on, make
any distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common Stock after the first issuance of a share or
fraction of a share of Series A Preferred Stock unless concurrently therewith it
shall declare a dividend on the Series A Preferred Stock, and set aside funds or
other assets, as the case may be, for payment thereof, as required by Section 2
hereof.
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<PAGE> 7
(B) Whenever dividends or distributions payable on the Series
A Preferred Stock as provided in Section 2 have been declared but not paid,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the corporation shall not:
(i) declare or pay dividends on, make any other
distribution on, or redeem or purchase or otherwise acquire for
consideration any Common Stock or other shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that the corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock;
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(C) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any shares of
stock of the corporation unless the corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or
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<PAGE> 8
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the corporation, no distribution shall be made to the holders
of Common Stock or other shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received $1,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in subparagraph C below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series A Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series A Preferred Stock and Common
Stock, respectively, holders of Series A Preferred Stock and holders of shares
of Common Stock shall receive their ratable and proportionate share of remaining
assets to be distributed in the ratio of the Adjustment Number to one (1) with
respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event that there
are not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
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<PAGE> 9
Section 7. Consolidation, Merger, etc. In case the corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Series A Preferred Stock shall rank
junior to all other series of the corporation's Preferred Stock, if any, as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Articles of Incorporation of the
corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series A
Preferred Stock, if any, voting separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share, which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
ARTICLE VI
BYLAWS
At all times up to immediately prior to the consummation of
the Initial Public Offering, this Article VI shall have no effect. Effective
immediately prior to the consummation of the Initial Public Offering, this
Article VI shall become effective.
In furtherance and not in limitation of powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend, and rescind from
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<PAGE> 10
time to time any or all of the bylaws of the corporation; provided, however,
that any bylaw amendment adopted by the Board of Directors increasing or
reducing the authorized number of directors or otherwise amending or altering
the classified nature of the Board of Directors shall require a resolution
adopted by the affirmative vote of not less than seventy-five (75%) percent of
the directors. In addition, new bylaws may be adopted or the bylaws may be
amended or repealed only by a vote of not less than sixty-six and two-thirds (66
2/3%) percent of the outstanding stock of the corporation entitled to vote
thereon.
3. The foregoing Amendment and Restatement of Articles of
Incorporation has been duly approved by the board of directors.
4. The foregoing Amendment and Restatement of Articles of
Incorporation has been duly approved by the required vote of shareholders in
accordance with Sections 902 and 903 of the California General Corporation Law.
The total number of outstanding shares of the corporation is 3,750,000 shares of
Common Stock, consisting of 1,250,000 shares of Series A Common Stock and
2,500,000 shares of Series B Common Stock. The number of shares of each series
of Common Stock voting as a class in favor of the amendment equaled or exceeded
the vote required. The percentage vote required for each series of Common Stock
was more than 50% of each, voting as a class.
We further declare under penalty of perjury under the laws of
the State of California that the matters set forth in this certificate are true
and correct of our own knowledge.
Dated effective as of April 27, 1996.
-----------------------------------
Robert E. McDonough,
Chairman of the Board of Directors
-----------------------------------
Alan M. Purdy, Assistant Secretary
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<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
REMEDYTEMP, INC.,
A CALIFORNIA CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I OFFICES.................................................................................................1
Section 1.01 Principal Executive Office........................................................................1
ARTICLE II SHAREHOLDERS...........................................................................................1
Section 2.01 Annual Meetings...................................................................................1
Section 2.02 Special Meetings..................................................................................3
Section 2.03 Conduct of Meetings...............................................................................4
Section 2.04 Elimination of Cumulative Voting..................................................................4
ARTICLE III DIRECTORS.............................................................................................4
Section 3.01 Number of Directors...............................................................................4
Section 3.02 Classification of the Board.......................................................................4
Section 3.03 Creation and Filling of Vacancies on the Board....................................................4
Section 3.04 Fees and Compensation.............................................................................5
Section 3.05 Organization Meeting..............................................................................5
Section 3.06 Other Regular Meetings............................................................................5
Section 3.07 Special Meetings..................................................................................5
Section 3.08 Place of Meetings.................................................................................6
Section 3.09 Committees of the Board...........................................................................6
Section 3.10 Loans to Officers.................................................................................6
ARTICLE IV OFFICERS...............................................................................................7
Section 4.01 Officers..........................................................................................7
Section 4.02 Election and Term of Office.......................................................................7
Section 4.03 Removal and Resignation...........................................................................7
Section 4.04 Vacancies.........................................................................................7
Section 4.05 Duties and Compensation...........................................................................7
ARTICLE V INDEMNIFICATION OF AGENTS OF THE CORPORATION; PURCHASE OF LIABILITY INSURANCE...........................8
Section 5.01 Indemnification of Agents.........................................................................8
</TABLE>
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<PAGE> 3
AMENDED AND RESTATED BYLAWS
OF
REMEDYTEMP, INC.,
A CALIFORNIA CORPORATION
ARTICLE I
OFFICES
Section 1.01 Principal Executive Office. The principal
executive office of the corporation is located at: 32122 Camino Capistrano, San
Juan Capistrano, State of California. The board of directors shall have full
power and authority to, and to authorize appropriate officers of the corporation
to, change the location of said principal executive office and to establish
other offices of the corporation.
ARTICLE II
SHAREHOLDERS
Section 2.01 Annual Meetings.
(a) The annual meeting of shareholders shall be held each year
on a date and at a time designated by the board of directors. At each annual
meeting, directors shall be elected and any other proper business may be
transacted. The date so designated shall be within five (5) months after the end
of the fiscal year of the corporation and within fifteen (15) months after the
last annual meeting.
(b) At an annual meeting of shareholders, only such business
shall be conducted, and only such proposals shall be acted upon, as shall have
been brought before the annual meeting by or at the direction of a majority of
the directors or by any shareholder of the corporation who complies with the
notice procedures set forth in this Section 2.01(b). For a proposal to be
properly brought before an annual meeting by a shareholder, the shareholder must
have given timely notice thereof in writing to the secretary of the corporation.
To be timely, a shareholder's notice must be delivered to, or mailed and
received at, the principal executive offices of the corporation not less than
sixty (60) days nor more than one hundred twenty (120) days prior to the
scheduled annual meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however, that if less
than seventy (70) days notice or prior public disclosure of the date of the
scheduled annual meeting is given or made, notice by the shareholder, to be
timely, must be so delivered or received not later than the close of business on
the tenth day following the earlier of the day on which such notice of the date
of the scheduled annual meeting was mailed or the day on which such public
disclosure was made. A shareholder's notice to the secretary shall set forth as
to each matter the shareholder proposes to bring before the annual meeting (i) a
brief description of the proposal desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the corporation's books, of the
shareholder proposing such business and any other shareholders known by such
<PAGE> 4
shareholder to be supporting such proposal, (iii) the class and number of shares
of the corporation's stock which are beneficially owned by the shareholder on
the date of such shareholder notice and by any other shareholders known by such
shareholder to be supporting such proposal on the date of such shareholder
notice, and (iv) any financial interest of the shareholder in such proposal. The
presiding officer of the annual meeting shall determine and declare at the
annual meeting whether the shareholder proposal was made in accordance with the
terms of this Section 2.01(b). If the presiding officer determines that a
shareholder proposal was not made in accordance with the terms of this Section
2.01(b), he or she shall so declare at the annual meeting and any such proposal
shall not be acted upon at the annual meeting. This provision shall not prevent
the consideration and approval or disapproval at the annual meeting of reports
of officers, directors and committees of the board of directors, but, in
connection with such reports, no new business shall be acted upon at such annual
meeting unless stated, filed and received as herein provided.
(c) Subject to the rights, if any, of the holders of shares of
Preferred Stock then outstanding, only persons who are nominated in accordance
with the following procedures shall be eligible for election as directors.
Nominations of persons for election to the board of directors of the corporation
may be made at a meeting of shareholders by or at the direction of the board of
directors, by any nominating committee or person appointed by the board of
directors or by any shareholder of the corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures set
forth in this Section 2.01(c). Such nominations, other than those made by or at
the direction of the board of directors, shall be made pursuant to timely notice
in writing to the secretary of the corporation. To be timely, a shareholder's
notice must be delivered to, or mailed and received at, the principal executive
offices of the corporation not less than sixty (60) days nor more than one
hundred twenty (120) days prior to the scheduled annual meeting, regardless of
any postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than seventy (70) days notice or prior public
disclosure of the date of the scheduled annual meeting is given or made, notice
by the shareholder, to be timely, must be so delivered or received not later
than the close of business on the tenth day following the earlier of the day on
which such notice of the date of the scheduled annual meeting was mailed or the
day on which such public disclosure was made. A shareholder's notice to the
secretary shall set forth (i) as to each person whom the shareholder proposes to
nominate for election or re-election as a director, (A) the name, age and
business address of the person, (B) the principal occupation or employment of
the person (C) the class and number of shares of capital stock of the
corporation which are beneficially owned by the person and (D) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to applicable rules
and regulations of the Securities and Exchange Commission (the "SEC")
promulgated under the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act of 1934"); and (ii) as to the shareholder giving the
notice (A) the name and address, as they appear on the corporation's books, of
the shareholder and (B) the class and number of shares of the corporation's
stock which are beneficially owned by the shareholder on the date of such
shareholder notice. The corporation may require any proposed nominee to furnish
such other information as may reasonably be required by the corporation to
determine the eligibility of such proposed nominee to serve as director of the
corporation. The presiding
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<PAGE> 5
officer of the annual meeting shall determine and declare at the annual meeting
whether the nomination was made in accordance with the terms of this Section
2.01(c). If the presiding officer determines that a nomination was not made in
accordance with the terms of this Section 2.01(c), he or she shall so declare at
the annual meeting and any such defective nomination shall be disregarded.
Section 2.02 Special Meetings.
(a) A special meeting of the shareholders may be called at any
time by the board of directors, or by the chairman of the board, or by the
president, or by one or more shareholders holding shares in the aggregate
entitled to cast not less than twenty percent (20%) of the votes at that
meeting.
(b) For a special meeting of shareholders to be properly
called by any person or persons other than the board of directors, the request
must be in writing, specifying the date and time of such meeting and the
information set forth in Section 2.02(c) hereof, and must be delivered to, or
mailed and received by, the chairman of the board, the president or the
secretary of the corporation not less than forty (40) nor more than sixty (60)
days prior to the date requested for such meeting. The officer receiving the
request shall cause notice to be promptly given to the shareholders entitled to
vote, in accordance with the provisions of Section 2.05, that a meeting will be
held at the time requested by the person or persons calling the meeting. If the
notice is not given within twenty (20) days after receipt of the request, the
person or persons requesting the meeting may give the notice. Nothing contained
in this paragraph of this Section 2.02(b) shall be construed as limiting, fixing
or affecting the time when a meeting of shareholders called by action of the
board of directors may be held.
(c) Any request for a special meting submitted pursuant to
Section 2.02(b) hereof shall set forth as to each matter the shareholder
proposes to bring before the special meeting (i) a brief description of the
proposal desired to be brought before the special meeting and the reasons for
conducting such business at the special meeting, (ii) the name and address, as
they appear on the corporation's books, of the shareholder proposing such
business and any other shareholders known by such shareholder to be supporting
such proposal, (iii) the class and number of shares of the corporation's stock
which are beneficially owned by the shareholder on the date of such shareholder
request and by any other shareholders known by such shareholder to be supporting
such proposal on the date of such shareholder request, and (iv) any financial
interest of the shareholder in such proposal. In addition to whatever other
limitations are imposed by applicable law, no person may be nominated for
election to the board of directors of the corporation by any of the person or
persons making a request for a special meeting pursuant to Section 2.02(b)
hereof unless the request sets forth as to each person whom the requesting
person or persons propose to nominate for election as a director, (A) the name,
age and business address of the person, (B) the principal occupation or
employment of the person (C) the class and number of shares of capital stock of
the corporation which are beneficially owned by the person and (D) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors
3
<PAGE> 6
pursuant to applicable rules and regulations of the SEC promulgated under the
Securities Exchange Act of 1934.
Section 2.03 Conduct of Meetings. Subject to the requirements
of applicable law, and the express provisions of the Articles of Incorporation
and these bylaws, all annual and special meetings of shareholders shall be
conducted in accordance with such rules and procedures as the board of directors
may determine and, as to matters not governed by such rules and procedures, as
the chairman of such meeting shall determine. The chairman of any annual or
special meeting of shareholders shall be designated by the board of directors
and, in the absence of any such designation, shall be the president of the
corporation.
Section 2.04 Elimination of Cumulative Voting. The right of
shareholders to cumulate votes shall be eliminated when the corporation becomes
a listed corporation within the meaning of Section 301.5 of the California
Corporations Code.
ARTICLE III DIRECTORS
Section 3.01 Number of Directors. The authorized number of
directors of the corporation shall be seven (7), provided that when the
corporation becomes a "listed corporation" within the meaning of the California
Corporations Code and the board of directors of the corporation is divided into
three classes pursuant to Section 3.02, the authorized number of directors of
the corporation shall be nine (9).
Section 3.02 Classification of the Board. When the corporation
becomes a "listed corporation" within the meaning of the California Corporations
Code, the board of directors of the corporation shall be divided into three
classes, initially to serve terms of one, two, and three years, respectively,
and thereafter being elected every three years to serve for terms of three
years.
Section 3.03 Creation and Filling of Vacancies on the Board. A
vacancy or vacancies on the board of directors shall be deemed to exist in case
of the death, removal or resignation of any director, if the authorized number
of directors is increased, or if the shareholders fail, at any annual or special
meeting of shareholders at which any director or directors are to be elected, to
elect the full authorized number of directors to be elected at that meeting.
Any director may resign effective upon giving written notice
to the chairman of the board, the president, the secretary or the board of
directors of the corporation, or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. If the resignation is effective at a future
time, a successor may be elected to take office when the resignation becomes
effective.
Unless otherwise provided in the Articles of Incorporation,
vacancies in the board of directors, including without limitation vacancies
created by the removal of a director, may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining director,
and each director so elected shall hold office until occurrence of an event
4
<PAGE> 7
specified above creating a vacancy in such director's office or until such
director's successor is elected and qualified.
Section 3.04 Fees and Compensation. By resolution of the board
of directors, one or more of the directors may be paid a retainer for their
services as directors, or a fixed fee (with or without expenses of attendance)
for attendance at each meeting, or both. Payment of such fees shall not preclude
participation in stock option or incentive plans. Nothing herein contained shall
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee, or otherwise, and receiving
compensation therefor.
Section 3.05 Organization Meeting. Immediately following each
annual meeting of shareholders, the board of directors shall hold a regular
meeting at the place of said annual meeting or at such other place as shall be
fixed by the board of directors, for the purpose of organization, election of
officers, and the transaction of other business. Call and notice of such meeting
are hereby dispensed with.
Section 3.06 Other Regular Meetings. Other regular meetings of
the board of directors may be held at the time and place of regular meetings of
the board fixed in advance by the board of directors. Call and notice of such
regular meetings of the board of directors are hereby dispensed with.
Section 3.07 Special Meetings. Special meetings of the board
of directors, for the purpose of taking any action permitted by the directors
under the General Corporation Law and the Articles of Incorporation, may be
called at any time by the chairman of the board, the president, any vice
president, the secretary or by any two directors.
Notice of a meeting need not be given to any director who
signs a waiver of notice or a consent to hold the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who attends the meeting
without protesting, prior to the meeting or at its commencement, the lack of
notice to such director. All such waivers, consents and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting. Subject
to the preceding sentence, notice of the time and place of special meetings
shall be given to each director (a) personally or by telephone, including a
voice messaging system or other system or technology designed to record and
communicate messages, telegraph, facsimile, electronic mail, or other electronic
means, in each case forty-eight (48) hours prior to the holding of the meeting,
or (b) by mail, charges prepaid, addressed to him at his address as it is shown
upon the records of the corporation or, if it is not so shown on such records
and is not readily ascertainable, at the place at which the meetings of the
directors are regularly held, at least four (4) days prior to the holding of the
meeting. Notice by mail shall be deemed to have been given at the time a written
notice is deposited in the United States mails, postage prepaid. Any other
written notice shall be deemed to have been given at the time it is personally
delivered to the recipient or is delivered to a common carrier for transmission,
or actually transmitted by the person giving the notice by electronic means, to
the recipient. Oral notice shall be deemed to have been given at the time it is
communicated, in person or by telephone or wireless, to the recipient or to a
person at the office of the
5
<PAGE> 8
recipient who the person giving the notice has reason to believe will promptly
communicate it to the recipient.
Any notice, waiver of notice or consent to holding a meeting
shall state the time and place of the meeting but need not specify the purpose
of the meeting.
Section 3.08 Place of Meetings. Regular and special meetings
of the board of directors may be held at any place within or without the State
which has been designated by resolution of the board. In the absence of such
designation, meetings shall be held at the principal executive office of the
corporation.
Section 3.09 Committees of the Board. By resolution adopted by
a majority of the authorized number of directors, the board of directors may
designate such committees as it shall determine, each consisting of two or more
directors, to serve at the pleasure of the board and having such authority as
prescribed by the board, subject to applicable restrictions on committee
authority imposed by the California Corporations Code. Unless, to the extent
permitted by the General Corporation Law, the board of directors shall otherwise
prescribe the manner of proceedings of any such committee, the provisions of
these bylaws with respect to notice and conduct of meetings of the board shall
govern committees of the board and action by such committees.
Section 3.10 Loans to Officers. If the corporation has
outstanding shares held of record by 100 or more persons (determined as provided
by Section 605 of the California Corporations Code) on the date of board
approval, the board may approve a loan of money or property to, or a guarantee
of the obligation of, an officer, whether or not a director, or an employee
benefit plan authorizing such a loan or guaranty to an officer, if the board
determines that such loan, guaranty or plan may reasonably be expected to
benefit the corporation in accordance with the provisions of Section 315 of the
California Corporations Code. Board approval shall require a vote sufficient
without counting the vote of any interested director or directors to approve
such loan, guaranty or benefit plan.
ARTICLE IV
OFFICERS
Section 4.01 Officers. The officers of the corporation shall
be a chairman of the board, a chief executive officer, a president, a secretary
and a chief financial officer. The corporation may also have, at the discretion
of the board of directors, such other officers, with such titles and duties as
may be determined by the board of directors. One person may hold two or more
offices, except that the offices of president and secretary shall not be held by
the same person.
Section 4.02 Election and Term of Office. The officers of the
corporation shall be chosen by the board of directors, and each shall hold
office at the pleasure of the board or until such officer shall resign, subject,
in each case, to the rights, if any, of the corporation and any such officer
under any contract of employment with the corporation.
6
<PAGE> 9
Section 4.03 Removal and Resignation. Any officer may be
removed, either with or without cause, by a majority of the directors at the
time in office, at any regular or special meeting of the board of directors, or,
except in case of an officer chosen by the board of directors, by any officer
upon whom such power of removal may be conferred by the board of directors,
subject, in each case, to the rights, if any, of any such officer under any
contract of employment with the corporation.
Any officer may resign at any time by giving written notice to
the corporation, without prejudice, however, to the rights, if any, of the
corporation under any contract to which such officer is a party. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 4.04 Vacancies. A vacancy in any office shall be
filled in the manner prescribed in these bylaws for regular appointments to such
office.
Section 4.05 Duties and Compensation. Officers of the
corporation shall have such powers and duties, and shall receive such
compensation therefor, as may be specified from time to time by the board of
directors.
ARTICLE V
INDEMNIFICATION OF AGENTS OF THE CORPORATION;
PURCHASE OF LIABILITY INSURANCE
Section 5.01 Indemnification of Agents.
(a) For the purposes of this Section, "Agent" means any person
who is or was a director or officer of this corporation, or is or was serving at
the request of the Board of Directors of this corporation as a director,
officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, including any such entity
which was a predecessor of the corporation or of such other enterprise;
"proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
without limitation an action by or in the right of this corporation); and
"expenses" includes, without limitation, attorneys' fees and any expenses of
establishing a right to indemnification under paragraph (d) or subparagraph (e)
(3) of this Section.
(b) This corporation shall indemnify any person who was or is
a party, or is threatened to be made a party, to any threatened, pending or
completed proceeding (other than an action by or in the right of this
corporation to procure a judgment in its favor) by reason of the fact that such
person is or was an Agent of this corporation, against expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with such proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in the best interests of this
corporation and, in the case of a criminal proceeding, had no reasonable cause
to believe the conduct of such person was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its
7
<PAGE> 10
equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be in
the best interests of this corporation or that the person had reasonable cause
to believe that the person's conduct was unlawful.
(c) This corporation shall indemnify any person who was or is
a party, or is threatened to be made a party, to any threatened, pending or
completed action by or in the right of this corporation to procure a judgment in
its favor by reason of the fact that such person is or was an Agent of this
corporation, against expenses actually and reasonably incurred by such person in
connection with the defense or settlement of such action if such person acted in
good faith, in a manner such person believed to be in the best interests of this
corporation and its shareholders.
No indemnification shall be made under this paragraph (c) for
any of the following:
(1) In respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to this
corporation in the performance of such person's duty to this
corporation and its shareholders, unless and only to the extent that
the court in which such proceeding is or was pending shall determine
upon application that, in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for expenses
and then only to the extent that such court shall determine;
(2) Of amounts paid in settling or otherwise disposing of a
pending action without court approval;
(3) Of expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval; or
(4) Of amounts or expenses the corporation is otherwise
prohibited from paying under California Law.
(d) To the extent that an Agent of this corporation has been
successful on the merits in defense of any proceeding referred to in paragraph
(b) or (c) or in defense of any claim, issue or matter therein, the Agent shall
be indemnified against expenses actually and reasonably incurred by the Agent in
connection therewith.
(e) Except as provided in paragraph (d), any indemnification
under this Section shall be made by this corporation only if authorized in the
specific case, upon a determination that indemnification of the Agent is proper
in the circumstances because the Agent has met the applicable standard of
conduct set forth in paragraph (b) or (c), by any of the following:
(1) A majority vote of a quorum consisting of directors who
are not parties to such proceeding;
8
<PAGE> 11
(2) Approval or ratification by the affirmative vote
of the holders of a majority of the shares of this corporation entitled
to vote represented at a duly held meeting at which a quorum is present
or by the written consent of holders of a majority of the outstanding
shares entitled to vote, and by the affirmative vote or written consent
of such greater proportion of the shares of any class or series as may
be provided in the Articles of Incorporation for such action. For
purposes of determining the required quorum of any meeting of
shareholders called to approve or ratify indemnification of an Agent
and the vote or written consent required therefor, the shares owned by
the person to be indemnified shall not be considered outstanding and
shall not be entitled to vote thereon; or
(3) The court in which such proceeding is or was
pending, upon application made by this corporation or the agent or the
attorney or other person rendering services in connection with the
defense, whether or not such application by the agent, attorney or
other person is opposed by this corporation.
(f) Expenses incurred by or on behalf of an Agent in defending
or investigating any proceeding shall be advanced by this corporation prior to
the final disposition of such proceeding if such Agent undertakes in writing to
repay any such advances if it is ultimately determined that such Agent is not
entitled to be indemnified. Notwithstanding the foregoing, no advance shall be
made by this corporation if a determination is reasonably and promptly made by
the Board of Directors by a majority vote of a quorum of disinterested
directors, or (if such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs) by independent legal counsel,
that, based upon the facts known to the Board or counsel at the time such
determination is made, (a) the Agent acted in bad faith or deliberately breached
a duty to the corporation or its shareholders, and (b) as a result of such
actions by the Agent, it is more likely than not that it will ultimately be
determined that such Agent is not entitled to indemnification.
(g) This Section shall create a right of indemnification for
each person referred to in this Section, whether or not the proceeding to which
the indemnification relates arose in whole or in part prior to adoption of this
Section. The indemnification provided by this Section shall not be exclusive of
any other rights to which those seeking indemnification may be entitled under
any agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office, to the extent such additional rights to
indemnification are authorized in the Articles of Incorporation. The rights to
indemnity under this Section shall continue as to a person who has ceased to be
a director, officer, employee or Agent and shall inure to the benefit of the
heirs, executors and administrators of such person. Nothing contained in this
Section shall affect any right to indemnification to which persons other than
such directors and officers may be entitled by contract, insurance policy or
otherwise.
(h) No indemnification or advance shall be made under this
Section, except as provided in paragraph (d) or subparagraph (e)(3), in any
circumstance where it appears:
9
<PAGE> 12
(1) That it would be inconsistent with a provision of
the Articles of Incorporation, these bylaws, a resolution of the
shareholders or an agreement in effect at the time of the accrual of
the alleged cause of action asserted in the proceeding in which the
expenses were incurred or other amounts were paid, which prohibits or
otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
(i) Upon determination by the board of directors, this
corporation may purchase and maintain insurance on behalf of any Agent of this
corporation against any liability asserted against or incurred by the Agent in
such capacity or arising out of the Agent's status as such, whether or not this
corporation would have the power to indemnify the Agent against such liability
under the provisions of this Section.
(j) This Section does not apply to any proceeding against any
trustee, investment manager or other fiduciary of an employee benefit plan in
such person's capacity as such, even though such person may also be an Agent of
this corporation as defined in paragraph (a). This corporation shall have power
to indemnify such a trustee, investment manager or other fiduciary to the extent
permitted by Section 207(f) of the California Corporations Code.
(k) As a condition precedent to the right to indemnification
under this Section, notice shall be given to this corporation in writing as soon
as practicable of any claim for which indemnity will or could be sought under
this Section. In addition, no costs, charges or expenses for which indemnity
shall be sought hereunder shall be incurred without this corporation's consent,
which consent shall not be unreasonably withheld.
(l) If a claim under this Section is not paid by this
corporation, or on its behalf, within ninety (90) days after a written claim has
been received by this corporation, the Agent may at any time thereafter bring
suit against this corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the Agent shall be entitled to be paid also the
expense of prosecuting such claim.
10
<PAGE> 13
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting secretary of
RemedyTemp, Inc., a California corporation; and
2. That the foregoing bylaws, consisting of ten (10) pages,
including this page, constitute the amended and restated bylaws of said
corporation as duly adopted by the shareholders of the corporation on
______________, 1996.
IN WITNESS WHEREOF, I have executed this Certificate as
secretary of the corporation effective as of the _____ day of June, 1996.
-----------------------------------
Alan M. Purdy
Assistant Secretary
<PAGE> 1
EXHIBIT 4.1
[SPECIMEN COMMON STOCK CERTIFICATE]
<TABLE>
<S> <C> <C>
COMMON STOCK [LOGO] REMEDYTEMP,INC. COMMON STOCK
SHARES SHARES
[RT ] [ ]
SEE REVERSE FOR STATEMENTS RELATING
INCORPORATED UNDER THE LAWS OF TO RIGHTS, PREFERENCES,
THE STATE OF CALIFORNIA PRIVILEGES AND RESTRICTIONS, IF ANY
CUSIP 759549 10 8
</TABLE>
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE
CLASS A COMMON STOCK, $0.01 VALUE, OF
REMEDYTEMP, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/ Alan M. Purdey [SEAL] /s/ Robert E. McDonough Sr.
CHIEF FINANCIAL OFFICER PRESIDENT AND CHIEF EXECUTIVE
OFFICER
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
BY /s/
AUTHORIZED SIGNATURE
- -----------------------------------------------
AMERICAN BANK NOTE COMPANY JULY 3, 1996 fm
3504 ATLANTIC AVENUE
SUITE 12
LONG BEACH, CA 90807 044935fc
(310) 989-2333
(FAX) (310) 426-7450 270-19X REV 2
- -----------------------------------------------
<PAGE> 2
A statement of the rights, preferences and restrictions granted to or
imposed upon the respective classes or series of shares and upon the holders
thereof as established, from time to time, by the Articles of Incorporation
of the Corporation and by any certificate of determination, and the
number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon written request and without
charge from the Chief Financial Officer of the Corporation at its corporate
headquarters.
The certificate also represents Rights that entitle the holder hereof to
certain rights as set forth in a Shareholder Rights Agreement between the
Corporation and American Stock Transfer & Trust Company, as Rights Agent, dated
as of , 1986 (the "Rights Agreement"), the terms, conditions and
limitations of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. The Corporation will mail to the holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
beneficially owned by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- _______________ Custodian _________________
(Cust) (Minor)
under Uniform Gifts to Minors
Act________________________________________
(State)
UNIF TRF MIN ACT -- _______________ Custodian (until age _____)
(Cust)
____________________under Uniform Transfers
(Minor)
to Minors Act______________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, _______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated_____________________________
X________________________________________________
X________________________________________________
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
NOTICE: CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
Signature(s) Guaranteed
By_______________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.
__________________________________________________
AMERICAN BANK NOTE COMPANY JULY 2, 1996 fm
3504 ATLANTIC AVENUE
SUITE 12 044935bk
LONG BEACH, CA 90807
(310) 989-2333
(FAX) (310) 426-7450 REV 1
_________________________________________________
<PAGE> 1
Exhibit 4.2
REMEDYTEMP, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
AS RIGHTS AGENT
--------------
SHAREHOLDER RIGHTS AGREEMENT
DATED AS OF , 1996
<PAGE> 2
TABLE OF CONTENTS
1. Certain Definitions..................................................... 1
2. Appointment of Rights Agent............................................. 5
3. Issue of Rights Certificates............................................ 5
4. Form of Rights Certificates............................................. 7
5. Countersignature and Registration....................................... 7
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates. ......... 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights. ......... 9
8. Cancellation and Destruction of Rights Certificates..................... 10
9. Reservation and Availability of Capital Stock........................... 10
10. Preferred Stock Record Date............................................. 12
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights............................................................. 12
12. Certificate of Adjusted Purchase Price or Number of Shares ............. 19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. .. 19
14. Fractional Rights and Fractional Shares................................. 22
15. Rights of Actions....................................................... 23
16. Agreement of Rights Holders............................................. 24
17. Rights Certificate Holder Not Deemed a Shareholder...................... 24
18. Concerning the Rights Agent............................................. 24
19. Merger or Consolidation or Change of Name of Rights Agent. ............. 25
20. Duties of Rights Agent.................................................. 25
21. Change of Rights Agents................................................. 27
22. Issuance of New Rights Certificates..................................... 28
23. Redemption and Termination.............................................. 28
24. Exchange................................................................ 29
<PAGE> 3
25. Notice of Certain Events................................................ 31
26. Notices................................................................. 32
27. Supplements and Amendments.............................................. 32
28. Successors.............................................................. 33
29. Determination and Actions by the Board of Directors, etc. .............. 33
30. Benefits of this Agreement.............................................. 33
31. Severability............................................................ 33
32. Governing Law........................................................... 34
33. Counterparts............................................................ 34
34. Descriptive Headings; References........................................ 34
ii
<PAGE> 4
SHAREHOLDER RIGHTS AGREEMENT
SHAREHOLDER RIGHTS AGREEMENT, dated as of , 1996
(the "AGREEMENT"), between RemedyTemp, Inc., a California corporation (the
"COMPANY") and American Stock Transfer & Trust Company, a New York corporation
(the "RIGHTS AGENT").
WHEREAS, on April 29, 1996 (the "RIGHTS DIVIDEND DECLARATION
DATE"), the Board of Directors of the Company authorized and declared a dividend
distribution, contingent upon and immediately prior to the consummation of the
initial public offering by the Company of its equity securities (the "EFFECTIVE
TIME") of one Right for each Common Share (as hereinafter defined) of the
Company outstanding at the close of business on the Effective Time (the "RECORD
DATE"), and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock (as hereinafter defined) of the Company issued from
the Record Date (whether originally issued or delivered from the Company's
treasury) until the earliest of the Distribution Date or a Section 13 Event or
the Expiration Date (each as hereinafter defined), each Right initially
representing the right to purchase one one-thousandth of a share of Series A
Junior Participating Preferred Stock of the Company having the rights,
preferences, privileges and restrictions set forth in the Company's Amended and
Restated Articles of Incorporation as effective as of the Record Date, upon the
terms and subject to the conditions hereinafter set forth (the "RIGHTS");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, without the prior
approval of the Board of Directors of the Company, shall become, after the date
hereof, the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, but shall not include (i) an Exempt Person, (ii) a Person who or
which, together with its Affiliates and Associates, shall become the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding solely as a
result of a reduction in the number of shares of Common Stock outstanding due to
a repurchase of Common Stock by the Company, unless such Person shall thereafter
purchase or otherwise become the Beneficial Owner of additional shares of Common
Stock. Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the provisions of this paragraph (a), has
become such inadvertently, and such Person divests as promptly as practicable
a sufficient number of shares of Common Stock so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to
be an "Acquiring Person" for any purposes of this Agreement. Furthermore,
notwithstanding the foregoing, no shareholder of the Company beneficially owning
(together with such shareholder's Affiliates and Associates) 15% or more of the
shares of Common Stock as of the Record Date and after giving effect to the
Company's initial public offering (an "ORIGINAL 15% SHAREHOLDER") and no
Affiliate or Associate of any such shareholder shall be an Acquiring Person
unless and until such Original 15% Shareholder (together with such shareholder's
Associates and Affiliates) shall become the
<PAGE> 5
Beneficial Owner of the Threshold Percentage (as applicable to such shareholder)
of the shares of Common Stock then outstanding, at which point such shareholder
shall be an Acquiring Person. Furthermore, notwithstanding the foregoing, no
Person who becomes the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding as a result of a bequest by Robert E. McDonough, Sr., or
the automatic conversion of shares of Class B Common Stock owned by such Person
into Common Stock on the tenth anniversary of the Company's initial public
offering or upon the death or legal incapacity of Robert E. McDonough, Sr. (an
"EXCLUDED SHAREHOLDER"), and no Affiliate or Associate of any such Excluded
Shareholder, shall be an Acquiring Person unless and until such Excluded
Shareholder (together with such shareholder's Associates and Affiliates) shall
become the Beneficial Owner of the Threshold Percentage (as applicable to such
shareholder) of the shares of Common Stock then outstanding. For purposes
hereof, (i) the "THRESHOLD PERCENTAGE" for an Original 15% Shareholder equals
the sum of 15 and the percentage of the shares of Common Stock as of the Record
Date after giving effect to the Company's initial public offering beneficially
owned by such shareholder and such shareholder's Affiliates and Associates; and
the "Threshold Percentage" for an Excluded Shareholder equals the sum of 15 and
the percentage of the shares of Common Stock beneficially owned by such Excluded
Shareholder and such shareholder's Affiliates and Associates immediately after
the event causing such shareholder to become an Excluded Shareholder. Thus, for
example, an Original 15% Shareholder owning (together with such shareholder's
Affiliates and Associates) 20% of the Common Stock as of the Record Date after
giving effect to the Company's initial public offering, or an Excluded
Shareholder owning (together with such shareholder's Affiliates and Associates)
20% of the Common Stock immediately after the event causing such shareholder to
become an Excluded Shareholder, would become an Acquiring Person when and if
that shareholder (together with such shareholder's Affiliates and Associates)
became the Beneficial Owner of 35% or more of the shares of Common Stock then
outstanding.
(b) "ACT" shall mean the Securities Act of 1933.
(c) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and in effect
on the date of this Agreement (the "EXCHANGE ACT").
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and
shall be deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (B) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering
Event which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 (the "ORIGINAL RIGHTS") or pursuant to Section 11(i) in
connection with an adjustment made with respect to any Original Rights;
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<PAGE> 6
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (d)) or
disposing of any voting securities of the Company; provided, however, that
nothing in this paragraph (d) shall cause a person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such person's participation in good faith
in a firm commitment underwriting until the expiration of forty days after the
date of such acquisition.
(e) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.
(f) "CLASS B COMMON STOCK" means the Class B Common Stock of
the Company, par value $.01 per share. "Class B Common Stock" excludes Common
Stock.
(g) "CLOSE OF BUSINESS" on any given date shall mean 5:00
P.M., California time on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., California time on the next succeeding
Business Day.
(h) "COMMON SHARES" means the Common Stock and the Class B
Common Stock.
(i) "COMMON STOCK" shall mean the Class A Common Stock, $0.01
par value, of the Company, except that "Common Stock" when used with reference
to any Person other than the Company shall mean the capital stock (or units of
beneficial interest which represent the right to participate in profits, losses,
deductions and credits) of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct the
management, of such Person. "Common Stock" excludes Class B Common Stock.
(j) "COMMON STOCK EQUIVALENTS" shall have the meaning set
forth in Section 11(a)(iii).
(k) "CONTINUING DIRECTOR" shall mean (i) any member of the
Board of Directors of the Company who is not, while a member of the Board, an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring
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<PAGE> 7
Person or of any such Affiliate or Associate, and who was a member of the Board
prior to the Effective Date, or (ii) any Person who subsequently becomes a
member of the Board who is not , while a member of the Board, an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended or approved by a
majority of the Continuing Directors.
(l) "CURRENT MARKET PRICE" shall have the meaning set forth in
Section 11(d)(i).
(m) "CURRENT VALUE" shall have the meaning set forth in
Section 11(a)(iii).
(n) "DISTRIBUTION DATE" shall have the meaning set forth in
Section 3(a).
(o) "EQUIVALENT PREFERRED STOCK" shall have the meaning set
forth in Section 11(b).
(p) "EXCHANGE ACT" shall have the meaning set forth in Section
1(c).
(q) "EXEMPT PERSON" shall mean the Company, any Subsidiary of
the Company, any employee benefit plan or employee stock plan of the Company or
any Subsidiary of the Company, or any person or entity organized, appointed, or
established by the Company or any Subsidiary of the Company, for or pursuant to
the terms of any such plan.
(r) "EXPIRATION DATE" shall mean the earliest of (i) the Final
Expiration Date, (ii) the time at which the Rights are redeemed as provided in
Section 23, (iii) the time at which the Board of Directors orders the exchange
of Rights as provided in Section 24, or (iv) the consummation of a transaction
contemplated by Section 13(d).
(s) "FINAL EXPIRATION DATE" shall mean the close of business
on the tenth anniversary of the Record Date.
(t) "PERSON" shall mean any individual, firm, corporation,
partnership or other entity.
(u) "PREFERRED STOCK" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value, of the Company and, to the extent
that there is not a sufficient number of shares of Series A Junior Participating
Preferred Stock authorized to permit the full exercise of the Rights, any other
series of Preferred Stock, $.01 par value, of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A
Junior Participating Preferred Stock.
(v) "PRINCIPAL PARTY" shall have the meaning set forth in
Section 13(b).
(w) "PURCHASE PRICE" shall have the meaning set forth in
Section 4(a).
(x) "RECORD DATE" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
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<PAGE> 8
(y) "REDEMPTION PRICE" shall have the meaning set forth in
Section 23(a).
(z) "RIGHTS" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(aa) "RIGHTS CERTIFICATES" shall have the meaning set forth in
Section 3(a).
(bb) "RIGHTS DIVIDEND DECLARATION DATE" shall-have the meaning
set forth in the WHEREAS clause at the beginning of this Agreement.
(cc) "SECTION 11(A)(II) EVENT" shall mean any event described
in Section 11(a)(ii).
(dd) "SECTION 11(A)(II) TRIGGER DATE" shall have the meaning
set forth in Section 11(a)(iii).
(ee) "SECTION 13 EVENT" shall mean any event described in
clause (x), (y) or (z) of Section 13(a).
(ff) "SPECIAL VOTE:" An action of the Company's Board of
Directors by "Special Vote" means an action that is taken (and can only be
taken) at a time when there are two or more Continuing Directors, and that is
approved by both (i) a majority of the Continuing Directors, and (ii) a majority
of the entire Board of Directors, including the Continuing Directors.
(gg) "SPREAD" shall have the meaning set forth in Section
11(a)(iii).
(hh) "STOCK ACQUISITION DATE" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such or such earlier date as a majority of the directors shall become aware of
the existence of an Acquiring Person; provided that, if such person is
thereafter determined not to have become an Acquiring Person within the meaning
of Section 1(a), then no Stock Acquisition Date shall be deemed to have
occurred.
(ii) "SUBSIDIARY" shall mean, with reference to any Person,
any corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect at least a majority of the
directors of such corporation (or other persons performing similar functions) is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(jj) "SUBSTITUTION PERIOD" shall have the meaning set forth in
Section 11(a)(iii).
(kk) "TRADING DAY" shall have the meaning set forth in Section
11(d)(i).
(ll) "TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
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<PAGE> 9
Any determination required by the definitions contained in
this Section 1 shall be made by the Board of Directors of the Company in its
good faith judgment, which determination shall be binding on the Rights Agent
and the holders of the Rights.
2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent
for the Company and the holders of the Rights (who, in accordance with Section
3, shall prior to the Distribution Date also be the holders of the Common Stock)
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth day after the date that
a tender or exchange offer by any Person (other than an Exempt Person) is first
published or sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon consummation thereof, such
Person, together with its Affiliates and Associates, would be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding, or, if such
Person is an Original 15% Shareholder or an Excluded Shareholder, then such
Person, together with such Person's Affiliates and Associates, would be the
Beneficial Owner of the Threshold Percentage (as applicable to such shareholder)
of the shares of Common Stock then outstanding (irrespective of whether any
shares are actually purchased pursuant to any such offer) (each of the time
periods in (i) and (ii) being subject to extension as provided in Section 27 and
the earliest of (i) and (ii) being herein referred to as the "DISTRIBUTION
DATE"), (x) the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for the Common Shares registered in
the names of the holders of the Common Shares (which certificates for Common
Shares shall be deemed also to be certificates for Rights) and not by separate
certificates, and (y) each Right will be transferable only in connection with
the transfer of the underlying Common Share (including a transfer to the
Company), and until the earlier of the Distribution Date or the Expiration Date,
the transfer of any certificates representing Common Shares in respect of which
Rights have been issued shall also constitute the transfer of the Rights
associated with such Common Shares. As soon as practicable after the
Distribution Date, the Rights Agent will send to the record holder of each
Common Share as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the "RIGHTS
CERTIFICATES"), evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. In the event that an adjustment in the number of
Rights per Common Share has been made pursuant to Section 11(p), at the time of
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a)) so that
Rights Certificates representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) Rights shall be issued in respect of all Common Shares
which are issued after the Record Date but prior to the earliest of the Stock
Acquisition Date or a
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<PAGE> 10
Section 13 Event or the Expiration Date. Certificates representing such Common
Shares (including, without limitation, certificates issued upon transfer or
exchange of Common Stock) shall also be deemed to be certificates for Rights,
and shall bear the following legend:
"This certificate also represents Rights that entitle
the holder hereof to certain rights as set forth in a Shareholder
Rights Agreement between the Corporation and American Stock Transfer &
Trust Company, as Rights Agent, dated as of __________ ____, 1996 (the
"Rights Agreement"), the terms, conditions and limitations of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Corporation will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or beneficially owned by, any Person who
is, was or becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent
holder, may become null and void."
4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of an election to
purchase and of assignment and of certificates to be printed on the reverse
thereof) when, as and if issued, shall each be substantially in the form set
forth in Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date
and on their face shall entitle the holders thereof to purchase such number of
one one-thousandths of a share of Preferred Stock as shall be set forth therein
at the price set forth therein (such exercise price per one one-thousandth of a
share, the "PURCHASE PRICE"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Notwithstanding any other provision of this Agreement, any
Rights Certificate issued pursuant to Section 3(a) or Section 22 that represents
Rights beneficially owned by any Person known to be: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(e), and any Rights
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<PAGE> 11
Certificate issued pursuant to Section 6 or Section 11 upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend, modified
as applicable to apply to such Person:
"The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement). Accordingly, this
Rights Certificate and the Rights represented hereby may become null
and void in the circumstances specified in Section 7(e) of such
Agreement."
5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any other officer of the
Company designated by the Chairman or President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the certificate number and the date of each of the Rights
Certificates.
6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e)
and Section 14, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one-thousandths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
8
<PAGE> 12
exchanged at the office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14, countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Sections 7(e), 23(b) and 24(b), the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and
Section 23(a)), in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-thousandths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$65.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) and shall be payable in accordance with paragraph (c)
below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per one one-thousandth of a share of Preferred Stock (or
other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer tax,
the Rights Agent shall, subject to Section 20(k), thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one- thousandths of a share of
Preferred Stock to be purchased and the Company hereby authorizes its transfer
agent to comply with all such requests, or (B) if
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<PAGE> 13
the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depository
agent, requisition from the depository agent depository receipts representing
such number of one one-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depository agent) and the Company will direct the depository agent to comply
with such request, (ii) requisition from the Company an amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14, (iii)
after receipt of such certificates or depository receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii)) may be made by bank draft, certified bank check or money order
payable to the order of the Company. In the event that the Company is obligated
to issue other securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a), the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate of Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) by or for the Acquiring Person
to holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the provisions of this Section
7(e) and Section 4(b) are complied with, but shall have no liability
to any holder of Rights Certificates or other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or any of their
respective Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights
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<PAGE> 14
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercises, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and, or other securities) that, as provided in this Agreement including
Section 11(a)(iii), will be sufficient to permit the exercise in full of all
outstanding Rights, provided, however, that the Company shall not be required to
reserve and keep available shares of Preferred Stock, Common Stock or other
securities sufficient to permit the exercise in full of all outstanding Rights
pursuant to the adjustments set forth in Section 11(a)(ii), Section 11(a)(iii)
or Section 13 unless, and only to the extent that, the Rights become exercisable
pursuant to such adjustments.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) If necessary to permit the offer and issuance of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon the exercise of Rights, the
Company shall use its best efforts to (i) file, as soon as practicable following
the earliest date after the occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights has
been determined in accordance with Section 11(a)(iii), or as soon as is required
by law following the Distribution Date, as the case may be, a registration
statement under the Act, with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities,
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<PAGE> 15
and (B) the date of the expiration of the Rights. The Company will also take
such action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction, unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement (if required) has been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one one-thousandths of a
share of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the issuance or
delivery of a number of one one-thousandths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or to issue or deliver any certificates for a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
10. Preferred Stock Record Date. Each person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby and such certificate
shall be dated as of the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares (fractional or otherwise) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be)
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<PAGE> 16
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights. The Purchase Price, the number and kind of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e), the Purchase Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of Preferred Stock or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 23(a) and Section 24, in the event any
Person (other than an Exempt Person or an Original 15% Shareholder or an
Excluded Shareholder), alone or together with its Affiliates and Associates,
shall, at any time after the Rights Dividend Declaration Date, become the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
or any Original 15% Shareholder or Excluded Shareholder alone or together with
such shareholder's Affiliates or Associates, shall, at any time after the Rights
Dividend Declaration Date, become the Beneficial Owner of the Threshold
Percentage of the shares of Common Stock then outstanding, unless the event
causing the 15% threshold or the Threshold Percentage, as the case may be, to be
crossed is an acquisition of shares of Common Stock pursuant to a tender offer
or an exchange offer for all outstanding shares of Common Stock at a price and
on terms determined by the Board of Directors of the Company acting by Special
Vote and by at least a majority of the Continuing Directors who are not officers
of the Company, after receiving advice from one or more investment banking
firms, to be (a) at a price which is fair to shareholders of the Company (taking
into account all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of the Company and its
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<PAGE> 17
shareholders, then, proper provision shall be made so that each holder of a
Right (except as provided below and in Section 7(e)) shall thereafter have the
right to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one
one-thousandths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-thousandths of a share
of Preferred Stock for which a Right was exercisable immediately prior to the
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which,
following such occurrence, shall thereafter be referred to as the "PURCHASE
PRICE" for each Right and for all purposes of this Agreement) by 50% of the
Current Market Price (determined pursuant to Section 11(d)) per share of Common
Stock on the date of such occurrence (such number of shares is herein called the
"ADJUSTMENT SHARES"); provided that the Purchase Price and the number of
Adjustment Shares shall be further adjusted as provided in this Agreement to
reflect any events occurring after the date of such occurrence.
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's Articles of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a) and the Rights shall become so
exercisable, to the extent permitted by applicable law and any agreements in
effect on the date hereof to which the Company is a party, the Company shall:
(A) determine the excess of (1) the value of the Adjustment Shares issuable upon
the exercise of a Right (the "CURRENT VALUE") over (2) the Purchase Price (such
excess, the "SPREAD"), and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as shares of Common
Stock (such shares of preferred stock, "COMMON STOCK EQUIVALENTS")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of (x) the
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "SECTION 11(A)(II) TRIGGER DATE"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the "SUBSTITUTION PERIOD"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e), that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares
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<PAGE> 18
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the Current
Market Price (as determined pursuant to Section 11(d)) per share of the Common
Stock on the Section 11(a)(ii) Trigger Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the Common Stock on such
date. The Board of Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Stock upon the exercise of
Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of Preferred
Stock ("EQUIVALENT PREFERRED STOCK")) or securities convertible into Preferred
Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or
per share of Equivalent Preferred Stock (or having a conversion price per share,
if a security convertible into Preferred Stock or Equivalent Preferred Stock)
less than the Current Market Price (as determined pursuant to Section 11(d)) per
share of Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock (and/or
Equivalent Preferred Stock so to be offered and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other then Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price (as determined pursuant to
Section 11(d)) per share of
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<PAGE> 19
Preferred Stock on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion of
the cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock and the
denominator of which shall be such Current Market Price (as determined pursuant
to Section 11(d)) per share of Preferred Stock. Such adjustments shall be made
successively whenever such a record dated is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "CURRENT MARKET PRICE" per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date and for purposes of computations made pursuant to Section 11(a)(iii), the
"Current Market Price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common Stock for
the then ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per share of
the Common Stock is determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of the requisite thirty (30) Trading Day or ten (10) Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Market Price shall be
properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange or the NASDAQ National
Market on which the shares of Common Stock are listed or admitted to trading or,
if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange or the NASDAQ National Market the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or, if on any such date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Stock selected by
the Board of Directors of the Company. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such date
as determined in good faith by the Board of Directors of the Company shall be
used. The term "TRADING DAY" shall mean a day on which the principal national
securities exchange or the NASDAQ National Market on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "Current Market Price" per share shall
mean the fair value per share as determined
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<PAGE> 20
in good faith by the board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "Current Market Price" per share of the
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the Current Market Price of one
one-thousandth of a share of Preferred Stock shall be equal to the Current
Market Price of one share of Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), an adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustments, or
(ii) the Expiration date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of
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<PAGE> 21
such adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest one ten-thousandth) obtained by (i) multiplying (x)
the number of one one-thousandths of a share covered by a Right immediately
prior to this adjustment, by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Rights Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-thousandths of a
share and the number of one one-thousandths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause adjustment reducing the
Purchase Price below the then stated value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable such number of one one-thousandths of a share
of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the
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<PAGE> 22
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of one
one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the Current Market Price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
(ii) merge with or into any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)), or (iii) sell or transfer
(or permit any Subsidiary to sell or transfer), in one transaction, or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)), if (x) at the time of or immediately after such consolidation, merger,
sale or transfer there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger, sale or transfer, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23, 24 or 27, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller
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<PAGE> 23
number of shares, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred Stock
and the Common Stock, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
accordance with Section 25. Notwithstanding the foregoing sentence, the failure
of the Company to give such notice shall not affect the validity of or the force
or effect of or the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained. Any adjustment to be made pursuant to Sections 11 and 13 shall be
effective as of the date of the event giving rise to such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)) shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger, and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property, or
(z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary of the
Company in one or more transactions each of which complies with Section 11(o)),
then, and in each such case, proper provisions shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e), shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, non-assessable and freely tradable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the by the
number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the occurrence of a Section 11(a)(ii) Event
by the
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Purchase Price in effect immediately prior to such Section 11(a)(ii) Event, and
(2) dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "PURCHASE PRICE" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price (determined
pursuant to Section 11(d)(i)) per share of the Common Stock of such Principal
Party on the date of consummation of such Section 13 Event (or the fair market
value on such date of other securities or property of the Principal Party, as
provided for herein); provided that the Purchase Price and the number of shares
of Common Stock of such Principal Party issuable upon exercise of each Right
shall be further adjusted as provided in this Agreement to reflect any events
occurring after the date of the first occurrence of a Section 13 event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had he, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property; and (v) the provisions of
Section 11(a)(ii) shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a): (A) the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer whose issued and outstanding Common Stock has the greatest aggregate
market value or (B) if no securities are so issued, (x) the Person that is the
other party to such merger or consolidation and survives said merger or
consolidation, or, if there is more than one such Person, the Person whose
issued and outstanding Common Stock has the greatest aggregate market value or
(y) if the Person that is the other party to the merger or consolidation does
not survive the merger or consolidation, the Person that does survive the merger
or consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of
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the assets or earning power cannot be determined, whichever of such Persons as
is the issuer of Common Stock having the greatest market value of shares
outstanding;
provided, however, that in any such case, (l) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such persons is the
issuer of the issued and outstanding Common Stock having the greatest aggregate
market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date and similarly comply with applicable state
securities laws;
(ii) will deliver to holders of the Rights historical financial
statements of the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 (or any successor
form) under the Exchange Act;
(iii) use its best efforts, if the Common Stock of the Principal
Party shall become listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on such securities exchange and, if the Common Stock of the
Principal Party shall not be listed on a national securities exchange, to cause
the Rights and the securities purchasable upon exercise of the Rights to be
reported by NASDAQ or such other system then in use; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
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(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock which complies with
the provisions of Section 11(a)(ii) hereof (or a wholly owned Subsidiary of any
such Person or Persons), (ii) the price per share of Common Stock offered in
such transaction is not less than the price per share of Common Stock paid to
all holders of shares of Common Stock whose shares were purchased pursuant to
such tender offer or exchange offer, and (iii) the form of consideration being
offered to the remaining holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to such
tender offer or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution date as provided in Section 11(p), or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Current Market
Value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Current Market Value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the Current Market Value of
one one-thousandth of a share of Preferred Stock shall be one one-thousandth of
the closing price of a share of
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<PAGE> 27
Preferred Stock (as determined pursuant to Section 11(d)(ii)) for the Trading
Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
Current Market Value of one (1) share of Common Stock. For purposes of this
Section 14(c), the Current Market Value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i)) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
16. Agreement of Rights Holders. Every holder of a Right by accepting
the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of
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<PAGE> 28
ownership or writing on the Rights Certificates or the associated Common Share
certificate made by anyone other than the Company or the Rights Agents) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e), shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purposes the holder of the number of one one-thousandths of a
share of Preferred Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder as set forth in a
separately executed written fee agreement. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross negligence or willful misconduct on the part of
the Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
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19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Current Market Price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder only for its own gross
negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of the certificate described in Section 12
setting forth any such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation of
any shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificates or as to whether any shares of Common Stock
or Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board or the President of the Company or any other officer of
the Company designated to the Rights Agent in writing by the Chairman of the
Board or President of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct or any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
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(j) No provision of this Agreement shall require the Rights Agents to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company, and to each transfer
agent of the Common Stock and Preferred Stock by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent (with or without
cause) upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30) days after giving notice
of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or any
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
of any other state of the United States in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus deemed by the Company's Board of Directors to be reasonable under the
circumstances. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agents as the case may be.
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<PAGE> 32
22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the tenth day
following the Record Date), subject to extension as provided in Section 27 or
(ii) the close of business on the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $0.01 per Right,
as such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "REDEMPTION PRICE"). Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the occurrence of an event described in Section 11(a)(ii)
until such time as the Company's right of redemption hereunder has expired. The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the "Current Market Price," as defined in Section 11(d)(i), of
the Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors. Such redemption of the Rights by
the Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish;
provided, however, that any redemption of Rights occurring as of or after the
time a Person becomes an Acquiring Person may be effected, and the method of
payment of the redemption price and conditions to redemption may be determined,
only by the Company's Board of Directors acting by Special Vote.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held, without any interest thereon. Promptly
after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption
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<PAGE> 33
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the Transfer Agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made. The failure to
give notice required by this Section 23(b) or any defect therein shall not
affect the legality or validity of the action taken by the Company.
24. Exchange.
(a) Subject to applicable laws, rules and regulations, and subject to
subsection (c) below, at any time after the occurrence of a Triggering Event,
the Board of Directors of the Company, acting by Special Vote, may cause the
Company to exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 7(e)) for Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "RATIO OF EXCHANGE"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Ratio of Exchange. The Company
shall give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e)) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Stock
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with Section 24(a), the Company shall either take such action as may
be necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights or alternatively, at the option of the Board of Directors
acting by Special Vote, with respect to each Right (i) pay cash in an amount
equal to the Current Value (as hereinafter defined), in lieu of issuing Common
Stock in exchange therefor, or (ii) issue debt or equity securities or a
combination thereof, having a value equal to the Current Value, in lieu of
issuing Common Stock in exchange for each such Right, where the value of such
securities shall be determined by a nationally recognized investment banking
firm selected by the Board of Directors acting by Special Vote, or (iii) deliver
any combination of cash,
30
<PAGE> 34
property, Common Stock and/or other securities having a value equal to the
Current Value in exchange for each Right. For purposes of this Section 24(c)
only, the "CURRENT VALUE" shall mean the product of the current per share market
price of Common Stock (determined pursuant to Section 11(d) on the date of the
occurrence of the event described above in subparagraph (a)) multiplied by the
number of shares of Common Stock for which the Right otherwise would be
exchangeable if there were sufficient shares available. To the extent that the
Company determines that some action need be taken pursuant to clauses (i), (ii),
or (iii) of this Section 24(c), the Board of Directors acting by Special Vote
may temporarily suspend the exercisability of the Rights for a period of up to
sixty (60) days following the date on which the event described in Section 24(a)
shall have occurred, in order to seek any authorization of additional Common
Stock and/or to determine the appropriate form of distribution to be made
pursuant to the above provision and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions of Common
Stock or to distribute certificates that evidence fractional Common Stock. In
lieu of such fractional Common Stock, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Common
Stock would otherwise be issuable, an amount in cash equal to the same fraction
of the current per share market value of a whole Common Stock (as determined
pursuant to the second sentence of Section 11(d)).
(e) The Company may, at the option of the Board of Directors acting by
Special Vote, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of substantially
equivalent value, as determined reasonably and with good faith by the Board of
Directors acting by Special Vote, based upon the advice of one or more
nationally recognized investment banking firms.
(f) Immediately upon the action of the Board of Directors acting by
Special Vote ordering the exchange of any Rights pursuant to subsection (e) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of rights in exchange
therefore as has been determined by the Board of Directors in accordance with
subsection (e) above. The Company shall give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the transfer agent for the Common Stock
of the Company. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Rights will be
effected.
25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to
31
<PAGE> 35
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), or (iv) to
effect any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least ten (10) days prior to the record date for determining holders of the
shares of Preferred Stock for purposes of such action, and in the case of any
such other action, at least ten (10) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any of the events set forth in Section 11(a)(ii) shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii), and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.
26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
RemedyTemp, Inc.
32122 Camino Capistrano
San Juan Capistrano, California 92675
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
32
<PAGE> 36
40 Wall Street
New York, New York 10005
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Transfer Agent.
27. Supplements and Amendments. Prior to the Distribution Date and
subject to the penultimate sentence of this Section 27, the Board of Directors
of the Company may, in its sole and absolute discretion and the Rights Agent
shall, if the Board of Directors so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock, whether or not such supplement or amendment
is adverse to any holders of Rights. From and after the Distribution Date, and
subject to the penultimate sentence of this Section 27, the Board of Directors
acting by Special Vote may, and the Rights Agent shall, if the Board of
Directors acting by Special Vote so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order to (i) cure
any ambiguity, (ii) correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions hereunder, (iii)
shorten or lengthen any time period hereunder, or (iv) otherwise change or
supplement the provisions hereunder in any manner which the Board of Directors
acting by Special Vote may deem necessary or desirable and which shall not
materially and adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of any
such Person); provided, this Agreement may not be supplemented or amended after
the Distribution Date to (A) make the Rights again redeemable after the Rights
have ceased to be redeemable, or (B) change any other time period unless such
change is for the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to the holders of Rights (other than any Acquiring Person
and its Associates or Affiliates). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price or the Final Expiration Date. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
28. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
29. Determination and Actions by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company (acting by Special Vote
where specifically provided for herein) shall have the exclusive power and
authority to
33
<PAGE> 37
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, but not limited to, a
determination to redeem or not redeem the Rights, or to amend this Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors of the Company in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject any member of
the Board of Directors to any liability to the holders of the Rights or to any
other Person.
30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
31. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company
(acting by Special Vote) determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23, if
lapsed, shall be reinstated and shall not expire until the close of business on
the tenth Business Day following the date of such determination by the Board of
Directors of the Company.
32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
33. Counterparts. This Agreement may be executed in counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
34. Descriptive Headings; References. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
34
<PAGE> 38
References herein to Sections and Exhibits shall, unless otherwise specified, be
to the referenced section or exhibit hereof or hereto.
35
<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
REMEDYTEMP, INC.
By:
-----------------------------------
Name: Paul W. Mikos
Title: President
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
36
<PAGE> 40
EXHIBIT A
(FORM OF RIGHTS CERTIFICATE)
CERTIFICATE NO. R______________ ________________RIGHTS
NOT EXERCISABLE AFTER ________, 2006 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.*]
RIGHTS CERTIFICATE
REMEDYTEMP, INC.
This certifies that ________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of ________________, 1996 (the "Rights
Agreement"), between RemedyTemp, Inc., a California corporation (the "Company"),
and American Stock Transfer & Trust Company, a __________________ corporation
(the "Rights Agent"), to purchase from the Company at any time prior to 5:00
P.M. (California time) on _____________, 2006 at the office or offices of the
Rights Agent designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, non-assessable share of Series A Junior
Participating Preferred Stock (the "Preferred Stock") of the Company, at a
purchase price of $65.00 per one one-thousandth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed. The Purchase
Price may be paid by bank draft, certified bank check or money order payable to
the order of the Company.
The number of Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price
- ---------------------
* The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person, and shall replace the
preceding sentence.
<PAGE> 41
per share set forth above, are the number and Purchase Price as of
______________, based on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate an Acquiring of Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of an Acquiring Person, (or of any such Associate
or Affiliate), or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such, such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
The Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the Rights,
limitations of Rights, and obligations, duties and immunities of the Rights
Agent, the Company and the holders of the Rights Certificates, which limitations
of Rights include the temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights Agreement. Copies of
the Rights Agreement are on file at the office of the Rights Agent and are also
available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be (i) redeemed by the Company at its option at a
redemption price of $0.01 per Right or (ii) exchanged by the Company in whole or
part for Common Shares, substantially equivalent rights, or other consideration
as determined by the Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or
2
<PAGE> 42
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or, to receive notice of meeting or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
The Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of _____________________,
(Seal)
ATTEST: REMEDYTEMP, INC.
By: By:
------------------------------- --------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
---------------------------- -----------------------------
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
3
<PAGE> 43
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________________ hereby sells,
assigns and transfers unto ______________________________________________
___________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
__________________________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company with full power of
substitution.
Dated: ___________________,
______________________________
Signature
Signature Guaranteed:
______________________________
<PAGE> 44
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated:
-------------------,
- ------------------------------
Signature
Signature Guaranteed:
- ------------------------------
<PAGE> 45
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 46
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED IF HOLDER DESIRES TO
EXERCISE RIGHTS REPRESENTED BY THE
RIGHTS CERTIFICATE)
To: REMEDYTEMP, INC.
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Rights Certificate to purchase the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of the
Rights (or such other securities of the Company or of any other Person which may
be issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of and delivered to:
Please insert social security or other identifying number _____________
(Please print name and address) ____________________________________
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number _____________
(Please print name and address) _______________________________________
________________________________________________________________________________
Dated: ___________________,
______________________________
Signature
Signature Guaranteed:
______________________________
<PAGE> 47
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(l) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of any such Person.
Dated:
-------------------,
- ------------------------------
Signature
Signature Guaranteed:
- ------------------------------
<PAGE> 48
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 1
EXHIBIT 5.1
Gibson, Dunn & Crutcher LLP
4 Park Plaza, Suite 1700
Irvine, Californis 92614
July 8, 1996
Telephone Our File Number
(714) 451-3800 75293-00027
RemedyTemp, Inc.
32122 Camino Capistrano
San Juan Capistrano, CA 92675
Re: Registration Statement on Form S-1
(Registration No. 333-4276)
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 (the
"Registration Statement") filed by RemedyTemp, Inc., a California corporation
(the "Company") with the Securities and Exchange Commission on May 1, 1996
(Registration No. 333-4276), as amended to the date hereof, in connection with
the registration under the Securities Act of 1933, as amended, of up to an
aggregate of 3,565,000 shares of the Company's Class A Common Stock, par value
$0.01 per share (the "Common Stock"), to be sold in a proposed public offering
(the "Offering"), consisting of (i) up to 1,870,000 shares of Common Stock to be
issued and sold by the Company, and (ii) up to 1,695,000 shares of Common Stock
to be sold by selling shareholders (such shares, together with the shares to be
issued and sold by the Company, being referred to herein as the "Shares"), all
as set forth in the Registration Statement.
As your counsel, we have examined the Company's Amended and Restated
Articles of Incorporation and Amended and Restated Bylaws, each as amended to
the date hereof, and the records of corporate proceedings and other actions
taken by the Company in connection with the
<PAGE> 2
RemedyTemp, Inc.
June 14, 1996
Page 2
authorization and issuance of the Common Stock being sold by the Company and
the sale of the Shares by the Company and the Selling Shareholders. Based upon
the foregoing and in reliance thereon, and subject to (i) compliance with
applicable state securities laws and (ii) receipt from the Securities and
Exchange Commission of an order declaring the Registration Statement effective,
it is our opinion that the Shares, when issued and paid for pursuant to the
Registration Statement (and pertinent exhibits thereto), will be validly issued,
fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and we further consent to the use of our name under the
caption "Legal Matters" in the Prospectus forming a part of said Registration
Statement. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act or the Rules and Regulations of the Commissioner.
Very truly yours,
GIBSON, DUNN & CRUTCHER
WLS/BWC/CNL
<PAGE> 1
Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement")
is entered into effective May 1, 1996 between REMEDYTEMP, INC., a California
corporation (the "Company"), and Robert E. McDonough, Sr.
("McDonough") (collectively referred to herein as the "Parties").
WHEREAS, an Employment Agreement (the "Original Agreement")
was entered into effective December 5, 1994 between the Company and McDonough;
WHEREAS, this Agreement has been prepared to amend the
Original Agreement to respond to certain requests of Dillon, Read & Co., Inc.,
the Company's underwriter in its proposed initial public offering of stock, and
its legal counsel and to implement certain understandings reached between the
Company and McDonough;
WHEREAS, McDonough has served as Chairman of the Board of the
Company ("Chairman") since its inception and Chief Executive Officer from its
inception until May 2, 1994; and
WHEREAS, the Company desires to maintain the benefits of
having McDonough continue to serve as Chairman and McDonough desires to continue
to serve as Chairman.
WHEREAS, the term of the Original Agreement ends on December
4, 2001.
NOW, THEREFORE, in consideration of the foregoing premises,
the Parties hereby amend and restate the Original Agreement and agree to the
following terms and conditions under which McDonough will serve as Chairman.
1. EMPLOYMENT SERVICES AND DUTIES
The Company agrees to employ and retain the services of
McDonough as Chairman, and McDonough hereby agrees to continue employment with
the Company as its Chairman, for the term of this Agreement. McDonough agrees to
perform his duties as Chairman of the Board faithfully, to the best of his
ability and in the best interests of the Company, and to preserve and protect
the confidential information of the Company, and to perform both his regular
duties and strategic projects as requested by the Board of Directors.
2. TERM OF EMPLOYMENT
The Company agrees to employ McDonough, and McDonough agrees
to serve, as Chairman for the period commencing May 1, 1996 and ending on
December 4, 2001 (the "Employment Period").
3. COMPENSATION TERMS
The Company agrees to compensate McDonough for his services
rendered as Chairman under this Agreement as follows:
(a) Effective May 1, 1996, for the Employment Period,
McDonough shall receive a base salary of $390,000 per year.
<PAGE> 2
(b) McDonough shall receive such annual bonuses as
determined by the Board of Directors of the Company in its sole and absolute
discretion; provided, however, that for each fiscal year during the term of this
Agreement McDonough's bonus shall be no less than $160,000 and no more than
$390,000 dependent on his performance and the Company's satisfaction of certain
performance goals set annually by the Compensation Committee of the Board of
Directors and, provided, further, that during the term of that certain
Employment Agreement dated effective May 1, 1996, between the Company and Paul
W. Mikos as Chief Executive Officer of the Company, McDonough's bonus shall be
determined on the same basis and in the same amount as that of the Chief
Executive Officer.
(c) McDonough shall be entitled to and shall receive
any and all other benefits generally available to executive employees of the
Company, including participation in health insurance programs and retirement
plans.
(d) The Company shall pay any and all of McDonough's
existing life insurance premium payments as well as any additional life
insurance premium payments that McDonough shall deem reasonably appropriate. In
the event that McDonough is no longer Chairman or employed by the Company in any
other capacity, the Company shall continue to pay such premiums as required
under each and every life insurance policy. Notwithstanding the above, the total
sum of annual life insurance premium payments made by the Company for McDonough
shall not exceed $50,000 per year.
(e) The Company shall indemnify McDonough in
accordance with the terms and conditions of its then current indemnification
agreements with directors of the Company.
(f) In the event that McDonough becomes disabled and
is unable to perform his duties as Chairman of the Board, he shall continue to
receive as disability income the amount of his base salary under Section 3(a),
but the Board of Directors may elect another person to serve as Chairman of the
Board during the period of McDonough's disability.
4. REGISTRATION RIGHTS
The Company shall grant McDonough certain defined registration
rights for the stock of the Company owned by McDonough, individually or in a
fiduciary capacity, as set forth in that certain Registration Rights Agreement
attached hereto as Exhibit A and executed concurrently herewith.
5. SEVERABILITY
The provisions of this Agreement are severable. If a court of
competent jurisdiction determines that any one or more provisions of this
Agreement is invalid, void or unenforceable, in whole or in part, it will be
severed therefrom. The remaining provisions of this Agreement shall then
continue in full force without being impaired or invalidated in any way.
6. BINDING EFFECT; ASSIGNMENT
This Agreement shall inure to the benefit of and be binding on
the parties and their respective successors and assigns.
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<PAGE> 3
7. ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between
the parties concerning the subject matter hereof. This Agreement supersedes all
negotiations, prior discussions and preliminary agreements. This Agreement may
not be amended except in a writing executed by the Parties.
8. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
9. NOTICES
All notices, requests, demands and other communication
required or contemplated under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when enclosed in a
properly sealed and addressed envelope, registered or certified, and deposited
(postage prepaid) in a post office or branch post office regularly maintained by
the United States Government.
Any notice given to the Company under the terms of this
Agreement shall be addressed to the Company at the address of its principal
place of business. Any notice to be given to McDonough shall be addressed to him
at his home address last shown on the Company's records, or at such other
address as either party may hereafter designate in writing to the other.
10. WAIVER
No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
11. COUNTERPARTS
This Agreement may be executed in counterparts, and such
counterparts may be transmitted by facsimile, and all counterparts, taken
together, will constitute one and the same document.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement effective May 1, 1996.
REMEDYTEMP, INC.
- ----------------------------
Robert E. McDonough, Sr.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
3
<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into
effective May 1, 1996 between REMEDYTEMP, INC., a California corporation (the
"Company"), and Paul W. Mikos, an individual ("Mikos").
WHEREAS, the Company desires to have the benefits of having
Mikos be employed by the Company as its President and Chief Executive Officer
and Mikos desires to be employed by the Company as President and Chief Executive
Officer;
NOW, THEREFORE, in consideration of the promises and the
mutual covenants set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT SERVICES AND DUTIES
The Company agrees to employ and retain the services of Mikos
as President and Chief Executive Officer, and Mikos hereby agrees to be employed
with the Company as its President and Chief Executive Officer. Mikos's duties
and obligations as President and Chief Executive Officer shall be: (i) to
implement the policies determined by the Board of Directors of the Company, (ii)
to generally manage the day-to-day business of the Company and (iii) to prepare
the Company for initial and secondary public offerings of its stock. Mikos
agrees to perform his duties faithfully, to the best of his ability and in the
best interests of the Company, to preserve and protect the confidential
information of the Company, and to perform both his regular duties and strategic
projects as requested by the Board of Directors. As President and Chief
Executive Officer, Mikos shall report directly to the Company's Board of
Directors. With respect to all matters before the Board of Directors related to
this Agreement or to Mr. or Mrs. Mikos, it is understood and agreed that Mr. &
Mrs. Mikos shall abstain from participating and voting as members of the Board
of Directors.
2. TERM OF EMPLOYMENT
Subject to the terms and conditions of this Agreement, the
Company agrees to employ, and Mikos agrees to serve as President and Chief
Executive Officer of the Company for three (3) years commencing on May 1, 1996
and ending on May 1, 1999 (the "Employment Period").
3. COMPENSATION TERMS
The Company agrees to compensate Mikos for his services
rendered as President and Chief Executive Officer under this Agreement as
follows:
(a) Mikos shall receive a base salary of $390,000 per
year payable semi-monthly. In addition, Mikos shall be entitled to earn an
annual performance bonus of up to $390,000 dependent upon his performance and
the Company's satisfaction of certain performance goals set annually by the
Executive Committee of the Board of Directors.
(b) During the Employment Period, Mikos shall be
entitled to and shall receive the same employee benefits package that Mikos
received as an executive officer of the Company immediately prior to the date of
this Agreement, including, without limitation, all health, life and disability
insurance and all policies or agreements providing for indemnification.
<PAGE> 2
4. TERMINATION AND SEVERANCE PACKAGE
The Board of Directors of the Company may terminate Mikos's
employment with the Company, with or without cause, at any time upon notice to
Mikos. Mikos may terminate his employment with the Company at any time upon
notice to the Company's Board of Directors. Upon the termination by the Company
of Mikos's employment with the Company, the Company shall offer Mikos the
following severance package; provided Mikos agrees to the following terms:
(a) For a period of two (2) years after his
termination, Mikos shall receive an annual compensation of Three Hundred Ninety
Thousand Dollars ($390,000) per year, payable semi-monthly (the "Severance
Payments").
(b) In consideration for the agreements set forth
herein and the Severance Payments, Mikos shall, upon the termination of his
employment, execute a release of the Company, the Board of Directors of the
Company, and all officers, employees and agents of the Company from any and all
claims, liabilities, actions, causes of action, obligations, costs, damages,
losses and demands of every kind and nature whatsoever known or unknown, which
arise out of, relate to or are in any manner whatsoever connected with any
action, transaction, occurrence or event which has occurred prior to the date of
the release and those which may arise out of or are in any manner whatsoever
connected with or related to the termination of Mikos's employment with the
Company. Such release shall include a waiver of all rights granted under Section
1542 of the California Civil Code which reads as follows: A general release does
not extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which, if known by him must have
materially affected his settlement with the debtor. Cal. Civ. Code Section 1542.
(c) In consideration of the agreements set forth
herein and the Severance Payments, Mikos agrees that upon termination of his
employment with the Company he shall resign as a Director of the Board of
Directors of the Company.
5. NONDISCLOSURE
Mikos shall at all times keep confidential and
maintain the confidentiality of all proprietary information, confidential
information, and/or trade secrets of the Company, including but not limited to
customer lists, the EDGE system, HPT, and IntelliSearch ("Proprietary
Information"), and shall not, unless the Company's prior written consent is
obtained, at any time after the date hereof, either directly or indirectly, use
any Proprietary Information for his own benefit, or in competition with, or to
the detriment of the Company, or divulge, disclose, or communicate any
Proprietary Information to any person or entity in any manner whatsoever, except
to employees or agents of the Company having a need to know such Proprietary
Information, and only to the extent necessary to perform his responsibilities on
behalf of the Company. In addition, for a period of two (2) years after the
termination of his employment with the Company, Mikos shall not solicit
employees or customers of the Company in any geographical location where the
Company conducts business.
6. REGISTRATION EXPENSES
To the extent that Mikos is permitted to sell stock
in the Company owned by him individually or in a fiduciary capacity
(collectively, the "Mikos Stock") in a public offering of stock by the Company,
all expenses incurred in effecting any registration of such Mikos Stock,
including, all registration and filing fees, printing expenses, expenses of
compliance with blue sky laws, fees and disbursements of counsel for the
Company,
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<PAGE> 3
expenses of any audits incidental to or required by any such registration, and
expenses of all marketing and promotional efforts requested by the managing
underwriter shall be borne by the Company; provided, however, that Mikos shall
bear underwriting discounts and/or brokerage fees and commissions relating to
the sale of the Mikos Stock.
7. SEVERABILITY
The provisions of this Agreement are severable. If a court of
competent jurisdiction determines that any one or more provisions of this
Agreement is invalid, void or unenforceable, in whole or in part, it will be
severed therefrom. The remaining provisions of this Agreement shall then
continue in full force without being impaired or invalidated in any way.
8. NO ASSIGNMENT
The parties acknowledge and agree that this Agreement is
personal in nature and may not be assigned by Mikos.
9. ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between
the parties concerning the subject matter hereof. This Agreement supersedes all
negotiations, prior discussions and preliminary agreements. This Agreement may
not be amended except in a writing executed by the parties.
10. GOVERNING LAW AND ARBITRATION
This Agreement shall be governed by and construed in
accordance with the laws of the State of California and the parties agree that
the venue for the resolution of all disputes hereunder shall be in the
appropriate courts in the County of Orange, California.
11. NOTICES
All notices, requests, demands and other communication
required or contemplated under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when enclosed in a
properly sealed and addressed envelope, registered or certified, and deposited
(postage prepaid) in a post office or branch post office regularly maintained by
the United States Government.
Any notice given to the Company under the terms of this
Agreement shall be addressed to the Company at the address of its principal
place of business. Any notice to be given to Mikos shall be addressed to him at
his home address last shown on the Company's records, or at such other address
as either party may hereafter designate in writing to the other.
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<PAGE> 4
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the dates below.
DATE:____________________ REMEDYTEMP, INC., a California
Corporation
By:___________________________
Robert E. McDonough, Sr.
Chairman of the Board
DATE:____________________ ______________________________
Paul W. Mikos
SPOUSAL CONSENT
The undersigned has reviewed this Agreement and consents and
agrees to its terms.
Date:____________________ ______________________________
Susan McDonough Mikos
4
<PAGE> 1
EXHIBIT 10.11
REMEDYTEMP, INC.
FORM OF 1996 STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in the Plan and not otherwise
defined shall have the meanings set forth below:
(a) "AWARD" means an Incentive Award or a Non-employee Director's
Option.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time. Where the context so requires, a reference to a particular Code
section or regulation thereunder shall also be a reference to any successor
provision of the Code to such section or regulation.
(d) "COMMISSION" means the Securities and Exchange Commission.
(e) "COMMITTEE" means the committee appointed by the Board to
administer the Plan and, to the extent required to comply with Rule 16b-3 under
the Exchange Act, consisting of two or more Board members, each of whom shall be
a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange
Act. In addition, if Incentive Awards are to be made to persons subject to
Section 162(m) of the Code and such awards are intended to constitute
Performance-Based Compensation, then each of the Committee's members shall also
be an "outside director," as such term is defined in the regulations under
Section 162(m) of the Code.
(f) "COMMON STOCK" means the Class A Common Stock of the Company, $0.01
par value.
(g) "DIVIDEND EQUIVALENT" means a right granted by the Company under
Section 3.07 to a holder of a Stock Option, Stock Appreciation Right, or other
Award denominated in shares of Common Stock to receive from the Company during
the Applicable Dividend Period (as defined in Section 3.07) payments equivalent
to the amount of dividends payable to holders of the number of shares of Common
Stock underlying such Stock Option, Stock Appreciation Right, or other Award.
(h) "ELIGIBLE PERSON" shall include officers or key employees,
consultants, and advisors of the Company (as determined by the Committee) other
than Non-employee Directors.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended. Where the context so requires, a reference to a particular section of
the Exchange Act or rule thereunder shall also refer to any successor provision
to such section or rule.
(j) "FAIR MARKET VALUE" of a share of the Company's capital stock as of
a particular date shall be: (i) if the stock is listed on an established stock
exchange or exchanges (including, for this purpose, The Nasdaq National Market),
the mean between the highest and
<PAGE> 2
lowest sale prices of the stock quoted for such date in the Transactions Index
of each such exchange as averaged with such mean price as reported on any and
all other exchanges, as published in The Wall Street Journal and determined by
the Committee, or, if no sale price was quoted in any such Index for such date,
then as of the next preceding date on which such a sale price was quoted; or
(ii) if the stock is not then listed on an exchange, the average of the closing
bid and asked prices per share for the stock in the over-the-counter market as
quoted on the NASDAQ system on such date (in the case of (i) or (ii), subject to
adjustment as and if necessary and appropriate to set an exercise price not less
than 100% of the fair market value of the stock on the date an option is
granted); or (iii) if the stock is not then listed on an exchange or quoted in
the over-the-counter market, an amount determined in good faith by the
Committee; provided, however, that when appropriate, the Committee in
determining Fair Market Value of capital stock of the Company may take into
account such other factors as it may deem appropriate under the circumstances.
Notwithstanding the foregoing, the Fair Market Value of capital stock for
purposes of grants of Incentive Stock Options shall be determined in compliance
with applicable provisions of the Code. The Fair Market Value of rights or
property other than capital stock of the Company means the fair market value
thereof as determined by the Committee on the basis of such factors as it may
deem appropriate.
(k) "INCENTIVE AWARD" means any Stock Option, Restricted Stock, Stock
Appreciation Right or Dividend Equivalent granted or sold to an Eligible Person
under the Plan, but not a Non-employee Director's Option.
(l) "INCENTIVE STOCK OPTION" means a Stock Option that qualifies as an
incentive stock option under Section 422 of the Code and the regulations
thereunder.
(m) "JUST CAUSE DISMISSAL" means a termination of a Recipient's
employment for any of the following reasons: (i) the Recipient violates any
reasonable rule or regulation of the Board or the Recipient's superiors or the
Chief Executive Officer or President of the Company that results in damage to
the Company or which the Recipient fails to correct within a reasonable time
after written notice; (ii) any willful misconduct or gross negligence by the
Recipient in the discharge of the responsibilities assigned to him or her; (iii)
any willful failure to perform his or her job as required to meet Company
objectives; (iv) any wrongful conduct of a Recipient which has an adverse impact
on the Company or which constitutes a misappropriation of Company assets; (v)
the Recipient's performing services for any other person or entity which
competes with the Company while he or she is employed by the Company, without
the written approval of the Chief Executive Officer or President of the Company;
or (vi) any other conduct that the Board or Committee determines constitutes
Just Cause for Dismissal, provided, however, that if a Recipient is party to an
employment agreement with the Company providing for just cause dismissal (or
some comparable notion) of Recipient from his or her employment with the
Company, "Just Cause Dismissal" purposes of the Plan shall have the same meaning
as ascribed thereto or to such comparable notion in such employment agreement.
(n) "NON-EMPLOYEE DIRECTOR" means a director of the Company who
qualifies as a "disinterested" person or a "Non-Employee Director" under Rule
16b-3 under the Exchange Act.
(o) "NON-EMPLOYEE DIRECTOR'S OPTION" means a Stock Option granted to a
Non-employee Director pursuant to Article IV of the Plan.
(p) "NON-QUALIFIED STOCK OPTION" means a Stock Option that is not an
Incentive Stock Option.
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<PAGE> 3
(q) "OPTION" or "STOCK OPTION" means a right to purchase Common Stock
granted under the Plan, and can be an Incentive Stock Option or a Non-qualified
Stock Option.
(r) "PAYMENT EVENT" means the event or events giving rise to the right
to payment of a Performance Award.
(s) "PERFORMANCE AWARD" means an award granted under Section 3.03,
payable in cash, Common Stock or a combination thereof, which vests and becomes
payable over a period of time upon attainment of performance criteria
established in connection with the grant of the award.
(t) "PERFORMANCE-BASED COMPENSATION" means performance-based
compensation as described in Section 162(m) of the Code and the regulations
thereunder. If the amount of compensation a Recipient will receive under any
Incentive Award is not based solely on an increase in the value of Common Stock
after the date of grant or award, the Committee, in order to qualify an
Incentive Award as performance-based compensation under Section 162(m) of the
Code and the regulations thereunder, can condition the grant, award, vesting, or
exercisability of such an award on the attainment of a preestablished, objective
performance goal. For this purpose, a preestablished, objective performance goal
may include one or more of the following performance criteria: (i) cash flow,
(ii) earnings per share (including earnings before interest, taxes, and
amortization), (iii) return on equity, (iv) total stockholder return, (v) return
on capital, (vi) return on assets or net assets, (vii) income or net income,
(viii) operating margin, (ix) return on operating revenue, and (x) any other
similar performance criteria contemplated by the regulations under Section
162(m).
(u) "PERMANENT DISABILITY" means that the Recipient becomes physically
or mentally incapacitated or disabled so that he or she is unable to perform
substantially the same services as he or she performed prior to incurring such
incapacity or disability (the Company, at its option and expense, being entitled
to retain a physician to confirm the existence of such incapacity or disability,
and the determination of such physician to be binding upon the Company and the
Recipient), and such incapacity or disability continues for a period of three
consecutive months or six months in any 12-month period or such other period(s)
as may be determined by the Committee with respect to any Option, provided that
for purposes of determining the period during which an Incentive Stock Option
may be exercised pursuant to Section 3.02(g)(ii) hereof, Permanent Disability
shall mean "permanent and total disability" as defined in Section 22(e) of the
Code.
(v) "PURCHASE PRICE" means the purchase price (if any) to be paid by a
Recipient for Restricted Stock as determined by the Committee (which price shall
be at least equal to the minimum price required under applicable laws and
regulations for the issuance of Common Stock which is nontransferable and
subject to a substantial risk of forfeiture until specific conditions are met).
(w) "RECIPIENT" means a recipient of an Award hereunder.
(x) "RESTRICTED STOCK" means Common Stock that is the subject of an
award made under Section 3.04 and which is nontransferable and subject to a
substantial risk of forfeiture until specific conditions are met as set forth in
this Plan and in any statement evidencing the grant of such Award.
(y) "SECURITIES ACT" means the Securities Act of 1933, as amended.
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<PAGE> 4
(z) "STOCK APPRECIATION RIGHT" or "SAR" means a right granted under
Section 3.05 to receive a payment that is measured with reference to the amount
by which the Fair Market Value of a specified number of shares of Common Stock
appreciates from a specified date, such as the date of grant of the SAR, to the
date of exercise.
(aa) "STOCK PAYMENT" means a payment in shares of the Company's Common
Stock to replace all or any portion of the compensation (other than base salary)
that would otherwise become payable to a Recipient.
ARTICLE II
GENERAL
2.01 ADOPTION. The Plan has been adopted by the Board and approved by
the shareholders of the Company and is effective immediately prior to the
closing of the initial public offering of the Company's securities.
2.02 PURPOSE. The purpose of the Plan is to promote the interests of
the Company and its shareholders by using investment interests in the Company to
attract and retain key personnel, to encourage and reward their contributions to
the performance of the Company, and to align their interests with the interests
of Company's shareholders.
2.03 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee, which, subject to the express provisions of the Plan, shall have the
power to construe the Plan and any agreements or memoranda defining the rights
and obligations of the Company and Recipients thereunder, to determine all
questions arising thereunder, to adopt and amend such rules and regulations for
the administration thereof as it may deem desirable, and otherwise to carry out
the terms of the Plan and such agreements and confirming memoranda. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Award granted under the Plan shall be final. Any action taken by, or
inaction of, the Committee relating to the Plan or Awards shall be within the
absolute discretion of the Committee and shall be conclusive and binding upon
all persons. No member of the Committee shall be liable for any such action or
inaction except in circumstances involving bad faith of himself or herself.
Subject only to compliance with the express provisions hereof, the Committee may
act in its absolute discretion in matters related to the Plan or Awards,
provided, however, that notwithstanding anything herein to the contrary, the
Committee shall have no authority or discretion as to the selection of persons
eligible to receive Non-employee Director's Options or the timing, exercise
price, or number of shares covered by Non-employee Director's Options, which
matters are specifically governed by the Plan. Any action of the Committee with
respect to administration of the Plan shall be taken pursuant to a majority vote
or unanimous written consent of its members. Subject to the requirements of
Section 1.01(e), the Board may from time to time increase or decrease the number
of members of the Committee, remove from membership on the Committee all or any
portion of its members, and appoint such person or persons as it desires to fill
any vacancy existing on the Committee, whether caused by removal, resignation or
otherwise.
2.04 PARTICIPATION. A person shall be eligible to receive grants of
Incentive Awards under the Plan if, at the time of the Award's grant, he or she
is an Eligible Person.
2.05 SHARES OF COMMON STOCK SUBJECT TO PLAN.
(a) Plan Limit and Counting. The shares that may be issued upon
exercise of or in the form of Awards under the Plan shall be authorized and
unissued shares of Common Stock, previously issued shares of Common Stock
reacquired by the Company, and unused
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<PAGE> 5
Award shares pursuant to the final sentence of this Section 2.05(a). The
aggregate number of shares that may be issued pursuant to Awards under the Plan
shall not exceed 900,000 shares of Common Stock, subject to adjustment in
accordance with Article V. Shares of Common Stock subject to unexercised
portions of any Award granted under the Plan that expire, terminate or are
cancelled, and shares of Common Stock issued pursuant to an Award under the Plan
that are reacquired by the Company pursuant to the terms of the Award under
which such shares were issued, will again become available for the grant of
further Awards under this Plan.
(b) Annual Limit. Notwithstanding any other provision of this Plan, no
Eligible Person shall be granted Incentive Awards with respect to more than
100,000 shares of Common Stock in any one calendar year; provided, however, that
this limitation shall not apply if it is not required in order for the
compensation attributable to Incentive Awards hereunder to qualify as
Performance-Based Compensation. The limitation set forth in this Section 2.05(b)
shall be subject to adjustment as provided in Article V, but only to the extent
such adjustment would not affect the status of compensation attributable to
Incentive Awards hereunder as Performance-Based Compensation.
2.06 AWARDS SUBJECT TO PLAN.
(a) Terms. Each Award shall be subject to the terms and conditions of
the Plan and such other terms and conditions (whether or not applicable to any
other award) established by the Committee as are not inconsistent with the
purpose and provisions of the Plan including, without limitation, provisions to
assist the Recipient in financing the purchase of Common Stock through the
exercise of Stock Options, provisions for the forfeiture of or restrictions on
resale or other disposition of shares of Common Stock acquired under any Award,
provisions giving the Company the right to repurchase shares of Common Stock
acquired under any Award in the event the Recipient elects to dispose of such
shares, and provisions to comply with federal and state securities laws and
federal and state income tax withholding requirements.
(b) Award Documents. Each Award granted under the Plan shall be
evidenced by an award agreement duly executed on behalf of the Company and by
the Recipient or, in the Committee's discretion, a confirming memorandum issued
by the Company to the Recipient, setting forth such terms and conditions
applicable to the Award as the Committee may in its discretion determine. Such
option agreements or confirming memoranda may but need not be identical and
shall comply with and be subject to the terms and conditions of the Plan, a copy
of which shall be provided to each Recipient and incorporated by reference into
each option agreement or confirming memorandum. Any award agreement or
confirming memorandum may contain such other terms, provisions and conditions
not inconsistent with the Plan as may be determined by the Committee.
2.07 AMENDMENTS.
(a) Amendment and Suspension of the Plan. The Board or the Committee
may, insofar as permitted by applicable laws and regulations, from time to time
suspend or discontinue the Plan or revise or amend it in any respect whatsoever,
and the Plan as so revised or amended will govern all options thereunder,
including those granted before such revision or amendment, except that no such
amendment shall impair or diminish in any material respect any rights or impose
additional material obligations under any Award theretofore granted under the
Plan without the consent of the person to whom such Award was granted.
Amendments shall be subject to approval by the Company's shareholders only to
the extent required to comply with applicable laws or regulations.
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<PAGE> 6
(b) Amendment of Incentive Awards. Subject to the requirements set
forth in the Plan for amendment of particular Incentive Awards, the Committee
may, with the consent of a Recipient, make such modifications in the terms and
conditions of an Incentive Award as it deems advisable. Without limiting the
generality of the foregoing, the Committee may, in its discretion with the
consent of the Recipient, at any time and from time to time after the grant of
any Incentive Award accelerate or extend the vesting or exercise period of the
Incentive Award in whole or part, and adjust or reduce the purchase or exercise
price of Incentive Awards held by such Recipient by cancellation of such
Incentive Awards and granting of Incentive Awards at lower purchase or exercise
prices or by modification, extension or renewal of such Incentive Awards.
(c) Other Rights. Except as otherwise provided in this Plan or in the
applicable award agreement or confirming memorandum, no amendment, suspension or
termination of the Plan will, without the consent of the Recipient, alter,
terminate, impair or adversely affect any right or obligation under any Award
previously granted under the Plan.
2.08 TERM OF PLAN. Awards may be granted under the Plan until the tenth
anniversary of the effective date of the Plan, whereupon the Plan shall
terminate. No Awards may be granted during any suspension of the Plan or after
its termination for any reason. Notwithstanding the foregoing, each Award
properly granted under the Plan shall remain in effect until such Award has been
exercised or terminated in accordance with its terms and the terms of the Plan.
2.09 RESTRICTIONS. All Awards granted under the Plan shall be subject
to the requirement that, if at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to Awards granted under the Plan upon any securities exchange or under
any state or federal law, or the consent or approval of any government or
regulatory body or authority, is necessary or desirable as a condition of, or in
connection with, the granting of such an Award or the issuance, if any, or
purchase of shares in connection therewith, such Award may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company. Unless the shares of stock covered by an Award
granted under the Plan have been effectively registered under the Securities
Act, the Company shall be under no obligation to issue such shares unless the
Recipient shall give a written representation and undertaking to the Company
satisfactory in form and scope to counsel to the Company and upon which, in the
opinion of such counsel, the Company may reasonably rely, that he or she is
acquiring such shares for his or her own account as an investment and not with a
view to, or for sale in connection with, the distribution of any such shares of
stock, and that he or she will make no transfer of the same except in compliance
with any rules and regulations in force at the time of such transfer under the
Securities Act, or any other applicable law or regulation, and that if shares of
stock are issued without such registration, a legend to this effect may be
endorsed upon the securities so issued, and the Company may order its transfer
agent to stop transfers of such shares.
2.10 NONASSIGNABILITY. No Award granted under the Plan shall be
assignable or transferable except (a) by will or by the laws of descent and
distribution, or (b) subject to the final sentence of this Section 2.10, upon
dissolution of marriage pursuant to a qualified domestic relations order or, in
the discretion of the Committee and under circumstances that would not adversely
affect the interests of the Company, pursuant to a nominal transfer that does
not result in a change in beneficial ownership. During the lifetime of a
Recipient, an Award granted to him or her shall be exercisable only by the
Recipient (or the Recipient's permitted transferee) or his or her guardian or
legal representative. Notwithstanding the foregoing, (x) no Award owned by a
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Recipient subject to Section 16 of the Exchange Act may be assigned or
transferred in any manner inconsistent with Rule 16b-3 as interpreted and
administered by the Commission and its staff, and (y) Incentive Stock Options
(or other Awards subject to transfer restrictions under the Code) may not be
assigned or transferred in violation of Section 422(b)(5) of the Code or the
Treasury Regulations thereunder, and nothing herein is intended to allow such
assignment or transfer.
2.11 WITHHOLDING TAXES. Whenever shares of stock are to be issued upon
exercise of or in connection with an Award granted under the Plan or
subsequently transferred, the Committee shall have the right to require the
Recipient to remit to the Company an amount sufficient to satisfy any federal,
state and local withholding tax requirements prior to issuance of such shares.
The Committee may, in the exercise of its discretion, allow satisfaction of tax
withholding requirements by accepting delivery of stock of the Company or by
withholding a portion of the stock otherwise issuable in connection with an
Award.
2.12 RIGHTS OF ELIGIBLE PERSONS AND RECIPIENTS. Except as otherwise set
forth herein, a Recipient or a permitted transferee of an Award shall have no
rights as a shareholder with respect to any shares issuable or issued in
connection with the Award until the date of the receipt by the Company of all
amounts payable in connection with exercise of the Award and performance by the
Recipient of all obligations thereunder. Status as an Eligible Person shall not
be construed as a commitment that any Award will be granted under this Plan to
an Eligible Person or to Eligible Persons generally. Nothing contained in this
Plan (or in award agreements or confirming memoranda or in any other documents
related to this Plan or to Awards granted hereunder) shall confer upon any
Eligible Person or Recipient any right to continue in the employ of the Company
or any of its subsidiaries or affiliates or constitute any contract or agreement
of employment or engagement, or interfere in any way with the right of the
Company or any of its subsidiaries or affiliates to reduce such person's
compensation or other benefits or to terminate the employment of such Eligible
Person or Recipient, with or without cause. No person shall have any right,
title or interest in any fund or in any specific asset (including shares of
capital stock) of the Company or any of its subsidiaries or affiliates by reason
of any Award granted hereunder. Neither this Plan (or any documents related
hereto) nor any action taken pursuant hereto shall be construed to create a
trust of any kind or a fiduciary relationship between the Company or any of its
subsidiaries or affiliates and any person. To the extent that any person
acquires a right to receive an Award hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Company.
2.13 OTHER COMPENSATION PLANS. The adoption of the Plan shall not
affect any other stock option, incentive or other compensation plans in effect
for the Company, and the Plan shall not preclude the Company from establishing
any other forms of incentive or other compensation for employees, directors, or
advisors of the Company, whether or not approved by shareholders.
2.14 PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
successors and assigns of the Company.
2.15 PARTICIPATION BY FOREIGN EMPLOYEES. Notwithstanding anything to
the contrary herein, the Committee may, consistent with the purposes of the
Plan, modify grants of Awards to confer the intended benefits of the Plan upon
Recipients who are foreign nationals or employed outside of the United States to
recognize differences in applicable law, tax policy or local custom.
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ARTICLE III
AWARDS
3.01 GRANTS OF AWARDS. Subject to the express provisions of the Plan,
the Committee may from time to time in its discretion select the Eligible
Persons to whom, and the time or times at which, Incentive Awards shall be
granted or sold, the nature of each Incentive Award, the number of shares of
Common Stock or the number of rights that make up or underlie each Incentive
Award, the period for the exercise of each Incentive Award, the performance
criteria (which need not be identical) utilized to measure the value of
Performance Awards, and such other terms and conditions applicable to each
individual Incentive Award as the Committee shall determine. The Committee may
grant at any time new Incentive Awards to an Eligible Person who has previously
received Incentive Awards or other grants (including other stock options)
whether such prior Incentive Awards or such other grants are still outstanding,
have previously been exercised in whole or in part, or are cancelled in
connection with the issuance of new Incentive Awards. The Committee may grant
Incentive Awards singly or in combination or in tandem with other Incentive
Awards as it determines in its discretion. The purchase price or initial value
and any and all other terms and conditions of the Incentive Awards may be
established by the Committee without regard to existing Incentive Awards or
other grants. Further, the Committee may amend in a manner not inconsistent with
the Plan the terms of any existing Incentive Award previously granted to such
Eligible Person, provided that the consent of the Recipient shall be required
for amendments that impair or diminish in any material respect any rights or
impose additional material obligations under the Incentive Award to be amended.
Notwithstanding the foregoing, however, members of the Committee shall not be
eligible to receive Incentive Awards.
3.02 STOCK OPTIONS.
(a) Nature of Stock Options. Stock Options may be Incentive Stock
Options or Non-qualified Stock Options; Stock Options granted as Incentive Stock
Options that fail or cease to qualify as such shall be treated as Non-qualified
Stock Options hereunder.
(b) Setting the Exercise Price. The exercise price for each Option
shall be determined by the Committee at the date such Option is granted. The
exercise price may be less than the Fair Market Value of the Common Stock
subject to the Option, provided that in no event shall the exercise price be
less than the par value of the shares of Common Stock subject to the Option, and
provided further that the exercise price of an Incentive Stock Option shall be
not less than such amount as is necessary to enable such Option to be treated as
an "incentive stock option" within the meaning of Section 422 of the Code. The
Committee, with the consent of the Recipient, and subject to compliance with
statutory or administrative requirements applicable to Incentive Stock Options,
may amend the terms of any Option (other than a Non-employee Director's Option)
to provide that the exercise price of the shares remaining subject to the Option
shall be reestablished at a price below the existing exercise price thereof or
effect a reduction in exercise price by cancellation of an existing option and
grant of a replacement option at an exercise price below the existing exercise
price thereof. If the exercise price of an Option is reduced (or such Option is
canceled for a new Option) and such Option is Performance-Based Compensation,
the reduction of the Option's price (or the cancellation and grant of a new
Option) shall be treated as the grant of a new Option and both the old and new
Option shall be taken into account for purposes of applying the stock limit of
Section 2.05(b). No modification of any other term or provision of any Option
which is amended in accordance with the foregoing shall be required, although
the Committee may, in its discretion, make such further modifications of any
such Option (other than Non-employee Director's Options) as are not inconsistent
with the Plan.
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(c) Payment of the Exercise Price. The exercise price shall be payable
upon the exercise of an Option in legal tender of the United States or capital
stock of the Company delivered in transfer to the Company by or on behalf of the
person exercising the Option and duly endorsed in blank or accompanied by stock
powers duly endorsed in blank, with signatures guaranteed in accordance with the
Exchange Act if required by the Committee, or retained by the Company from the
Stock otherwise issuable upon exercise or surrender of vested and/or exercisable
Awards or other equity incentive awards previously granted to the Recipient and
being exercised (if applicable) (in either case valued at Fair Market Value as
of the exercise date); or such other consideration as the Committee may from
time to time in the exercise of its discretion deem acceptable in any particular
instance, provided, however, that the Committee may, in the exercise of its
discretion, (i) allow exercise of an Option in a broker-assisted or similar
transaction in which the exercise price is not received by the Company until
promptly after exercise, and/or (ii) allow the Company to loan the exercise
price to the person entitled to exercise the Option, if the exercise will be
followed by a prompt sale of some or all of the underlying shares and a portion
of the sales proceeds is dedicated to full payment of the Exercise Price and
amounts required pursuant to Section 2.11.
(d) Option Period and Vesting. Options granted hereunder (other than
Non-employee Director's Options) shall vest and may be exercised as determined
by the Committee, except that exercise of such Options after termination of the
Recipient's employment shall be subject to Section 3.02(g). Each Option granted
hereunder (other than a Non-employee Director's Option) and all rights or
obligations thereunder shall expire on such date as shall be determined by the
Committee, but not later than ten years after the date the Option is granted, or
five years after the date of grant in the case of a Recipient of an Incentive
Stock Option who at the time of grant owns more than 10% of the combined voting
power of the Company (after application of the constructive ownership rules of
Section 424(d) of the Code), or any Parent or Subsidiary (as defined in Sections
424(e) and (f) of the Code, respectively), and shall be subject to earlier
termination as herein provided.
(e) Exercise of Options. Except as otherwise provided herein, an Option
may become exercisable, in whole or in part, on the date or dates specified by
the Committee (or, in the case of Non-employee Director's Options, the Plan) and
thereafter shall remain exercisable until the expiration or earlier termination
of the Option. No Option shall be exercisable except in respect of whole shares,
and fractional share interests shall be disregarded. Not less than 100 shares of
stock (or such other amount as is set forth in the applicable option agreement
or confirming memorandum) may be purchased at one time and Options must be
exercised in multiples of 100 unless the number purchased upon exercise is the
total number at the time available for purchase under the terms of the Option.
An Option shall be deemed to be exercised when the Secretary or other designated
official of the Company receives written notice of such exercise from the
Recipient, together with payment of the exercise price and any amounts required
under Section 2.11. Notwithstanding any other provision of the Plan, the
Committee may impose, by rule and in option agreements or confirming memoranda,
such conditions upon the exercise of Options (including, without limitation,
conditions limiting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements, including without
limitation Rule 10b-5 or Rule 16b-3 (or any successor rule) under the Exchange
Act and any applicable section of or regulation under the Code.
(f) Limitation on Exercise of Incentive Stock Options. The aggregate
Fair Market Value (determined as of the respective date or dates of grant) of
the stock for which one or more Options granted to any Recipient under the Plan
(or any other option plan of the Company or any of its subsidiaries or
affiliates) may for the first time become exercisable as Incentive Stock Options
under the federal tax laws during any one calendar year shall not exceed
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$100,000. Any Options granted as Incentive Stock Options pursuant to the Plan in
excess of such limitation shall be treated as Non-qualified Stock Options.
(g) Termination of Employment.
(i) Termination for Cause. Except as otherwise provided in a
written agreement between the Company and the Recipient, which may be entered
into at any time before or after termination, in the event of a Just Cause
Dismissal of a Recipient all of the Recipient's unexercised Options, whether or
not vested, shall expire and become unexercisable as of the date of such Just
Cause Dismissal.
(ii) Termination other than Just Cause Dismissal. Subject to
subsection (i) above and subsection (iii) below, and except as otherwise
provided in a written agreement between the Company and the Recipient, or a
confirming memorandum issued by the Company to the Recipient with the
Recipient's consent, which may be entered into or delivered at any time before
or after termination, in the event of a Recipient's termination of employment
for:
(A) any reason other than Just Cause Dismissal, death, or
Permanent Disability, the Recipient's unexercised Options, whether or not
vested, shall expire and become unexercisable as of the earlier of (1) the date
such Options would expire in accordance with their terms if the Recipient
remained employed or (2) three calendar months after the date of termination in
the case of Incentive Stock Options, or six months after the date of termination
in the case of Non-qualified Stock Options.
(B) death or Permanent Disability, the Recipient's
unexercised Options, whether or not vested, shall expire and become
unexercisable as of the earlier of (1) the date such Options would expire in
accordance with their terms if the Recipient remained employed or (2) 12 months
after the date of termination.
(iii) Alteration of Vesting and Exercise Periods. Notwithstanding
anything to the contrary in subsections (i) or (ii) above, the Committee may in
its discretion pursuant to Section 2.07(b) designate shorter or longer periods
to exercise Options following a Recipient's termination of employment. Options
shall be exercisable by a Recipient (or his successor in interest) following
such Recipient's termination of employment only to the extent that installments
thereof had become exercisable on or prior to the date of such termination
unless the Company has a written agreement with the Recipient of the Option
providing otherwise or the vesting period is extended pursuant to Section
2.07(b).
3.03 PERFORMANCE AWARDS.
(a) Grant of Performance Award. The Committee shall determine the
performance criteria (which need not be identical and may be established on an
individual or group basis) governing Performance Awards, the terms thereof, and
the form and time of payment of Performance Awards.
(b) Payment of Award; Limitation. Upon satisfaction of the conditions
applicable to a Performance Award, payment will be made to the Recipient in cash
or in shares of Common Stock valued at Fair Market Value or a combination of
Common Stock and cash, as the Committee in its discretion may determine.
(c) Annual Limit. Notwithstanding any other provision of this Plan, no
Eligible Person shall be paid a Performance Award in excess of $250,000 in any
one calendar
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year; provided, however, that this limitation shall not apply to the extent it
is not required in order for the compensation attributable to the Performance
Award hereunder to qualify as Performance-Based Compensation.
(d) Expiration of Performance Award. If any Recipient's employment with
the Company is terminated for any reason other than normal retirement, death, or
Permanent Disability prior to the time a Performance Award or any portion
thereof becomes payable, all of the Recipient's rights under the unpaid portion
of the Performance Award shall expire and terminate unless otherwise determined
by the Committee. In the event of termination of employment by reason of death,
Permanent Disability or normal retirement, the Committee, in its discretion, may
determine what portions, if any, of the Performance Award should be paid to the
Recipient.
3.04 RESTRICTED STOCK.
(a) Award of Restricted Stock. The Committee shall determine the
Purchase Price (if any) applicable to Restricted Stock, the terms of payment of
the Purchase Price, the restrictions upon the Restricted Stock, and when such
restrictions shall lapse.
(b) Requirements of Restricted Stock. All shares of Restricted Stock
granted or sold pursuant to the Plan will be subject to the following
conditions:
(i) No Transfer. The shares may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, alienated or encumbered until
the restrictions are removed or expire;
(ii) Certificates. The Committee may require that the certificates
representing Restricted Stock granted or sold to a Recipient pursuant to the
Plan remain in the physical custody of an escrow holder or the Company until all
restrictions are removed or expire;
(iii) Restrictive Legends. Each certificate representing Restricted
Stock granted or sold to a Recipient pursuant to the Plan will bear such legend
or legends making reference to the restrictions imposed upon such Restricted
Stock as the Committee in its discretion deems necessary or appropriate to
enforce such restrictions; and
(iv) Other Restrictions. The Committee may impose such other
conditions on Restricted Stock as the Committee may deem advisable including,
without limitation, restrictions under the Securities Act, under the Exchange
Act, under the requirements of any stock exchange upon which such Restricted
Stock or shares of the same class are then listed and under any blue sky or
other securities laws applicable to such shares.
(c) Lapse of Restrictions. The restrictions imposed upon Restricted
Stock will lapse in accordance with such schedule or other conditions as are
determined by the Committee.
(d) Rights of Recipient. Subject to the provisions of Section 3.04(b)
and any restrictions imposed upon the Restricted Stock, the Recipient will have
all rights of a shareholder with respect to the Restricted Stock granted or sold
to such Recipient under the Plan, including the right to vote the shares and
receive all dividends and other distributions paid or made with respect thereto.
(e) Termination of Employment. Unless the Committee in its discretion
determines otherwise, upon a Recipient's termination of employment for any
reason, all of the
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Recipient's Restricted Stock remaining subject to restrictions imposed pursuant
to the Plan on the date of such termination of employment shall be repurchased
by the Company at the Purchase Price (if any) paid therefor by the Recipient.
3.05 STOCK APPRECIATION RIGHTS.
(a) Granting of Stock Appreciation Rights. The Committee may approve
the grant to Eligible Persons of Stock Appreciation Rights, related or unrelated
to Options, at any time.
(b) SARs Related to Options.
(i) A Stock Appreciation Right granted in connection with an Option
granted under this Plan will entitle the holder of the related Option, upon
exercise of the Stock Appreciation Right, to surrender such Option, or any
portion thereof to the extent unexercised, with respect to the number of shares
as to which such Stock Appreciation Right is exercised, and to receive payment
of an amount computed pursuant to Section 3.05(b)(iii). Such Option will, to the
extent surrendered, then cease to be exercisable.
(ii) A Stock Appreciation Right granted in connection with an
Option hereunder will be exercisable at such time or times, and only to the
extent that, the related Option is exercisable, and will not be transferable
except to the extent that such related Option may be transferable.
(iii) Upon the exercise of a Stock Appreciation Right related to an
Option, the Holder will be entitled to receive payment of an amount determined
by multiplying: (i) the difference obtained by subtracting the Exercise Price of
a share of Common Stock specified in the related Option from the Fair Market
Value of a share of Common Stock on the date of exercise of such Stock
Appreciation Right (or as of such other date or as of the occurrence of such
event as may have been specified in the instrument evidencing the grant of the
Stock Appreciation Right), by (ii) the number of shares as to which such Stock
Appreciation Right is exercised.
(c) SARs Unrelated to Options. The Committee may grant Stock
Appreciation Rights unrelated to Options to Eligible Persons. Section
3.05(b)(iii) shall be used to determine the amount payable at exercise under
such Stock Appreciation Right, except that in lieu of the Option Exercise Price
specified in the related Option the initial base amount specified in the Award
shall be used.
(d) Limits. Notwithstanding the foregoing, the Committee, in its
discretion, may place a dollar limitation on the maximum amount that will be
payable upon the exercise of a Stock Appreciation Right under the Plan.
(e) Payments. Payment of the amount determined under the foregoing
provisions may be made solely in whole shares of Common Stock valued at their
Fair Market Value on the date of exercise of the Stock Appreciation Right or,
alternatively, at the sole discretion of the Committee, in cash or in a
combination of cash and shares of Common Stock as the Committee deems advisable.
The Committee has full discretion to determine the form in which payment of A
Stock Appreciation Right will be made and to consent to or disapprove the
election of a Recipient to receive cash in full or partial settlement of a Stock
Appreciation Right. If the Committee decides to make full payment in shares of
Common Stock, and the amount payable results in a fractional share, payment for
the fractional share will be made in cash.
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(f) Rule 16b-3. The Committee may, at the time a Stock Appreciation
Right is granted, impose such conditions on the exercise of the Stock
Appreciation Right as may be required to satisfy the requirements of Rule 16b-3
under the Exchange Act (or any other comparable provisions in effect at the time
or times in question).
(g) Termination of Employment. Section 3.02(g) will govern the
treatment of Stock Appreciation Rights upon the termination of a Recipient's
employment with the Company.
3.06 STOCK PAYMENTS. The Committee may approve Stock Payments of the
Company's Common Stock to any Eligible Person for all or any portion of the
compensation (other than base salary) or other payment that would otherwise
become payable by the Company to the Eligible Person in cash.
3.07 DIVIDEND EQUIVALENTS. The Committee may grant Dividend Equivalents
to any Recipient who has received a Stock Option, SAR, or other Award
denominated in shares of Common Stock. Such Dividend Equivalents shall be
effective and shall entitle the recipients thereof to payments during the
"APPLICABLE DIVIDEND PERIOD," which shall be (i) the period between the date the
Dividend Equivalent is granted and the date the related Stock Option, SAR, or
other Award is exercised, terminates, or is converted to Common Stock, or (ii)
such other time as the Committee may specify in the written instrument
evidencing the grant of the Dividend Equivalent. Dividend Equivalents may be
paid in cash, Common Stock, or other Awards; the amount of Dividend Equivalents
paid other than in cash shall be determined by the Committee by application of
such formula as the Committee may deem appropriate to translate the cash value
of dividends paid to the alternative form of payment of the Dividend Equivalent.
Dividend Equivalents shall be computed as of each dividend record date and shall
be payable to recipients thereof at such time as the Committee may determine.
Notwithstanding the foregoing, if it is intended that an Incentive Award qualify
as Performance-Based Compensation and the amount of the compensation the
Eligible Person could receive under the award is based solely on an increase in
value of the underlying stock after the date of grant or award (i.e., the grant,
vesting, or exercisability of the award is not conditioned upon the attainment
of a preestablished, objective performance goal described in Section 1.01(t)),
then the payment of any Dividend Equivalents related to the award shall not be
made contingent on the exercise of the award.
ARTICLE IV
NON-EMPLOYEE DIRECTOR'S OPTIONS
4.01 GRANTS OF ORIGINAL AND INITIAL OPTIONS.
(a) Original Options. Persons serving as Non-employee Directors as of
the closing of the initial public offering of the Company's securities shall,
upon such closing, receive a one-time grant of an option to purchase up to
10,000 shares (or 15,000 shares if such person has served as a director of the
Company for at least two years) of the Company's Common Stock at an exercise
price per share equal to the price to the public in such initial public
offering, subject to adjustment as set forth in Article V. Options granted under
this Section 4.01(a) are "ORIGINAL OPTIONS" for purposes hereof.
(b) Initial Options. Each Non-employee Director who joins the Board
after the consummation of the initial public offering of the Company's
securities shall, upon first becoming a Non-employee Director, receive a
one-time grant of an option to purchase up to 10,000 shares of the Company's
Common Stock at an exercise price per share equal to the Fair Market Value of
the Company's Common Stock on the date of grant, subject to (a) vesting as set
forth in
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Section 4.03, and (b) adjustment as set forth in Article V. Options granted
under this Section 4.01(b) are "INITIAL OPTIONS" for purposes hereof.
4.02 GRANTS OF ADDITIONAL OPTIONS. Immediately following the annual
meeting of shareholders of the Company next following an Eligible Director's
becoming an Eligible Director, and immediately following each subsequent annual
meeting of shareholders of the Company, in each case if the Eligible Director
has served as a director since his or her election or appointment and has been
re-elected as a director at such annual meeting or is continuing as a director
without being re-elected due to the classification of the board, such Eligible
Director shall automatically receive an option to purchase up to 5,000 shares of
the Company's Common Stock (an "ADDITIONAL OPTION"). In addition to the
Additional Options described above, an individual who was previously an Eligible
Director and received an initial grant of stock options under the Plan or
pursuant to a prior option plan for the Company's directors, who then ceased to
be a director for any reason, and who then again becomes an Eligible Director,
shall upon again becoming an Eligible Director automatically receive an
Additional Option. The exercise price per share for all Additional Options shall
be equal to the fair market value of the Company's Common Stock on the date of
grant, subject to (a) vesting as set forth in Section 4.03, and (b) adjustment
as set forth in Article V. No individual may receive Additional Options to
purchase more than an aggregate of 20,000 shares of the Company's Common Stock,
less the number of additional options received under any other option plan for
the Company's directors.
4.03 VESTING. Original Options shall vest and become exercisable with
respect to all underlying shares upon grant. Initial Options shall vest and
become exercisable with respect to 50% of the underlying shares upon the date of
grant and 50% of the underlying shares immediately prior to the next annual
shareholders' meeting following the date of grant (or, if an annual meeting of
shareholders occurs within six months after the grant date, then immediately
prior to the second annual shareholders' meeting after the date of grant), if
the Recipient has remained a director from the grant date to such vesting time.
Additional Options shall vest and become exercisable with respect to all
underlying shares upon the earlier of (y) the first anniversary the grant date
or (z) immediately prior to the annual meeting of shareholders of the Company
next following the grant date, if the optionee has served as a director from the
grant date to such earlier date. Notwithstanding the foregoing, however, Initial
Options and Additional Options that have not vested and become exercisable at
the time the optionee ceases to be a director shall terminate.
4.04 EXERCISE. The exercise price for Non-employee Directors' Options
shall be payable as set forth in Section 3.02(c). Non-employee Directors'
Options shall be exercised in the manner provided in Section 3.02(e).
4.05 TERM OF OPTIONS AND EFFECT OF TERMINATION. Notwithstanding any
other provision of the Plan, no Non-employee Director's Option granted under the
Plan shall be exercisable after the expiration of ten years from the effective
date of its grant. In the event that the recipient of any Non-employee
Directors' Options granted under the Plan shall cease to be a director of the
Company, (a) all Original Options and Initial Options granted under this plan to
such recipient shall be exercisable, to the extent already exercisable at the
date such recipient ceases to be a director and regardless of the reason the
recipient ceases to be a director, for a period of 365 days after that date (or,
if sooner, until the expiration of the option according to its terms), and shall
then terminate; and (b) all Additional Options granted under this Plan to such
recipient shall be exercisable, to the extent already exercisable at the date
such recipient ceases to be a director, for a period of 365 days after that date
(or, if sooner, until the expiration of the option according to its terms) if he
or she ceases to be a director because of death or permanent disability, or for
a period of 90 days after that date (or, if sooner, until the expiration of the
option
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according to its terms) if he or she ceases to be a director for any other
reason, and shall then terminate. In the event of the death of an optionee while
such optionee is a director of the Company or within the period after
termination of such status during which he or she is permitted to exercise an
option, such option may be exercised by any person or persons designated by the
optionee on a beneficiary designation form adopted by the Plan administrator for
such purpose or, if there is no effective beneficiary designation form on file
with the Company, by the executors or administrators of the optionee's estate or
by any person or persons who shall have acquired the option directly from the
optionee by his or her will or the applicable laws of descent and distribution.
ARTICLE V
CORPORATE TRANSACTIONS
5.01 ANTI-DILUTION ADJUSTMENTS. The number of shares of Common Stock
available for issuance upon exercise of Awards granted under the Plan, the
number of shares for which each Award can be exercised, and the exercise price
per share of Awards shall be appropriately and proportionately adjusted for any
increase or decrease in the number of issued and outstanding shares of Common
Stock resulting from a subdivision or consolidation of shares or the payment of
a stock dividend or any other increase or decrease in the number of issued and
outstanding shares of capital stock of the Company effected without receipt of
consideration by the Company. No fractional interests will be issued under the
Plan resulting from any such adjustments. The preceding sentence shall not
result in an adjustment to the terms of an Incentive Stock Option unless such
adjustment either (a) would not cause the Option to lose its status as an
Incentive Stock Option or (b) is agreed to in writing by the Committee and the
Recipient.
5.02 REORGANIZATIONS; MERGERS; CHANGES IN CONTROL. Subject to the other
provisions of this Section 5.02, if the Company shall consummate any
reorganization or merger or consolidation in which holders of shares of the
Company's Common Stock are entitled to receive in respect of such shares any
other consideration (including, without limitation, a different number of such
shares), each Award outstanding under the Plan exercisable for Common Stock
shall thereafter be exercisable, in accordance with the Plan, only for the kind
and amount of securities, cash and/or other property receivable upon such
reorganization or merger or consolidation by a holder of the same number of
shares of Common Stock as are subject to that Award immediately prior to such
reorganization or merger or consolidation, and any appropriate adjustments will
be made to the exercise price thereof. In addition, if a Change in Control (as
defined below) occurs and in connection with such Change in Control any
Recipient's employment with the Company is terminated, then subject to the terms
of any written employment agreement between the Company and the Recipient and
the specific terms of any Award, such Recipient shall have the right to exercise
or receive the full benefit of his or her Awards granted under the Plan in whole
or in part during the applicable time period provided in Section 3.02(g) without
regard to any vesting or performance requirements or other milestones. For
purposes hereof, but without limitation, a Recipient's employment with the
Company will be deemed to have been terminated in connection with a Change of
Control if (i) the Recipient is removed from his or her employment with the
Company by or resigns his or her employment with the Company upon request of a
Person (as defined in paragraph (a) below) exercising practical voting control
over the Company following the Change in Control or a person acting upon
authority or at the instruction of such Person, or (ii) the Recipient's position
is eliminated as a result of a reduction in force within 150 days after the
consummation of the Change in Control. In addition, if a Change in Control
occurs and in connection with such Change in Control any recipient of a
Non-employee Director's Option granted under the Plan ceases to be a director of
the Company or its successor, then such recipient shall have the right to
exercise his or her Non-Employee Director's Options granted under the Plan in
whole or in part during the applicable time period provided in Section 4.05
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without regard to any vesting requirements. For purposes hereof, but without
limitation, a director will be deemed to have ceased to be a director of the
Company or its successor in connection with a Change in Control if such director
(i) is removed by or resigns upon request of a Person (as defined in paragraph
(a) below) exercising practical voting control over the Company following the
Change in Control or a person acting upon authority or at the instruction of
such Person, or (ii) is willing and able to continue as a director of the
Company or its successor but is not re-elected to or retained on the Company's
board of directors by the Company's shareholders through the shareholder vote or
consent action for election of directors that precedes and is taken in
connection with, or next follows, the Change in Control, and is not elected or
appointed to the board of directors of the successor. For purposes hereof, a
"CHANGE IN CONTROL" means the following and shall be deemed to occur if any of
the following events occur:
(a) Any person, entity or group, within the meaning of Section 13(d) or
14(d) of the Exchange Act, but excluding the Company, its subsidiaries, any
employee benefit or stock ownership plan of the Company or its subsidiaries, and
any shareholder of the Company who, together with such shareholder's Affiliates,
owned at least 25% of the Common Stock prior to the effective date of the Plan
("affiliate" being defined for such purpose as an entity controlled by or under
common control with such shareholder), and also excluding an underwriter or
underwriting syndicate that has acquired the Company's securities solely in
connection with a public offering thereof (such person, entity or group being
referred to herein as a "Person"), becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of
either the then outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding securities entitled to vote generally in the
election of directors; or
(b) Individuals who, as of the effective date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the Company,
provided that any individual who becomes a director after the effective date
hereof whose election, or nomination for election by the Company's shareholders,
is approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered to be a member of the Incumbent Board;
or
(c) Consummation by the Company of the sale or other disposition by the
Company of all or substantially all of the Company's assets or a reorganization
or merger or consolidation of the Company with any other person, entity or
corporation, other than
(i) a reorganization or merger or consolidation that would result
in the voting securities of the Company outstanding immediately prior thereto
(or, in the case of a reorganization or merger or consolidation that is preceded
or accomplished by an acquisition or series of related acquisitions by any
Person, by tender or exchange offer or otherwise, of voting securities
representing 5% or more of the combined voting power of all securities of the
Company, immediately prior to such acquisition or the first acquisition in such
series of acquisitions) continuing to represent, either by remaining outstanding
or by being converted into voting securities of another entity, more than 50% of
the combined voting power of the voting securities of the Company or such other
entity outstanding immediately after such reorganization or merger or
consolidation (or series of related transactions involving such a reorganization
or merger or consolidation), or
(ii) a reorganization or merger or consolidation effected to
implement a recapitalization or reincorporation of the Company (or similar
transaction) that does not result in a material change in beneficial ownership
of the voting securities of the Company or its successor; or
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(d) Approval by the shareholders of the Company or an order by a
court of competent jurisdiction of a plan of liquidation of the Company.
5.03 DETERMINATION BY THE COMMITTEE. To the extent that the
foregoing adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive. The grant of an Award pursuant to the
Plan 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 of any part of its business or assets.
<PAGE> 1
Exhibit 10.12
REMEDYTEMP, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the provisions of the RemedyTemp, Inc. 1996
Employee Stock Purchase Plan (the "PLAN").
1. PURPOSE.
The purpose of the Plan is to maintain competitive equity compensation
programs and to provide employees of RemedyTemp, Inc. (the "COMPANY") with an
opportunity and incentive to acquire a proprietary interest in the Company
through the purchase of the Company's Class A Common Stock, thereby more closely
aligning the interests of the Company's employees and stockholders. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended
("SECTION 423"). Accordingly, the provisions of the Plan shall be construed to
extend and limit participation consistent with the requirements of Section 423.
2. DEFINITIONS.
Capitalized terms used in this Plan and not otherwise defined have the
meanings set forth below.
"ADMINISTRATOR" means the Committee, or the Board if the Board asserts
administrative authority over the Plan pursuant to Section 13.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means a committee of members of the Board meeting the
qualifications described in Section 13 and appointed by the Board to administer
the Plan.
"COMMON STOCK" shall mean the Class A Common Stock of the Company.
"COMPENSATION" means, with respect to each participant for each pay
period, the full base salary or hourly compensation and any cash bonus paid to
such participant. Except as otherwise determined by the Committee for all
participants, "Compensation" does not include (i) commissions, overtime pay or
shift premiums, (ii) any amount contributed on behalf of a participant to any
pension plan or plan of deferred compensation, (iii) any automobile or
relocation allowances (or reimbursement for any such expenses), (iv) any amounts
realized as compensation from the exercise of qualified or nonqualified stock
options, (v) any amounts paid as a starting bonus or finder's fee, (vi) any
amounts paid to a participant in the form of fringe benefits, such as health and
welfare, hospitalization, and group life insurance benefits, or perquisites, or
paid in lieu of such benefits, such as cash-out credits generated under a plan
qualified under Code Section 125, or (vii) other similar forms of extraordinary
compensation.
"ELIGIBLE EMPLOYEE" means an Employee who has been an Employee for at
least six months.
<PAGE> 2
"EMPLOYEE" means any individual who is customarily employed for at least fifteen
(15) hours per week and more than five (5) months in a calendar year by the
Company or a Subsidiary that is permitted to participate in the Plan under
Section 16(b). For purposes of the Plan, the employment relationship shall be
treated as continuing while the individual is on sick leave or other leave of
absence approved by the Company, except that when the period of leave exceeds 90
days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship will be deemed to have
terminated on the 91st day of such leave.
"ENROLLMENT DATE" means the first day of each Offering Period, i.e.
August 1, 1996 and each February 1 and August 1 thereafter for the duration of
the Plan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE DATE" means the last day of each Purchase Period, i.e.
January 31, 1997 and each July 31 and January 31 thereafter for the duration of
the Plan.
"FAIR MARKET VALUE" of the Common Stock on any date means the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the Nasdaq
National Market, its Fair Market Value shall be the closing sales price for such
stock (or the closing bid, if no sales were reported), as quoted on such
exchange or system (or the exchange or system with the greatest volume of
trading in the Common Stock) on the date of such determination (or, if such date
is not a Trading Day, then on the next preceding Trading Day), as reported in
the Wall Street Journal or such other source as the Administrator deems
reliable; or
(2) If the Common Stock is quoted on the National Association
of Securities Dealers Automated Quotation System (but not on the Nasdaq National
Market) or is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the
high and low asked prices for the Common Stock on the date of such determination
(or, if such date is not a Trading Day, then on the next preceding Trading Day),
as reported in the Wall Street Journal or such other source as the Administrator
deems reliable; or
(3) In the absence of an established market for the Common
Stock, the Fair Market Value of the Common Stock shall be determined in good
faith by the Administrator.
"OFFERING PERIOD" means each period of twenty-four (24) months, either
(i) commencing on August 1, 1996 and each August 1 thereafter for the duration
of the Plan and terminating on the July 31 twenty-four (24) months later, or
(ii) commencing on February 1, 1997 and each February 1 thereafter for the
duration of the Plan and terminating on the January 31 twenty-four (24) months
later. The Administrator shall have the power to change the duration of Offering
Periods without stockholder approval as set forth in Section 12 or if such
change is announced at least fifteen (15) days prior to the scheduled beginning
of the first Offering Period to be affected.
"OPTION" means the option granted to each participant pursuant to
Section 4 upon enrollment in an Offering Period.
"PERIODIC EXERCISE LIMIT" has the meaning set forth in Section 4(a).
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<PAGE> 3
"PLAN ACCOUNT" means an account maintained by the Company for each
participant in the Plan, to which are credited the payroll deductions made for
such participant pursuant to Section 5 and from which are debited amounts paid
for the purchase of shares upon exercise of such participant's Option pursuant
to Section 6.
"PURCHASE PRICE" as of any Exercise Date means an amount equal to 85%
of the Fair Market Value of a share of Common Stock on the Exercise Date or on
the Enrollment Date for the Offering Period in which such Exercise Date occurs,
whichever is lower.
"PURCHASE PERIOD" means each six-month period within an Offering
Period, commencing each August 1 and February 1 and ending each July 31 and
January 31, respectively.
"RESERVES" means the number of shares of Common Stock covered by each
Option that have not yet been exercised and the number of shares of Common Stock
that have been authorized for issuance under the Plan, but not yet placed under
Option.
"RULE 16b-3" means Rule 16b-3 under the Exchange Act and any successor
provision.
"SUBSIDIARY" has the meaning as set forth under Section 424(f) of the
Code.
"TRADING DAY" means a day on which national stock exchanges and the
National Association of Securities Dealers Automated Quotation System are open
for trading.
3. OFFERING PERIODS AND PARTICIPATION.
The Plan shall be implemented through a series of consecutive and
overlapping Offering Periods. An Eligible Employee may enroll in an Offering
Period by delivering a subscription agreement in the form of Exhibit A hereto to
the Company's payroll office at least five (5) business days prior to the
Enrollment Date for that Offering Period. Eligible Employees shall participate
in only one Offering Period at a time, and a subscription agreement in effect
for a Plan participant for a particular Offering Period shall continue in effect
for subsequent Offering Periods if the participant remains an Eligible Employee
and has not withdrawn pursuant to Section 8.
4. OPTIONS.
(a) Grants. On the Enrollment Date for each Offering Period, each
Eligible Employee participating in such Offering Period shall be granted an
Option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to that number of shares of Common Stock
determined by dividing $12,500 by the Fair Market Value of a share of Common
Stock on the Enrollment Date (such number of shares being the "PERIODIC EXERCISE
LIMIT"). The Option shall expire immediately after the last Exercise Date of the
Offering Period.
(b) Grant Limitations. Any provisions of the Plan to the contrary
notwithstanding, no participant shall be granted an Option under the Plan:
(i) if, immediately after the grant, such participant (taking
into account stock held by other persons that is attributed to such
Employee pursuant to Section 424(d) of the Code) would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%)
or more of the total combined voting power or value of all classes of
stock of the Company or of any Subsidiary (as determined under Treasury
regulations Section 1.423-2(d)); or
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<PAGE> 4
(ii) which permits such participant's rights to purchase stock
under all employee stock purchase plans of the Company and its
Subsidiaries to accrue at a rate that exceeds Twenty-Five Thousand
Dollars ($25,000) worth of stock (determined at the Fair Market Value
of the shares at the time such Option is granted) in any calendar year.
(c) No Rights in Respect of Underlying Stock. The participant will have
no interest or voting right in shares covered by an Option until such Option has
been exercised.
5. PAYROLL DEDUCTIONS.
(a) Participant Designations. The subscription agreement applicable to
an Offering Period shall designate payroll deductions to be made on each payday
during the Offering Period as a whole number percentage not exceeding ten
percent (10%) of such Eligible Employee's Compensation for the pay period
preceding such payday, provided that the aggregate of such payroll deductions
during the Offering Period shall not exceed ten percent (10%) of the
participant's Compensation during said Offering Period.
(b) Plan Account Balances. The Company shall make payroll deductions as
specified in each participant's subscription agreement on each payday during the
Offering Period and credit such payroll deductions to such participant's Plan
Account. A participant may not make any additional payments into such Plan
Account. No interest will accrue on any payroll deductions. All payroll
deductions received or held by the Company under the Plan may be used by the
Company for any corporate purpose, and the Company shall not be obligated to
segregate such payroll deductions.
(c) Participant Changes. A participant may discontinue his or her
participation in the Plan as provided in Section 8, or may increase or decrease
(subject to such limits as the Administrator may impose) the rate of his or her
payroll deductions during any Purchase Period by filing with the Company a new
subscription agreement authorizing such a change in the payroll deduction rate.
The change in rate shall be effective with the first full payroll period
following five (5) business days after the Company's receipt of the new
subscription agreement, unless the Company elects to process a given change in
participation more quickly.
(d) Decreases. Notwithstanding the foregoing, to the extent necessary
to comply with Section 423(b)(8) of the Code and Section 4(b) herein, a
participant's payroll deductions may be decreased to 0% at such time during any
Purchase Period that is scheduled to end during a calendar year (the "CURRENT
PURCHASE PERIOD") when the aggregate of all payroll deductions previously used
to purchase stock under the Plan in a prior Purchase Period which ended during
that calendar year plus all payroll deductions accumulated with respect to the
Current Purchase Period equal $21,250. Payroll deductions shall recommence at
the rate provided in such participant's subscription agreement at the beginning
of the first Purchase Period that is scheduled to end in the following calendar
year, unless terminated by the participant as provided in Section 8.
(e) Tax Obligations. At the time of each exercise of a participant's
Option, and at the time any Common Stock issued under the Plan to a participant
is disposed of, the participant must adequately provide for the Company's
federal, state, or other tax withholding obligations, if any, that arise upon
the exercise of the Option or the disposition of the Common Stock. At any time,
the Company may, but will not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefit attributable to sale or early disposition of
Common Stock by the Employee.
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<PAGE> 5
(f) Statements of Account. The Company shall maintain each
participant's Plan Account and shall give each Plan participant a statement of
account at least annually. Such statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any, for the period covered.
6. EXERCISE OF OPTIONS.
(a) Automatic Exercise on Exercise Dates. Unless a participant
withdraws as provided in Section 8, his or her Option for the purchase of shares
will be exercised automatically on each Exercise Date within the Offering Period
in which such participant is enrolled for the maximum number of shares of Common
Stock, including fractional shares, as can then be purchased at the applicable
Purchase Price with the payroll deductions accumulated in such participant's
Plan Account and not yet applied to the purchase of shares under the Plan,
subject to the Periodic Exercise Limit. During a participant's lifetime, a
participant's Options to purchase shares hereunder are exercisable only by the
participant.
(b) Delivery of Shares. As promptly as practicable after each Exercise
Date on which a purchase of shares occurs, the Company shall arrange the
delivery to each participant, as appropriate, of a certificate or book entry
transfer representing the shares purchased upon exercise of his or her Option,
provided that the Company may in its discretion hold fractional shares for the
accounts of the participants pending aggregation to whole shares.
(c) Compliance with Law. Shares shall not be issued with respect to an
Option unless the exercise of such Option and the issuance and delivery of such
shares pursuant thereto comply with all applicable provisions of law, domestic
or foreign, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance. As a condition to the exercise of an Option, the
Company may require the participant for whom an Option is exercised to represent
and warrant at the time of any such exercise that the shares are being purchased
only for investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned applicable provisions of law. Shares
issued upon purchase under the Plan may be subject to such transfer restrictions
and stop-transfer instructions as the Administrator deems appropriate.
(d) Excess Plan Account Balances. If, due to application of the
Periodic Exercise Limit, there remains in a participant's Plan Account
immediately following exercise of such participant's Option on an Exercise Date
any cash accumulated during the Purchase Period immediately preceding such
Exercise Date and not applied to the purchase of shares under the Plan, such
cash shall promptly be returned to the participant.
7. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD.
If the Fair Market Value of the Common Stock on any Exercise Date is
lower than the Fair Market Value of the Common Stock on the Enrollment Date for
the Offering Period in which such Exercise Date occurs, then all participants in
such Offering Period shall be automatically withdrawn from such Offering Period
immediately after the exercise of their Options on such Exercise Date and
automatically re-enrolled in the immediately following Offering Period as of the
first day thereof.
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<PAGE> 6
8. WITHDRAWAL: TERMINATION OF EMPLOYMENT.
(a) Voluntary Withdrawal. Subject to Section 16(g), a participant may
withdraw from an Offering Period by giving written notice to the Company's
payroll office at least five (5) business days prior to the next Exercise Date.
Such withdrawal shall be effective beginning five business days after receipt by
the Company's payroll office of notice thereof. On or promptly following the
effective date of any withdrawal, all (but not less than all) of the withdrawing
participant's payroll deductions credited to his or her Plan Account and not yet
applied to the purchase of shares under the Plan will be paid to such
participant, and on the effective date of such withdrawal such participant's
Option for the Offering Period will be automatically terminated, and no further
payroll deductions for the purchase of shares will be made during the Offering
Period. If a participant withdraws from an Offering Period, payroll deductions
will not resume at the beginning of any succeeding Offering Period unless the
participant delivers to the Company a new subscription agreement with respect
thereto.
(b) Termination of Employment. Promptly after a participant's ceasing
to be an Employee for any reason the payroll deductions credited to such
participant's Plan Account and not yet applied to the purchase of shares under
the Plan will be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 10, and such
participant's Option will be automatically terminated, provided that, if the
Company does not learn of such death more than five (5) business days prior to
an Exercise Date, payroll deductions credited to such participant's Plan account
may be applied to the purchase of shares under the Plan on such Exercise Date.
9. TRANSFERABILITY.
Neither payroll deductions credited to a participant's Plan Account nor
any rights with regard to the exercise of an Option or to receive shares under
the Plan may be assigned, transferred, pledged or otherwise disposed of by the
participant in any way other than by will, the laws of descent and distribution
or as provided in Section 10 hereof. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the
Administrator may treat such act as an election to withdraw from an Offering
Period in accordance with Section 8. The Administrator may, in its discretion
and consistent with applicable law, restrict the transfer of shares purchased
under the Plan by imposing a holding period not to exceed one year from the date
of issuance.
10. DESIGNATION OF BENEFICIARY.
A participant may file a written designation of a beneficiary who is to
receive any cash from the participant's Plan Account in the event of such
participant's death and any shares purchased for the participant upon exercise
of his or her Option but not yet issued. If a participant is married and the
designated beneficiary is not the spouse, spousal consent may be required for
such designation to be effective. A designation of beneficiary may be changed by
a participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
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<PAGE> 7
11. STOCK.
The maximum number of shares of the Company's Common Stock that shall
be made available for sale under the Plan shall be 300,000 shares, subject to
adjustment upon changes in capitalization of the Company as provided in Section
12. If on a given Enrollment Date or Exercise Date the number of shares with
respect to which Options are to be granted or exercised exceeds the number of
shares then available under the Plan, the Administrator shall make a pro rata
allocation of the shares remaining available for purchase in as uniform a manner
as shall be practicable and as it shall determine to be equitable. Shares of
Common Stock subject to unexercised Options that expire, terminate or are
cancelled will again become available for the grant of further Options under the
Plan.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves as well as the Purchase Price,
Periodic Exercise Limit, and other characteristics of the Options, shall be
appropriately and proportionately adjusted for any increase or decrease or
exchange in the issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, exchange or any other increase or decrease in the number of shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option. The Administrator may, if it so determines
in the exercise of its sole discretion, provide for adjusting the Reserves, as
well as the Purchase Price, Periodic Exercise Limit, and other characteristics
of the Options, in the event the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or reductions of shares
of its outstanding Common Stock.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, all pending Offering Periods will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Administrator, and all Plan Account balances will be
paid to participants as appropriate consistent with applicable law.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger or other
combination (the "TRANSACTION") of the Company with or into another entity, each
Option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor entity or a parent or subsidiary of such successor
entity, unless the Administrator determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Periods then in progress by setting a new Exercise Date (the "NEW
EXERCISE DATE"). If the Administrator shortens the Offering Periods then in
progress in lieu of assumption or substitution, the Administrator shall notify
each participant in writing, at least ten (10) days prior to the New Exercise
Date, that the Exercise Date for such participant's Option has been changed to
the New Exercise Date and that such participant's Option will be exercised
automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 8
(provided that, in such case, the participant's withdrawal shall be effective if
notice thereof is delivered to the Company's payroll office at least two (2)
business days prior to the New Exercise
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Date). For purposes of this Section, an Option granted under the Plan shall be
deemed to be assumed if, following the Transaction the Option confers the right
to purchase at the Purchase Price (provided that for such purposes the Fair
Market Value of the Common Stock on the New Exercise Date shall be the value per
share of the consideration paid in the Transaction), for each share of stock
subject to the Option immediately prior to the Transaction, the consideration
(whether stock, cash or other securities or property) received in the
Transaction by holders of Common Stock for each share of Common Stock held on
the effective date of the transaction (and if such holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares of Common Stock); provided, however, that if such
consideration received in the Transaction was not solely common equity of the
successor entity or its parent (as defined in Section 424(e) of the Code), the
Administrator may, with the consent of the successor entity and the participant,
provide for the consideration to be received upon exercise of the Option to be
solely common equity of the successor entity or its parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
Transaction.
13. ADMINISTRATION.
The Plan shall be administered by the Committee, which shall have the
authority to construe, interpret and apply the terms of the Plan and any
agreements defining the rights and obligations of the Company and participants
under the Plan, to prescribe, amend, and rescind rules and regulations relating
to the Plan, to determine eligibility and to adjudicate all disputed claims
filed under the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. The Administrator may, in its
discretion, delegate ministerial responsibilities under the Plan to the Company.
Every finding, decision and determination made by the Committee shall, to the
full extent permitted by law, be final and binding upon all parties. Any action
of the Committee shall be taken pursuant to a majority vote or by the unanimous
written consent of its members. The Committee shall consist of three or more
members of the Board, each of whom shall be disinterested within the meaning of
Rule 16b-3, provided, however, that the number of members of the Committee may
be reduced or increased from time to time by the Board to the number required or
allowed by Rule 16b-3. The Board may from time to time in its discretion
exercise any responsibilities or authority allocated to the Committee under the
Plan. No member of the Committee or any designee thereof will be liable for any
action or determination made in good faith with respect to the Plan or any
transaction arising under the Plan.
14. AMENDMENT OR TERMINATION.
(a) Administrator's Discretion. The Administrator may, at any time and
for any reason, terminate or amend the Plan. Except as provided in Section 12,
no such termination can affect Options previously granted, provided that an
Offering Period may be terminated by the Administrator on any Exercise Date if
the Administrator determines that such termination is in the best interests of
the Company and its stockholders. Except as provided herein, no amendment may
make any change in any Option theretofore granted that adversely affects the
rights of any participant. To the extent necessary to comply with and qualify
under Rule 16b-3 or under Section 423 (or any successor rule or provision or any
other applicable law or regulation), the Administrator shall obtain stockholder
approval of amendments to the Plan in such a manner and to such a degree as
required.
(b) Administrative Modifications. Without stockholder consent (except
as specifically required by applicable law or regulation) and without regard to
whether any participant rights may be considered to have been "adversely
affected," the Administrator shall be entitled to amend the
8
<PAGE> 9
Plan to the extent necessary to comply with and qualify under Rule 16b-3 and
Section 423, change the Purchase Periods and/or Offering Periods, limit the
frequency and/or number of changes in payroll deductions during Purchase Periods
and/or Offering Periods, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant to adjust for delays or
mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Administrator determines in its sole discretion to be
advisable and which are consistent with the Plan.
15. TERM OF PLAN.
The Plan shall become effective upon the first Enrollment Date after
its approval by the stockholders of the Company and shall continue in effect for
a term of twenty (20) years unless sooner terminated pursuant to Section 14.
16. MISCELLANEOUS.
(a) Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
(b) Subsidiaries. The Administrator may from time to time in its
discretion permit Employees of any Subsidiary to participate in the Plan on the
same terms as Eligible Employees hereunder.
(c) Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve months before or after the date the
Board adopts the Plan. If such stockholder approval is not obtained, the Plan
and all rights to the Common Stock purchased under the Plan shall be null and
void and shall have no effect.
(d) Expenses. All costs and expenses incurred in administering the Plan
shall be paid by the Company, except that any stamp duties or transfer taxes
applicable to participation in the Plan may be charged to the account of such
participant by the Company. Any brokerage fees for the purchase of shares by a
participant shall be paid by the Company, but any brokerage fees for the sale of
shares by a participant shall be borne by the participant.
(e) Equal Rights and Privileges. All Employees of the Company (or of
any Subsidiary that is permitted to participate in the Plan under Section 16(b))
shall have equal rights and privileges under the Plan so that the Plan qualifies
as an "employee stock purchase" within the meaning of Section 423 (or any
successor provision of the Code) and the Treasury regulations thereunder. Any
provision of the Plan which is inconsistent with Section 423 (or any successor
provision of the Code) or applicable Treasury regulations shall, without further
act or amendment by the Company or the Board, be reformed to comply with the
requirements of Section 423 (or any successor provision of the Code) or
applicable Treasury regulations. This Section 16(e) shall take precedence over
all other provisions of the Plan.
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<PAGE> 10
(f) Exclusion From Retirement and Fringe Benefit Computation. To the
extent not prohibited by statutory law, no portion of the award of Options under
this Plan shall be taken into account as "wages," "salary," or other
"compensation" for any purpose, whether in determining eligibility, benefits, or
otherwise, under (i) any pension, retirement, profit sharing or other qualified
or nonqualified plan of deferred compensation, (ii) any employee welfare or
fringe benefit plan including, but not limited to, group insurance,
hospitalization, medical, and disability, or (iii) any form of extraordinary pay
including but not limited to, bonuses, sick pay, and vacation pay.
(g) Additional Restrictions of Rule 16b-3. The terms and conditions of
Options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such Options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions. Without limitation of the foregoing, the election
by a person subject to Section 16 of the Exchange Act to enroll in an Offering
Period may be made irrevocable for specific Purchase Period within the Offering
Period.
(h) No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of an employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an employee's employment at any time.
(i) Applicable Law. The laws of the State of California shall govern
all matters relating to the Plan, except to the extent (if any) superseded by
the laws of the United States.
(j) Headings. Headings used herein are for convenience of reference
only and do not affect the meaning or interpretation of the Plan.
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<PAGE> 11
REMEDYTEMP, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. The undersigned hereby elects to participate in the RemedyTemp, Inc.
1996 Employee Stock Purchase Plan (the "Plan") and subscribes to
purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% (not to exceed 10%) of my Compensation (as defined in the
Plan) on each payday during the Offering Period in accordance with the
Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Plan. I understand that if I do not
withdraw from an Offering Period, any accumulated payroll deductions
will be used to automatically exercise my Option on each Exercise Date
within the Offering Period.
4. I have received a copy of the complete Plan. I understand that my
participation in the Plan is in all respects subject to the terms of
the Plan, that capitalized terms used herein have the same meanings as
ascribed thereto in the Plan, and that in case of any inconsistency
between this Subscription Agreement and the Plan, the Plan shall
govern. I understand that the grant of the Option by the Company under
this Subscription Agreement is subject to stockholder approval of the
Plan.
5. Shares purchased for me under the Plan should be issued in the name(s)
of (employee and/or spouse only):____________________________________.
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within two years after the Enrollment Date (the first day of
the Offering Period during which I purchased such shares) or within one
year after the Exercise Date (the date I purchased such shares), I will
be treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess
of the fair market value of the shares at the time such shares were
delivered to me over the price which I paid for the shares. I hereby
agree to notify the Company in writing within 30 days after the date of
any disposition of my shares, and I will make adequate provision for
Federal, State or other tax withholding obligations, if any, which
arise upon the disposition of the Common Stock. The Company may, but
will not be obligated to, withhold from my Compensation or other
amounts payable to me the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make
available to the Company any tax deductions or benefits attributable to
sale or early disposition of Common Stock by me. If I dispose of such
shares at any time after the expiration of the one-year and two-year
holding periods described above, I understand that I will be treated
for federal income tax purposes as having received income only at the
time of such disposition, and that such income will be taxed as
ordinary income only to the extent of an amount equal to the lesser of
(a) the excess of the fair market value of the shares at the time of
such disposition over the purchase price which I paid for the shares,
or (b) 15% of the fair
<PAGE> 12
market value of the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition will be
taxed as capital gain. I understand that this tax summary is only a
summary for general information purposes and is subject to change and I
agree to consult with my own tax advisors for definitive advice
regarding the tax consequences to me of participation in the Plan and
sale of shares purchased thereunder.
7. I agree to be bound by the terms of the Plan. The effectiveness of this
Subscription Agreement is dependent upon my eligibility to participate
in the Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive (in proportion to the percentages listed
below) all payments and shares due me under the Plan (use additional
sheets to add beneficiaries):
NAME: (Please print) __________________________________________________
(First) (Middle) (Last)
______________________________ ______________________________
Relationship
Percentage: __________ ______________________________
(Address)
NAME: (Please print) __________________________________________________
(First) (Middle) (Last)
______________________________ ______________________________
Relationship
Percentage: __________ ______________________________
(Address)
Employee's Social
Security Number: ______________________________________
Employee's Address: ______________________________________
______________________________________
______________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ___________________ ______________________________________
Signature of Employee
________________________________________
Spouse's Signature (If beneficiary other
than spouse)
2
<PAGE> 1
Exhibit 10.18
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
effective as of May 1, 1996 by and among on the one hand RemedyTemp, Inc., a
California corporation (the "Company"), and on the other hand, R. E. McDonough,
Sr., an adult individual ("McDonough"), Robert E. McDonough, Trustee of the
McDonough Survivor's Trust U/D/T dated 6/5/85 and Robert E. McDonough, Trustee
of the McDonough Exempt Marital Trust U/D/T dated 6/5/85 (collectively referred
to herein as the "McDonough Entities" or "Shareholders").
WHEREAS, it is a requirement of that certain Amended and
Restated Employment Agreement by and between the Company and McDonough dated as
of May 1, 1996 (the "Employment Agreement") and the desire of the parties hereto
to enter into this Agreement reflecting the terms upon which the Company grants
the McDonough Entities "piggyback" registration rights allowing the McDonough
Entities to sell their shares of common stock in the Company in any public
offering conducted by the Company subject to the limitations provided herein.
NOW, THEREFORE, on the basis of the preceding facts, and as a
material inducement and consideration to McDonough to enter into the Employment
Agreement and to perform his obligations thereunder, the parties to this
Agreement hereby agree to the following:
1. APPOINTMENT OF REPRESENTATIVE.
The McDonough Entities hereby appoints Robert E. McDonough,
Sr. (the "Representative") to represent the McDonough Entities with full power
and authority to make binding decisions on behalf of the McDonough Entities in
connection with any and all matters arising out of this Agreement. The McDonough
Entities agrees to be legally bound by all decisions made by the Representative
and acknowledge that the Company shall not be held liable for complying with any
directions of the Representative in connection with any and all matters arising
out of this Agreement.
2. DEFINITIONS.
For the purposes of this Agreement, the following words shall
have the meanings set forth below:
(a) "ADVERSE DISCLOSURE" means public disclosure of
material non-public information relating to a significant transaction, which
disclosure (i) would, in the good faith judgment of the Board, based as to legal
matters on the written opinion of outside counsel, be required to be made in any
registration statement filed with the Commission by the Company so that such
registration statement would not be materially misleading; (ii) would not, in
the good faith judgment of the Board, based as to legal matters on the written
opinion of outside counsel, be required to be made but for the filing of such a
registration statement; and (iii) would have a material adverse effect on the
Company's ability to complete such significant transaction, or the terms upon
which such significant transaction can be completed.
(b) The terms "REGISTER," "REGISTERED" and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement (other than on
<PAGE> 2
Form S-4 or S-8 or successor forms) in compliance with the Securities Act of
1933, as amended (the "Act").
(c) "REGISTRABLE STOCK" means (i) all shares of
common stock of the Company ("Common Stock") held by the McDonough Entities as
of the date hereof and (ii) any Common Stock issued as a dividend or other
distribution with respect to or in exchange for or in replacement of the shares
referenced above, provided, however, that each share of Registrable Stock shall
cease to be Registrable Stock when and if transferred to any person or entity
that is not a party to this Agreement.
3. DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. At any time and from
time to time the Representative may request that the Company effect the
registration of Registrable Stock (a "DEMAND REGISTRATION"). Upon receipt of
such request, the Company shall use its best efforts to effect such Demand
Registration, subject to the limitations set forth in Section 3(b). the Company
may include in any Demand Registration any other shares of Common Stock
(including issued and outstanding shares of Common Stock as to which the holders
thereof have contracted with the Company for "piggyback" registration rights) so
long as the inclusion in such registration of such shares will not, in the
reasonable judgment of the managing underwriter(s), if any, interfere with the
successful marketing in accordance with the intended method of sale or other
disposition of all the Registrable Stock sought to be registered. If it is
determined as provided above that there will be such interference, the other
shares of Common Stock sought to be included shall be excluded to the extent
deemed appropriate by the managing underwriter(s).
(b) LIMITATIONS ON DEMAND REGISTRATIONS. Subject to
Section 3(d), the Company's obligation to effect a Demand Registration requested
by the Representative pursuant to Section 3(a) shall be subject to the following
limitations:
(i) Within any twelve month period, the
Company shall not be required to effect more than one Demand Registration on
Form S-1 (or a successor form) under the Securities Act or one Demand
Registrations on Form S-3 (or a successor form) under the Securities Act,
provided that no registration shall constitute a Demand Registration and count
against such limits unless and until all Registrable Stock sought to be included
in such Demand Registration are covered by a Registration that has been declared
effective by the Commission.
(ii) The Company shall not be required to
effect any Demand Registration of fewer than 2,000,000 shares of Registrable
Stock (as adjusted for any stock splits, reverse stock splits or similar events
which occur after the date hereof).
(iii) The Company may defer its obligations
to effect a Demand Registration if, in the good faith judgment of the Board,
filing a registration statement with the Commission at the time a Demand
Registration is requested would require Adverse Disclosure, provided that such
deferral may not extend beyond the earlier to occur of (1) 180 days after the
receipt by the Company of the Representative's request for such Demand
Registration, or (2) the date that filing of a registration statement with the
Commission would not require Adverse Disclosure therein.
(c) HOLDBACK. Subject to Section 3(d), if requested
(pursuant to a timely written notice) by the managing underwriter(s) of an
underwritten offering or the
2
<PAGE> 3
initial purchaser(s) in any offering being resold pursuant to Rule 144A under
the Securities Act of shares of Common Stock being issued and sold by the
Company, the Representative shall agree on the same terms applicable to officers
and directors of the Company not to effect any public sale or distribution of
any of the Registrable Stock for a period of up to 120 days following and 15
days prior to the date of the final prospectus contained in the registration
statement filed in connection with such offering, provided that this Section
3(c) shall not apply with respect to any offering (a) that excludes the
Representative notwithstanding the Representative's desire to participate
therein, and includes any other selling shareholders, or (b) if more than 30% of
the shares being sold in such offering are for the account of selling
shareholders other than the Representative.
(d) MINIMUM SALE AVAILABILITY. The limitations on the
Company's obligations to effect Demand Registrations set forth in Section
3(b)(iii) and the Representative's obligation under Section 3(c) shall not be
applicable to the extent that such limitations would result in the
Representative not having a period of at least 180 consecutive days within any
18-month period during which the Representative may sell Registrable Stock under
a Registration effected pursuant to the provisions hereof.
(e) SELECTION OF UNDERWRITER. Any Demand Registration
and related offering shall be managed by the Representative as follows: subject
to the reasonable approval of the Company, the Representative shall have the
power to select the managing underwriter(s) for such offering, and shall in
consultation with the managing underwriter(s) have the power to determine the
number of shares of Registrable Stock to be included in such registration and
offering (subject to applicable limitations set forth herein), the offering
price per Registrable Share, the underwriting discounts and commissions per
Registrable Share, the timing of the registration and related offering (subject
to applicable limitations set forth herein), counsel to the Representative, and
all other administrative matters related to the registration and related
offering. the Company shall enter into an underwriting agreement in customary
form with the underwriter(s) selected by the Representative and shall enter into
such other customary agreements and take all such other customary actions as the
Representative or its underwriter(s) may reasonably request to facilitate the
disposition of the Registrable Stock.
4. PIGGYBACK REGISTRATION.
(a) If the Company at any time proposes to register
any of its securities for sale, whether or not for its own account (other than a
registration relating to the sale of securities to employees of the Company
pursuant to a stock option, stock purchase or similar plan or a Rule 145
transaction or a registration on any form that does not permit secondary sales),
it shall give written notice (the "Company's Notice"), at its expense, to all
holders of Registrable Stock of its intention to do so at least twenty (20) days
prior to the filing of a registration statement with respect to such
registration with the Securities and Exchange Commission (the "Commission"). If
the Representative desires to dispose of all or a portion of such stock, the
Representative may request registration thereof in connection with the Company's
registration by delivering to the Company, within twenty (20) days after receipt
of the Company's Notice, written notice of such request (the "Piggyback Notice")
stating the number of shares of Registrable Stock to be registered for resale
(whether or not this Agreement has then been exercised in full or in part) by
the holders of the then outstanding Registrable Stock. The Company shall use its
best efforts to cause all shares of Registrable Stock specified in the Piggyback
Notice to be registered under the Act so as to permit the sale by such holders
of the shares so registered, subject to the limitations set forth in this
Agreement.
3
<PAGE> 4
(b) If the registration of which the Company gives
notice pursuant to this Agreement is for the purpose of permitting a disposition
of securities by the Company pursuant to a firm commitment underwritten
offering, the notice shall so state, and the Company shall have the right to
limit the aggregate size of the offering or the number of shares to be included
therein by stockholders of the Company if requested to do so by the managing
underwriter of the offering and only securities which are to be included in the
underwriting may be included in the registration.
(c) Whenever the number of shares which may be
registered pursuant to this Agreement is limited by the provisions hereof, (i)
the Company shall have priority as to sales over the holders of Registrable
Stock and each holder hereby agrees that it shall withdraw its securities from
such registration to the extent necessary to allow the Company to include all
the shares which the Company desires to sell for its own account to be included
within such registration, and (ii) subject to the foregoing clause (a) and
certain rights granted in that certain Master Agreement with Respect to the Sale
of Certain Shareholder's Interests by and between the Company, the McDonough
Entities, and other Shareholders of the Company dated February 6, 1996, the
holders of Registrable Stock shall have priority as to sales over any other
Company shareholders allowed to participate in such registration in order to
allow the holders of Registrable Stock to include as many shares as such holders
desire to be included in such registration. The holders of Registrable Stock
given rights herein shall share pro rata in the available portion of the
registration in question, such sharing to be based upon the number of shares of
such stock then held by each of such holders, respectively.
(d) The provisions of this Agreement shall not apply
to the initial public offering of the Company scheduled to occur prior to August
30, 1996; provided, however, the provisions of this Agreement shall apply to any
initial public offering conducted after such date.
5. DESIGNATION OF UNDERWRITER.
If any registration hereunder is an underwritten offering, the
Company shall have the right to designate the managing underwriter, and all
holders of Registrable Stock participating in the registration shall sell their
shares only pursuant to such underwriting.
6. REGISTRATION PROCEDURES.
(a) If and when the Company is required by the
provisions of this Agreement to use its best efforts to effect the registration
of shares of Registrable Stock, the Company shall:
(i) prepare and file with the Commission a
registration statement with respect to such shares and use its best efforts to
cause such registration statement to become and remain effective for up to 120
days as provided herein;
(ii) prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectuses used in connection therewith as may be necessary to keep such
registration statement effective and current and to comply with the provisions
of the Act with respect to the sale or other disposition of all shares covered
by such registration statement, including such amendments and supplements as may
be necessary to reflect the intended method of disposition from time to time of
the
4
<PAGE> 5
holder or holders of such shares who have requested that any of their shares
be sold or otherwise disposed of in connection with the registration (the
"Prospective Sellers");
(iii) furnish to each Prospective Seller
such number of copies of each prospectus, including preliminary prospectuses, in
conformity with the requirements of the Act, and such other documents, as the
Prospective Seller may reasonably request in order to facilitate the public sale
or other disposition of the shares owned by it;
(iv) use its best efforts to register or
qualify the shares covered by such registration statement under such other
securities or blue sky or other applicable laws of such jurisdictions as each
Prospective Seller shall reasonably request to enable such seller to consummate
the public sale or other disposition of the shares owned by such seller;
provided that, the Company shall not be required in connection therewith or as a
election thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction;
(v) upon written request, furnish to each
Prospective Seller a signed counterpart, addressed to the Prospective Sellers
of: (x) an opinion of counsel for the Company, dated the effective date of the
registration statement; and (y) a "comfort" letter signed by the independent
public accountants who have certified the Company's financial statements
included in the registration statement; covering substantially the same matters
with respect to the registration statement (and the prospectus included therein)
and (in the case of the accountants' letter) with respect to the events
subsequent to the date of the financial statements, as are customarily covered
(at the time of such registration) in the opinions of issuers' counsel and in
accountants' letters delivered to the underwriters in connection with
underwritten public offerings of securities;
(vi) cause all such shares to be listed on
each securities exchange on which similar securities issued by the Company are
then listed;
(vii) provide a transfer agent and registrar
for all such shares not later than the effective date of such registration
statement;
(viii) enter into such customary agreements
(including an underwriting agreement) and take all such other customary actions
as the holders of all the shares being sold may reasonably request in order to
expedite or facilitate the disposition of such shares; and
(ix) make available for inspection by any
Prospective Seller, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with the preparation of such registration statement.
(b) Each Prospective Seller of such shares shall
furnish in writing to the Company such information as the Company may require
from the Prospective Seller for inclusion in the registration statement (and the
prospectus included therein).
5
<PAGE> 6
(c) The Prospective Sellers shall not (until further
notice) effect sales of the shares covered by the registration statement after
receipt of telegraphic, facsimile or written notice from the Company to suspend
sales to permit the Company to correct or update a registration statement or
prospectus.
7. EXPENSES OF REGISTRATION.
All expenses incurred in effecting any registration
requested pursuant to this Agreement hereof, including, all registration and
filing fees, printing expenses, expenses of compliance with blue sky laws, fees
and disbursements of counsel for the Company, expenses of any audits incidental
to or required by any such registration, and expenses of all marketing and
promotional efforts requested by the managing underwriter ("Registration
Expenses") shall be borne by the Company; provided, however, that each
Prospective Seller shall bear underwriting discounts or brokerage fees or
commissions relating to the sale of its shares. The Company shall pay the
attorneys' fees for one (1) counsel appointed by the Prospective Seller in each
registration.
8. INDEMNIFICATION.
(a) In the event of any registration of any of its
securities under the Act pursuant to this Agreement, the Company shall indemnify
and hold harmless each Holder joining in a registration of such securities, each
underwriter (as defined in the Act) and each controlling person of any Holder or
underwriter, if any (within the meaning of the Act), against any losses, claims,
damages or liabilities, joint or several (or actions in respect thereof), to
which such holder, underwriter or controlling person may be subject under the
Act, under any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (1) any untrue statement (or alleged untrue statement) of any material fact
contained in any registration statement under which such securities were
registered under the Act, any preliminary prospectus or final prospectus
contained therein, or any summary prospectus issued in connection with any
securities being registered, or any amendment or supplement thereto, or (2) any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading ((1)
and (2) are each referred to hereafter as a "Violation"), and shall reimburse
each such holder, underwriter or controlling person for any legal or other
expenses reasonably incurred by such holder, underwriter or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
any holder, underwriter or controlling person in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or omission made in such registration statement,
preliminary prospectus, summary prospectus, prospectus, or amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by such Holder in its capacity as a shareholder,
underwriter or controlling person, respectively, specifically for use therein;
provided further that, the indemnification contained in this Section 8(a) with
respect to any preliminary prospectus shall not inure to the benefit of any
selling Holder or underwriter (or to the benefit of any person controlling such
selling Holder or underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of any of the shares to any person if
a copy of the prospectus, as amended and
6
<PAGE> 7
supplemented, shall not have been delivered or sent to such person within the
time required by the Act and the regulations thereunder, and the untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in such preliminary prospectus was corrected in the
prospectus, as amended and supplemented, provided that the Company has delivered
the prospectus, as amended or supplemented, to the selling Holder or underwriter
on a timely basis to permit such delivery or sending. The indemnity contained in
this Section 8(a) shall not apply to amounts paid in settlement of any such
claim, if such settlement is effected without the consent of the Company.
(b) In the event of any registration of any of its
securities under the Act pursuant to this Agreement, each holder joining in a
registration of such securities shall indemnify and hold harmless the Company,
each underwriter (as defined in the Act) and each controlling person of the
Company or underwriter, if any (within the meaning of the Act), against any
losses, claims, damages or liabilities, joint or several (or actions in respect
thereof), to which the Company, underwriter or controlling person may be subject
under the Act, under any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any Violation, in each case only to the extent that such
Violation occurs in reliance upon written information furnished by the holder in
its capacity as a shareholder expressly for use in connection with such
registration, and shall reimburse the Company, underwriter or controlling person
for any legal or other expenses reasonably incurred by the Company, underwriter
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that in no event
shall the selling Holder's indemnification obligations under this Section 8(b)
exceed the amount of gross proceeds received by the selling Holder pursuant to
such registration. Notwith-standing the foregoing provisions of this Section
8(b), if any losses, claims, damages, or liabilities arise out of or are based
upon an untrue statement, alleged untrue statement, omission or alleged omission
contained in any preliminary prospectus which did not appear in the final
prospectus or, to the extent hereinafter provided, as such final prospectus was
amended or supplemented (if so amended or supplemented), a selling Holder shall
not have any such liability with respect thereto to (i) the Company, any person
who controls the Company within the meaning of the Act, any officer of the
Company who signed the registration statement or any director of the Company, if
the Company delivered a copy of the preliminary prospectus to the person
alleging such losses, claims, damages or liabilities and failed to deliver a
copy of the final prospectus or, to the extent such final prospectus has
theretofore been amended or supplemented, a copy of the final prospectus as so
amended or supplemented, to such person at or prior to the written confirmation
of the sale to such person or (ii) any underwriter or any person controlling
such underwriter within the meaning of the Act, if such underwriter delivered a
copy of the preliminary prospectus to the person alleging such losses, claims,
damages or liabilities and failed to deliver a copy of the final prospectus or,
to the extent such final prospectus has theretofore been amended or
supplemented, a copy of the final prospectus, as so amended or supplemented, to
such person at or prior to the written confirmation of the sale to such person.
The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company, underwriter
or controlling person.
(c) If the indemnification provided for above is
unavailable to an indemnified party in respect of any losses, claims, damages or
liabilities referred to therein, then the indemnifying party in lieu of
indemnifying such indemnified party thereunder shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable
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considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party, or by the indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties agree that it would not be just and
equitable if contribution pursuant to this Section 8(c) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in this Section 8(c). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities or actions in respect thereof referred to in
this Section 8(c) shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(d) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, such
indemnified party shall notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section or to the extent that the
indemnifying party has been prejudiced as a proximate result of such failure. In
case any such action shall be brought against any indemnified party, and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, to assume the defense thereof, with counsel of its choice,
and the indemnifying party shall not be liable to such indemnified party under
this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (1 the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time, (2) the indemnifying party and its counsel do not actively and vigorously
pursue the defense of such action, (3) the indemnifying party, in its
discretion, has authorized the employment of counsel for the indemnified party
at the expense of the indemnifying party or (4) the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, in such case
the indemnified party or parties shall have the right to select separate counsel
to assert such legal defenses at their expense (in which case the indemnifying
party shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties).
9. RULE 144 REQUIREMENTS.
The Company shall use its best efforts to file the reports
required by it under the Act and the Securities Exchange Act of 1934 and the
rules and regulations adopted thereunder and to make publicly available, and
available to the holders of Registrable Stock, such information as is necessary
to enable the holders of Registrable Stock to make sales of such stock pursuant
to Rule 144 as promulgated by the Commission under the Act, as such Rule may be
amended from time to time ("Rule 144"). The Company shall furnish to any such
holder, upon request, (i) a written statement executed by the Company as to
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whether or not it has complied with the current public information requirements
of Rule 144 and (ii) a copy of the most recent annual and quarterly reports of
the Company.
10. HOLDBACK.
If the Company files a registration statement in connection
with the initial public offering, a holder of Registrable Stock shall not effect
any sale or distribution of any shares (except pursuant to such registration
statement) of the capital stock of the Company, whether now owned or hereafter
acquired, during the period requested by the underwriters commencing with the
effective date of such registration statement and ending on the close of
business on a date which is not more than one hundred and eighty (180) days
thereafter or such time as the registration statement is withdrawn, whichever is
earlier.
11. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to cause the Company to register Registrable Stock
pursuant to this Agreement may only be assigned to a party to this Agreement.
12. TERMINATION OF REGISTRATION RIGHTS.
The registration rights set forth in this Agreement shall
terminate when the McDonough Entities collectively no longer hold more than ten
percent (10%) of the Registrable Stock.
13. MISCELLANEOUS.
(a) NOTICES. Notice to either party provided for in
this Agreement shall be given by personal delivery or by mailing such notice by
first class or certified mail, return receipt requested, to the addresses stated
below or such other address as either party may hereafter specify in writing:
To RemedyTemp:
Attn: President
RemedyTemp, Inc.
32122 Camino Capistrano
San Juan Capistrano, CA 92675
To The McDonough Entities:
Attn: Robert E. McDonough, Sr.
32122 Camino Capistrano
San Juan Capistrano, CA 92675
(b) SEVERABILITY AND GOVERNING LAW. Should any
Section or any part of a Section within this Agreement be rendered void, invalid
or unenforceable by any court of law for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable any other
Section or part of a Section in this Agreement. This Agreement is made and
entered into in the State of California and the laws of California
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shall govern the validity and interpretation hereof and the performance by the
parties hereto of their respective duties and obligations hereunder.
(c) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same Agreement.
(d) ENTIRE AGREEMENT. This Agreement contains the
entire understanding of the parties and there are no further or other agreements
or understandings, written or oral, in effect between the parties relating to
the subject matter hereof.
(e) COSTS AND ATTORNEYS' FEES. In the event that any
action, suit, or other proceeding is instituted concerning or arising out of
this Agreement, the prevailing party shall recover from the non-prevailing party
all of such prevailing party's costs and attorneys' fees incurred in each and
every such action, suit, or other proceeding, including any and all appeals or
petitions therefrom. As used herein, "attorneys' fees" shall mean the reasonable
costs of any legal services actually rendered in connection with the matters
involved, calculated on the basis of the usual fee charged by the attorneys
performing such services and the reasonable expenses incurred in connection
therewith.
(f) ARBITRATION. Any controversy, dispute or claim
arising out of the interpretation, performance or breach of the terms of this
Agreement shall be resolved by binding arbitration. Such arbitration shall
proceed in accordance with the then-current rules for arbitration as established
by Judicial Arbitration Mediation Services, Inc./ENDISPUTE ("JAMS"), unless the
parties hereto mutually agree otherwise, and pursuant to the following
procedures:
(i) Each of the Company and the Shareholders
shall appoint an arbitrator from the JAMS panel of retired judges, and those
appointed arbitrators shall appoint a third arbitrator from the JAMS panel of
retired judges within ten (10) days. If the appointed arbitrators fail to
appoint a third arbitrator within ten (10) days, such third arbitrator shall be
appointed by JAMS in accordance with its rules.
(ii) Reasonable discovery shall be allowed
in arbitration.
(iii) All proceedings before the arbitrators
shall be held in Orange County, California.
(iv) The award rendered by the arbitrators
shall be final and binding and judgment may be entered in accordance with
applicable law and in any court having jurisdiction thereof.
(v) The award rendered by the arbitrators
shall include (i) a provision that the prevailing party in such arbitration
recover its costs relating to the arbitration and reasonable attorneys' fees
from the other party, (ii) the amount of such costs and fees, and (iii) an order
that the losing party pay the fees and expenses of the arbitrators.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the dates below.
DATE:______________________ REMEDYTEMP, INC., a California
Corporation
By:___________________________________
Paul W. Mikos
President and Chief Executive Officer
DATE:______________________ ______________________________________
Robert E. McDonough, Sr.,
an individual
DATE:______________________ ______________________________________
Robert E. McDonough, Trustee of the
McDonough Survivor's Trust U/D/T
dated 6/5/85
DATE:______________________ ______________________________________
Robert E. McDonough, Trustee of the
McDonough Exempt Marital Trust
U/D/T dated 6/5/85
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